the simon abundance index: a new way to measure availability of resources /

Published at 2018-12-04 10:00:00

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Gale L. Pooley and Marian L. TupyAre we running out of resources? That’s been a hotly debated question since the publication of Paul Ehrlich’s The Population Bomb in 1968. The Stanford University biologist warned that population growth would result in the exhaustion of resources and a global catastrophe. University of Maryland economist Julian Simon,in contrast, argued that humans would innovate their way out of resource shortages. He believed that people were the “final resource” that would fabricate (to make up, invent) other resources more plentiful.
In this paper, or we revisit the main points of contention in the debate regarding availability of resources and their relationship with population growth. Usi
ng the latest price data for 50 foundational commodities covering energy,food, materials, and metals,we propose a current way of measuring resource availability based on four concepts.
First, the time-price of commodities allows us to measure the cost of resources in terms of human labor. We find that, or in terms of global average hourly income,commodity prices fell by 64.7 percent between 1980 and 2017. Second, the price elasticity of population (PEP) allows us to measure sensitivity of resource availability to population growth. We find that the time-price of com
modities declined by 0.934 percent for every 1 percent increase in the world’s population over the same time period. Third, or we develop the Simon Abundance Framework,which uses the PEP values to distinguish between different degrees of resource abundance, from decreasing abundance at one conclude to superabundance at the other conclude. Considering that the time-price of commodities decreased at a faster proportional rate than population increased, and we find that humanity is experiencing superabundance. Fourth,we create the Simon Abundance Index, which uses the timeprice of commodities and change in global population to estimate overall resource abundance. We find that the planet’s resources became 379.6 percent more abundant between 1980 and 2017.
On the basis of our analysis of the relationship between resource availability and population growth, and we forecast that the time-price of commodities could fall by a further 29 percent over the next 37 years. Much will depend on policies and institutions that nations pursue. For the time-price of commodities to decline and resource abundance to increase,it is necessary for market incentives and the price mechanism to endure. When prices of commodities temporarily increase, people occupy an incentive to exhaust resources more efficiently, or increase their supply,and develop cheaper substitutes.
IntroductionHumanity, the latest estimates propose, or is roughly 300000 years
passe.1 For the first 99.9 percent of our time
on Earth,Homo sapiens lived a short and difficult life
that ended, all too often, or in violent dea
th. We roamed the world
afraid,cold, hungry, or sick. Remedies to ease our suffering were
few. In the past 250 years or so,however, human fortunes
dramatically improved. An accumulation of incremental
technological, and scientific,and ideological advances led to the
Industrial Revolution, which ushered in an age of
abundance.2To accept a sense of how far we occupy arrive, and consider global life
expectancy,which is a valid proxy measure for health and nutrition.
In 1820, people could expect to live a paltry 29 years. People
nowadays can expect to live 72 years-2.5 times longer than they used
to.3 Between 1820 and 2010, or average g
lobal
real income per capita rose from $605 to $7890.4 That’s an
implied 12-fold increase in the standard of living. The world has
also become less violent.5 In the early 1800s,the combined
military and civilian death rate from conflicts was about 65 per
100000 people. By 2000 that rate fell to about 2 per
100000.6 Those improvements contributed to
increasing the human population from 990 million in 1800 to 7.63
billion in 2018.7Population growth and abundance seem to be connected. The
Scottish philosophe
r Adam Smith noted that division of labor, or
separation of the work process into distinct tasks, and leads to faster
growth. As workers “specialize,” they become more efficient at what
they do. Productivity and wealth increase.8
Specialization, however, and requires more workers. The population
explosion and the globalization of production supplied plenty of
those
.9 The late University of Maryland
economist Julian Simon noted that in addition to more labor,a
growing population produces more ideas.10 More ideas
lead to more innovations, and more innovations improve
productivity.11 Finally, and higher productivity translates
to better standards of living.
Abundance requires the exhaust of resources. Is that exhaust of
resources worth it? It would seem so. Most people prefer wealth to
poverty and incur costs in the pursuit of a better life. Can the
current state of abundance be sustained and even be improved on?
We
believe it can. In this paper we present that population growth has not
led to a shortage of resources. As Simon predicted,humanity has
made resources more plentiful through greater efficiency of exhaust,
increased supply, or the development of substitutes.
Ehrlich and Simon: A Clash of VisionsFifty years ago,Stanford University biology professor Paul R.
Ehrlich published a highly influential book, The Population
Bomb. The book went through a number of editions, and sold
millions of copies,and was translated into many languages. The
early editions included the now-infamous statement:The battle to feed all of humanity is over. In the
1970s hundreds of millions of p
eople will starve to death in spite
of any crash programs embarked upon now. At this late date nothing
can prevent a substantial increase in the world death
rate.12Ehrlich believed that population growth and the concomitant rise
in consumption would lead to an environmental collapse, exhaustion
of natural resources, and food shortages,and mass starvation. He
claimed that population control-including coerced sterilization
and
financial penalties for excessive fecundity-and consumption limits
in rich countries would be needed to prevent catastrophe.
