*The Bet*

by on September 5, 2013 at 5:56 am in Books, Economics, History | Permalink

The author is Paul Sabin and the subtitle is Paul Ehrlich, Julian Simon, and Our Gamble over Earth’s Future.  I found this book informative, charming, and highly readable.  Here are a few excerpts:

Ehrlich later described his political development as a “natural progression.”  “I didn’t stand up one day and say ‘My God, I’m going to get everybody to stop [fuck]ing.’  It’s sort of one thing led to another.”

But Julian had a very different temperament:

…Simon also helped support himself in college with the winnings he took away from a regular poker game, often staying up until dawn during his senior year.  He did not suffer fools lightly, but his close college friends thought him a terrific companion.  Simon was curious and funny.  He was interested in a broad range of people…

And my favorite part is this (with apologies to Bryan Caplan):

“You can’t choose your relatives,” Simon later wrote.  “But one can imagine.”  His dream family consisted of a roster of famous theorists, some of them notable conservatives: “William James as my father, Hayek as my uncle, Milton Friedman as my older brother, Theodore Schultz as my thesis adviser, and David Hume as my idol.”

Recommended (who was the dream mother?).  There is a good WSJ review of the book here.

Addendum: Here is a new research paper on testing the Prebisch-Singer hypothesis about resource prices over time.

Brian Donohue September 5, 2013 at 7:57 am

After 45 years, it’s difficult to tell where Ehrlich leaves off and the sandwich board begins.

Andrew' September 5, 2013 at 8:19 am

Couple things. It certainly seems counter-intuitive that stuff wouldn’t cost more with more consumers. OTOH, organizing more dirt into brains is probably a net gain and there might be something to how consumers value and thus price things correlating to the total brain biomass.

rpl September 5, 2013 at 12:09 pm

Too true. Ehrlich has revised his forecasts of doom many times, and he’s been comprehensively proven wrong by events each time; yet, as far as I can tell he has refused to alter his beliefs in the slightest. There is no shame in having a hypothesis and being shown to be wrong by events, but continuing to cling to the discredited hypothesis after that happens is a pretty good working definition for crankhood. I guess the best you can say about him is that at least he made some concrete, falsifiable predictions, at least early on. Unfortunately, the lesson he seems to have learned from that is to be more vague in his predictions, so he can score them more generously.

It really is beyond me why people continue to view Ehrlich as a serious scholar and futurist. Any time I see someone defending him it usually amounts to, “Well, he’s tenured at Stanford,” or “So he exaggerated wildly in his claims, it’s justified by the importance of the subject matter.” The former is a non sequitur, and the latter is completely opposite to how reputable scholarship should work. If a subject really is important, then observations about it should be able to stand on their own without exaggeration or embellishment.

Doug M September 5, 2013 at 1:27 pm

I am sure he is a thoroughly qualified entomologist.

That doesn’t make him make him an expert in social sciences.

Andrew' September 5, 2013 at 8:23 am

Btw, if you believe that technology equals deflation then commodity prices have skyrocketed, right?

Z September 5, 2013 at 9:08 am

Commodity prices have not changed much at all over time. Roughly 2.5 grams of gold would buy a barrel of crude in 1950 and today it is a little higher, but close enough to say it is the same. All that tells us is we have more dollars floating around the financial system, which makes it appear commodity prices are higher. That’s what happens when you take people through currency devaluation.

dan1111 September 5, 2013 at 9:23 am

Comparing the price of one commodity to the price of another says nothing about whether commodity prices have gone up as a whole!

Andrew' September 5, 2013 at 9:25 am

That’s comparing a commodity to a commodity. Compare a gram of gold to the wage and productive output of someone in 1800 versus today.

JWatts September 5, 2013 at 10:08 am

“Commodity prices have not changed much at all over time. Roughly 2.5 grams of gold would buy a barrel of crude in 1950 and today it is a little higher, but close enough to say it is the same. ”

You are comparing two commodity prices against each other, which doesn’t really tell us whether commodity prices in general have skyrocketed or not.

“All that tells us is we have more dollars floating around the financial system, which makes it appear commodity prices are higher. That’s what happens when you take people through currency devaluation.”

That’s true to a point, but on the other hand many finished goods, particularly technological goods, have not gone up as fast as commodities have.

To some degree this is a case of resource constrained goods, gold, land and oil; for example, vs manufacturing constrained goods; computers and vehicles, for example. Granted, in the long run even oil, gold and land are subject to technological solutions. At a certain point, mining technology will get good enough that gold becomes abundant, and oil becomes useless (at least as far as an energy source).

dan1111 September 5, 2013 at 10:24 am

Darn that comment delay problem!

Brian Donohue September 5, 2013 at 9:38 am

I don’t like this frame. Cut money out completely. Consider how much of something I can buy with, say, an hour of my labor over time. On this view, commodity prices continue on a centuries-long downward path.

