122 Years of Increasing Abundance
Last year, I wrote about the Simon-Ehrlich wager. The short version was that Julian Simon challenged celebrity biologist Paul Ehrlich to a bet. Their wager was on the future prices of five metals:
Copper
Chromium
Nickel
Tin
Tungsten
Ehrlich, author of the landmark book The Population Bomb, predicted that rising populations would cause overconsumption, resource scarcity, and famine—with apocalyptic consequences for humanity. Simon optimistically countered that human welfare would flourish thanks to flexible markets, technological change, and our collective ingenuity.
Over the period of the bet, from 1980 – 1990, the prices for all five metals declined, and the world didn’t end. The more people we added, the more abundant resources became, and the more humanity prospered.
I bring this back up because it is tempting to believe the world is still going in the wrong direction, and the ten-year span of the bet wasn’t representative of reality.
However, an article by Hannah Richie at OurWorldinData.org updated the numbers to show the data sets from 1900 to 2022. HumanProgress.org summarized the data in the following chart:
Over the 122 years, the global population increased by 400 percent. At the same time, the abundance of the five metals tracked in the wager increased by an average of 546 percent, demonstrating that abundance has grown 36.5 percent faster than the population.
What does this mean for investors?
It has never made sense to extrapolate today's problems indefinitely into the future. Today’s scarcity incentivizes tomorrow’s innovations, and every new person born is another mind capable of tackling humanity's most significant issues. While it often feels safer and smarter to invest like our world is heading toward disaster, the reality is that it is most likely the optimists and those who bet on humanity’s capacity for progress who will make the most money.
Personal note: Last week’s bizarre weather gave the kids two extra days off from school and the opportunity to create a snowman.
Not exactly what I pictured when I moved to Houston 16 years ago, but I’ll take it.
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