Is it productive to consume?

What does "productive" mean, anyway?

Value and price are not the same - we should keep it in mind

We often use “price” and “value” as if they had the same meaning. But when you dissect them, there are several areas where it’s important to keep in mind that they are different.

GDP is one. It’s almost banal these days to point out that measuring a society’s wealth in terms of GDP – simply the economic activity – is misleading. There are other factors, which contribute to the true wellbeing of an economy – there are other values than money.

In the industrial age, with its focus on physical objects – atoms – scarcity determined the price. Exclusivity made stuff expensive. These days the economy is increasingly based on information – bits. Bits are different than atoms. Their price may be low, but when bits are shared and widely distributed and used, their value increases.

When you recycle or reuse an object, value is created, but in purely economic terms it’s a loss, compared to simply throwing the old away and buying a new.

Many people can report about the rise in quality of life that comes from getting a job so close to their home that they can bike to work. When you don’t need a car, you spend a lot less, but in this case you experience an increase in utility and pleasure. This illustrates a decoupling between growth in value and growth in revenue.

Finally, price and value do not grow in sync. It’s the old 20/80 rule again: You can often get 80% of the value for 20% of the price. The last 20% of value is much more expensive. The higher you are already, the more expensive it becomes to achieve the next marginal increase in value.

This is colossal!

This is the most interesting and entertaining site I’ve come across in quite a while - thisiscolossal.com. Colossal presents art that is very close to my liking: modern, colorful, high tech, quirky, fun, beautiful. There’s just a lot of great stuff, day after day.

Colossal is the project of Christopher Jobson – based in Chicago. This is how he presents the site himself:

”I like to describe Colossal as a blog that explores the intersection of art, design, and physical craft. I enjoy artwork that is tactile, physical and non-digital in nature, especially sculptural work and installations that use impossible numbers of components, or sequences in a process. During the course of a week you’ll find roughly 30 posts on photography, design, animation, painting, installation art, architecture, drawing and street art. I share things that I feel are accessible to everyone, requiring little explanation or theory, so in that sense, I hope people not involved directly in the arts can also find this site engaging”.

Virtues of the formal economy: There are reasons for having taxes and regulations

The ideas of the ”mesh” economy and ”collaborative consumption” are to create services built on shared access and shared maintenance of goods. Lots of businesses are based on this: Hotels, rental cars, car sharing, and airlines… What’s new is how digitization, urban density and a tight economy makes it possible to share many more things: Tools, sports equipment, car rides, little chores like shopping or assembling IKEA furniture.

In a sense it is a very efficient market: if someone has idle capacity, it can be offered to others and used easily and quickly and with a minimum of regulatory hassle and paperwork. Wonderful!

However, there are a few dilemmas that arise as the exchange becomes less formal, and you start doing a lot of peer-to-peer exchange and bartering.

In many ways it's the good old moonlighting economy, but digitally enhanced – and the trouble with moonlighting is that you can’t collect taxes from it, and there’s no way to enforce society’s normal regulation.

So, if you believe in having a well functioning and adequately funded public sector, good roads, public healthcare and education – or if you believe in regulation to keep track of pollution and unsafe working conditions – or if you believe in trade unions to protect decent wages and blatant exploitation of those who are too weak to negotiate – well, then you might feel that a growing informal sector is undermining the rights that others have fought hard to ensure over the past century.

It’s a paradox that the mesh economy is seen as a way of strengthening local communities and building stronger social interaction – but at another level, you can argue that it short-circuits the building blocks of society as a whole.

I have no doubt that the current commercial system, and our current way of regulating business and interactions is too rigid and often counter productive. Mesh-style initiatives are needed to challenge and explore.

But going local shouldn’t mean ignoring your obligations to contribute to society at the greater level.

Sign of the times - fake euro bills in Copenhagen

This is new

Business models for wired objects

It strikes me, that as every object gradually becomes equipped with computing power and net connectivty, we can extend to all industries, the distinction used in the computer industry between hardware and software, and within software between the operating system (OS) and the specific applications.

In hardware, new products and features are quickly copied and adjusted, and over time a product tends to become a commodity, where the only differences between makes are in the price. Also, despite the talk about mass customization and 3D printing, physical manufacturing belongs to the industrial age of mass production. High volume of identical stuff means lower prices – for now.

