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Our Ultimate Resource Gone

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On February 8, economist Julian Simon died. It is a grave loss on many levels. He was, first of all, a wonderful human being — ever positive, smiling, and encouraging; a complete joy to be around.

After that, he was one of freedom’s great crusaders. When our age was first sinking into the despair of what is called environmentalism, with its agenda of expropriation, restricted consumption, and population control, Julian Simon strode center stage, impish grin on his countenance, to sing his song of scientifically grounded optimism. To those who wailed that, environmentally speaking, things could hardly get worse, Julian Simon replied: do you want to see worse? Read about how people lived a mere one hundred years ago; look at what age and of what they died. Now look at our time through the lens of historical perspective. With all the self-conscious moaning about our killer environment, people the world over live longer and better than ever before. That is why the population grows. Women aren’t having more babies — actually, they have far fewer than just a short time ago. The population grows because the death rate falls. And a growing population is good.

That leads to Julian Simon’s landmark contribution to our understanding of the world: his work on the nature of resources. How often do we hear people warn that “we are running out of resources”? Too often, especially since Julian Simon’s magnum opus, The Ultimate Resource, came out over a decade ago. In that book, and its updated, 1997 edition, he asked a simple question: if we are running out of resources, why do prices fall rather than rise? Everyone accepts as a law of economics that as anything of value becomes more scarce, its price goes up. That law has been repealed with respect to natural resources. Or so it seemed. As Julian Simon showed, resources in fact are not becoming more scarce at all! On the contrary, they are more plentiful than ever. Simon was confident that the long-term trends of the past would continue into the future — so confident that he was willing to bet on it. Environmental alarmist Paul Ehrlich made the mistake of accepting the challenge. In 1980 Ehrlich picked five metals and bet Simon that ten years later the price of each would be higher in inflation-adjusted terms.

Ehrlich lost. Even in unadjusted terms, the price of each was lower. Julian Simon kept his offer to bet open till the end of his life. To my knowledge, there were no other takers.

Why was Julian Simon so confident that the benign trends would continue? Because he understood that, strictly speaking, there are no natural resources. Nature provides us with lots of variegated stuff. But stuff is only a potential. To transform it into a resource, a creative person must first stamp it with a human purpose. People create resources. They turn sand — sand! — into computer chips and fiber optic cables. The ultimate resource is human intelligence. If individuals are free to think and create, we will have an unending supply of resources. The more people, the more creators.

Julian Simon was never complacent about human progress. It requires effort. As an economist, he understood that certain institutions favor discovery and creation, including property rights and the market’s free-pricing system. Given freedom, human beings create and make their fellows better off in the process.

That is Julian Simon’s inestimable legacy. When the presumptuous environmental movement is long forgotten, that legacy will live on to honor his name.

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    Sheldon Richman is vice president of The Future of Freedom Foundation and editor of FFF's monthly journal, Future of Freedom. For 15 years he was editor of The Freeman, published by the Foundation for Economic Education in Irvington, New York. He is the author of FFF's award-winning book Separating School & State: How to Liberate America's Families; Your Money or Your Life: Why We Must Abolish the Income Tax; and Tethered Citizens: Time to Repeal the Welfare State. Calling for the abolition, not the reform, of public schooling. Separating School & State has become a landmark book in both libertarian and educational circles. In his column in the Financial Times, Michael Prowse wrote: "I recommend a subversive tract, Separating School & State by Sheldon Richman of the Cato Institute, a Washington think tank... . I also think that Mr. Richman is right to fear that state education undermines personal responsibility..." Sheldon's articles on economic policy, education, civil liberties, American history, foreign policy, and the Middle East have appeared in the Washington Post, Wall Street Journal, American Scholar, Chicago Tribune, USA Today, Washington Times, The American Conservative, Insight, Cato Policy Report, Journal of Economic Development, The Freeman, The World & I, Reason, Washington Report on Middle East Affairs, Middle East Policy, Liberty magazine, and other publications. He is a contributor to the The Concise Encyclopedia of Economics. A former newspaper reporter and senior editor at the Cato Institute and the Institute for Humane Studies, Sheldon is a graduate of Temple University in Philadelphia. He blogs at Free Association. Send him e-mail.