6 ms·

Who would have won the Simon-Ehrlich bet over different decades?

76 points by sien 2y ago

ekianjo 2y ago
This only works if you consider the "official inflation rate". We all know that the real inflation is often much higher so the charts would look very different over time.
- sbelskie 2y ago
  How do we “know” this?
  - lazide 2y ago
    Paid for healthcare, housing, or schooling recently?
    - rat87 2y ago
      So no answer except an appeal to anecdotes?
      - lazide 2y ago
        ‘Core’ inflation excludes most of this, explicitly. [https://wolfstreet.com/2021/03/30/the-most-splendid-housing-bubbles-in-america-house-price-inflation-in-all-its-glory-march-update/ https://wolfstreet.com/2021/03/30/the-most-splendid-housing-...], [https://www.pgpf.org/article/why-are-americans-paying-more-for-healthcare/ https://www.pgpf.org/article/why-are-americans-paying-more-f...] Average Housing costs as a multiple of average salary are at 10x, and increasing. Roughly where they were in the 80’s during hyper inflation. Healthcare spend has increasing from 5% of GDP in ‘62 to 17% of GDP in 2022. Education cost data is similarly insane - [https://educationdata.org/average-cost-of-college#:~:text=The%20average%20cost%20of%20attendance,or%20%24234%2C512%20over%204%20years https://educationdata.org/average-cost-of-college#:~:text=Th....] With an average 4 year degree (living on campus) costing > $100k. If you need a study to tell you traffic is terrible right now, you might just have no idea what’s happening.
sashank_1509 2y ago
Fine maybe another 100 years we’re good. But what about 200, what about 1000. Copper is not water, there is no natural process that renews it. The question is, is it as ubiquitous as silicon that we will never run out of it compared to our demands or is it not. If it is not, then we have a serious problem if we want human civilization to thrive and continue. The only solutions I can think of are, reaching a very high recycle rate, but we know from thermodynamics that chemical reactions are not reversible, but maybe we can build enough tech that we recycle everything very well and not just dump them in landfills. Or we develop enough tech to be able to mine the asteroids, which can give us access to some minerals at amounts that would last us another 1000+ years. But not all minerals are found at asteroids, and it’s not clear if we can actually do this very hard task. The final solution which seems to have fallen out of vogue but I’m in favor of is limiting human population. If everyone has 1 kid, human population halves in 1 generation. If we do this for 3-4 generations, we can reach a really good sustainable population, and then have 2 kids to maintain it. I don't understand this insane to me belief that we want to constantly grow human population. It seems to come from the belief that each human is an innovation robot, and that with more innovation robots we get more innovation. A cursory glance at humanity shows this to be obviously false. Humans need to be trained, taught, led to be able to produce something new. We have 10x more researchers now and scientific progress has still slowed compared to 1900s. Throwing more researchers into the mix will not fix it. People who run companies intuitively know this. If Google could invent AGI, by hiring 100,000 more AI engineers, they would do it in a heartbeat. Instead you find that talent density is extremely important for innovation. Small groups of exceptional talent, outperform large groups of mediocre talent always. There is a cost to cultivating talent in human beings and obviously with more humans it becomes more competitive and harder to cultivate talent in every human. There is a cost to coordinating between different humans and sifting through to find talent, that again increases the more humans are thrown into the mix. This whole more humans are undeniably good always, is insane enough that only academics and those with no experience in the real world can convince themselves of it. There is obviously an optimal number of humans, you may disagree that it is higher or lower than the current number, but the number must exist! I suspect we are way more than optimal, ymmv.
- IX-103 2y ago
olalonde 2y ago
Not Paul Ehrlich's worse prediction. His most infamous was that "hundreds of millions of people are going to starve to death" in the 1970s[0]. It’s curious how he managed to remain influential despite a track record of such inaccurate forecasts. [0] https://en.wikipedia.org/wiki/Paul_R._Ehrlich#The_Population_Bomb_(1968) https://en.wikipedia.org/wiki/Paul_R._Ehrlich#The_Population...
- roenxi 2y ago
  It depends on whether you are the sort of person who tries to account for recency bias or not. We're living through the most anomalously prosperous period in not just the history of history, but probably also including the unrecorded aeons before humans even existed on earth that there was no particular reason to anticipate at the time. If you go with the gut, then sure everything was fine and dandy. But a more data-oriented approach will still get people to the conclusion that we're on the clock until billions of humans starve to death. So on the one hand, the predictions were completely wrong. On the other, none of the underlying problems have really gone away and any analysis of the future will still conclude that population growth (even flat-lining at this point) is insanely risky in terms of how much human suffering it will eventually lead to. So the people pushing it still have influence. Although I've been a lot more chipper about the situation since it turns out that wealth leads to depopulation which is one of those wonderful and unexpectedly good things. Plus obviously the AI and presumably coming robotics revolution are just absurdly promising.
  - Isamu 2y ago
    > But a more data-oriented approach will still get people to the conclusion that we're on the clock until billions of people starve to death. You’ve piqued my interest, where can I read about this data oriented approach that leads to this conclusion?
    - roenxi 2y ago
      Most people live in cities [0] and requires ~2,000 k/cal a day. The systems required to feed people are complex and energy demanding. There are 8 billion humans which is a large number relative to the amount of food we can store. It is a matter of time until we have a multi-billion person famine. Hopefully multiple centuries away if the transition away from oil to something else works out. Something like the year without summer [1] could be even more catastrophic, for example. Or wars, particularly of the nuclear variety. [0] https://en.wikipedia.org/wiki/Urbanization https://en.wikipedia.org/wiki/Urbanization [1] https://en.wikipedia.org/wiki/Year_Without_a_Summer https://en.wikipedia.org/wiki/Year_Without_a_Summer
bleuchase 2y ago