Software is different. Bits are live, fluent. It’s in their nature to be modified, recombined, individualized etc. The bit business is about processes rather than products. Value comes from change, and from matching the user’s context exactly.

But there are different types of bits: Some software is the OS: The protocols, standards, interfaces and basic functions, that the more specifics apps can run on. Crucially, the more devices use the same OS, the more diversity you can achieve in the apps that will be available.

So there is a progression: The physical device is a platform, which supports an OS, which in turn supports the apps.

As more objects are equipped with computing power and network connectivity we will see the same progression in every industry. Whether it’s cars, classrooms, hospital beds or thermostats, there will be a physical platform of objects that functionally are very similar. There will only be a handful of manufacturers on the market, and their margins will be razor thin.

Even though end-users have more or less the same physical equipment, they will have very different experiences, because the processes that are running on their devices are very different. We all have the same smart phone, but the feel of each phone is very personal.

This is a useful observation, because it allows you to understand better how there are different business models and different logics at play in the market – not just in computers, but generally.

When we think about the trend toward mass customization, we need to distinguish between the physical object and the processes it supports. Physical objects can be customized by running different applications on them. Physical products are cheaper when you produce them in large volume, but the software they are running can be individualized at very little cost. For manufacturers, these are very different games.

The OS layer is particularly interesting, because this is where the most power and profits reside.

There are very powerful lock-in effects at this level. Everyone benefits from standards, so once one system is established as the dominating solution, there will be a strong trend towards monopoly – witness Microsoft, Google, Facebook.

The problem with monopolies of course, is when the benefits to users from standardization and mass production are outweighed by high prices and lack of innovation when the dominating brand isn’t kept alert by competition.

… And you could go on to describe the relations between producers of apps and those owning the OS, or the relative importance of the physical device and the OS…

The main argument is to point out, that this division of roles and business models will extend to almost any kind of objects, as everything becomes wired.

The City of Samba - tilt shift movie from Rio Carnival

A nice little video shot at the Rio Carnival. The tilt shift technique makes you aware how unreal it all is.

No nonsense tools for everyday creative work

Let me present three of my favorite personal tools: The Parker Jotter ball pen in stainless steel, the Pentel p205 mechanical pencil, and the classic black Swatch GB743.

They may seem very different, but actually, they have several important characteristics in common. Functionally, they are as good as any product on the market.

The refill for the Jotter is exactly the same that is used for many way more expensive pens. The Swatch keeps time with the same precision as a Rolex, and it is as easy to read.

In fact, they are all extremely functional. The Pentel p205 pencil has a great grip, it’s sturdy, accurate, the eraser works, no wonder it has many fans around the world. The Jotter fits your hands very well – as the 750 million jotters sold since its introduction in 1954 testify. The Swatch is clear, simple, light, and sufficiently waterproof for any everyday use.

The 3 tools also belong to the same category price wise. Depending on where you buy it, the Jotter cost between 5 and 12 €, the Pentel costs around 8 € and the Swatch costs around 40 €.

That’s more than a disposable or really cheap product costs, so they are something that you take care to keep. You get a certain attachment, but no more. Should I lose one (and I do), it would be an irritation, but nothing like the disaster of losing a Montblanc pen or a Rolex watch.

They are not status objects. You don’t pay for fancy ads in glossy magazine. You don’t flash these tools to show your wealth – but when I meet others who use them, I feel I know something significant about those people. The signal they send is one of an emphasis on no nonsense functionality.

Muji exhibit of "fitness products" at London design Museum

This looks like an interesting exhibition. Muji, the minimalist Japanese retailer, is exhibiting products that are "fit" at London's Design museum. The idea is to show products that are adequate and give us a truly healthy life. Products for a life with a bit of self constraint.

Audio interview with Robert H. Frank

I have started to review books for the saturday book section of Politiken, the Danish daily newspaper. In todays paper, I’m reviewing ”The Darwin Economy” by Robert H. Frank. The plan is to combine the reviews with a short podcast with an interview with the author.

Here’s the link to my interview with Robert Frank – you need to scroll down a bit to see the player.

The interview lasts 14 minutes and covers the main point of his book: The tension between what is good for the individual, short term and locally – and what is good for the community and in the longer term.