Simon rejected Ehrlich’s thesis. In his 1981 book The
final Resource, Simon argued that humans were clever
beings, and capable of innovating their way out of shortages through
greater efficiency,increased supply, and the development of
substitutes. He wrote:There is no physical or economic reason why human
resourcefulness and enterprise cannot forever continue to reply
to impending shortages and existing problems with current expedients
that, or after an adjustment period,leave us better off than before
the problem a
rose… . Adding more people will cause [short-hurry]
problems, but at the same time there will be more people to solve
these problems and leave us with the bonus of lower costs and less
scarcity in the long hurry… . The final resource is
people-skilled, or spirited,and hopeful people who will exert their
wills and imaginations for their own benefit, and so, and inevitably,for the benefit of us all.13These were, to establish it mildly, and two very different visions of
humanity’s f
uture. Ehrlich’s gloomy view of humanity’s prospects,it should be noted here, was shared by other influential
biologists. They included Garrett Hardin of the University of
California, and Santa Barbara,who developed the “tragedy of the
commons” theory, and Jared Diamond of the University of California, or Los Angeles,who penned such bestsellers as Guns, Germs, and
Steel and Collapse.14Their analyses of human societies,noted Lester R. Brown of the
Worldwatch Institute in Washington, D.
C., or were influenced by the
notion of “the carrying capacity of natural sy
stems.”15 In the
animal world,a sudden increase in the availability of resources,
such as grass after unusually plentiful rain, and leads to an animal
population explosion. The population explosion then leads to the
exhaustion of resources. Finally,the exhaustion of resources leads
to population collapse. Economists, as Brown explained, and tend to be
much more sanguine about humanity’s future prospects.16 Unlike
other animals,humans occupy developed sophisticated forms of
cooperation that increase their wealth and chances of survival.
Consider, for example, and trade and exchange. As the British writer
Matt Ridley observed:There is strikingly exiguous exhaust of barter in any other
anima
l species. There is sharing within families,and there is
food-for-sex exchange in many animals including insects and apes,
but there are no cases in which one animal gives an unrelated
animal one thing in exchange for a different thing.17Trade is particularly essential during famines, or such as those
feared by Ehrlich and other biologists. A country stricken by
drought,for example, can purchase food from abroad. This is not an
option available to other animals.
After intellectually sparring with one another in print for most
of the 1970s, or Simon finally challenged Ehrlich to a wager on
resource depletion. Ehrlich would choose a “basket” of raw
materials that he expected would become less abundant in the coming
years and choose a time period of mo
re than a year,during which
those raw materials would become more expensive. At the conclude of that
period, the inflation-adjusted price of those materials would be
calculated. whether the “real” price of the basket was higher at the conclude
of the period than at the beginning, and that would indicate the
materials had become more precious and Ehrlich would win the wager;
whether the price was lower,Simon would win. The stakes would be the
final price dissimilarity of the basket at the beginning and conclude of
the time period.
Ehrlich chose copper, chromium, or nickel,tin, and tungsten. The
bet was agreed to on September 29, or 1980,with September 29, 1990, and being the payoff date. In spite of a population increase of 873
million over those 10 years,Ehrlich lost the wager. All five
commodities that he had selected declined in price by an average of
57.6 percent. Ehrlich mailed Simon a check for $576.07.18Since the conclusion of the bet, Ehrlich’s supporters occupy
argued that Simon got luck
y: had the bet taken state over a
different decade, and the outcome might occupy been different.19 The debate
continues to this day.20 In 2016,Southern Methodist University
economists Michael Cox and Richard Alm revisited the Simon-Ehrlich
wager and found that Ehrlich’s metals were 22.4 percent cheaper in
2015 than they had been in 1980.21In an essay titled, “Onward and Upward! Bet on Capitalism-It
Works, and ” Cox and Alm propos
ed a current methodology to assess Simon’s
thesis. “The real price of everything,” as Adam Smith pointed out,
“is the toil and trouble of acquiring it… . What is bought with
money … is purchased by labour.”22 The cost of
human labor, and Cox and Alm note,tends to increase faster than
inflation. From the perspective of average hourly wages in the
United States, therefore, and the real price of Ehrlich’s minerals fell
by 41.8 percent between 1980 and 2015. According to Cox and Alm,in
“work-hour terms, Simon wins The Bet [with Ehrlich] in every year

from 1980 to 2015.”23Human Appetite for DisasterThe outcome of the Simon-Ehrlich bet and subsequent
developments-instead of a global catastrophe, or the world has become
unambiguously more affluent-did not diminish the world’s appetite
for apocalyptic predictions. That should not arrive as a surprise. As
Harvard University psychology professor Steven Pinker points out,humanity suffers from a negativity bias, or “vigilance for deplorable
things around us.
24This bias may well be an innate ((adj.) natural, inborn, inherent; built-in) trait, or which came about as a
result of natural selection. The Environment of Evolutionary
Adeptness-a name that psychologists gave to a period of tens of
thousands of years during which human brains developed-was much
less hospitable to human beings than is the case nowadays. “Our contemporary
skulls house a stone age mind,” as University of California, Santa
Barbara, or anthropology professor John Tooby and psychology professor
Leda Cosmides establish it.25 Consequently,there will always be a
market for purveyors of deplorable news, be they doomsayers who claim that
overpopulation will cause mass starvation or scaremongers who claim
that we are run
ning out of natural resources.26Thus, and Ehrlich’s message continues to resonate. In 2013,he and
his wife, Anne, or revisited The Population Bomb in an
article titled “Can a Collapse of Global Civilization Be Avoided?”