Good article. I look forward to the day when Ehrlich’s bad ideas are no longer en vogue.
ggm 2y ago
Love this. Ehrlich acted from good intent but with a bad case. I like this analysis saying the short term could have had Simons lose if the decade is chosen wrong, but the trend is with Simons. A lot of battery related FUD recapitulates this, people mistake active mines for available reserves and available reserves for worldwide geology. We aren't running out of the inputs to make batteries we're in supply chain shock not resource limits. Same with oil and peak oil. We'll never run out of oil.
- chii 2y ago
  things never really "run out", they just get expensive as availability becomes lower. But some people consider this the same as running out, because it is indistinguishable from running out if you could not afford it.
  - ggm 2y ago
    I think Simons point was that afford and need equipoise. There's also substitution going on all the time, and innovation. Battery chemistry has changed massively over the life of batteries for EV (the thing most often cited as a modern day Ehrlich/Simons bet) Ehrlich thought need would exceed afford at scale. And that it would have massive societal repercussions. Well, it just didn't historically, and there's no reason to believe the (misnamed) rare earths and metallic ores are limiting things for any reason other than price motivation. This last decade we had a temporary chip shortage affect car production rates worldwide. Localised supply chains for Diesel additive have been a problem. There were discussions about ring fencing nitrate fertiliser as a strategic supply. None of these are "limits to growth" stories. Capital investment followed. That said, the price of copper spiked enough to make people start stealing it again worldwide.
    - selimthegrim 2y ago
      Which diesel additive?
      - dredmorbius 2y ago
jmount 2y ago
For this stability one should consider the minerals are in fact setting the value of currency itself.
glaucon 2y ago
| If I were a gambler, I would take even money that England will not exist in the year 2000 I would love to know what it was about England that meant it's end was nigh, I mean what about France, Norway or Belgium ? Also, when he said "England" was he actually referring to the United Kingdom (as Americans often are) or were Scotland, Wales and Northern Ireland going to be spared in some way ?
Thomashuet 2y ago
The main problem with this is that we're looking at the evolution of inflation-adjusted prices for common ressources. By definition, inflation-adjusted prices for common ressources must be constant, that's how we measure inflation. So it shouldn't come as a surprise that the prices do not change much in the long term.
- choeger 2y ago
  That's obviously wrong. If one resource gets scarce but retains its use, it will get more expensive compared to other resources that remain plentiful. All commodities together feed into inflation. So either some will become less expensive or some will outpace inflation. What we're seeing here is that resource extraction can get better, so resources aren't really scarce. But there are certainly some commodities, not reflected here, that became much cheaper. E.g., corn or meat, so these metals might have become more expensive in relative terms.
- dredmorbius 2y ago
  I think you're right that the underlying problem is the economic theory and behaviour of nonrenewable resources. Or more accurately, the utter lack of correspondence between economic theory (Hotelling's Rule) and actual price behaviour. This isn't a matter of inflation but of the lack of accounting for the fact that nonrenewable resource are, well, nonrenewable. Unlike (at a first blush) farming or labour, where utilisation currently doesn't mean that the same resource is unavailable in the future, once a nonrenewable resource is extracted and used, that production process cannot be run again. Metals and ores can of course be recycled or reused, though in practice achieved rates are quite low (50% is exceptional, and that means that 1/32nd of the original resource is available after five cycles). Fuels which are combusted are a whole 'nother matter, as once burnt (or fissioned, in the case of nuclear power), the resource has been degraded and won't reform in anything less than geological time, if ever. Once one comes to face with the fact that we're utilising fossil fuels at ~1--10 million times their rate of formation, the problem and inadequacy of economic pricing models becomes glaringly apparent. Metal ores may recycle in less time, and some (e.g., iron) are massively abundant. But, again in the case of iron, when one considers that commercially viable ore deposits were formed 1--3 billion years ago, during the first phases of life on Earth, and driven by those biological processes.
magic_smoke_ee 2y ago
He was successful at marketing extreme FUD books in the late 60's and early 70's, kind of reminds me of "the impending catastrophe" doomer like Thom Hartmann. Heck, even Jim Morrison had an opinion on the subject. The reality (WRT to bulk metals) is that we get some "free passes" due to mining technological advancements, and that increased scarcity -> increased costs -> curtails wastes, encourages recycling, and drives substitutes. More generally, peak production isn't a problem itself, per se. There is concern when there are risks for sudden shocks or collapse. If we suddenly ran out of phosphorous, that would be bad. I think there is still a lot of waste that could be captured with cleverer engineering, especially ag runoff, in industrial process, and failure to capture material going into landfills. Perhaps in 100 years, we will be mining old landfills for rare earth metals.
rkagerer 2y ago
I'd be curious about the results over 1000 years and 10,000 years. In the case of the latter I wonder if the concept of prices as we understand them today will even still be a thing.
braiamp 2y ago
Interesting that many people take this as a further prof that Ehrlich was wrong, when actually he was unlucky. This "bet" doesn't further our understanding of how anything works, and the article probably should drive the point across more forcefully. The bet itself is useless to tell us anything about "the long run". In the "long run" everyone is dead, so your lifetime isn't enough to predict a trend. You could have seen all your life an indicator heading in one direction, die, getting revived 200 years later, and the trend vanish, because someone discovered a better way.
leonhard 2y ago
> The loss or gain for each metal was then summed up to get the total. If the total basket of metals had increased in price, Ehrlich had to pay. If it decreased, Simon had to pay. I think this is the wrong way around, as the price dropped and that’s why Ehrlich lost and had to pay, no?

