Weather Report

Weather reports a few days ago predicted severe rainfall and flooding in Northern and Central California but it turned out to be a storm in a teacup.

After a few weeks in San Jose CA at a friend’s home, I was in Palo Alto CA at another friend’s home for a few days. Being in Palo Alto was interesting for two unrelated events. First, the mega-fraudster Sam Bankman-Fried of the FTX and Alameda Research fame was/is confined at his parents’ home in Palo Alto. So “SBF” was a neighbor of sorts for a bit.

As it happens, SBF was at a New York court on Jan 3rd for his arraignment and pleaded not guilty to all the charges. We’re sure to hear more about his embezzlement in the coming months.

The second event is related to a biology professor at Stanford University, Prof Paul Ehrlich. Stanford Univ is in a sense in Palo Alto even though it has its own zip code. Recently Ehrlich was featured in a recent 60 Minutes episode. Yahoo News reports:

Paul Ehrlich, who predicted that mass starvation would wipe out humanity decades ago, was invited to appear on an episode of 60 Minutes that aired Sunday night to revive his argument that current levels of human consumption will lead to the mass extinction of plants, animals, and mankind itself — echoing the case he first made in his since discredited 1968 book The Population Bomb.

Ehrlich is a Stanford University biology professor best known for predicting that a global famine driven by overpopulation would all but wipe out human civilization in the 1970’s. “The battle to feed all of humanity is over. In the 1970’s the world will undergo famines – hundreds of millions of people are going to starve to death…nothing can prevent a substantial increase in the world death rate,” Ehrlich and his co-author and wife warned readers in the book’s introduction.

In the mid-1980s, when I was working at HP in Cupertino CA (the same location where the current Apple headquarters is), I had considered the causes of India’s poverty and concluded that it was due to India being overpopulated. It appeared commonsensical to me that there was only so much of everything — land, minerals, water, etc. — and if there are more people than there was stuff to go around, then it must lead to poverty of the masses.

I was therefore persuaded by Ehrlich’s argument. But I was not in favor of Sanjay Gandhi’s forced sterilization of poor Indians. I don’t approve of violence, and I am particularly opposed to government violence. I think that persuasion, not violence and coercion, is a civilized way to solve social problems.

As it happened, I did a 180-degree turn on the matter of why India was poor. I realized that the problem was not overpopulation but something else entirely. I was seriously mistaken because I hadn’t understood the nature of the world. When I finally started learning economics, I understood the error in my thinking.

That’s a reasonable error to make. Kenneth Boulding, a deservedly celebrated economist is on record as saying, “Anyone who believes that exponential growth can go on forever in a finite world is either a madman or an economist.”

Certainly, no reasonable person would ever make the mistake of thinking that exponential growth can go on forever in a finite world. At some point, you are bound to hit a limit to that sort of growth. But wait a minute. We have to ask two questions. First, where is that limit? And second, at what rate of growth will that limit be reached and when?

What if that limit is so far in the future that it is for all practical purposes, no limit at all! Then there’s the matter that it could be that at some point in the future, we don’t need growth at all. Perhaps there’s a satiation point much before we reach the posited limit.

Also, we have to distinguish between growth and development. Perhaps there is no limit to development even though there’s a limit to growth. Let’s put off those considerations for now and get back to Prof Ehrlich.

Paul Ehrlich (b. 1932) is an accomplished 90-year old tenured professor of biology at Stanford University. That’s no mean achievement, to be sure. He must be very intelligent. So the mystery is why is it that he appears to be incapable of learning? He’s no slouch in the intelligence department. Even I am capable of learning and changing my mind. Why not Ehrlich?

I believe that it’s an ego thing. People with fragile egos don’t want to admit that they made mistakes. I think people who are supremely confident of themselves don’t hesitate to change their minds when presented with evidence that contradicts their position.

I used to believe that humanity was destined to end up in a disastrous massive die out if the human population was left unchecked. What changed my mind was a book by Julian Simon, a professor of business at the University of Maryland.

