Wednesday, December 4, 2013

What I've Been Reading

The Bet: Paul Ehrlich, Julian Simon and Our Gamble Over Earth's Future by Paul Sabin.

Tyler Cowen highly recommended this book, no question - one the most insightful and entertaining book of the year. The Bet was wrong and both sides were blindsided with their anger, biases and sadly changed the course of the environmental debate in this country. There is so much to learn from their mistakes. Ironically, both characters Ehrlich and Simon were polar opposite of Albert O. Hrischman, whose biography was the best book I read this year.

The Bet:
Ehrlich agreed to bet Simon that the cost of chromium, copper, nickel, tin, and tungsten would increase in the next decade. It was a simple thousand-dollar wager: five industrial metals, ten years, prices up or down. At the same time, the bet stood for much more. Ehrlich thought rising metal prices would prove that population growth caused resource scarcity, bolstering his call for government-led population control and for limits on resource consumption.

Simon had prevailed in their bet, by every measure. Despite a record increase in the world population from 4.5 to 5.3 billion people, the prices of the five minerals— chromium, copper, nickel, tin, and tungsten— had fallen by an average of almost 50 percent.


As most economists knew intuitively, and as Ehrlich learned painfully, volatile commodity prices served as a poor proxy for the impact of population growth, certainly over the course of just a decade. Subject to so many competing forces, commodity prices frequently cycle from boom to bust and from scarcity to overabundance. Ehrlich’s bet had been foolhardy— as even he later admitted. The bet also suggested that Ehrlich and his colleagues only tenuously understood economics and commodity markets. 6 At the same time, Simon’s victory was not guaranteed. He would not have won any ten-year bet about commodity prices. Indeed, when economists later ran simulations for every ten-year period between 1900 and 2008, they found that Ehrlich would have won the bet 63 percent of the time. That did not mean, however, that a longer bet over the course of the century necessarily would have gone to Ehrlich. Rather than a steady increase in prices over the century, the 1900– 2008 data showed a precipitous crash in commodity prices after World War I and then a century-long irregular return to World War I levels. The simulations showed Ehrlich prevailing in 63 percent of the ten-year bets largely because prices had plummeted so low in the post– World War I crash.


The New Bet:
Ehrlich said of his determination to prove Simon wrong and, if possible, publicly humiliate him. Ehrlich and Schneider challenged Simon to a new bet on different terms. They proposed betting a thousand dollars each on fifteen indicators over the next decade. The indicators included measures of material change: concentrations of carbon dioxide, nitrous oxide, and ozone in the atmosphere, global temperatures, tropical forest area, and quantities of fish, rice, and wheat per person. 

Simon refused Ehrlich and Schneider’s terms. Their proposed indicators affected human welfare only indirectly, Simon argued. Simon instead suggested indicators that directly measured human health and economic well-being, things like life expectancy, leisure time, purchasing power, and commodity prices. Rather than bet on change in a physical entity such as the ozone layer, Simon suggested measuring “the trend in skin cancer death.” The physical world, Simon argued, could change around us, but progress of human society would continue, bolstered by new technologies, adaptation, and markets.


Ehrlich called Simon “clueless.” Simon did not “understand anything about risk, trends or things that affect human welfare,” Ehrlich said in an interview at the time. “We do not have the slightest little twinge of interest in debating with him.” “Simon wants to bet on all of what people do,good and bad, and nothing else. We deliberately focus on negative environmental or social trends because they are the ones that need to be fixed regardless of whether other trends are positive.” Life expectancy would improve even more, Ehrlich claimed, if the negative trends that he identified turned around. Ehrlich said that he engaged in this “betting foolishness” only to get Simon to retract his claims or to get the public to see that Simon “blusters and asserts, but won’t back up his own rhetoric.”


The Lesson:
Extreme voices have come to dominate American politics, and the partisan divide has deepened. Contributing to this division are profoundly different ways of seeing the world, such as the divergent perspectives of Paul Ehrlich and Julian Simon. Each had important insights to offer about science, economics, and society. But neither presented a vision that can stand alone. The history of Ehrlich and Simon’s conflict instead reveals the limitations of their incompatible viewpoints. Their bitter clash also shows how intelligent people are drawn to vilify their opponents and to reduce the issues that they care about to stark and divisive terms. The conflict that their bet represents has ensnared the national political debate and helped to make environmental problems, especially climate change, among the most polarizing and divisive political questions.

Sometimes rhetorical sparring partners hone each other’s arguments so that they are sharper and better. The opposite happened with Paul Ehrlich and Julian Simon. Despite their respective strengths, both Ehrlich and Simon got carried away in their battle. The ready audience for their ideas encouraged them to make dramatic claims. Their unwillingness to concede anything in their often-vitriolic debate exacerbated critical weaknesses in each of their arguments.


The clashing insights of Ehrlich and Simon are necessary to help frame our thinking about the future. Our task is not to choose between these competing perspectives but rather to find ways to wrestle with their tensions and uncertainties, and to take what each offers that is of value. Ultimately, humanity’s course will be determined less by iron laws of nature or by unbounded market powers, Ehrlich and Simon’s dueling lodestars, and more by the social and political choices that we make. Neither biology nor economics can substitute for the deeper ethical question: What kind of world do we desire?

It reminds of John Gray's thoughts from his new book The Silence of Animals: On Progress and Other Modern Myths:

The distance between human and animal silence is a consequence of the use of language. It is not that other creatures lack language. The discourse of the birds is more than a human metaphor. Cats and dogs stir in their sleep, and talk to themselves as they go about their business. Only humans use words to construct a self-image and a story of their lives. But if other animals lack this interior monologue, it is not clear why this should put humans on a higher plane. Why should breaking silence and then loudly struggling to renew it be such an achievement?

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