In the early 1970s, pessimism was the order of the day. The world, it was said, was running out of everything. Unless radical action was taken immediately--action that included massive conservation efforts and a wholesale lowering of Western standards of
living--humankind was doomed.
At bottom, this apocalyptically gloomy view of things was probably nothing more than an understandable reaction to the optimism of the previous decade. Nonetheless, it did have a specific genesis: the publication early in 1972 of The Limits to Growth, an enormously influential--and utterly downbeat--study issued by the Club of Rome, a collection of distinguished industrialists, scientists, economists, sociologists, and government officials from twenty-five countries.
The Club of Rome had commissioned the study three years earlier, recruiting a team of seventeen experts--ranging from an Iranian population analyst to a Norwegian pollution specialist--to peer down the road a bit and report back on humankind's economic and
environmental prospects. Working first under the direction of futurist Jay Forrester of the Massachusetts Institute of Technology, and then under Forrester's colleague, MIT business professor Dennis Meadows, the experts used some of the most sophisticated
computer modeling techniques then available to produce a 197-page report that came to a genuinely shocking conclusion. What their computer models told them was that with the world's population growing at a rate of about 2 percent a year and industrial output rising by 7 percent annually, the world's physical resources would be exhausted sometime in the next few decades--a calamity, they said, that could wind up wiping out most of humanity before the year 2100.
The study's impact was phenomenal. For as long as anyone could remember, economic growth had been regarded as the solution to all of humankind's woes; now, suddenly, it
seemed to be the problem. Thinking big was deemed archaic, if not downright anti-social. The party was over; it was time for people everywhere to pull up their socks and lower their expectations. You might not like it, but what could you do? The Club of Rome wasn't a bunch of anti-social hippies, but an organization of some of the most highly regarded businesspeople, researchers and intellectuals of the day. And their conclusions seemed so scientific. As Time magazine noted: "Meadows is no latter-day Malthus prophesying doom on the basis of intuition: instead he has produced the first vision of the apocalypse ever prepared by a computer."
To be sure, not everyone was persuaded by The Limits to Growth that the sky was falling. There were more than a few skeptics who scoffed at the Club of Rome's cheerless projections as misleading and short-sighted. But most such doubts were washed away the
following year when Arab oil producers responded to the 1973 Yom Kippur war in the Middle East first by unilaterally raising prices and then by cutting off deliveries to the West. Though the actual embargo didn't last very long, the price hikes stuck--in the process, establishing the Organization of Petroleum Exporting Countries (OPEC) as a force to be reckoned with. They also marked what at the time seemed to be the end of the era of cheap and abundant energy--an era that most people took to be synonymous with
prosperity and growth.
What followed over the next few years seemed to prove the doomsayers right. Between 1973 and 1981, soaring energy prices pitched the United States headlong into its worst recession in four decades. Economic growth sputtered to a halt, unemployment mounted, and inflation soared, seemingly out of control. Long lines became commonplace at gas stations, with frustrated motorists often coming to blows. Electrical brown-outs became a regular feature of urban summers, and with heating oil deliveries uncertain nervous New England homeowners turned down their thermostats in winter.
The future looked grim indeed. Americans, we were told, would have to tighten their belts, garage their cars, turn off their appliances, and generally adjust to lower standards of living. The government even printed up millions of gasoline ration cards. As David
Rockefeller observed in 1975, there seemed no getting around the fact that there were now "constraints on the rate of economic growth, constraints that were not apparent in the preceding twenty years."
In short, it looked as if the world we had known--the world of expansion and prosperity, of thinking big and rising expectations--was coming to an end. In its place, a new image
came to dominate our thinking: that of the earth as a fragile spaceship with a rapidly declining store of supplies and fuel. And the consensus was that we had better get used to it. "The idea of sitting still until this thing blows over is just a bunch of nonsense," declared the president of Booz, Allen & Hamilton, Inc., one of the nation's largest management-consulting firms, in 1975. "It ain't gonna blow over. You can bet that for the next generation we're going to have to live with the conditions we've seen over the last decade."