76 points by sien 2y ago

This only works if you consider the "official inflation rate". We all know that the real inflation is often much higher so the charts would look very different over time.

sbelskie 2y ago
How do we “know” this?
- lazide 2y ago
  Paid for healthcare, housing, or schooling recently?
  - rat87 2y ago
    So no answer except an appeal to anecdotes?
    - lazide 2y ago
      ‘Core’ inflation excludes most of this, explicitly. [https://wolfstreet.com/2021/03/30/the-most-splendid-housing-bubbles-in-america-house-price-inflation-in-all-its-glory-march-update/ https://wolfstreet.com/2021/03/30/the-most-splendid-housing-...], [https://www.pgpf.org/article/why-are-americans-paying-more-for-healthcare/ https://www.pgpf.org/article/why-are-americans-paying-more-f...] Average Housing costs as a multiple of average salary are at 10x, and increasing. Roughly where they were in the 80’s during hyper inflation. Healthcare spend has increasing from 5% of GDP in ‘62 to 17% of GDP in 2022. Education cost data is similarly insane - [https://educationdata.org/average-cost-of-college#:~:text=The%20average%20cost%20of%20attendance,or%20%24234%2C512%20over%204%20years https://educationdata.org/average-cost-of-college#:~:text=Th....] With an average 4 year degree (living on campus) costing > $100k. If you need a study to tell you traffic is terrible right now, you might just have no idea what’s happening.

