Not the ones about population, the ones about falling real resource prices.
Here is a simple model: it is easier to transfer technologies of resource extraction than it is to transfer most other technologies. In other words, Nigeria has low TFP but still their oil rigs work pretty well.
If that's true, when the wealthiest economies are opening up a commanding lead in terms of living standards, real resource prices should be falling. Nigeria can supply a lot of oil without demanding very much.
When most of the growth is catch-up growth, the poor countries demand more resources but supply technologies are not racing so quickly ahead. Real resource prices are more likely to rise.
There is a long history of falling real resource prices, but is this simply reflecting the fact that the last three hundred years don't offer many periods of catch-up growth? Now, an era catch-up growth seems to be upon us. So why should we be so confident that Simon's predictions will continue to hold?
This is a plausible hypothesis. Why not see what the data has to say?
Simon also pointed out that we use resources more efficiently. For example he preferred to say concerning gasoline that a hour of work will take you further a given level of comfort in the future even if it gasoline cost you more per gallon.
Land prices per acre have risen dramatically for the average American homebuyer since Simon made his bet.
"It is easier to transfer technologies of resource extraction than it is to transfer most other technologies…"
Could someone point out for me some articles / book chapters which discuss this in greater detail? Because this is the first time I've ever heard this.
Do natural gas and coal and other commodities that are generally available domestically have a significantly different cost history than oil? Also, if the us allowed less limited drilling, oil supply would also be less dependent on 3rd world countries, and the effect would seemingly be lower prices.
Seems like resources can rise long term only if technology and liberty stagnate or regress. That doesn't seem likely.
We are unleashing a few billion extra workers which lowers the relative value of the man-hour, then they will start consuming, but eventually they'll participate in a real division of labor.
Uncertainty and inflation are fueling assets relative to productive risk investments, so while bets require timelines, recent price increases seem like a short-term cyclical affect. So, my opinion is that Simon's bet is as robust as the time horizon.
Remember, Simon never argued that there wouldn't be short term (which could be several years worth) spikes in prices. In fact, he counted on them both as a signal to develop more sources of existing resources and to spur innovation that would lead to substitutes, efficiencies, or other matters.
For me this is a data question. Here's a link to the <a href = "http://ideas.repec.org/p/hcx/wpaper/0908.html">working paper version of a paper published in Ecological Economics (a peer-reviewed journal) last year regarding the bet.
Simon would have won the bet during 38 of the 98 10-year periods between 1900 and 2007 based on price data from the U.S. Geological Survey.
My interpretation of the data is that Simon was lucky.
Better yet than seeing what the data say; I say TC should find his modern-day Julian Simon and put his money where his mouth is.
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