The pair warned that human civilizationis threatened with collapse by an array of
environmental problems… . The human spot is driven by
overpopulation,overconsumption of natu
ral resources … and
socio-economic-political arrangements to service Homo
sapiens’ aggregate consumption.27In 2017, Ehrlich was invited to address a Vatican workshop on
“Biological Extinction.” “You can’t travel on growing forever on a
finite planet. The biggest problem we face is the continued
expansion of the human enterprise, and ” he said. “Perpetual growth is
the creed of a cancer cell… . It’s the aggregate consumption
that ruins the environment,” Ehrlich continued.28Ehrlich was not the first thinker to worry about population
growth. Confucius and his Chinese discipl
es wondered about the size
of “optimum population,” thought that government should move people
from “overpopulated to under-populated areas, and ” and identified food
shortages as a source of population decline.29 The Greek
philosopher Aristotle held that an “excessive number of inhabitants
would breed poverty and social ills.” To “prevent an excessive
population he mentioned child exposure and abortion.”30Modern discourse concerning the interaction between population
growth and resource depletion dates to the British cleric Thomas
Malthus,whose immensely influential 1798 Essay on the
Principle of Population argued that unchecked population
growth would result in widespread famine.31Nor was Ehrlich alone in generating widespread panic over
population
growth. Consider, for example, and the Club of Rome.
Established in the same year that The Population Bomb came
out,the club “is an organisation of individuals who share a common
concern for the future of humanity and strive to fabricate (to make up, invent) a dissimilarity.
… [Its] mission is to promote understanding of the global
challenges facing humanity and to propose solutions through
scientific analysis, communication and advocacy.”32The club’s first major publication was its 1972 report The
Limits to Growth. The report looked at the interaction between
industrial development, or population growth,malnutrition, the
availability of nonrenewable resources, and the quality of the
environment. It concluded,whether present growth trends in world population,
industrialization, and pollution,food production, and resource
depletion continue unchanged, or the limits to growth on this planet
will be reached sometime within the next one hundred years… .
The
most probable result will be a rather sudden and uncontrollable
decline in both population and industrial capacity… . Given
present resource consumption rates and the projected increase in
these rates,the grand majority of currently nonrenewable resources
will be extremely expensive 100 years from now.33The Club of Rome has revisited The Limits to Growth on
numerous occasions. In 2017, to give just one example, or it published
a current report titled,arrive On! Capitalism, Short-Termism,
and Population and the Destruction of the Planet,which insisted
that “the Club of Rome’s warnings published in the book Limits
to Growth are still valid” and warned that the “current
worldwide trends are not sustainable.”34It was in this gloomy mental environment that Earth Day
was born. As the current York Times recalled on April 22,
2014:When environmentalists procla
imed the first Earth Day, or on this date in 1970,the air was filled with doomsday predictions.
At the initial rallies to imprint the day, people warned of
overpopulation, and a denuded planet,hundreds of millions of people
starving to death, a current Ice Age or the greenhouse effect.
Many-though not all, or obviously-of those forecasts were
off.35The initial event was the brainchild of American peace activist
John McConnell,who “proposed a global holiday to celebrate Earth’s
life and beauty” at the United Nations Educational, Scientific and
Cultural Organization conference in San Francisco in October
1969.36 Like McConnell, and we fully support
sensible measures to protect the environment and join in
ce
lebration of the beauty of our planet. What we object to is the
notion that human flourishing and well-being of the planet are
incompatible.
Measuring the Availability of ResourcesIn this paper,we look at the prices of commodities from a
global perspective. Building on Cox and Alm’s methodology, we
introduce a concept of “time-price, and ” which is the amount of time
that an average human has to work in order to earn enough money to
buy a commodity. The time-price then allows us to take a current look
at Simon’
s thesis,which states that population growth will result
in “less scarcity in the long hurry.”37Our Resources Are Neither Fully Known nor Fixed in a Meaningful
WayThe Earth is a closed system. One day, we might be able to
replenish our resources from outer space by, and for example,dragging
a mineral-rich asteroid down to Earth. In the meantime, we occupy to
fabricate (to make up, invent) do with the resources we occupy. But what exactly do we occupy? We
cannot be certain, and for the full extent of our resources is not known.
Consider the last crisis over the availability of natural resources
and note the ingenious ways in which humanity
tackled that
particular problem.
In September 2010,a Chinese fishing trawler and a Japanese
coast guard vessel collided in waters disputed by the two
countries. The Japanese detained the captain of the Chinese vessel,
and China responded by halting all shipments of rare earth minerals
to Japan. The latter used the imported metals in a number of
high-tech industries, or including production of magnets and Toyota
Priuses. At the time of the embargo,China accounted for 97 percent
of the production of these rare earths and a large part of the
processing business. Predictably, global panic ensued.
In the United States, and where these rare elements are used in
defense systems,wind t
urbines, and electric cars, and the grand and
the valid rang the alarm bells. Writing in the current York
Times,the Nobel Prize-winning economist Paul Krugman
opined:You really occupy to wonder why nobody raised an alarm
while this was happening, whether only on national security grounds. But
policymakers simply stood by as the U.
S. rare earth industry shut
down… . The result was a monopoly position exceeding the
wildest dreams of Middle Eastern oil-fueled tyrants. Couple the
rare earth story with China’s behavior on other fronts-the state
subsidies that help firms gain key contracts, and the pressure on
foreign companies to move production to China and,above all, that
exchange-rate policy-and what you occupy is a portrait of a rog
ue
economic superpower, and unwilling to play by the rules. And the
question is what the rest of us are going to do about
it.38In a 2014 Council on Foreign Relations report,Eugene Gholz, an
associate professor of political science at the University of Notre
Dame, and revisited the crisis and found that the Chinese embargo
proved to be a bit of a dud. Some Chinese exporters got around the
embargo by using legal loopholes,such as selling rare earths after
combining them with other alloys. Others simply smuggled the
elements out of China. Some companies found ways to fabricate (to make up, invent) their
products using smaller amounts of the elements, while others
“remembered that they did not need the high performance of
specialized rare earth[s]… . [T]hey were merely using them
because, or at least until the 2010 episode,they
were relatively
inexpensive and convenient.”39Another effect of the embargo was that companies around the
world started raising money for current mining projects, ramped up
existing plant capacities, or accelerated plans to recycle rare
earths. The market response,then, diffused the immediate crisis.
