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Natural Resources


Thomas Sowell, in his book The Vision of the Anointed, 1995


[About the Simon-Ehrlich Wager on resource scarcity over the decade leading up to 1990:]

How could a decade of extracting these minerals from the earth not lead to a greater scarcity and hence a higher price? Because supply and demand are based on known reserves and these can just as easily increase as decrease. For example, the known reserves of petroleum in the world were more than twice as large in 1993 as they were in 1969, despite massive usage of oil around the world during the intervening decades. One of the fatal flaws in the vision of the anointed is the implicit assumption that knowledge is far more extensive and less costly than it is. In some abstract sense, there is indeed a fixed amount of any natural resource in the earth and usage obviously reduces it. But no one knows what that fixed amount is and, since the process of discovery is costly, it will never pay anyone to discover that total amount.
(...)
By dividing the currently known reserves by the annual rate of usage, it is always possible to come up with a quotient - and to use that quotient to claim that in ten years, fifteen years, or some other time period we will "run out" of coal, petroleum, or some other natural resource.



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