Many of the doom-and-gloom books of the 1970s relied on what seemed like an obvious premise — as population and wealth increase, so do the amount of resources consumed. Critics, such as |Julian Simon|, argued that this simply was not the case. Writing for Reason magazine, Ronald Bailey highlights an interesting study that found the “weight” of the U.S. economy actually fell over the past 23 years, even though per capita income doubled while about 55 million people were added to the population.
Now, adding 55 million people and doubling income is supposed to lead to a disaster according to experts like the Club of Rome, Paul Ehrlich and others. But Bailey sites a study performed by Kate Kane of the Cap Gemini Ernst and Young Center for Business Innovation. Kane went through the Standard Industrial Classification codes for 500 finished products in agriculture, mining, construction and manufacturing, and then estimated how much a finished product would weigh in 1977 and how much that same finished product would weigh in 2000.
Kane estimates that the weight of physical goods used to produce goods and services in 1977 was 1.18 trillion pounds, which fell to 1.08 trillion pounds in 2000. But since the economy in 2000 was much bigger than it was in 1977, the interesting figure is the amount of GDP generated per pound. In 1977, the economy generated an estimated $3.64 per pound, while in 2000 it generated $7.96 per pound.
This occurred without any government mandates or programs, but occurred just as folks like Julian Simon predicted because resource scarcity tends to drive technological innovation. Or, as Bailey puts it, “we got richer not just by using more stuff, but by being smarter about the stuff [we] use.”
That’s good news, and the even better news is that the world is still at the very beginning of increasing the value of the resources it utilizes. And this is true even outside of high-tech industries. As Bailey notes, if every farmer in the world was able to achieve the same high yields that American farmers do, they could feed 10 billion people on just half the crop land currently in use. Meanwhile even the United States is still at the tip of the iceberg as far as enjoying economic benefits from increased technological efficiencies.
The real challenge for this century will be whether or not liberal democracy will continue to spread so that people will be able to use technology to adapt and transform their economies, or whether authoritarianism will continue to trap much of the world in its backward ways.
Source:
Dematerializing the economy. Ronald Bailey, Reason, September 5, 2001.