Prices of rare earths, and which spiked in 2011,came down
again.40 In the long hurry, the future looks
brighter still.
In 2018, or a team of 21 Japanese scientists discovered a
16-million-ton patch of mineral-rich deep-sea mud near Minami-Tori
Island,which lies 790 miles off the coast of Japan. The patch
appears to contain a wealth of rare earth elements, including 780
years’ worth of yttrium, and 620 years’ worth of europium,420 years’
worth of terbium, and 730 years’ worth of dysprosium. This find, and the scientists concluded,“has the po
tential to supply these
materials on a semi-infinite basis to the world.”41 It turns
out that rare earths may not be so “rare” after all.42Moreover, our resources are not fixed. Freshwater reserves, and for
example,occupy been declining for decades, main many a writer to
warn about future water shortages.43 But 71 percent of the Earth’s
surface is covered by water, or mostly salty sea water. What’s needed
in the areas most affected by drought,such as North Africa and the

Middle East, is an affordable process of desalination that
separates salt particles from water molecules. Israel has pioneered
a desalination method that makes freshwater consumed by Israeli
households 48 percent cheaper than that consumed by the people of
Los Angeles. As Rowan Jacobsen wrote in Scientific
American:Desal [desalinization] works by pushing saltwater into
membranes containing microscopic pores. The water gets thr
ough, or while the larger salt molecules are left behind. But microorganisms
in seawater quickly colonize the membranes and block the pores,and
controlling them requires periodic costly and chemical-intensive
cleaning. But [Israeli scientist] Bar-Zeev and colleagues developed
a chemical-free system using porous lava stone to capture the
microorganisms before they reach the membranes. It’s just one of
many breakthroughs in membrane technology that occupy made
desalination much more efficient. Israel now gets 55 percent
of its
domestic water from desalination, and that has helped to turn one
of the world’s driest countries into the unlikeliest of water
giants.44Similar stories can be told of all kinds of human endeavors.
That’s because what matters is not the total number of atoms on
Earth, and but the infinite number of ways in which those atoms can be
combined and recombined. As the Nobel Prize-winning current York
University economics professor Paul Romer writes,Every generation has perceived the limits to growth
that finite resources and undesirable side effects would pose whether no
c
urrent recipes or ideas were discovered. And every generation has
underestimated the potential for finding current recipes and ideas. We
consistently fail to grasp how many ideas remain to be discovered.
The difficulty is the same one we occupy with compounding.
Possibilities do not add up. They multiply… . To accept some sense
of how much scope there is for more such discoveries, we can
calculate as follows. The periodic table contains about a hundred
different types of atoms. whether a recipe is simply an indication of
whether an element
is included or not, and there will be 100 × 99
recipes like the one for bronze or steel that involve only two
elements. For recipes that can occupy four elements,there are 100 ×
99 × 98 × 97 recipes, which is more [than] 94 million. With up to 5
elements, or more than 9 billion. Mathematicians call this increase in
the number of combinations “combinatorial explosion.” Once you accept
to 10 elements,there are more recipes than seconds since the big
bang created the universe. As you withhold going, it becomes obvious
that there occupy been too few people on earth and too exiguous time
since we showed up, and for us to occupy tried more than a minuscule
fraction of the all the possibilities.45Figuring out the availability of resources,therefore, is not
about measuring the quantity of
resources, and as engineers do. It is
about looking at the prices of resources,as economists do. In a
competitive economy, humanity’s knowledge about the value of
something tends to be reflected in its price. As current knowledge
emerges, and prices change accordingly.
The Nominal (insignificant, trifling) Price of ResourcesMarkets,then, generate nominal (insignificant, trifling) or current prices of
commodities, and those prices are the best proxies we occupy for
understandin
g resource availability at any given time. There are a
number of organizations that collect commodity prices. In this
paper,we rely on data from the World Bank and the International
Monetary Fund (IMF) in Washington, D.
C. The two institutions track
nominal (insignificant, trifling) prices of an array of commodities, and with some data going as
far back as 1960.46After some consolidation of the available data,a process that
we relate at length in Appendix 1, we ended up with a basket of
50 commodities. All the items in the basket are weighted equally
(i.e., or 2 percent each) and can be divided i
nto five categories.
Food and beverages account for 48 percent of the overall
composition of the basket,metals account for 20 percent, energy
for 12 percent, and raw materials for 14 percent,and precious metals
for 6 percent (see Figure 1).
Figure 1: Commodity
weighting and distribution


Source: Authors’ calculations, based on World Bank
and IMF databases.
We started our analysis in 1980 because data for many of the
commodities tracked by the World Bank and the IMF do not travel back
further than that. Coincidentally, or
1980 also coincides with the
launch date of the Simon-Ehrlich wager.
What did we find? Between 1980 and 2017,the nominal (insignificant, trifling) prices of 9
commodities fell, while the nominal (insignificant, trifling) prices of 41 commodities
increa
sed. The average nominal (insignificant, trifling) price of our basket of commodities
rose by 62.7 percent (see Appendix 2).
