In
response to my last blog on the
fallacy of destroying the planet there have been a few misapprehensions
floating around. Consequently, I feel compelled to tell you that we are not
running out of resources. It's a myth, and quite a big one, as most people
(apart from most geology experts and most economists) seem to believe it. For
that reason I'm not surprised the above blog post turned out to be quite
contentious.
The
fallacy of depleting resources is usually comprised of a misunderstanding of the
word 'resources' and the word 'reserves'. Usually when people tell us we're
depleting the earth's resources at a precarious rate they are confusing
reserves with resources.
Here's
the difference. Reserves are the materials that have been planned for use in
the coming decades, consistent with current mining technology at current
prices. Depleting our reserves is quite normal. Resources on the other hand are
of a much greater quantity - they are all the potential reserves that haven't
been factored into the forecast of reserves. And those, we are not going to run
out of. One of the reasons potential reserves remain as resources is because
beyond a few decades we don't know how much we'll depend on them or what future
our innovations will do for us in terms of our being weaned off current
dependencies.
People
who warn us that unless we are careful we are going to run out of resources are
misunderstanding both numbers and resources, namely regarding what we've
planned to use and what we actually have the potential to use. To give you an
analogy. My wages give me an indication of what I have to spend each month. If
I have a particularly expensive month, that doesn't mean I'm always going to be
short of money, because future pay days will be forthcoming. My wages this
month is my reserve, and my future potential earnings are my resources.
I did
some research on this matter a few months ago, consulting the works of several
experts in this field - and they all said the same. They are the source of much
of what I've said above. People with a green agenda, like George Monbiot and
the Green Party, tell us differently - they tell us that we are in dire
straits. What do you think is more likely: that the experts have got it wrong,
or that amateur, agenda-driven green people have not grasped the difference
between reserves and resources? Please note, I am not aiming this point at
people who are merely green-conscious - for they are often caring people
without a hidden agenda or a self-serving ideological drive.
Anyway,
let's suppose you're still not sure who to believe. There is, as it happens, an
economic way to test who is right out of the experts vs. the greens, and that
is with the world's best mechanism for measuring the supply and demand levels
of resources. I'm talking about prices. Prices are the key. If there were
precarious times ahead with scarcer quantities of paper, oil, gas, manganese, copper, zinc,
bauxite, tin and chromium - you wouldn't find prices continuing to drop, you'd
find them increasing, particularly if demand increases. But the reason they
continue to fall is twofold - in part because supplies are not scarce, but also
because newer technology reduces the demand. Remember too, all supply and
demand markets are transitory - we don't continue indefinitely to rely on the
same resources with the same level of demand. As I pointed out in this
Blog post:
Because
of the limitation of the earth’s resources, supply-side initiatives in the free
market engender innovation, which creates value, but also brings about a change
in the way we use the earth’s resources. For example, we used to burn a lot
more coal than we do now. Currently the technology for electricity, gas, and
solar energy has weaned us off coal dependency, which means we use less of it. Another
example is paper. We used to use a lot more paper. Currently the technology for
digital interfaces (laptops, mobile phones, iPads) has weaned us off much of
our paper dependency (with much more still to come), which means….. you guessed
it…. we use less of it. So when we see economic growth, and increased
prosperity, as well as people continually being lifted out of poverty because
of it - that growth is not defined as a calibration of any single resource we
consume - it is the value created consistent with how the market most
efficiently allocates the ever-changing use of varying resources.
When
resources do actually become genuinely scarce (remember, 'resources', not
reserves), the prices rise, which provides a signal to consumers that they
should use less of them, and to manufacturers that they should look to
alternate technologies. Or if possible, that suppliers should find ways to
produce more of the scare resources. Thankfully, as far as I know, there isn't
a single known resource in the world that we are predicted to run out of - not
just because we have so much in terms of potential supplies, but also because
there isn't a single resource that we are going to have to depend on for longer
than our capacity to wean ourselves off it.
One last
thing, all this doesn't mean we have to deny that bad things are happening and
that people are misusing our planet in all sorts of cruel, careless and
wasteful ways. But what we must never do is what it is easiest to do - to look
at incidents of bad things happening and make that the entire argument. Of
course if you only focus on the bad then pretty much everything is negative.
But it just won't do.
What's
always needed is a proper cost-benefit analysis that factors in everything -
that is, all aspects of human progression, and all aspects of human
retrogression (or to the best of our ability). The moment a balanced view is
attempted, things change a great deal - and I must admit, I find it bizarre,
given the incredible progression-explosion that has occurred, that people find
it so easy to focus so much on the costs.
Don
Boudreaux has a neat illustration for this progression explosion - what he
calls "The
Hockey Stick of Human Prosperity"- so named because if you graphed the
living standards and life expectancy of humankind over the last few millennia,
they would mostly be flat until the exponential advances that occurred in the
aforementioned progression-explosion in the past two hundred years.
It is vital to emphasise just how good the hockey stick
illustration is in conveying two important things - not just in conveying the
benefits of becoming advanced at the point in human history at which the hockey
stick's heel and toe curves upwards, but in conveying just how comparably
bereft human beings were for so many centuries when they were without the
things we take for granted. One can see the astonishing progression-explosion
not just by how much we've reaped the benefits of capitalism, industry, science
and technology in the past two centuries, but by the absence of these things in
every century that pre-dated the Industrial Revolution, and in all the present
day countries that lack the qualities of free enterprise, and a basic political
structure, stable government, rule of law, and the conditions and technological
capabilities to lift them out of poverty as quickly as we'd like.
