Posts Tagged ‘Prosperity’

Ehrlich-Simon Round Two

Saturday, October 3rd, 2015

In 1980, doom-monger and perennial wrong person Paul Ehrlich made a wager with Julian Simon. Simon bet that the price of any commodities Ehrlich cared to nominate would go down over the next ten years due to increasing productivity. Ehrlich bet that they would go up because of the global pandemics and starvation that were supposed to happen but never did. At the end of the ten years, Ehrlich had to write Simon a check of $576.07.

Since the day the wager was concluded, Ehrlich and his fellow doom-sayers have been trying to weasel out of the result. You can see this on the Wikipedia page on the wager:

The prices of all five metals increased between 1950 and 1975, but Ehrlich believes three of the five went down during the 1980s because of the price of oil doubling in 1979, and because of a world-wide recession in the early 1980s.

Ehrlich might have a point if the entire motivation for the bet weren’t his prediction of a global catastrophe by the end of the 80’s.

Ehrlich would likely have won if the bet had been for a different ten-year period. Asset manager Jeremy Grantham wrote that if the Simon–Ehrlich wager had been for a longer period (from 1980 to 2011), then Simon would have lost on four of the five metals. He also noted that if the wager had been expanded to “all of the most important commodities,” instead of just five metals, over that longer period of 1980 to 2011, then Simon would have lost “by a lot.”

This doesn’t mean much. In 2011, we were in the middle of a precious metal crunch that sent prices skyrocketing. Since then, prices have tumbled. All five metals are down since 2011 and all but chromium are down around 50%. I can’t find good historical records, but copper, at least, is cheaper than it was in 1989, in inflation-adjusted terms. I’m also not clear by what Grantham means by “all of the most important commodities”. Oil is about the same as it was in 1980 in inflation adjusted terms. Wheat is cheaper.

Moreover, even if the commodities prices were higher, it’s still because Ehrlich was wrong. Ehrlich was predicting prices would go higher because we would run out of things. But when prices did go higher, they did because of increased global demand. They went higher because of the post-Cold War economic growth and development that has, so far, lifted two billion people out of poverty. This is growth that Ehrlich insisted (and still insists) was impossible.

(To be honest, I’m not sure why the Grantham quote is even on Wikipedia. Grantham is an investor, not an economist, and this quote was an off-hand remark in a quarterly newsletter about sound investment strategies, not a detailed analysis. The quote is so obscure and oblique to the larger issues that its inclusion crosses me as a desperate effort to defend Ehrlich’s honor.)

What really amuses me about the Ehrlich-Simon bet, however, was that he proposed a second wager. The second wager was not like the first. It was far more specific, far narrower and far more tailored to things that were not really in dispute. Simon rejected the second wager for the following reasons:

Let me characterize their offer as follows. I predict, and this is for real, that the average performances in the next Olympics will be better than those in the last Olympics. On average, the performances have gotten better, Olympics to Olympics, for a variety of reasons. What Ehrlich and others says is that they don’t want to bet on athletic performances, they want to bet on the conditions of the track, or the weather, or the officials, or any other such indirect measure.

Exactly. The two-and-a-half decades since the second wager have been the best in human history. We have had fewer wars than at any period. Fewer murders. Less disease. Less starvation. More wealth. Ehrlich’s second wager didn’t care about any of that. It was about details like global temperature and arable land and wild fish catches, not the big picture of human prosperity. Below, I will go through the specifics of the second wager and you will see, over and over again, how narrow Ehrlich’s points were. In many cases, he would have “won” on issues where he really lost — correctly predicting trivial details of a trend that contradicted everything he was saying.

In fact, even if Simon had taken up Ehrlich on his useless hideously biased bet, Ehrlich might have lost the bet anyway, depending on the criteria they agreed on. Let’s go through the bet Eherlich proposed, point by point:

  • The three years 2002–2004 will on average be warmer than 1992–1994. This would have been a win for Ehrlich, exaggerated by the Mt. Pinatubo cooling in 1993. So, 1-0 Ehrlich.
  • There will be more carbon dioxide in the atmosphere in 2004 than in 1994. Ehrlich wins again, 2-0. Neither of these was really in dispute, however.
  • There will be more nitrous oxide in the atmosphere in 2004 than 1994. Ehrlich wins again, 3-0. Again, this wasn’t really in dispute. Note, however, that this is basically three bets about the same thing: global warming. It would be as if Simon counted Tungsten three times in the original bet.
  • The concentration of ozone in the lower atmosphere (the troposphere) will be greater than in 1994. This took a lot of digging and I am happy to be corrected if I’m reading the literature wrong. But from what I can tell, tropospheric ozone has actually decreased or leveled off since 1994. At the very least, this pollutant has gotten under much firmer control. So, 3-1 Ehrlich.
  • Emissions of the air pollutant sulfur dioxide in Asia will be significantly greater in 2004 than in 1994. This is what I mean about how narrowly tailored the second wager was. Global SO2 emissions are down. In North America and Europe, they fell off a cliff. Only in Asia, did they go up. In fact, it’s really only in China. If it weren’t for China, global SO2 emissions would have been down by 20% over the span of the bet. It’s hard to call this a win for Ehrlich. 3-2.
  • There will be less fertile cropland per person in 2004 than in 1994. and There will be less agricultural soil per person in 2004 than 1994. Ehrlich really wanted to stack the deck in his favor, didn’t he? We’ll give him both of these as wins, but they really aren’t. There’s a reason we’re using less land for growing crops and it’s not because of environmental catastrophe. Its because …
  • There will be on average less rice and wheat grown per person in 2002–2004 than in 1992–1994. Boom. Not only is there not less rice and wheat per person being grown, there’s a hell of a lot more being grown. Thanks to improved farming methods and genetic engineering, today’s crops are hardier and more productive than ever. The reason Ehrlich “won” on the last two is because we don’t need as much land to feed people. So we’re at 5-3, but it’s a very cheap five for Ehrlich. So far, the only thing he was right on was that global warming would get worse.
  • In developing nations there will be less firewood available per person in 2004 than in 1994. I’m going to play Ehrlich’s game here. The key word here is “available”. From what I can tell, per capita firewood consumption is down in developing countries. But that’s not because of a crushing environmental crisis. It’s because fossil fuel consumption is way up. There’s plenty of firewood available. There’s a lot less need for it. This is once again Ehrlich focusing on trivia — how much firewood is available — rather than the big picture. Lots of firewood being burned is a bad thing. It means forests being gutted. It means indoor pollution. It means poverty. Fossil fuels aren’t exactly a panacea, obviously. But they’re way better than firewood. The people of the developing world are going to need natural gas if they’re ever going to get to solar power. 5-4.
  • The remaining area of virgin tropical moist forests will be significantly smaller in 2004 than in 1994. Once again, a very narrow criterion. I can’t find a source that is that specific. Tropical rainforest destruction has leveled off recently, thanks to prosperity. But I have little doubt Ehrlich would have won this. 6-4.
  • The oceanic fishery harvest per person will continue its downward trend and thus in 2004 will be smaller than in 1994. Again, note how harrow the criterion is. The amount of fish per person is actually up. But that’s because of a huge surge in farm fishing. Ehrlich only counts wild fish, which has not decreased, but is less on a per capita basis. How do we call that? I wouldn’t give him SO2, so I’ll give him wild fish. 7-4.
  • There will be fewer plant and animal species still extant in 2004 than in 1994. Sure. 8-4
  • More people will die of AIDS in 2004 than in 1994. Ehrlich would have won this one. But it’s a narrow win. AIDS deaths peaked in 2005. Since then, they have fallen by a third. 9-4
  • Between 1994 and 2004, sperm cell counts of human males will continue to decline and reproductive disorders will continue to increase. Nope. People aren’t even sure the original research is correct. At the very least, the picture is mixed. Reproductive disorders are probably increasing but that’s because of people waiting longer to have children because of … wait for it … increasing prosperity. 9-5.
  • The gap in wealth between the richest 10% of humanity and the poorest 10% will be greater in 2004 than in 1994. Nope. There’s concern about wealth inequality in developed countries. But, on global scale, wealth inequality has been in a decades-long decline. 9-6.
  • So … with Ehrlich counting global warming three times … with Ehrlich tailoring the questions incredibly narrowly … with Ehrlich betting twice on global farmland … Ehrlich wins the bet. But it’s a hollow victory. Ehrlich wins on nine of the bets, but only two or three of the larger issues. Had Simon taken him up on it and tweaked a few questions — going to global SO2 emissions or global fishing catches or one measure for global warming — Ehrlich would have lost and lost badly.

    That’s the point here. If you put aside the details, the second wager amounted to Ehrlich betting that the disaster that failed to happen in the 80’s would happen in the 90’s. He was wrong. Again. And if you “extended the bet” the way his defenders do for the initial bet, he was even wronger.

    And yet … he’s still a hero to the environmental movement. It just goes to show you that there’s no path to fame easier than being wrong with authority.