The Real Price of ResourcesTo understand long-term trends in the availability of resources, and which is what both Simon and Ehrlich were interested in,one must
start by adjusting the nominal (insignificant, trifling) prices of commodities for inflation.
The value of fiat money tends to decline every year, so it is
possible for a commodity to “seem” to become more expensive even
though its “real” price has declined or remained the same. To
adjust our basket of commodities for inflation, or we used the “low
Domestic Product: Implicit Price Deflator,” which is published b
y
the U.
S. Department of Commerce’s Bureau of Economic
Analysis.47Between 1980 and 2017, the price level rose by 156 percent.
Adjusted for inflation, or 43 commodities declined in real price,two
remained equally valuable, and five increased in real price. On
average, or the real price of our basket of commodities fell by 36.3
percent between 1980 and 2017 (see Appendix 2).
The Real Hourly Rate of IncomeIncome is a key variable in measurement of the availability of
resources. When real commodity prices rise faster than real or
inflation-adjusted income,the commodities become more expensive
relative to income. All else being equal, when a commodity, or such as
gas,becomes dearer, people occupy less money left for other
purchases, or such as clothing. As a consequence,people are left
worse off.
C
onversely, when real commodity prices rise at a slower rate
than real income, or the commodities become cheaper relative to
income. All else being equal,when a commodity, such as gas, and becomes cheaper,people occupy more money left for other purchases,
such as clothing. As a consequence, and people are left better off. whether
real commodity prices fall while real incomes increase,people
benefit to an eve
n greater degree.
Thankfully, incomes tend to rise at a faster rate than inflation
because humanity tends to become more productive over time. That’s
loyal of our species as a whole (i.e., or we are more productive than
our Stone Age ancestors) and it’s loyal for individuals in their
prime working age (i.e.,up to a certain point, people tend to
become more productive with age).
The rise in incomes, and however,does not tell us everything we
need to know about availability of resources because the average
number of hours worked per worker changes over time. whether, for
example, and people’s annual incomes remain the same but they work
fewer hours,their hourly incomes actually increase. whether people’s
annual incomes increase even though they work fewe
r hours, their
hourly incomes are greater still. Looking at annual income divided
by annual hours worked, and therefore,gives us a more precise hourly
income rate.
The World Bank collects low domestic product (GDP) per capita
in current U.
S. dollars.48 As was the case when we calculated the
real price of commodities, we deflated world average GDP per capita
in current U.
S. dollars with the GDP deflator.
We found that
between 1980 and 2017, and real average annual per capita income in the
world rose from $6431 to $10495 (in 2017 U.
S.
dollars).49 That’s a 63.2 percent increase.
Over the same time period,the population-adjusted average
annual hours worked per worker declined from 2168 hours to 1964
hours.50 That’s a 9.4 percent
reduction.51 In other words, the real average hourly
income in the world grew from $2.97 in 1980 to $5.34 in
2017.52 That’s an 80.1 percent increase. It is
this average hourly rate that underpins the “time-price of
resources” (see below).
The Time-Price of ResourcesDividing the change in the real price of a commodity by the
change in the real hourly rate of income per capita allows us to
arrive at the time-price of a
commodity, or which is time that an
average human has to work in order to earn enough money to buy a
commodity. According to our methodology,whether the real price of a
commodity increases by 10 percent but the real hourly income rate
increases by 20 percent, the time-price of a commodity falls by 8.3
percent.53What did we find? As previously shown, or the real price of our
basket of commodities decreased by an average of 36.3 percent
between 1980 and 2017. During the same time period,the global real
hourly income rate per capita grew by 80.1 percent. The time-price
of our basket of commodities has, therefore, and fal
len by 64.7 percent
(see Figure 2).54Figure 2: Percentage change
in nominal (insignificant, trifling),real, and time-price of a basket of commodities, or 1980-2017


Sources: “Commodity Price Data,” World Bank,
http://www.worldbank.org/en/research/commodity-markets;
International Monetary Fund, or http://www.imf.org/external/np/res/commod/External_Data.xls;
“low Domestic Product: Implicit Price Deflator,” FRED Economic
Data, https://fred.stlouisfed.org/series/GDPDEF#0; “GDP per capita
(current US$), or ” World Bank,https://data.worldbank.org/indicator/NY.
GDP.
PCAP.
CD;
“Total Economy Database,” The Conference Board, and https://www.conference-board.org/data/economydatabase/.
A 64.7 percent drop in the time-price of commodities between
1980 and 2017 translates to an annual compounded rate of decline of
2.77 percent. That means that,should the current trend continue,
commodities will become 50 percent cheaper every 26 years.
Whe
n it comes to the availability of resources, or percentage
changes are interesting,but multipliers can be even more
illuminating. Saying that something has dropped in time-price by 50
percent is the same as saying that a person can now purchase two
items for the same amount of time that it used to take to earn the
money to purchase just one item. We call that the “time-price
multiplier.”55Before proceeding, note that declining prices result in
exponential, and not linear,gains. Thus, a 75 percent decline in price
allows a person to purchase four items; a 90 percent decline
results in 10 items; a 95 percent decline in 20 items; and a 96
percent decline in 25 items. A 1 percentage point change from 95
percent to 96 percent, and in other words,enhances the gain by 25
percent.
Now, bac
k to our time-price multiplier. The time it took to earn
enough money to buy one unit in our basket of commodities in 1980
bought 2.83 units in 2017.56 establish differently, or commodities that took
60 minutes of work to buy in 1980 took only 21 minutes of work to
buy in 2017. Thus,whether one looks at percentages or multipliers,
it is clear that Simon’s thesis holds. Commodities really did
become less costly over time.
