Leaders & Success: Julian Simon

By Michael Fumento

Investor’s Business Daily, January 31, 1992
Copyright 1992 by Investor’s Business Daily, Inc.

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Julian Simon

Last year, University of Maryland economist Julian Simon won the most important bet he’d ever made.

On the losing end was the world’s foremost promoter of population and growth control — Paul Ehrlich, author of the 1968 best seller The Population Bomb.

In 1981, in an exchange with Ehrlich, Simon, who is now 60, offered to make a bet that the cost of non-government-controlled raw materials would not rise over the succeeding 10 years.

It has been a tenet of Simon’s that such materials become cheaper over time as people become more adept at finding and extracting them, while Ehrlich and other advocates of controlling population and growth claim they must become more expensive because we are gradually running out of them.

At the time the bet was proffered, Ehrlich archly replied, "I and my colleagues . . . jointly accept Simon’s astonishing offer before other greedy people jump in."

But as of last September, Ehrlich disovered something more astonishing. He owed Simon money — specifically, according to the terms of their bet, $567.07.

Not that Ehrlich was hurting for the cash. Last year, he also received $345,000 from the MacArthur Foundation — one of its so-called genius awards — and he split a $240,000 award from Sweden’s Royal Academy of Science, which also gives out the Nobel Prize.

All of which indicates to Simon that being right may be its own reward, but spending a lifetime being wrong can definitely be more lucrative.

Indeed, Simon recently pointed out, "Every major prediction in Ehrlich’s 1968 book has proven wrong."

Among those predictions was the somewhat startling forecast that 65 million Americans would starve to death by the year 2000.

More recently, Ehrlich said, "If I were a gambler, I would take even money that England will not exist in the year 2000."

With less than eight years to go, both predictions seem premature.

Yet Ehrlich continues to pull in fame as well as fortune.

"Everything he says is perfectly common-sensical," said Simon. "With fixed resources and more users, there’s less to go around — or so it seems."

But Ehrlich’s training was as an entomologist — one who studies insects — not as an economist.

"The strength of the study of economics is to assess not just the direct and local effects, but also the indirect affects which occur as the result of economic adjustments, and the aggregate effects," Simon said.

Disciple Of Malthus

Back when The Population Bomb came out, Simon and Ehrlich were sitting on the same side of the fence. Both were disciples of the early 19th century economist Thomas R. Malthus, who claimed that population grows geometrically — as in the numerical series 2, 4, 8, 16 — while food production grows arithmetically — as in the series 2, 4, 6, 8.

Hence the world’s population would eventually outstrip its food supply and massive famine would result.

But while Ehrlich became rich and famous promoting Malthusianism, Simon broke ranks.

"I simply looked at the data and the studies (by historical economists and demographers) over the last 100 years," said Simon, "and found it simply didn’t fit the theory. My eyes were pried open."

Simon became not only a convert but a missionary, going on to write the landmark book The Ultimate Resource.

That resource, says Simon, is not a metal or a fuel or food or water, but humankind and its ability to use these resources to its best advantage.

With words, statistics, charts and graphs, Simon made the case that the best answer to the problems of humanity lies not in reining in its sheer numbers, but in allowing the proliferation of free thought and free markets.

By doing so, he has become the doomsayers’ worst nightmare and, in the process, has been labeled a "terrorist" and accused of "sabotaging the human race."

For all the talk of how mankind is supposedly poisoning itself like runaway bacteria in a petri dish, Simon notes that in recent years food production per person is up, in both the U.S. and the world. Likewise for the availability of natural resources, as measured by their prices.

In the U.S., there have been increases in the cleanliness of air and water, in the amount of space per person in homes and, most importantly, in the length of life.

Simon notes that worldwide there is no correlation between population density and standard of living.

"You have Hong Kong, Singapore and Holland on one end" with extremely high population density, and yet "with a very high standard of living," he said. "And on the other end you have the miserably poor peoples of much of Africa," where the population is spread quite thinly over a vast continent.

China, he noted, "is one-fifth as densely populated as Taiwan, yet it is much poorer."

The real factor, says Simon, is not the population density but the economic system. Those countries with collectivist economic systems have difficulty feeding their people; those with capitalist economies do not.

The basic formula concerning the impact of population on living quality, he said, is that "in the short run, more people and higher income cause shortages. But the shortages represent opportunity — opportunities for businesspeople to make more money because of the higher prices and opportunities for individual inventors and institutions to make contributions to society."

Said Simon: "The amazing part of the process is that the solutions they find leave us better off than if the problems had never arisen in the first place, and the people who created the problem in the first place provide the solution to the problem. Ain’t it wonderful?"

In one of his recent books, The Economic Consequences of Immigration, Simon argues that the economic good that comes about from having more people extends to increases in the U.S. population due to immigration.

Among the presumptions he counters with hard data are that immigrants overuse welfare services, that the nation is being swamped with immigrants and that immigrants cause unemployment.

On the first point — that immigrants overuse welfare — he notes that since immigrants typically arrive when they are young and strong, they are ready-made taxpayers and far from the day they’ll start collecting the most expensive of entitlements, Social Security. Thus, immigration contributes more to the public coffers in taxes than it draws out, on average of about $1,300 more each year per immigrant, he estimates.

As to immigrants’ inundating the country, Simon notes that in a ratio to native-born citizens, immigration now is a fifth of what it was earlier in the century.

Immigrants can cause marginal increases in unemployment over the short haul, observes Simon. But just as new entrants take jobs, they also create them — both by starting up new businesses and through their purchasing power.

Simon says that there may be a point of diminishing returns after which each additional immigrant contributes less and less to his new homeland, and that suddenly throwing the doors wide open may result in unforeseeable consequences.

To that end, he favors some limits on immigration, perhaps using preferences in favor of immigrants with higher education, the ability to speak English — or more assets.

Animosity to immigration, which appears to have grown somewhat in recent years, is fueled primarily by "economic ignorance and prejudice," Simon said.

In the wake of winning his bet with Ehrlich, Simon has found himself suddenly gaining new respect both in the U.S. and abroad.

"I’ll go to my grave being remembered as nothing but a two-bit gambler," he said, tongue in cheek.

Confidence In Future

While Simon’s not sitting by the phone waiting for the MacArthur Foundation to call, he knows that his ideas will have their day in the sun.

"Ideas matter, but concrete realities matter more," he said. "I know that 50 years from now, ideas will have rolled all over the nonsense of Ehrlich and his colleagues. They’re a drag on progress in the short run, but in the long run they’ll be washed away like all the doomsayers in the past."

In the meantime, Simon said, he’s offering a new bet: "Pick any measure of human welfare and any year in the future and my bet is that the measure will show improvement."

"I’m not betting on physical conditions, but on human ones," he said.

Paul Ehrlich, call your bookie.


Read Michael Fumento’s additional work on the environment and on economics.