Why Julian Simon is both right and wrong

[This is the followup to my earlier article about Julian Simon.]

Now I’ll restate this line of thought into a theory that will appear again and again in the book: More people, and increased income, cause resources to become more scarce in the short run. Heightened scarcity causes prices to rise. The higher prices present opportunity, and prompt inventors and entrepreneurs to search for solutions. Many fail in the search, at cost to themselves. But in a free society, solutions are eventually found. And in the long run the new developments leave us better off than if the problems had not arisen. That is, prices eventually become lower than before the increased scarcity occurred. (From The Ultimate Resource 2, Chapter 3)

This is perhaps the key passage in Chapter 3 of Simon’s book. It highlights a key part of the drive that has led humanity to develop a dizzying array of technologies, achieve the longest lifespans, the most comfortable lifestyles and the healthiest populations in history. It also illustrates why Paul Erhlich lost his infamous bet with Julian Simon.

Unfortunately, the copy of the book on the internet I’ve been using seems to have Chapter 3 cut short, so I don’t have the reasoning there that takes Simon from the problems of defining “natural resources” discussed in Chapter 2 and the passage above to his conclusion that resources are not finite. However, an article of his published at the Cato Institute, does shed some light:

…the term “finite” is not only inappropriate, it is downright misleading when applied to natural resources. The mathematical definition of “finite” is quite different from a useful economic definition.

For instance, the quantity of services we obtain from copper should not be considered “economically” finite because there is no way of counting them appropriately. We should also consider the possibilities of using copper more efficiently, of creating copper or its economic equivalent from other materials, of recycling copper or even obtaining copper from sources beyond planet Earth.

Therefore, a working definition of the total services that we could obtain from copper now or in the future is impossible to construct. (emphasis added)

There is also his reply to critics in which he says:

Finiteness by itself is not testable, except insofar as the fact that no one is able to state the absolute size of the relevant system (our cosmos) demonstrates the absence of finiteness in its dictionary sense. But the relevant evidence we have available – decreasing prices and increasing substitutability – is not what one would expect from a finite system. (emphasis added)

And:

Nothing I have written is intended to suggest that during any particular period there may not be too much use of any resource, renewable or non-renewable; indeed, I expect temporary overuses (for example, overuse of forest resources in various countries in various centuries) just as I expect boom-and-bust cycles in all other human endeavors. But this is a matter of management and adjustment in dealing with, and riding out, the ups and downs, rather than a matter of ultimate finiteness.(emphasis added)

From this I posit that Simon’s argument can be boiled down to the following:

  • As reserves of resources run down, the resulting price rises spur the search for new sources of them, for more efficient ways of using them and for ways of substituting other resources for them.
  • The long run trend (for centuries) has been for the price of resources to continue falling. Temporary shortages have often led to discoveries that leave humanity better off than before those shortages occur.
  • We do not know, ultimately, what resources are available to humanity in the long run. All we know is what resources are available now/in the forseeable future, given current technology.
  • We don’t know whether the universe is finite or not, and we cannot thus state that the resources available to us are finite. The long run trend of falling prices and greater abundance of resources seems at odds with the assumption of finiteness.
  • Since we do not know what resources will be ultimately available to us, we cannot say they are finite in any meaningful sense.

There are several problems here:

  1. We do know that the earth is finite. This is an incontrovertable fact. There is a finite amount of energy reaching earth from the sun each year, and a finite amount of matter falling to earth each year from outer space. Until we can exploit extra terrestrial resources at least as easily as we currently exploit the resources on earth, i.e. until we can escape the confines of earth as easily as we can escape the confines of a continent, this really does limit how many people the earth can support and the standard of living those people can enjoy. That seems unlikely to happen for at least a century — on that timescale the most I’d expect is colonies on the moon and a manned trip to mars.
  2. The trend for falling resource costs is a matter of a few centuries — this is a short time compared to (a) recorded history (b) the existence of humanity. We know that civilisations in the past have thrived and then collapsed. It seems likely that some of them died because of resource shortages.
  3. For the process of resource discovery and creation to keep us from “running out”, it must produce new resources at or above the rate at which we consume them. If we’re to rely on this process to prevent disaster, we must therefore posit that there will always be sufficient resources that can be reached via the process within the timescale required to stave off disaster, at every point in time. It seems to me unlikely that this can be guaranteed.

