Last year, Jeremy Grantham, CEO of the US assets management company GMO, observed that the outcome of the famous wager between Julian Simon and Paul Ehrlich had changed.
In 1980, Julian Simon was so frustrated with Paul Ehrlich's gloomy prediction of an exploding population and the depletion of resources, that he made a bet with Ehrlich. Ehrlich chose 5 major commodities - copper, chromium, nickel, tin and tungsten - and they bet whether the prices would go up over the next ten years.
Prices fell, and Ehrlich lost, and for many, the wager was a demonstration of human capability to innovate and thus stay ahead or Malthus’ old prediction that the population and our needs would grow faster than we were able to increase production – leaving the masses to starve.
Well, Jeremy Grantham in his quarterly newsletter in July pointed out that if the bet had continued till today (Simon in fact proposed to extend it), Ehrlich would have won. Prices on all 5 commodities have risen above the 1980 level in recent years.
An excellent recent report from McKinsey Global Institute, The Resource Revolution, documents how the entire fall in commodity prices that industrialization and new technologies created during the past century have been erased by the rapid rise in prices since 2000.
I guess that’s bad news.
No comments:
Post a Comment