Oil falls below $42 a barrel (the paradox of Julian Simon)

Yes, I call it the paradox of Julian Simon.  He is right about resource prices falling mostly when his optimism about emerging economies is wrong, and vice versa.  The Ultimate Resource was published in 1981, much of the resource price spike didn’t start until the early 1990s, and when Simon published the emerging economies hadn’t yet done so much to emerge.  The world where Simon is wrong about resource prices — think Chinese peak growth years — is probably the more optimistic scenario.  Another way to put this is that manufactured goods are more likely subject to increasing returns to scale than is resource production.

The Bloomberg news report on oil is here.


Comments for this post are closed