sashank_1509 2y ago

Fine maybe another 100 years we’re good. But what about 200, what about 1000. Copper is not water, there is no natural process that renews it. The question is, is it as ubiquitous as silicon that we will never run out of it compared to our demands or is it not. If it is not, then we have a serious problem if we want human civilization to thrive and continue. The only solutions I can think of are, reaching a very high recycle rate, but we know from thermodynamics that chemical reactions are not reversible, but maybe we can build enough tech that we recycle everything very well and not just dump them in landfills. Or we develop enough tech to be able to mine the asteroids, which can give us access to some minerals at amounts that would last us another 1000+ years. But not all minerals are found at asteroids, and it’s not clear if we can actually do this very hard task. The final solution which seems to have fallen out of vogue but I’m in favor of is limiting human population. If everyone has 1 kid, human population halves in 1 generation. If we do this for 3-4 generations, we can reach a really good sustainable population, and then have 2 kids to maintain it. I don't understand this insane to me belief that we want to constantly grow human population. It seems to come from the belief that each human is an innovation robot, and that with more innovation robots we get more innovation. A cursory glance at humanity shows this to be obviously false. Humans need to be trained, taught, led to be able to produce something new. We have 10x more researchers now and scientific progress has still slowed compared to 1900s. Throwing more researchers into the mix will not fix it. People who run companies intuitively know this. If Google could invent AGI, by hiring 100,000 more AI engineers, they would do it in a heartbeat. Instead you find that talent density is extremely important for innovation. Small groups of exceptional talent, outperform large groups of mediocre talent always. There is a cost to cultivating talent in human beings and obviously with more humans it becomes more competitive and harder to cultivate talent in every human. There is a cost to coordinating between different humans and sifting through to find talent, that again increases the more humans are thrown into the mix. This whole more humans are undeniably good always, is insane enough that only academics and those with no experience in the real world can convince themselves of it. There is obviously an optimal number of humans, you may disagree that it is higher or lower than the current number, but the number must exist! I suspect we are way more than optimal, ymmv.

IX-103 2y ago

olalonde 2y ago

Not Paul Ehrlich's worse prediction. His most infamous was that "hundreds of millions of people are going to starve to death" in the 1970s[0]. It’s curious how he managed to remain influential despite a track record of such inaccurate forecasts. [0] https://en.wikipedia.org/wiki/Paul_R._Ehrlich#The_Population_Bomb_(1968) https://en.wikipedia.org/wiki/Paul_R._Ehrlich#The_Population...

roenxi 2y ago
It depends on whether you are the sort of person who tries to account for recency bias or not. We're living through the most anomalously prosperous period in not just the history of history, but probably also including the unrecorded aeons before humans even existed on earth that there was no particular reason to anticipate at the time. If you go with the gut, then sure everything was fine and dandy. But a more data-oriented approach will still get people to the conclusion that we're on the clock until billions of humans starve to death. So on the one hand, the predictions were completely wrong. On the other, none of the underlying problems have really gone away and any analysis of the future will still conclude that population growth (even flat-lining at this point) is insanely risky in terms of how much human suffering it will eventually lead to. So the people pushing it still have influence. Although I've been a lot more chipper about the situation since it turns out that wealth leads to depopulation which is one of those wonderful and unexpectedly good things. Plus obviously the AI and presumably coming robotics revolution are just absurdly promising.
- Isamu 2y ago
  > But a more data-oriented approach will still get people to the conclusion that we're on the clock until billions of people starve to death. You’ve piqued my interest, where can I read about this data oriented approach that leads to this conclusion?
  - roenxi 2y ago
    Most people live in cities [0] and requires ~2,000 k/cal a day. The systems required to feed people are complex and energy demanding. There are 8 billion humans which is a large number relative to the amount of food we can store. It is a matter of time until we have a multi-billion person famine. Hopefully multiple centuries away if the transition away from oil to something else works out. Something like the year without summer [1] could be even more catastrophic, for example. Or wars, particularly of the nuclear variety. [0] https://en.wikipedia.org/wiki/Urbanization https://en.wikipedia.org/wiki/Urbanization [1] https://en.wikipedia.org/wiki/Year_Without_a_Summer https://en.wikipedia.org/wiki/Year_Without_a_Summer

bleuchase 2y ago

Good article. I look forward to the day when Ehrlich’s bad ideas are no longer en vogue.

ggm 2y ago

Love this. Ehrlich acted from good intent but with a bad case. I like this analysis saying the short term could have had Simons lose if the decade is chosen wrong, but the trend is with Simons. A lot of battery related FUD recapitulates this, people mistake active mines for available reserves and available reserves for worldwide geology. We aren't running out of the inputs to make batteries we're in supply chain shock not resource limits. Same with oil and peak oil. We'll never run out of oil.