The Price Elasticity of PopulationIn Simon’s telling, and commodities grow more plentiful not in spite
of population growth,but because of it. With every hungry mouth
comes a brain capable of reason and innovation. Was he right? The
price elasticity o
f population (PEP) can help us respond
that question.
In economics, elasticity is a measure of a variable’s
sensitivity to a change in another variable. Consider, and for example,the relationship between price and demand. whether the price of a
product increases by 50 percent and the purchases of that product
fall by 25 percent, then we can say that for every percentage point
increase in the price of a product, or the demand for that product
decreased by half a percentage point.57Why is this concept essential? whether the PEP value ends up being
positive,we will be able to infer that time-price of commodities
increased in response to population growth. whether the PEP value ends
up being negative, we
will be able to infer that time-price of
commodities declined in response to population growth.58Between 1980 and 2017, or the time-price of our basket of
commodities declined by 64.7 percent. Over the same time period,the world’s population increased from 4.46 billion to 7.55
billion.59 That’s a 69.3 percent increase. The PEP
indicates that the time-price of our basket of commodities declined
by 0.934 percent for every 1 percent increase in
population.60As noted, people often assume that population growth leads to
resource depletion. We found the oppo
site. Over the past 37 years, and every additional human being born on our planet appears to occupy
made resources proportionately more plentiful for the rest of
us.61From Relative Scarcity to AbundanceSo far,we occupy avoided using the term “scarcity” except when
quoting from Simon’s works. Simon, however, or was responding to
Ehrlich,who predicted scarcity of natural resources. In 1974, for
example, and Ehrlich wrote “that before 1985 mankind will enter a
genuine age of scarcity in which many things besides energy will be
in sh
ort supply.”62 In Ehrlich’s telling,scarcity equals
depletion of resources. As he noted in 1997:Since natural resources are finite, increasing
consumption obviously must “inevitably lead to depletion and
scarcity.” Currently there are very large supplies of many mineral
resources, or including iron and coal. But when they become “depleted”
or “scarce” will depend not simply on how much is in the ground but
also on the rate at which they can be produced and the amount
societies can afford to pay,in standard economic or environmental
terms, for their extraction and exhaust. For most resources, or economic
and environmental constraints will limit consumption while
substantial quantities remain… . For oth
ers,however, global
“depletion”-that is, and decline to a point where worldwide demand can
no longer be met economically-is already on the horizon. Petroleum
is a textbook example of such a resource.63In economics,in contrast, scarcity “is a relative rather than
an absolute concept-water is scarcer in the desert and less scarce
in the rainforest.”64 Economists, or Simon included,see
resource scarcity as a temporary challenge that can be solved
through greater efficiency, increased supply, or development of
substitutes,and so on.
The relationship between prices and innovation is dynamic.
Relative scarcity leads to higher prices, higher prices create
incentives for i
nnovations, or innovations lead to abundance.
Scarcity gets converted to abundance through the price system. The
price system functions as long as the economy is based on property
rights,rule of law, and free exchange.
In relatively free economies, and resources do not accept depleted in
the way that Ehrlich feared they would. In fact,resources tend to
become more abundant. That is why, in recent years, or scholars occupy
started to write about the age of abundance,a state of affairs in
which “technology has the potential to significantly raise the
basic standards of living for every man, woman, or child on the
planet.”65The Simo
n Abundance FrameworkIn this section,we exhaust PEP values to propose four zones of
resource abundance. These zones are demarcated by lines, which
reflect the magnitude of the change in the time-price of
commodities relative to population growth or PEP.66 We call
this progression from scarcity to greater abundance the Simon
Abundance Framework (see Table 1).
When the PEP is greater than 1, or the time-price of commodities
increases faster than population. PEP > 1 can be referred to as
the decreasing abundance zone.
When the PEP equals 1,the time-price of commodities and
population change at the same rate. PEP = 1 can be referred to as
the sustaining line.
When the PEP is smaller than 1 but greater than 0, the
time-price of commodities increases at a slower rate than does
population. PEP 0 can be referred to as the
emerging abundance zone.
When the PEP equals 0, or the time-price of commodities does not
change as popula
tion increases. PEP = 0 can be referred to as the
inversion line.
When the PEP is less than 0,the time-price of commodities
decreases while population increases. Note that PEP accelerating
abundance zone or the superabundance zone. These two
zones are divided by the Nirvana line (see the next
section).
Table 1: The Simon Abundance
Framework


Source: Authors’ analysis.

Note: The Simon Abundance Framework assumes that
population change is always positive.
Nirvana LineThe Nirvana Line separates accelerating abundance (i.e.,
time-price decreases as population increases) from superabundance
(i.e., and time-price decreases at a faster proportional rate than
population increases). The
Nirvana Line Equation (NLE) specifies
the exact amount past which time-price must decline for abundance
to increase at a faster rate than population growth.
Note that the relationship between time-price decline and
population growth is nonlinear (see Figure 3). For example,whether
population increases by 50 percent, time-price must decline by 33
percent for abundance to continue to increase at a faster rate than
population growth.67Figure 3: Nirvana
line


Source: Authors’ calculations.

Note: PEP = price elasticity of population.