Andrew' September 5, 2013 at 11:00 am

Relative to what?

JWatts September 5, 2013 at 11:19 am

He says relative to “an hour of my labor over time”.

Andrew' September 5, 2013 at 12:57 pm

What is he buying with it?

Andrew' September 5, 2013 at 12:57 pm

Or making…

Brian Donohue September 5, 2013 at 11:34 am

Relative to the amount of time I must sacrifice to generate the means of procuring them.

dbp September 5, 2013 at 11:36 am

Relative to the value, in commodities, for an hour of labor in the past versus now.

charlie September 5, 2013 at 9:46 am

can an economist make money at poker?

Finch September 5, 2013 at 10:39 am

Likely, given a venue to play in, which for political reasons is tough to find in much of the country. Studies consistently show skill in excess of cost and the persistence of skill for somewhere between 5 and 20% of the poker playing population. That said, my understanding from pros I’ve known is that it’s a lot easier to make $50k per year than $200k.

mpowell September 5, 2013 at 3:08 pm

If it were easy to make $200K/year… yeah, of course. It’s probably gotten easier though as the popularity of poker has risen (though maybe the quality of the average player has gone up?). Haven’t played for actual income in over 10 years so can’t say for sure.

Finch September 6, 2013 at 9:50 am

I think it peaked in ease for the few years after Moneymaker, and obviously fell off a cliff with Black Friday. Internet poker is still in a legal mess in the United States, and live poker is quite different with higher stakes at comparable skill levels, lower quality players overall, and much slower play. $1/$2 live is extremely soft, but online it would be quite tough.

Ray Lopez September 5, 2013 at 9:51 am

Left out of this discussion is who won the bet? Simon did on the time frame they bet on, but, as the Economist pointed out a while ago, had the time frame been longer, Ehrlich would have won. Jury still out. With another 3B people coming on-stream in the next 35 years, and our weak IP laws not encouraging innovation (aka “Great Stagnation” if you want to rephrase it from the ‘demand’ side), it could well be that the Club of Rome doomsters will be proved right.

Cliff September 5, 2013 at 11:24 am

Weak??

JWatts September 5, 2013 at 11:34 am

“it could well be that the Club of Rome doomsters will be proved right. ”

Maybe, but the idea seems unlikely at best. Remember they weren’t claiming that commodity prices would be roughly the same or slightly higher. They were claiming that the world would run out of resources (or at least the prices would rise to very high levels) and that massive starvation would lead to a human die off early in the twenty-first century.

Obviously, they were completely wrong.

Gabe September 5, 2013 at 11:55 am

Here are three quotes from Ehrlich’s books. I think they have been proven wrong.

We’ve already had too much economic growth in the US. Economic growth in rich countries like ours is the disease, not the cure.
- Paul Ehrlich, author of Population Bomb and Population Explosion.

The battle to feed all of humanity is over. In the 1970′s and 1980′s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now.
- Paul Ehrlich – the first sentence of his 1968 “The Population Bomb”

This vast tragedy, however, is nothing compared to the nutritional disaster that seems likely to overtake humanity in the 1970s (or, at the latest, the 1980s) … A situation has been created that could lead to a billion or more people starving to death.
- Paul Ehrlich, “The End of Affluence” (1974), p.21

…it is interesting to note that those here critical of Ehrlich, like JWatt, are even being kind in their attributions. Ehrlich was not selling investment advice that a commodity bull market could occur in the years of 2001-2008 as Ray Lopez seems to suggest…no he was saying massive dieoff would occur in the 1980′s.

Prakash September 5, 2013 at 12:21 pm

To be fair, the modern version of this bet, the simmons-tierney bet (http://en.wikipedia.org/wiki/Simmons%E2%80%93Tierney_bet) also ended in favour of the optimists.

Pareto September 5, 2013 at 9:59 am

Ayn Rand. Who else?

gabe September 5, 2013 at 11:55 am

We’ve already had too much economic growth in the US. Economic growth in rich countries like ours is the disease, not the cure.
- Paul Ehrlich, author of Population Bomb and Population Explosion.

The battle to feed all of humanity is over. In the 1970′s and 1980′s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now.
- Paul Ehrlich – the first sentence of his 1968 “The Population Bomb”

This vast tragedy, however, is nothing compared to the nutritional disaster that seems likely to overtake humanity in the 1970s (or, at the latest, the 1980s) … A situation has been created that could lead to a billion or more people starving to death.
- Paul Ehrlich, “The End of Affluence” (1974), p.21

Merijn Knibbe September 5, 2013 at 3:39 pm

Whatever happened to the total costsmade to produce the really important resources: (clean) water, (clean) air, (clean) fire, including fire in combustion engines in cars and katalysators, and fertile, uneroded soil (even discounting sites of exploded nuclear plants)? We realy have to look beyond copper and gold.