His solution is to tax activities that are harmful for the community in order to encourage individuals to change their behaviour. The taxes are then used to invest in activities that strengthen the community, but which the individual has very little incentive to spend on. In short; Robert H. Frank makes the case for having a state which balances the interests of individuals and society, but doing so very carefully in order not to stifle the dynamics which individual initiative creates.

Converging interests - individual and community

I just wrote a review of Robert H. Frank’s book, The Darwin Economy, for the Danish Newspaper Politiken, and it gave me a reason to re-consider some of the mechanisms behind the never-ending quest for growth, which seems to be driving our civilization into the ground.

Why do we always want more? Why can’t we just enjoy the stuff we have already acquired, rather than racing on without even taking the time to fully savor what we have?

As Robert Frank points out, it’s due to Darwinism. We are always in a battle with each other for position; the one with the highest position gets to reproduce. The crucial point is that position is relative, not absolute. Even though we are wealthy and have no objective needs, it’s not enough if those around us have even more. Even though a company makes a decent profit, it needs to make the most profits in order to attract investors. …And so the race is on.

It continues, even if pursuing our individual wealth means that we start to undermine the foundation for the entire community – as evident in the environmental degradation and depleting of natural resources. Apparently, as individuals we can’t help pushing our consumption to the absolute limit of what’s available.

On the one hands this is a great mechanism to keep humans evolving, and not growing complacent. We are always under pressure, and it keeps us fit. It’s a drive deep within us. We’re programmed to be ambitious rather than content.

But, it creates a growing conflict between the individuals’ immediate goals and the long-term good of the community. We may become stronger as individuals, but as a species, we can end up very vulnerable.

Robert Frank argues that we need the state to tend to the interest of the community as a whole. The state can tax harmful activities and thus steer individuals towards types of growth that don’t undermine the community. Furthermore, the state can invest the taxes in projects that create benefits for the entire society, but which we don’t have sufficient incentive to spend money on as individuals.

I’d like to go a bit further with the Darwinian perspective. The problem, as outlined, is that evolutionary pressure works on the individual, rather than at the species level – and this leads to conflicting interests.

One solution would be if we moved up a level, becoming a global organism.

We would continue to be individuals that act and think independently, but we would be much more conscious of how our actions fit in relation to the interests of the whole of mankind. We would - almost as second nature – have a clear understanding of our role in the community, and it would affect how we act as individuals.

One might assume that the stronger community would mean that we would build values that go beyond our own narrow and immediate interests, and that we would be more willing to subordinate our individual agenda and personal interest for the good of the whole system.

At a very general level, I believe that humanity may indeed be moving to a different level of Darwinian selection. We are becoming so tightly connected, so interdependent and our fates are so intertwined as a community, that we are, in effect, becoming a coherent organism. We are at a stage of evolution, where it is not only an issue of which persons get to survive, but whether we as a species can continue here on earth. Unless humanity proves fit for the current conditions, other types of life will take our place.

This sounds pretty far-fetched, but actually, it wouldn’t be the first incidence of such a Darwinian quantum leap. In their book The Major Transitions in Evolution the biologists John Maynard Smith and Szathmary Eörs described how living organisms have taken qualitative leaps upwards in complexity, when several separate but interacting organisms have become linked so closely that at some point they began to function as one.
Examples of this where when single cell organisms merged to former more advanced multicellular organisms, or when organs merged to former more advanced bodies.

As far as I can see, this movement towards larger levels of coordination is a constant trend throughout history – although there may be periodic setbacks.

So what does this imply?

It means that we will see more global coordination, global laws and decision-making.

It means that as conditions become tighter and tighter coupled, individual freedom and consumption will be much more contingent upon what the community can handle and accept.

It means that the distance from what is good for the individual and what is good for the community becomes shorter.

It means that we – as individuals, companies or nation states – will have to give up some sovereignty to the community we share our fate with. This requires trust and faith in the common project.

It means lots and lots of conflicts along the borders between those that we feel are inside the circle of our ”organism” and those outside it.

And it challenges us to define where we draw the circle of inclusion – although, in many cases, it’s doubtful whether we can decide who we share fate with, or if the lines simply emerge from necessity.

My favorite museum – the London Science Museum

Of all the world’s great museums, my favorite is the Science Museum in London. It’s probably also the museum, which I’ve visited the most times. Just spent three long mornings in a row there with my 17-year-old son, studying the beauty of the inner workings of our world and the elegance of engineering. We have been learning about steam engines and mechanical clocks, how to produce paper clips and tetra pak cartons… All sorts of fascinating and wonderful stuff. When you understand it, it makes you feel like a richer person.