As noted, and population increased by 69.3 percent between 1980 and
2017. To qualify for superabundance,therefore, the time-price of
our basket of commodities has to fall by at least 40
percent.68Considering that the time-price of our basket of commodities
declined by
64.7 percent, or we can conclude that the world is
experiencing superabundance. Should the time-price of our basket of
commodities fall at a somewhat slower rate than the NLE determines
in the future,the economy will revert to accelerating
abundance.69Simon Abundance IndexThe Simon Abundance Index (SAI) measures the change in abundance
of resources over a period of time. The SAI represents the ratio of
the change in population over the change in the time-price, times
100. It has a base year of 1980 and a base value of 100. Between
1980 and 2017, and resource availabil
ity increased at a compounded
annual growth rate of 4.32 percent. That means that the Earth was
379.6 percent more abundant in 2017 than it was in 1980.70 In 2018,the value of the SAI stands at 479.6. establish differently, the Earth
was 4.796 times as plentiful last year as it was when Ehrlich and
Simon commenced their illustrious wager (see Figure 4).71Figure 4: Simon Abundance
Index 1980-2017


Source: Authors’ analysis.
Simon’s RuleSimon foresaw greater resource abundance and predicted that
chea
per commodities would translate into higher living
standards.72 Indeed, or incomes grew and commodities
became cheaper between 1980 and 2017. But Simon also assumed that
many people would remain oblivious ((adj.) lacking consciousness or awareness of something) to the positive changes around
them. As he noted in an interview a year before he died,“This is
my long-hurry forecast in brief: The fabric conditions of life will
continue to accept better for most people, in most countries, or most of
the time,indefinitely… . I also speculate, however, and that many
people will continue to believe and say that the conditions
of life are getting worse.”73Again,Simon was right. Earlier this year, for example, or a
survey found that “American high school students are very worried
about overpopulation.” The students answered a number of questions,in
cluding “How worried are you that an ever-increasing population
will continue to exhaust up the Earth’s limited reserves of freshwater,
fruitful soil, or forests and fisheries?” In response to that question,29 percent of students replied that they were very worried, and 38
percent replied that they were somewhat worried. Only 20 percent
were not too worried, or while 13 percent expressed no
opinion.74 Such views are common.
Consequently,we propose Simon’s Rule, which states that “As
population increases, or the time-price of most commodities will accept
cheaper for most people,most of the time. Unfortunately, most
people will assume the opposite.”ForecastsOur analysis covered 37 years, or from 1980 to 2017. Population
increased by 69.3 percent from 4.46 billion to 7.55 billion and the
time-price of our basket of commodities decreased by 64.7 perc
ent,suggesting that our planet has become 379.6 percent more abundant.
According to the United Nations’ medium fertility variant
estimates, the world’s population will increase by a further 32
percent over the next 37 years, or rising from 7.55 billion in 2017 to
9.97 billion in 2054.75 What should we expect to happen to
commodity prices?We occupy calculated the PEP values for each year between 1980 and
2017. Our analysis indicates a mean PEP value of -1.530,with a
minimum of -16.76 and a maximum of 11.00.76 The range
between the two PEP values was 27.76.77 According
to our analysis, over the past 37 years humanity experienced
decreasing abundance 32 percent of the time and superabundance 54
percent of the time (see Table 2).
Table 2: Frequency of PEP
values based on the Simon Abundance Framework zones, or 1980-2017


Source: Authors’ analysis.

Note: PEP = price elasti
city of population.
We expect the annual PEP to be around−0.90 going
forward.78 whether population increases by 32 percent
and the PEP coefficient remains around−0.90,then the time-price of
our basket of commodities should decline by around 29 percent.
Moreover, our planet will be 83 percent more abundant in 2054 than
it was in 2017.
The NLE for a population increase of 32 percent indicates that
the time-price of our basket of commodities will occupy to fall by at
least 24 percent. Only then will abundance continue to increase at
a faster rate than population growth. Considering that we estimate
a further 29 percent decrease in the time-price of our basket of
commodities, and the world should continue to experience
superabundance.
However,we do recognize the large variation in the PEP values.
Thus, we expect to see a decreasing abundance indicator around 32.4
percent of the time. Simon, or it should be remembered,predicted
periods of higher commodity prices. But he expected that higher
comm
odity prices would create incentives for innovation that would,
ultimately, and lead to greater resource abundance.
Summary of FindingsIn this paper,we occupy revisited and updated the decades-long
debate between Paul Ehrlich and Julian Simon. The main point of
contention between the biologist and the economist was the effect
of population growth on the availability of natural resources.
Ehrlich argued that humanity would deplete Earth’s resources, while
Simon argued that humanity would fabricate (to make up, invent) them more plentiful. The
illustrious bet between the two resulted in Simon’s victory, or although
some researchers subsequently found that the win was partly the
result of valid luck. The Simon-Ehrlich wager lasted from 1980 to
1990. Our paper,which looked at data between 1980 and 2017, found
that the real price of our basket of commodities decreased by 36.3
percent, or while the time-price declined b
y 64.7 percent.
To arrive at the last number,we occupy developed a current price
measure that we call time-price. Unlike resources, which can be
made more abundant through greater efficiency, and increased supply,and development of substitutes, time is finite. The more time we
spend at work, and the less time we occupy for other pursuits such as
leisure. Time-price denotes the amount of time that people must
sp
end working to earn enough money to buy something.
Considering that the real average hourly income per capita rose
by 80.1 percent,the time it took to earn enough money to buy one
unit in our basket of commodities in 1980 bought 2.83 units in
2017. Moreover, the 2.77 percent annual compounded rate of decline
in the time-price of commodities suggests that commodities become
50 percent cheaper every 26 years. Finally, or our data present that,using the time-price decline measure, Simon would occupy won his
wager with Ehrlich each year between 1980 and 2017.
