culling the species

[Kevin B. O'Brien]

dsummersminet at comcast.net wrote:
> All the doomsayers of the 70s predicted
> prices for copper, iron ore, etc. would go through the roof.
The main culprit here is the Club of Rome, which is famous for 
publishing "Limits to Growth" and "Mankind At The Turning Point".  
Hotelling's Rule (See http://en.wikipedia.org/wiki/Hotelling%27s_rule) 
would have been a clue to anyone who looked at it. For those who are not 
used to the arcane language of professional economics, let me give a 
simple explanation.

If you own a non-renewable resource, such as a copper mine, you can dig 
the copper now, take the money, and invest it; or you can leave the 
copper in the ground until next year, and take advantage of a potential 
price increase to get for more for it when you dig it out. The 
equilibrium solution in a simple model is that the price of the resource 
(i.e. copper) should increase at a rate equal to the interest rate. As 
to why this happens, the short answer is that if it did not, people 
would change their behavior, and by so doing, they would make it come 
true after all. I can give a longer explanation, but most normal people 
seem to display eyes glazing over whenever an economist explains anything.

Now, this result holds for a simple model, and the world is nothing like 
a simple model, but it illustrates some important principals 
nonetheless. As supplies decrease, we should expect prices to increase, 
and when prices increase behavior changes in response. For example, in 
the 1970s we had several oil price shocks that pushed prices what were 
then all-time highs. In the short-term, people got gouged, but in the 
longer term they changed their behavior, and as a result demand fell and 
prices by the late 1980s were near historical lows (at least recent 
history; I don't know what 19th c. prices were like.) The behavior chage 
can take a variety of forms, such as increased use of substitutes, 
conservation, increased search for new supplies, etc. So Dan is entirely 
correct to be skeptical about a claim that resource limitations are 
going to be a near-term problem. As he says, local disturbances would 
result (for some reason Detroit has never quite understood that oil 
prices might ever go up, so they are always caught out every time it 
happens), but it is not a global catastrophe in any reasonable sense of 
the term.

Where I disagree with Dan is his implication that since one class of 
potential problems didn't materialize, no problems will ever 
materialize. Over-population is not the same sort of thing as resource 
usage (though it can contribute to it). I would not call it 
unprecedented, since it has happened locally, as has climate change. 
(Ever notice that the bread-basket of the Roman Empire is now a 
desert?), but the scale on which it is happening is truly new. I was 
just listening to Science Friday the other day, talking about the 
melting of the Greenland Ice Sheet. Apparently, lakes were forming on 
the surface, and they were starting to investigate when the lakes 
started disappearing. And by disappearing, I mean in minutes. They told 
of one lake that was kilometers wide that disappeared in 90 minutes. 
They computed the rate of flow as 3x that of Niagara Falls. And now they 
only observe from a safe distance.

Maybe it will all turn out to be just a minor localized disturbance, but 
a whole lot of climatologists seem to think it is pretty serious, so I 
am inclined to go that way. And there is always the Fermi paradox to 
keep in mind. Back in the 1960s some of us wondered if the reason there 
were no other advanced civilizations out there is that they blew 
themselves up with nuclear weapons or something like that. Now there is 
an alternative possibility, they they could not escape the Malthusian 
trap and destroyed themselves and their environment.

Regards,

-- 
Kevin B. O'Brien         TANSTAAFL
zwilnik at zwilnik.com      Linux User #333216

"In large states public education will always be mediocre, for the same 
reason that in large kitchens the cooking is bad." -- Nietzsche