As a visitor to the Science Museum you sense the deep love of the subject that lies behind the exhibitions. I used to do this sort of exhibitions and explaining myself at Danfoss Universe, and I can appreciate the expertise and craftsmanship of the communicators at the Science museum.

Interestingly, I find the older, basic displays of models more interesting than a lot of the recent, more colorful, interactive and playful activities. The dioramas are great – old fashioned, but they do an excellent job.

At this visit we took a particular interest in Charles Babbage’s difference engine – arguably the first serious computer in the world, built in 1832 Babbage had the Royal Navy finance the building of his first, small version. Building such mechanical wonders was exceedingly expensive. Babbage fought for years to build a second, much larger version, but he failed to get the funding.

As the displays at the Science museum tell, lack of adequate technology and Babbage’s own difficult temper were the main hindrances. He never saw it completed, but in 1991 it was finally built – and that is the machine, which is shown at the museum today. If you crank it firmly and carefully, it can calculate a result with 31 digits every 6 seconds. It would have been revolutionary at Babbage’s time.

So amazing, that the computer was invented – in theory – but not built. The solution was lying around for a century and a half.

… And when you are done at the Science Museum, you can go right next door to the (almost) equally impressive Museum of Natural History. British at its best.

The surveillance mobile

London is still pushing hard to be the world capital of surveillance. Here’s a mobile camera solution: A small car with a roof mounted camera – Google streetview-style. I saw it parked outside Paddington station, in a street with a lot of pubs and nightlife. If you look closely you can see that there is a policeman sitting inside, staring at me as I aim my camera at his.

The CCTV mobile is probably a very useful tool for the police, but it also a clear manifestation of a particular way of maintaining law and order. Having a police officer being visible by walking the streets, helping with requests, talking to people, creates a very different interaction than having an officer sitting semi-covert in a car, recording passers–by for some unclear purpose, demonstrating the ever-vigilant eye of Big Brother.

Frugal solutions – our project website is now online

With my colleagues at the Universe Foundation, I have been working on starting up a new project which examines the elements of creating frugal solutions in more depth, and which eventually should lead to a handful of companies trying it out for real.

The project website has just launched, it still has a few bugs, but it’s a young project. I’d love to hear any comments or questions.

There are good reasons to fear that many people in Denmark - and in the West in general – will need to get by with much more limited resources in the coming years.

The economy is seriously challenged by a number of fundamental weaknesses. Unemployment is rising, the population is aging, the polarization of wealth is increasing.

Therefore, the Universe Foundation is now starting up a project to examine the potential in developing frugal solutions for the Western markets.

What are frugal solutions?

Frugal solutions use resources efficiently . They enable customers to fulfill their needs adequately, with a decent experience and at a low price. They expand a company's market by opening it to users who otherwise could not afford to use such a solution. The strategy is to drive down prices and achieve higher sales volume - rather than raising revenue per unit by adding additional features.

Frugal innovation is driven by the need to manage with limited resources, and therefore there is some acceptance among customers of compromising slightly on convenience.

Frugal solutions are services and systems rather than just stand alone products. They meet needs at a much lower price than usual, by considering the wider context of the user and the usage, and by integrating and coordinating several means (products and service) and stakeholders, including the users themselves, in creating value.

They focus on providing utility rather than selling products , and this may be best achieved by innovating in terms of systems – such as business models, creating standards and bridging components, organizing interaction or mobilizing non-commercial resources.

After the black swans: Anti-fragility

Nassim Nicholas Taleb, the author of The Black Swan is evolving his theories of risk assessment. Apparently his next book will be about a new word, he has coined: Anti-fragility.

Although I still find his description of the concept a bit hard to grasp, the basic idea sounds intriguing. Contrary to systems that are fragile (easily broken), anti-fragile systems get stronger by being stressed and shocked. They get used to change, accidents, hard wear etc. Just the kind of systems we would like have, rather than the brittle systems in infrastructure, technology and finance, which are we so dependent on.

How do you make systems anti-fragile: By making them adapt to regular stress: Like a forest that regularly experiences small fires will not be so vulnerable to the very rare, but completely devastating forest fire, that is bound to happen eventually.