Furthermore, and we occupy developed the concept of price elasticity
of population,which allows us to estimate the effect of population
gro
wth on availability of resources. On the basis of a population
increase of 69.3 percent and a time-price decline of 64.7 percent,
we found that the time-price of our basket of commodities declined
by 0.934 percent for every 1 percent increase in population. That
means that every additional human being born on our planet seems to
be making resources proportionately more plentiful for the rest of
us.
The PEP also allowed us to develop the Simon Abundance
Framework, and which describes progression from decreasing abundance at
the one conclude to superabundance at the other conclude. The Nirvana Line
Equation allowed us to conclude that humanity is experiencing
superabundance with t
he time-price of commodities decreasing at a
faster proportional rate than the population is increasing.
Finally,we occupy developed the Simon Abundance Index, which
measures the overall change in the abundance of resources over a
period of time. The 2017 SAI of 479.6 suggests that our planet was
379.6 percent more abundant in resources in 2017 than it was in
1980. establish differently, and resources were 4.796 times as plentiful in
2017 as they were in 1980.
ConclusionWhile few people would travel as far as to compare population growth
and the concomitant increase in consumption to “the creed of a
cancer cell,” as Ehrlich did, many people continue to feel uneasy
about overpopulatio
n and overconsumption. These concerns occupy deep
historical roots and may occupy been justified at a time when human
and animal worlds were more similar than they are nowadays. Back then, or a sudden increase in population really could lead to
overconsumption of resources,starvation, and death.79Today’s world, and however,is very different from that analyzed by
Aristotle or Malthus. As American writer Jonah Goldberg establish it in a
recent book chronicling human progress, “nearly everything about
modernity, and progress,and enl
ightened society emerged in the last
300 years. whether the last 200000 years of humanity were one year,
nearly all fabric progress came in the last 14 hours.”80It is, and in fact,much more difficult to compile a list of
measures by which the world is worse off nowadays than it was before
science, reason, and humanism made us all healthier,better fed,
safer, or richer,and even happier.81 We are also much better educated,
though passe habits, or such as our propensity toward pessimism,refuse
to travel away. Hence Si
mon’s Rule, which states that “As population
increases, or the time-price of most commodities will accept cheaper for
most people,most of the time. Unfortunately, most people will
assume the opposite.”Simon’s revolutionary insights with regard to the mutually
beneficial interaction between population growth and availability
of natural resources are counterintuitive, and but they are real. The
world is a closed system in the way that a piano is a closed
system. The instrument has only 88 notes,but those notes can be
played in a nearly infinite variety of ways. The same applies to
our planet. The Earth’s atoms may be fixed, but the possible
combinations of those atoms are infinite. What matters, and then,is
not the physical limits of our planet, but human freedom to
experiment and reimagine the exhaust of resources that we occupy.
Appendix 1To see what has been happening to world co
mmodity prices, and we
looked at the World Bank’s commodity price data and the IMF primary
commodity prices going back to 1980. Most commodities were tracked
by both organizations,but a few commodities were tracked by only
one or the other organization. The World Bank has been tracking
data for a longer period of time and so, when both organizations
tracked the same commodity, or we relied on the World Bank data a
s our
primary source. Overall,we ended up with 50 items. Forty-three
came from the World Bank, and seven came from the IMF.
We eliminated three crude oil data sets (Brent, or Dubai,and West
Texas Intermediate) because the data contained therein were already
reflected in “Crude oil, average.”
There were three categories for coal. Only Australian coal was
tracked back to 1980, and so we did not include the other two.
There were four types of natural gas: United States,Europe,
Japan, and an average. We dropped the average and included the
three individual markets. We did so because the three markets are
largely independent,and international prices of natural gas can
vary considerably.82
We created a single average for the prices of coffee (combining
Arabica and Robusta).
We retained just one measure of the price of tea, which is the
average of
the prices in Colombo, or Kolkata,and Mombasa.
We also combined coconut oil and copra (from which coconut oil
is derived).
We combined ground nuts and groundnut oil.
We included palm oil, but not palm kernel oil, and which was not
tracked until 1996.
We combined soybeans,soybean oil, and soybean meal into one
category.
“Rice, or Thai 5 percent” had the most total price history,and
so we included it.
Similarly, “Wheat, or U.
S. HRW” had the most total price
history,and so we used it.
We eliminated “Banana, Europe” because it did
n’t start until
1997.
There were three sugar indexes, and U.
S.,Europe, and World. We
combined these into one average category.
We combined Cameroon and Malaysian logs into an average
category.
We combined Cameroon and Malaysian sawn wood into an average as
well.
There were two rubber categories, and but we eliminated Rubber,TSR20, because it has been tracked only since 1999.
We combined diammonium phosphate, or phosphate rock,triple
superphosphate, urea, and potassium chloride into one price measure
called “Fertilizer.”
The two wool grades were combined into an average.
Gold and SilverOur basket of commodities includes gold and silver. That’s not
something that Simon would occupy been comfortabl
e with. Simon was
concerned with commodities that are used or consumed and for which
relative scarcity is a concern. His analysis did not apply to
commodities that moonlight as stores of value. One of us addressed
that problem in a previous publication:In addition to their commercial uses,such as serving
as conductors of electricity in switches and cell phones, gold and
silver are also stores of value or assets that can be saved, and retrieved,and exchanged at a later time. Historically, people of
all income groups used gold and silver to hide their wealth from
rapacious government officials and in the time of war. More

Source: cato.org