Steve Sailer September 5, 2013 at 5:43 pm

Ehrlich learned much from losing the first bet and proposed a more sophisticated second bet (which Simon refused to take up). From Wikipedia:

Understanding that Simon wanted to bet again, Ehrlich and climatologist Stephen Schneider counter-offered, challenging Simon to bet on 15 current trends, betting $1000 that each will get worse (as in the previous wager) over a ten-year future period.[2]

The trends they bet would continue to worsen were:

The three years 2002–2004 will on average be warmer than 1992–1994.
There will be more carbon dioxide in the atmosphere in 2004 than in 1994.
There will be more nitrous oxide in the atmosphere in 2004 than 1994.
The concentration of ozone in the lower atmosphere (the troposphere) will be greater than in 1994.
Emissions of the air pollutant sulfur dioxide in Asia will be significantly greater in 2004 than in 1994.
There will be less fertile cropland per person in 2004 than in 1994.
There will be less agricultural soil per person in 2004 than 1994.
There will be on average less rice and wheat grown per person in 2002–2004 than in 1992–1994.
In developing nations there will be less firewood available per person in 2004 than in 1994.
The remaining area of virgin tropical moist forests will be significantly smaller in 2004 than in 1994.
The oceanic fishery harvest per person will continue its downward trend and thus in 2004 will be smaller than in 1994.
There will be fewer plant and animal species still extant in 2004 than in 1994.
More people will die of AIDS in 2004 than in 1994.
Between 1994 and 2004, sperm cell counts of human males will continue to decline and reproductive disorders will continue to increase.
The gap in wealth between the richest 10% of humanity and the poorest 10% will be greater in 2004 than in 1994.

http://en.wikipedia.org/wiki/Simon%E2%80%93Ehrlich_wager

Casey September 5, 2013 at 7:26 pm

Could the reason he refused to take that bet have anything to do with the.fact that most of those categories have nothing to do with the resource depletion which was the subject of the original bet? I mean come on, the rate of AIDS spread? That’s just generalized doomsaying. Its just a grab bag, very intellectually lazy.

Gabe September 5, 2013 at 9:10 pm

I am pretty sure ehrlich would be happy that sperm counts are declining. Seems he was correct there. Mass starvation in the 1980′s ?wrong

Floccina September 9, 2013 at 3:27 pm

Julian Simon’s answer
http://www.juliansimon.com/writings/Articles/EHRLICH6.txt

Commentators said that a single bet proves little, and they are right. Hence I offered to repeat the wager, but there were no takers. The commentators also said that the bet was too narrow and should encompass environmental and other measures of human welfare. Hence I broadened the offer as follows: I’ll bet a week’s or a month’s pay that just about any trend pertaining to material human welfare will improve rather than get worse. You pick the trend – perhaps the death rate, the price of a natural resource, some measure of air or water pollution, or the number of telephones per person – and you choose the area of the world and the future year in which the comparison is to be made. If I win, my winnings go to non-profit research. The details are as follows:

1. Five years or more, to ensure that there is time for conditions to change and to reduce the likelihood of statistical blip.

2. Measures of actual welfare, rather than intermediate conditions. That is, mortality and morbidity, for example, rather than incidences of particular diseases.

3. The measures that I would consider most appropriate are:

Life expectancy; ambient concentrations of air and water pollutants – that is, the cleanliness of air and water; purchasing power of any group; ownership of specific household goods; costs of natural resources; amount of leisure time; amount of schooling; amount of housing space.

4. I would prefer to make multiple bets – perhaps a collection of countries rather than one country, for example, or a variety of measures of human nutrition – rather than on just one item.

Ehrlich and Schneider have not accepted my offer. Instead they suggest betting on what they call “indirect measures”, most of which pertain to physical conditions rather than directly to human welfare. And they suggest aspects of our environment whose connection to human welfare is questionable and perhaps subjective, instead of being objectively measurable, Still, I hope we can find a way to join the issue, as follows:

The main effects on human welfare of global warming, cropland, soil conditions, and rice-wheat production (items Ehrlich and Schneider suggest) all relate to food and nutrition, as they themselves note. I therefore will be delighted to wager with them on future calorie intake, food prices, or food output.

Firewood (an E and S item) pertains to energy. So let’s bet on energy prices and quantities used….

reader of daily telegraph September 5, 2013 at 9:42 pm

“did not suffer fools gladly” or variants thereof was for decades English obituary codeword for uncharitable “fool” in the sense the word fool was used circa 1500s (when Book of Proverbs, which treats this subject at length, was first translated in a recognizably modern form). So I am not sure that is the correct phrase here.

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