Tuesday, January 15, 2013

Isn't She (And All She Represents) Lovely?

One of my oldest friends and his wife recently had their first child (a daughter). Some of you may remember my post a couple years ago on the world's increasing population. In celebration of yet another life, let's revisit the Simon-Ehrlich wager:

As economist Mark Perry explains,

Between early 2010 and the summer of 2011, the DJ-AIG index increased by 28.5%, partly because oil prices increased from $80 per barrel to $110, and gasoline prices increased almost 60% from $2.50 per gallon to almost $4.00.  But since the summer of 2011, the commodity index has fallen back to the same level as in early 2010, thanks probably due to falling natural gas prices, and declines in the prices of copper, nickel and aluminum.  As of January 2013, the inflation-adjusted commodity index is at about exactly the same level as January 2003, reflecting a flat price trend over the last decade. The updated chart also shows that the world population in 1934 was about 2 billion people, and we now live in a world with almost 7 billion people. Therefore, over a period that includes several generations or more, we see an overall significant downward trend in real commodity prices, despite an increase of more than 5 billion people in the world.  Overall, I still conclude that Julian Simon was more right than lucky.

With the global rise in population, we have found new ways to innovate. Increased population has been met with increased trade, increased innovation, and thus higher living standards. Science writer Matt Ridley concluded with this thought at his reception of the 2012 Julian L. Simon Memorial Award:

If [Simon] were here today...I would tell him about the new evidence from Paleolithic Tasmania, from Mesolithic Europe from the Neolithic Pacific, and from the internet today, that it’s trade and exchange that breeds innovation, through the meeting and mating of ideas...This means that stupid people are just as important as clever ones; that the collective intelligence that gives us incredible improvements in living standards depends on people’s ideas meeting and mating, more than on how many people there are. That’s why a little country like Athens or Genoa or Holland can suddenly lead the world. That’s why mobile telephony and the internet has no inventor, not even Al Gore...The great human adventure has barely begun. The greenest thing we can do is innovate. The most sustainable thing we can do is change. The only limit is knowledge. Thank you Julian Simon for these insights. And thank you for this award.

So, to my friends: Congratulations (and thanks). Let's wrap it up with the song Stevie Wonder wrote for his own daughter.

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