Curiously Simon too in the 1960s suspected that excess population was a problem. But he wanted to know precisely how big a problem it was and that required that he look at the data related to resources and population. To his astonishment he realized that the data indicated that even though the population was going up, resources were going up too. How does that happen?

He realized that all resources were ultimately the result of human ingenuity. And therefore, more people meant more ingenuity, and therefore more resources. It made perfect sense that in a world with a growing population, it was more likely that there would be stuff that we value.

He wrote a book, titled The Ultimate Resource II: People, Materials, and Environment. Good thing is that the book is available free at that site. Read his brief biography there.

As it happened, Ehrlich had become a celebrity of sorts because of his doom-saying that the battle for the future of humanity was over, and that in a few years, billions of humans would starve to death — unless coercive methods were not taken immediately by responsible governments to somehow restrict human fertility. He appeared on The Tonight Show starring Johnny Carson over 20 times. (I loved Johnny’s show; he was one of the best in the business.) That’s publicity that money couldn’t buy.

Julian Simon was aghast that there was scant opposition to the doom and gloom that Ehrlich was relentlessly peddling. He realized that it was not harmless nonsense but had dire implications for human welfare. He tried his best to engage Ehrlich in debate but the latter couldn’t be bothered to debate a nearly unknown professor of business.

But as it happened, Simon publicly challenged Ehrlich to a bet which the latter could not refuse. Put up or shut up, was the message. There is no meaning “resource scarcity” was the core of Simon’s message. Resources keep increasing because resources are human-made, and therefore more humans means more resources.

Ehrlich lost the bet decisively in 1990. But the “put up or shut up” thing did not work. He did not shut up. Ehrlich did not admit that he was wrong then, and 33 years later, he is still peddling his doomsday nonsense. As noted above, Ehrlich continued to peddle his “we’re all going to die” nonsense on the first day of this year on CBS 60 Minutes.

Why would CBS promote Ehrlich’s nonsense? A modified version of  Boudling quote is the answer: “Anyone who believes that exponential growth can go on forever in a finite world is either a madman or a trained economist.”

Most of us have the basic sense to realize that there are limits to growth. If there are four people sharing a pizza pie, then each gets a fourth of the pie; if you have forty people sharing that same pie, then each gets 1/40th of the pie. If the earth can only support two billion people in reasonable comfort given the resources at hand, increasing the population to eight billion will be the road to ruin. Therefore, Ehrlich makes sense to most people — except to madmen, and to trained economists.

Trained economists realize that there are no limits to resources because resources are not limited in any meaningful way. The problems humans face — including scarcity of resources — are solved by humans. Indeed, the resources expand as a consequence of real resource constraints felt in the short term. It’s those short-term problems that lead to long-term growth.

This is counter-intuitive. This doesn’t come naturally to us. One has to be trained in economics to get that point. Ehrlich, unfortunately, has proven himself to be incapable of learning economics. The tragedy is that he will continue to mislead too many people into buying his silly doom and gloom.

C’est la vie. It’s all karma, neh.

 

Author: Atanu Dey

Economist.

4 thoughts on “Weather Report”

  1. Have you considered the alternate possibility…that economists are essentially shills for Wallstreet/the financial sector?

    Just imagine what would happen to the financial sector without growth. Complete annihilation, implosion!

    The most terrifying words you can tell a banker/financier is “zero growth” or “steady state economy”. Japan is already giving a foretaste of what degrowth and zero growth would look like. The stuff of nightmares for any banker.

    Like

  2. Thank you Prof. for explaining your journey of understanding, a fascinating post. Only true learners have the humility to update their views upon learning new details.
    I had no idea about Prof Simon and the wager. Its incredible that Ehrlich still can get away with his nonsense after thoroughly debunked by Prof. Simon.
    CBS news feeds on scaring people and creating fake emergency .. what a pathetic and disgusting way to make a living !!! I have nothing but visceral contempt for them. Ehrlich on the other hand is egoist in the extreme and loves the fame that he gets by his doomsday BS. They are both (CBS and Ehrlich) a match made in hell

    Like

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