Simon is correct to highlight the existence of the process of resource discovery and creation, and at a highly abstract level he is even right that we don’t know whether the resources ultimately available to humanity are finite or not. But the process is not automatic, and even when running efficiently, it is not guaranteed to provide us with all the resources we might need at a given point in time.

To act as if resources are infinite, when we know that running out is a real possibility and when even our most advanced science and technology tells us we can do no more than an exploratory flight to our nearest planetary neighbour (let alone colonise it, terraform it or get there in the sort of timescale we can travel to other continents) would be irresponsible.

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Technology and humanity’s impact on the environment

Note: I haven’t forgotten about my promised followup to my article on Julian Simon, it will appear after this one.

Two people have commented on my article on the recent paper from the Optimum Population Trust, namely Martin Desvaux, the paper’s author, and Tim Worstall, the blogger with an interest in economics, who’s also been critical of Desvaux’s paper.

The question at issue is whether technology increases or decreases humanity’s impact on the environment and whether T in the I=PAT equation should be considered to be a multiplicative term or whether we should divide bed T. Note that I measures the human impact on the environment, P is the population and A is a measure of consumption (or affluence).

I have thus far sided with Tim Worstall’s view that technology helps us reduce our impact on the environment, however whilst Devaux acknowledges that technology can do so, he argues that overall it has been a driver in increasing humanity’s impact on the environment. From his comment:

I think it is safe to state that, since the industrial revolution, technology has enabled us to reduce infant mortality, increase food production and increase life expectancy, all of which have caused the largest population explosion in the history of humankind. I think we can also safely assume that in that arena T is greater than 1 as a result. Such progress was possible only because we could extract oil, coal and gas out of the ground in ever increasing quantities, transport it via road, rail, pipe and sea* all around the world which, I feel sure you will agree, has also had a T-greater-than-one impact on the environment. In addition, we get most of our fertilizers from hydrocarbon technology. Without fossil fuels and thereby electrical energy, medical advances would have been impossible, We would not have been able to develop (to mention those which immediately spring to mind): warm homes, fridges, leisure centres Olympic stadia, moon shots, as well as several billions of cars, millions of lorries, ships buses, railways, aircraft, agricultural machinery factories, processing plant …. with all the infrastructure of roads, ports, depots, etc that these entities require.

What Devaux is saying here is that the advances in technology associated with the industrial revolution and the fossil fuel economy have led to a huge increase in both population and affluence, which has led to an increase in humanity’s impact on the environment, and thus we should consider T to be a multiplicative variable, with value greater than 1 in the I=PAT equation.

I think this is a misunderstanding of the role of T in the equation. Suppose we rewrite the equation to give us T in terms of the other three variables. We then get T=I/(PA). T is thus measuring the environmental impact per unit of consumption, where A is consumption per head of population and P is the size of the population. Stated in these terms, we can see that T does not measure “technology” per se (as I argued here) but rather measures a variable which technology can influence.

As Tim Worstall points out, Desvaux is double counting. Desvaux suggests that technological changes drove an increase in population and an increase in affluence, thus implying T should have a value > 1. The problem is that in the I=PAT equation, P and A already reflect those increases, thus to incorporate those increases in the value of T involves incorporating them twice!

This illustrates a weakness of the I=PAT equation. It treats P, A and T as independent variables when in fact there are feedbacks between them. But Desvaux is surely correct that technological advance enabled the large human population we now have and the levels of affluence we now see, and as I pointed out earlier, increases in affluence have led to a fall in birth rates in developed countries (and increasingly elsewhere) and thus to a slowing of population growth in recent decades.