chii 2y ago
things never really "run out", they just get expensive as availability becomes lower. But some people consider this the same as running out, because it is indistinguishable from running out if you could not afford it.
- ggm 2y ago
  I think Simons point was that afford and need equipoise. There's also substitution going on all the time, and innovation. Battery chemistry has changed massively over the life of batteries for EV (the thing most often cited as a modern day Ehrlich/Simons bet) Ehrlich thought need would exceed afford at scale. And that it would have massive societal repercussions. Well, it just didn't historically, and there's no reason to believe the (misnamed) rare earths and metallic ores are limiting things for any reason other than price motivation. This last decade we had a temporary chip shortage affect car production rates worldwide. Localised supply chains for Diesel additive have been a problem. There were discussions about ring fencing nitrate fertiliser as a strategic supply. None of these are "limits to growth" stories. Capital investment followed. That said, the price of copper spiked enough to make people start stealing it again worldwide.
  - selimthegrim 2y ago
    Which diesel additive?
    - dredmorbius 2y ago

jmount 2y ago

For this stability one should consider the minerals are in fact setting the value of currency itself.

glaucon 2y ago

| If I were a gambler, I would take even money that England will not exist in the year 2000 I would love to know what it was about England that meant it's end was nigh, I mean what about France, Norway or Belgium ? Also, when he said "England" was he actually referring to the United Kingdom (as Americans often are) or were Scotland, Wales and Northern Ireland going to be spared in some way ?

Thomashuet 2y ago

The main problem with this is that we're looking at the evolution of inflation-adjusted prices for common ressources. By definition, inflation-adjusted prices for common ressources must be constant, that's how we measure inflation. So it shouldn't come as a surprise that the prices do not change much in the long term.

choeger 2y ago
That's obviously wrong. If one resource gets scarce but retains its use, it will get more expensive compared to other resources that remain plentiful. All commodities together feed into inflation. So either some will become less expensive or some will outpace inflation. What we're seeing here is that resource extraction can get better, so resources aren't really scarce. But there are certainly some commodities, not reflected here, that became much cheaper. E.g., corn or meat, so these metals might have become more expensive in relative terms.
dredmorbius 2y ago
I think you're right that the underlying problem is the economic theory and behaviour of nonrenewable resources. Or more accurately, the utter lack of correspondence between economic theory (Hotelling's Rule) and actual price behaviour. This isn't a matter of inflation but of the lack of accounting for the fact that nonrenewable resource are, well, nonrenewable. Unlike (at a first blush) farming or labour, where utilisation currently doesn't mean that the same resource is unavailable in the future, once a nonrenewable resource is extracted and used, that production process cannot be run again. Metals and ores can of course be recycled or reused, though in practice achieved rates are quite low (50% is exceptional, and that means that 1/32nd of the original resource is available after five cycles). Fuels which are combusted are a whole 'nother matter, as once burnt (or fissioned, in the case of nuclear power), the resource has been degraded and won't reform in anything less than geological time, if ever. Once one comes to face with the fact that we're utilising fossil fuels at ~1--10 million times their rate of formation, the problem and inadequacy of economic pricing models becomes glaringly apparent. Metal ores may recycle in less time, and some (e.g., iron) are massively abundant. But, again in the case of iron, when one considers that commercially viable ore deposits were formed 1--3 billion years ago, during the first phases of life on Earth, and driven by those biological processes.

magic_smoke_ee 2y ago

He was successful at marketing extreme FUD books in the late 60's and early 70's, kind of reminds me of "the impending catastrophe" doomer like Thom Hartmann. Heck, even Jim Morrison had an opinion on the subject. The reality (WRT to bulk metals) is that we get some "free passes" due to mining technological advancements, and that increased scarcity -> increased costs -> curtails wastes, encourages recycling, and drives substitutes. More generally, peak production isn't a problem itself, per se. There is concern when there are risks for sudden shocks or collapse. If we suddenly ran out of phosphorous, that would be bad. I think there is still a lot of waste that could be captured with cleverer engineering, especially ag runoff, in industrial process, and failure to capture material going into landfills. Perhaps in 100 years, we will be mining old landfills for rare earth metals.

rkagerer 2y ago

I'd be curious about the results over 1000 years and 10,000 years. In the case of the latter I wonder if the concept of prices as we understand them today will even still be a thing.

braiamp 2y ago

Interesting that many people take this as a further prof that Ehrlich was wrong, when actually he was unlucky. This "bet" doesn't further our understanding of how anything works, and the article probably should drive the point across more forcefully. The bet itself is useless to tell us anything about "the long run". In the "long run" everyone is dead, so your lifetime isn't enough to predict a trend. You could have seen all your life an indicator heading in one direction, die, getting revived 200 years later, and the trend vanish, because someone discovered a better way.

leonhard 2y ago

> The loss or gain for each metal was then summed up to get the total. If the total basket of metals had increased in price, Ehrlich had to pay. If it decreased, Simon had to pay. I think this is the wrong way around, as the price dropped and that’s why Ehrlich lost and had to pay, no?