You can hear Taleb explain it in more and somewhat technical and slurred, details in this interview on the Econ-talk podcast. He tells that his book should be due late 2012.

Actually, Taleb mentioned Anti-fragility in chapter 4 of his book ”Fooled by randomness”:

“For the anti-fragile, shocks bring more benefits (equivalently, less harm) as their intensity increases —up to a point.

A simple case —what is known heuristically by weightlifters. Lifting one

hundred pounds once brings more benefits than lifting fifty pounds twice, and certainly a lot more than lifting one pound a hundred times. (Benefits here mean strengthening of the body, muscle growth and beach-friendly looks). The second fifty pounds play a larger role, hence the nonlinear (that is, we will see, convexity) effect. Every additional pound brings more benefits, until one gets close to the limit, what weightlifters call “failure”.

Missed call - the cheapest way to phone

Ah, I love this kind of streetwise innovation: The missed call.

Very popular in India it seems. The idea is that if you are calling someone who is better off than you, you will phone them, and hang up, so your number is transferred and they can call you up.

The system is known in many countries, there’s even a Wikipedia entry detailing the name for the system in many languages and with some examples of common codes:

- In Bhutan, farmers know how much milk their customers want by the number of missed calls they get.

- In India, a missed call from a shop or business means "Your order is ready".

A Laundry list of paradigms that are coming to an end

We will see less of this in the years ahead:

- The era of plenty oil and non-renewables ressources

- Ir-responsible consumerism – The freedom to do whatever you can pay for

- Analog media

- Reductionism

- Industrialism, one-way broadcasting

- The American/Western era

- Me-thinking

Economic bobbles are like traffic jams

I don’t usually listen to podcasts twice, but this one I did. 16 minutes.

One of the grand old men of complexity theory, Brian W. Arthur, gives a brief overview of why economics seen from a complexity point of view is different than neo-classic economics.

Brian Arthur mentions cars in traffic as an example of a complex, dynamic system.

“Traffic forms some sort of pattern at a given instant and the cars react locally to what ever that pattern is for them, and so in reacting they are recreating anew the pattern to which they further react. There is a beautiful causal loop”.

Arthur’s point is that the patterns and events in the economy arise in much the same way, but he argues that the models used in classic economic theory make a shortcut by assuming that the economy tends towards some equilibrium state as all players rationally adjust their behavior to balance demand and supply.

To Brian Arthur this type of top-down modeling is a simplification, which hides a lot of the important events and causes that determine how the economy actually develops.

As he explains it:

“In an equilibrium theory model of traffic flow, traffic would move along nicely, and settle at some equilibrium flow. But you can’t see phenomena in time, such as traffic jams. Traffic jams happen when there is a fair amount of density of traffic, and they happen spontaneously. Some small event, perhaps a dog running into the road causes a car to slow, that causes another car behind it to slow also, and very quickly you get this emergent structure of a traffic jam.

But you will not see it in an equilibrium model. And then the question arises; if we have put a massive filter in front of economic theory, if we took that filter away what else would we see? I think we would see something different and more realistic.

What you lose sight of, says Brian Arthur, are positive feedback, increasing returns, network effects, structure determined by accidents shaping the future as very small events will lock things in.

Complexity theory sees “an economy that is organic, one layer builds on top of what’s already there. It’s self constructing, the economy arises out of itself, forms of itself, gives new structures and new challenges, it's always boiling and roiling with change and opportunity. History matters, outcomes are historically contingent and that sets the scene for further outcomes that are historically contingent. It’s imperfect, it’s messy, but it’s realistic”

A different perspective on the world - as seen by robots

Completely rational, mechanical, explicable - but really weird. Like a new born trying to make sense of a new world. This video simply consists of footage from robo-cameras. More information here.
One of the inspirations for the work was this essay.

Work less hours

We’re hearing all the time that we need to work more, yet unemployment is high – as are stress levels among those who are fortunate to have a job. The new economics foundation (nef) in London recently published a report examining the case for a 21-hour workweek. It’s a radical idea, but in many ways it makes a lot of sense – if you are willing to examine some of the fundamental assumptions in our economy closely.

The launching of the report was marked by a lecture at the London School of Economics from Juliet Schor, Lord Skidelsky and Tim Jackson, all three of them who have been challenging the usual growth model very convincingly.

I can recommend the podcast from the event, it’s very refreshing to hear basic concepts like equality, growth, and well being and productive turned on their heads.