But equally one can point out that without our technology, it simply wouldn’t be possible to support over 6 billion people, and we would devastate the environment if we were to try doing so. So where does this leave us on whether technology increases or reduces our impact on the environment?

My view is this. Technology can do both. We employ technology because it makes things easier to do. It can do this in various ways:

  • It can substitute for human labour. For example, a man who spends 30 mins walking to work each day might buy a car to reduce the journey time to 10 mins. Getting to work is now easier and more comfortable, but his environmental impact has increased and he will be using more resources. E.g. instead of moving one human to and from work, he’s now moving one human plus a ton or two of metal and thus using more energy.
  • It can enable us to do things we couldn’t or wouldn’t do before. E.g. the man who buys a car to shorten his journey to work now visits his relatives 60 miles away several times a year, where previously he would have used public transport and only gone once or twice at most. Again this increases the impact on the environment, but this time it is because the man is engaging in more activities than he used to. Another example is the summer holiday abroad that many people take which they could not do were it not for the advent of air travel.
  • It can enable us to do things with fewer resources. Suppose the man who bought the car above, later on buys a new car with twice the fuel efficiency. His journeys to/from work and his relatives now have a lower environmental impact since less fuel is needed to power these journeys.
  • It can enable us to tap new or previously unconsidered resources. For example, the internal combustion engine indicated that some black gooey liquid, commonly called oil, actually has its uses and advances in pumping and drilling technology enabled us to extract oil from previously inaccessible places. This of course had a considerable environmental impact, though supporting 6 billion people without such a concentrated portable energy source would likely have devastated the environment were it to be tried.

Whether overall technology will increase or reduce environmental damage depends on the choices we make. If the environmental damage becomes serious enough we will choose to mitigate it. If the cost of such damage can be internalised so that e.g. the polluter pays for his pollution, then technology will tend to develop in more environmentaly friendly ways. We should thus look at ways in which technology can reduce the value of T in the I=PAT equation.

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The Commoner-Erhlich Equation

Further to my previous article, on the report from the Optimum Population Trust, I’ve been doing a bit of digging around on the I=PAT equation. Remember here that I is the measure of the impact of humanity on the environment and P is the population and A is a measure of affluence (or consumption). The question is what is T measuring? The OPT reports talks about T somehow measuring “technology”.

Anyway according to Wikipedia, T is in fact humanity’s ecological impact per unit of consumption. A is measured as consumption per capita. So by multiplying the population P by the consumption per capita A, you get total consumption, after which you multiply by T the total impact per unit consumption to get I, the total environmental impact of the population and its level of consumption.

Given this, it is clear Tim Worstall’s criticism of the I=PAT equation, saying that we should divide by T, not multiply by it, is mis-placed. Mr Worstall is treating T as if it measures technological sophistication. I agree with him that technological advancement reduces our environmental impact, at least for a given standard of living and population size, but that is not what T is measuring here. Technological advancement allows us to e.g. use less energy and resources and/or reduce pollution per unit of consumption. Thus such advancement reduces the value of T. The question then is whether the equation is an adequate description of what’s going on. It assumes independence of its variables and it also assumes the variables can be measured reasonably accurately. It seems to me both assumptions are questionable.

For example, there may be feedback loops between the variables that aren’t catered for and it’s not entirely clear how one would measure either “consumption” or “environmental impact” in a clear, accurate manner.

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Technology, Affluence and the Optimum Population Trust

The Optimum Population Trust recently published a study which claims that Britain’s optimal population is about 17 million people:

If the UK had to provide for itself from its own resources, it could support a population of only 17 million – 43 million less than its latest official population figure* – according to new research by the Optimum Population Trust.

Even if the UK dramatically improved its sustainability with a 60 per cent cut in carbon emissions by 2050 – the target set by the present Government – UK “overpopulation” would grow from 43 to 50 million, the research shows. This is because projected population growth of 17 million**, taking the country’s population to 77 million by 2050, would cancel out the sustainability benefits of carbon savings.

