I ended the last post by observing that what we need is not less people but more people who are stewards. Stewards are people who can get the most output of the least input on a sustainable basis. The obstacle to having more stewards is grinding poverty that dominates vast regions in the world. That poverty is overwhelming a result of societies who refuse to embrace individual rights like property rights, establish rule of law and create true market economies. This is not to say that developed nations do not have a significant role in some of the dysfunction that developing nations experience but I do not believe this to be the fundamental problem.
Let us suppose we wake up tomorrow and all the dysfunctional nations of the world, to our amazement, suddenly embrace all the institutions I have been talking about. Within a few short years, their death rates drop and, after a brief increase in pollution, they begin to become more environmentally conscious. Prosperity breaks out all over the world. Won’t we have a new problem? Won’t fuel and energy to power these growing economies become a problem? Furthermore, won’t that lead to increased pollution and carbon dioxide outputs? The answer to these questions is almost certainly yes, at least in the near term!
But let us step back for a moment. Let us imagine that the year is 1900. As we look at world population, we realize that the world population has grown by more than 50% over the last century to more than 1.5 billion people. Forecasting growth into the future we can see that the population will quadruple to 6 billion. The few developed nations of the world set a goal of having about 10% of the population in 2000 living at standards at least as high as the wealthiest 1% in 1900. How will we do that? Think of the incredible number of horses we are going to need for transportation. Think of the pollution and the stench they will produce. Think of the coal that will have to be mined and the distribution networks developed to get coal to people’s homes. Just imagine the number of new ice houses that will have to be built. Etc. Beginning to get he picture?
What should our response of have been in 1900? Curtail the amount of resources we use? Start restricting the use of horses to prevent pollution? Start rationing coal so there will be enough for future generations? Thankfully that is not what happened. Entrepreneurs evaluated problems and began experimenting with solutions. Bicycle makers began taking two bicycle frames and welding a carriage between them, and then adding an internal combustion engine for a motor to power them. Before long their innovations became a very practical mode of transportation that had more power than several horses. With the innovation of assembly line manufacturing, the prices dropped rapidly and the automobiles where widely available. Other entrepreneurs began to experiment with electricity which enabled homes to be wired with electrical power. That allowed the operation of home appliances like refrigerators. The iceman became a thing of the past. The electrical power also eventually allowed for climate control devices that had required home delivered coal. With each of these inventions tremendous advances were made in the amount of utility gained versus energy used and resources expended.
As we look forward from our standpoint, we can’t see how energy demands can possibly keep pace with the demand if developing nations begin to grow, anymore than people in 1900 could see how energy demands would be met over the coming century. New energy sources were created and existing energy using devices were made ever more efficient. That process is still underway. As the cost of energy like gasoline is driven up by demand, alternative fuels will become more attractive. As they become more attractive, more entrepreneurial efforts will be expended toward bringing these options to the market. It is entirely possible that by spurring economic growth we will increase the demand for fuel, causing the price to rise to a level that alternative fuels and new technologies will enter the market. Economic growth might be the quickest path to newer less polluting technologies, not economic retraction.
The fact is that most commodities in the world have been getting cheaper, not more expensive. Dropping prices indicate an increasing abundance in supply relative to demand. When some resource begins to escalate in price, innovators create alternatives that can be substituted more inexpensively. Too many of us view the economy statically (simply projecting the status quo into the future) and not dynamically (people reflect on and respond to demand and supply signals and innovate.)
With that said, do we just ignore issues like pollution and carbon dioxide emissions? Certainly not. A zero pollution option would be ideal but that does not yet exist in any way that can be mass deployed. This creates a public policy issue. We have to weigh each incremental benefit of pollution reduction against the costs to economic growth which will provide the resources that help us find new answers to pollution.
I am not arguing for a Pollyanna “head in the sand” optimism that just assumes everything will work out. But projecting impacts of existing technologies and circumstances into the future is equally naïve. There is no neat formula for how to proceed but both extremes are perilous. Unfortunately, in our polarized times, these extremes are where many people tend to gravitate. I believe striving for balance is the responsible choice but that means catching hell from two sides.
I have said before that carbon dioxide is not technically a pollutant. To plants and trees it is known as fresh air. But can too much “fresh air” be a bad thing? That brings us to the question of climate change and what to do about it.