Juliet Schor summarized the three benefits of working shorter hour as:

• shorter hours lead to lower unemployment and more job creation

• shorter hours reduce ecological and carbon footprints

• shorter hours give people more free time, reduce stress, enhance family life and community.

Tim Jackson has a nice comment on the ways that advertising and rampant lending worked, untill very recently:

”We can provide you with money that you don’t have to buy stuff that you don’t need, to create impressions that won’t last on people that you don’t care about. It’s pathological”.

As so often, it boils down to a very fundamental uncertainty and re-thinking of what we want to achieve – how do we define the good life.

Lord Skidelsky is working on it, he’s writing a book, and so far he has summarized it in 7 components:

Health, security, respect and dignity, personality, friendship, harmony with nature and leisure.

The economic outlook as seen from Davos

There are always some amazing panel sessions at Davos, and luckily we mere mortals can tune in via the World Economic Forum website. One of the heavy-duty sessions was about the economic outlook for 2012; with participation from a handful of the central players determining what will happen.

Martin Wolf, of the Financial Times chaired the panel, and started off with a few salient points to set the stage for the discussion.

He started out by observing that "The mood in Davos is that people are feeling relief in the way that somebody who has just been reprieved form hanging feels a relief. In stead of feeling the immanent prospects of catastrophe, there is a sense that things have been done which have eliminated very substantially the immediate risk of disaster, particularly in Europe, particularly because of the activities of European central bank, although not exclusively so. And that therefore we can start to think about the slightly longer term, which means the next few months, or perhaps even longer.

Martin Wolf then pointed out that the current economic crisis has been going on for nearly 4,5 years now, and by the time we reach September, according to IMF's forecasts, Chinas economy will have expanded by 60 percent over the past 5 years, the Asian developing and emerging countries, which are half the worlds population will have expanded by 50 %, the emerging world by about 35% and the developed world by essentially zero. So these 5 years will have seen the most extraordinary and unprecedented speed of transformation of the relative weight of countries.

The finer points of corruption

Just learned about an interesting distinction when discussing corruption:

Facilitation money is when to get faster access to something you have a right – for instance getting a permission quicker.

Bribery is paying for something you are not entitled to.

Nature's design is dynamic

A couple of thoughts on biomimetics and on using nature as inspiration for design.

Usually, it’s about things, finished objects whose beautiful shape or super-smart functionality and construction was copied or inspired by nature. Velcro, shark skin swimsuits, adhesives based on Gecko feet…

But we rarely see design that mimics the dynamics in nature. The ability to adjust, to grow and evolve, to move, to heal, to disintegrate and compost. These would be interesting properties in our objects and systems.

Just noticed that the Club of Amsterdam is doing a workshop on “Social biomimicry”; that is, the ability of systems in nature to self organize swarms and flocking behavior, typically without central leadership.

It’s on February 23^rd. – I wish I could go.

6 characteristics of the future web

Kevin Kelly remains an amazing intellectual force. In this podcast – of a presentation he gave at the Web 2.0 conference back in November - he presents his 6 characteristics of our relationship with the future web:

- Screening, every surface will be a window to information

- Interacting, we will be IN the web, not on it, with full body interface to ubiquitous data.

- Sharing. Anything that can be shared will be shared, and when information is shared it will increase in value.

- Flowing, data will be organized like streams, moving forward, weaving together the data emitted by every object and every person. The default mode is always on

- - Accessing. Without owning. You don’t buy individual items – books, music, films – you access it when you need it.

- Generating, raw data will have little value, but qualities that are generated for a particular context will be where the money is.

The whole thing lasts 20 minutes. You will feel wiser afterwards.

The ghost of Malthus is rising

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.

Diminishing returns of material goods and happiness

One of the lessons of the many studies of happiness is that the more you have already, the more it takes to make you happier. In that sense, we’re on a curve of diminishing returns, which drives us to exponentially higher levels of consumption in order to satisfy our desire for happiness.

Meanwhile, the planet’s natural resources are in overshoot. We’re extracting more and faster than the biosphere can re-generate. The fat, virgin sources of materials are getting depleted, and we’re moving to the margins, where it gets ever more costly – in terms of money and disruption – to extract resources.

We’re in a pinch; we need much more to feel happier, but it’s getting harder and harder to produce it.