The sustainability of human populations: How many people can live on Earth? ***, published today (Monday February 18), is based on a new analysis of biological capacity and ecological footprinting data. It suggests that in 2003, the last year for which comprehensive data are available, total world population was 6.3 billion but the sustainable figure was 5.1 billion. Global overpopulation was thus 1.2 billion. (italics in original)

A 9-page report based on this study can be downloaded here. From pages 2 to 3:

Not surprisingly, the impact of this population growth on the environment since 1750 has been extensive. Now, not a day goes by without news of droughts, floods, famines, conflicts over resources, extinctions, and, in the last 20 years, the increasingly evident effects of global warming. This impact has been expressed in what has become known as the Commoner-Ehrlich Equation:

I = P x A x T.

This states that the impact (I) on the environment is directly proportional to the population size (P), the ‘affluence’ (A) (defined as the resources a population consumes and wastes) and technology (T) through which we (1) prolong life, (2) produce things more quickly and cheaply (thus feeding back into consumerism and affluence) and (3) grow food faster which feeds back into ‘population’. This equation thus neatly summarises the impact of humankind on the planet.

Note that it is assumed that technology is multiplicative factor that increases the human impact on the environment. Yet technology mitigates the impact we have on the environment by enabling more efficient use of resources and/or less polluting methods to be used.

It is technology that has enabled us to sustain the large population we currently have on earth, living longer and healthier than at any time in history. Remove the technology and the environment would be devastated as people desparately try to grow food and obtain water using methods that simply cannot sustain us. Indeed, based on similar points to mine above, Tim Worstall argues that we should divide by T rather than multiply. However reading further, it seems that T isn’t measuring technological advancement, but rather the impact of technology on the environment:

Politicians, unsure what to do, offer solutions which include suggestions such as: develop fuel-efficient cars; change to efficient light bulbs; fly less; build renewable energy and nuclear power plant; increase mass transit systems; and plant trees. These solutions only address the reduction of the affluence and technology variables of the equation, but never the population variable.

Reducing impact by decreasing affluence (consumption) only partly addresses the problem since populations are growing faster than affluence – for example, in Africa. Technology, meanwhile, tends not to “decrease” at all. Whilst it can be used to reduce the impact of affluence, it is likely that its benefits in energy saving devices will be cancelled out by its disadvantages, as businesses continue to use it to maximise their economic growth via consumerism. So, realistically, impact will continue to rise since economic growth demands it. This is bad news since, as we will now see, human impact on the planet is already unsustainable. (italics in original)

Here the paper acknowledges that technology can in fact reduce the impact of humanity on the environment (though it argues that the drive to economic growth will then cancel this out). To retain T as a multiplicative variable, whilst acknowledging that it can reduce humanity’s impact on the environment, one must consider it to be a measure of the impact of our technologies on the environment, rather than a measure of advancement. Technological advancement will thus tend to reduce T, and I’d suggest it has been doing so for centuries whilst increasing population and affluence have offset the reductions in impact it enabled.

An interesting point is that there is no mention in this study of one of the main findings in demography which is that increasing affluence has lead to a fall in birth rates resulting in slow population growth rates or even declining populations in rich countries. This implies that rising affluence may in fact help with the goal of slowing population growth, a finding that is at odds with the arguments presented on the OPT’s paper.

I intend to return to other aspects of this paper in later posts.

Electronic voting: A threat to democracy?

With low turnouts in many elections in Britain, some people have suggested that electronic voting could be allowed in order to make things easier and hopefully raise voter turnouts, e.g. see this BBC report about e-voting trials in Swindon in recent local elections.

In America there has been a big push towards introducing electronic voting systems after the Florida vote counts in the 2000 presidential election where the voting machines’ performance may have influenced the end result in a tight election.

However the move towards electronic voting is by no means straightforward. With a paper ballot, with the vote manually registered by the voter as occurs in British elections at the moment, you have a high degree of checkability. People know what they write on the ballot before it’s put in the box. Vote counting can be done under the eyes of the candidates, their representatives and independent observers. We can therefore create reliable voting procedures and vote counting procedures quite easily.

