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The End of Scarcity

March 22, 2018 in Economics

By Marian L. Tupy

Marian L. Tupy

It is often posited that population growth must inevitably
result in the exhaustion of natural resources, environmental
destruction, and even mass starvation. Only last month, a
much-discussed study in the journal Nature Sustainability
insisted that “Humanity faces the challenge of how to achieve
a high quality of life for over 7 billion people without
destabilizing critical planetary processes.”

We have seen this before.

“The Limits to Growth,” which was published by the
Club of Rome in 1972, looked at the interplay between industrial
development, population growth, malnutrition, the availability of
nonrenewable resources, and the quality of the environment. It
concluded that “If present growth trends in world population,
industrialization, pollution, food production, and resource
depletion continue unchanged… [t]he most probable result will be a
rather sudden and uncontrollable decline in both population and
industrial capacity.”

Doomsdayers fret as world
population grows, yet human productivity increases all the while
and resources remain abundant.

That was 46 years ago. Let’s see how such a prediction panned
out, and let’s go one step further by broadening the period
studied. Looking at changes in population, commodity prices, and
income from 1960 to 2016, world population increased by 145
percent, from 3 billion to almost 7.5 billion. Yet inflation
adjusted gross domestic product (GDP) per person increased by 182
percent, from $3,689 to $10,391. Income, in other words, grew 26
percent faster than population.

What about natural resources? After all, as people grow richer,
they consume more stuff. Consider the evolution of prices of 42
natural resources, as tracked by the World Bank from 1960 to 2016.
Adjusted for inflation, 19 declined in price, while 23 increased in
price. But only three (crude oil, gold, and silver) appreciated
more than GDP per person. Put differently, GDP per person grew
faster than 92 percent of the commodities measured.

Adjusting prices for inflation is important, but adjusting for
changes in income is even more so. Time is humanity’s most
precious resource, and comparing prices and income is what really
counts. Are people spending less time to acquire more things? After
adjusting for the increase in GDP per person, commodity prices fell
by an average of 53 percent. Humanity is creating faster than it is

In spite of the Great Recession and the gloomy disposition of
many of our fellow Americans, the United States of America has done
well over the last 56 years. Our GDP per person grew from $17,036
to $52,194 — an increase of 206.3 percent. That’s 13.6
percent faster than the global average.

So what about gold, with a value which rose by 123.6 percent,
silver, which rose by 18.6 percent, and oil, which rose …read more

Source: OP-EDS

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