But then a strange thing happened. The world didn't come to an
end.
As we approach the final years of the twentieth century, we are coming to grips with an astonishing--and heartening--realization. The Club of Rome scientists and the other environmental pessimists of the 1970s were wrong. The world's supply of physical resources is not decreasing. On the contrary, our effective supply of resources is increasing.
Consider the example of one of our world's most essential and problematic resources--crude oil.
On the eve of the 1973 oil crisis, global oil reserves were figured to be something on the order of 700 billion barrels--enough to last about forty years at then current rates of consumption. If the pessimists were right, over the next fifteen years those reserves
should have dwindled to about 500 billion barrels. Well, the pessimists were wrong. In 1987, worldwide oil reserves were estimated at close to 900 billion barrels--nearly 30 percent more than they'd been fifteen years earlier. And that 900 billion barrel
figure included only proven reserves; it didn't count the nearly 2,000 billion additional barrels of oil still waiting to be discovered or produced by enhanced recovery methods.
The same is true of most other commodities. In 1970, worldwide natural gas reserves were estimated to total some 1,500 trillion cubic feet. By 1987, that estimate had been revised upward to nearly 4,000 trillion cubic feet. Similarly, global reserves of copper
more than doubled (from 279 million to 570 million tons) between 1970 and 1987. Over the same period, silver reserves climbed more than 60 percent (from 6.7 billion to 10.8 billion troy ounces), gold reserves rose by 50 percent (from 1 billion to 1.52 billion troy
ounces), and bauxite reserves were up more than 35 percent (from 17 billion to 23 billion metric tons). The list goes on.
As supplies have increased, prices have tumbled. Between 1980 and 1985 alone, prices in the International Monetary Fund's thirty-product commodity index dropped fully 74 percent. Throughout the 1980s, the cost of such raw materials as bauxite, coal, cocoa beans, coffee, copper, cotton, hides, iron ore, lead, manganese, nickel, oil, potash, rice, rubber, silver, soybeans, sugar, tin, and wheat collapsed--many falling to their lowest level in half a century. And the outlook for the foreseeable future is for more of the same. Indeed, the downward trend has been so dramatic that the U.S. Office of Technology Assessment was led to conclude in a 1988 study that America's "future has probably never been less constrained by the cost of natural resources."
Conventional economics has a simple explanation for this kind of situation. Increasing supplies and falling prices are traditionally regarded as classic symptoms of faltering demand and economic contraction--in other words, of recession and depression. Yet,
economically speaking, the decade of the 1980s was anything but that. Indeed, as we have noted, in the United States and most of the rest of the industrialized world, the 1980s saw one of the biggest peacetime economic booms ever. Industrial output, real wages, standards of living--all rose steadily, in some case sharply, and are continuing to rise. (Although, as we shall later on, not everyone is sharing equally in this rising prosperity.)
To put it simply, we are richer than we've ever been before.
The above is a portion from Chapter 2 - Supply Side Alchemy: W = PTn
Paul Zane Pilzer - Unlimited Wealth (1991)
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You know, kind of reminds one of Y2K (Y too Kay)
Doomers predicted recessions, havoc, and mayhem all because of Y2K. Well, I believe they will all be proven WRONG. I believe Y2K will be the biggest non-event in the history of man. Many have gained financially from Y2K doom and gloom, Y2K stocks, Y2K seminars, hundreds of web sites devoted to Y2K doom and gloom, and the media feeding on this frenzy; count on it getting worse in the coming weeks.
Some people so frightened about Y2K, have taken extraordinary measures to prepare for this non-event. Don't look at this problem with tunnel vision.
The book Unlimited Wealth, I have had since 1992, just started to read it again. Well worth the money, available from Amazon.com, book or audio cassette.
Cheeky Kid
The voice of reason. |
