Revisiting 1980 bet between Paul Ehrlich-Julian Simon!!
In 1980 two eminent professors, fierce critics of one another, made a bet regarding the real market price of five metal commodities over the next decade. Paul Ehrlich, a world-famous ecologist, bet that because the world was exceeding its carrying capacity, food and commodities would start to run out in the 1980s and prices in real terms would therefore rise. Julian Simon, an economist, said that resources were effectively so abundant, and becoming effectively more so, that prices would fall in real terms. He invited Ehrlich to nominate which commodities would be used to test the matter, and they settled on these (chrome, copper, nickel, tin and tungsten). In 1990 Ehrlich paid up - all the prices had fallen.
It has become fashionable to assert that because "the resources of the earth are finite", therefore we must face some day of reckoning, and will need to plan for "negative growth". All this, it is pointed out, is because these resources are being consumed at an increasing rate to support our western lifestyle and to cater for the increasing demands of developing nations. The assertion that we are likely to run out of resources is a re-run of the "Limits to Growth" argument fashionable in the early 1970s, which was substantially disowned by its originators, the Club of Rome, subsequently. It also echoes similar concerns raised by economists in the 1930s, and by Malthus at the end of the 18th Century.
In recent years there has been persistent misunderstanding and misrepresentation of the abundance of mineral resources, with the assertion that the world is in danger of actually running out of many mineral resources. While congenial to common sense, it lacks empirical support in the trend of practically mineral commodity prices over the long term.
For instance, measured resources of many minerals are increasing much faster than they are being used, due to exploration expenditure by mining companies and their investment in research. Simply on geological grounds, there is no reason to suppose that this trend will not continue. Today, proven mineral resources worldwide are more than we inherited.
Just over a hundred years ago aluminium was a precious metal, not because it was scarce, but because it was almost impossible to reduce the oxide to the metal, which was therefore fantastically expensive. With the discovery of the Hall-Heroult process in 1886, the cost of producing aluminium plummeted to about one twentieth of what it had been and that metal has steadily become more commonplace. It now competes with iron in many applications, and copper in others, as well as having its own widespread uses in every aspect of our lives. Not only was a virtually new material provided for people's use by this technological breakthrough, but enormous quantities of bauxite world-wide progressively became a valuable resource. Without the technological breakthrough, they would have remained a geological curiosity.
The development of new technologies which are able to utilise otherwise non-usable or uneconomic iron ore 'fines' and other low grade materials which otherwise aren't quite in the category of commercial-grade ore is another good example of creating resources, by enabling materials to be reclassified as such. Incremental improvements in processing technology at all plants are less obvious but nevertheless very significant also. Over many years they are probably as important as the historic technological breakthroughs.
Just over a hundred years ago aluminium was a precious metal, not because it was scarce, but because it was almost impossible to reduce the oxide to the metal, which was therefore fantastically expensive. With the discovery of the Hall-Heroult process in 1886, the cost of producing aluminium plummeted to about one twentieth of what it had been and that metal has steadily become more commonplace. It now competes with iron in many applications, and copper in others, as well as having its own widespread uses in every aspect of our lives. Not only was a virtually new material provided for people's use by this technological breakthrough, but enormous quantities of bauxite world-wide progressively became a valuable resource. Without the technological breakthrough, they would have remained a geological curiosity.
The development of new technologies which are able to utilise otherwise non-usable or uneconomic iron ore 'fines' and other low grade materials which otherwise aren't quite in the category of commercial-grade ore is another good example of creating resources, by enabling materials to be reclassified as such. Incremental improvements in processing technology at all plants are less obvious but nevertheless very significant also. Over many years they are probably as important as the historic technological breakthroughs.
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