With electronic voting, things are not so straightforward. Without knowing what code is running on the computer recording your vote, you cannot be sure whether the vote is correctly registered by the computer. The vote counting is done by the computer essentially out of sight. The possibility of incorrect counting due to software bugs, the software being hacked or plain skullduggery on the part of the software writers has to be taken into account.

America’s recent experiences with voting machines provided by a company called Diebold provide worrying reading:

Under the Help America Vote Act (HAVA), the Election Assistance Commission is charged with establishing voluntary standards for voting machine software and creating an independent testing process for the software. However, this process is far behind schedule. Under HAVA, the Election Assistance Commission members should have been nominated by the President in February 2003. Unfortunately, these nominees have only recently been sent to the Senate for confirmation.

Without this federal review and testing of software, deeply flawed software has been marketed by companies and bought by states. An Analysis of an Electronic Voting System was recently authored by Tadayoshi Kohno, Adam Stubblefield, Aviel Rubin, and Dan Wallach. This voting software, produced by Diebold, has already been purchased by two states. According to this study, some of the most serious of numerous flaws permit a person to:

-vote multiple times,
-view ballots already cast on a machine,
-modify party affiliation on ballots,
-cause votes to be miscounted,
-create, delete and modify votes on voting machine, and
-tamper with audit logs and election results.

States Purchase Insecure Software
As a result of this study, Maryland put on hold its purchase of Diebold voting machines. Later, an independent review confirmed the previous findings. It counted 328 security weaknesses, and concluded that: “The system, as implemented in policy, procedure and technology, is at high risk of compromise” (pg. 17).

Diebold had threatened legal action against students and ISPs who publicised the flaws found in their voting machines, though they have now backed down.

A comprehensive account of both the problems with the machines and the legal actions Diebold attempted in order to try and stop various internal emails detailing flaws in the machines being distributed around the web can be found here. Diebold’s response to the problems has been far from reassuring as the threatened legal action illustrates. But it gets worse, since according to the above article:

The state of Maryland, however, commissioned an investigation of the Diebold machines by SIAC. SIAC found 328 security weaknesses; of those, 26 were designated critical . Among the problems: Diebold doesn’t encrypt vote totals before they are transferred to the Board of Elections over the Internet. Diebold’s response is far from reassuring, as the Washington Post reported:

“Further, as a result of the review, Diebold has rewritten its software to include better encryption coding and harder-to-crack passwords. The encryption and password upgrades will be made only for the machines destined for Maryland , [Diebold executive Mark] Radke said, and would not be available for the 33,000 touch-screen machines already in use elsewhere.”

So there you have it: the squeaky wheel gets the grease. Diebold will fix Maryland’s machines, but everyone else in America will continue to suffer from hundreds of security holes, 26 of them critical. Feel better?

Of course, anyone that really cares about security knows that a system has to be built with security in mind from the get-go. You can’t just bolt security on top of a system after the fact and assume that the any problems will be fixed. But that’s exactly what Diebold proposes to do. They told us to trust them before, and now they’re asking us to trust them again. How trusting are you?

The above articles paint a very worrying picture about the way electronic voting is shaping up in America and suggest other countries should be very careful and cautious about e-voting. It seems to me that the any moves towards e-voting should involve the following requirements (based on the list in the security focus article):

* the use of open source software that is open to scrutiny by anyone

* the voting machines must pass thorough testing to ensure security and reliability

* the voting machines must produce paper copies of the votes, verified as accurate by the voter, to be used for auditing purposes.

* voting machines must be usable by the disabled.

* Surprise recounts must be held in a proportion of randomly selected constituencies in each election.

* voting machines must only communicate with other systems in order to report vote totals. Incoming communication from other systems should be forbidden.

At any rate, until trials have shown that electronic systems can be used reliably without opening up scope for manipulation of the voting process, we should stick to paper ballots.

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