Published: Thu, 27 Apr 2017 00:00:00 -0400
Last Build Date: Thu, 27 Apr 2017 07:22:35 -0400
Tue, 24 Jan 2017 07:00:00 -0500
Today, a post short on words, but full of good news. The World Bank has updated its famed "Pink Sheet," which tracks the prices of 72 commodities going back (in most cases) to 1960. I have eliminated some repetitive datasets (for example, there are four crude oil prices—West Texas Intermediate, Dubai, Brent and "average") and some datasets that contain data for only very short periods of time. As such, I was left with 42 commodity prices, which are included in the chart below.
Out of those 42 commodity prices, 19 have declined in absolute terms, which is to say that, adjusted for inflation, they were cheaper in 2016 than in 1960. Twenty-three commodities have increased in price over the last 56 years. However, of those 23 prices, 20 rose less than global per capita income (177 percent). Only three commodities (crude oil, gold and silver) rose more than income, which is to say that in a vast majority of cases commodities became cheaper—absolutely or relatively—in spite of population growth of 142 percent.
So, what's the moral of the story? Eighteen years after his untimely and much lamented passing, Julian Simon's wisdom continues to shine. As Simon argued in his 1981 book The Ultimate Resource, human beings, unlike other animals, innovate their way out of scarcity by increasing the supply of natural resources or developing substitutes for overused resources. Human ingenuity, in other words, is "the ultimate resource" that makes all other resources more plentiful.
Fri, 13 May 2016 13:30:00 -0400"Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever" was the title of an urgent report written by the legendary asset manager Jeremy Grantham in 2011. Grantham proclaimed the advent of a resource scarcity "paradigm shift" that was "perhaps the most important economic event since the Industrial Revolution." As evidence, he noted that "the prices of all important commodities except oil declined for 100 years until 2002, by an average of 70%." Since then, he continued, "this entire decline was erased" by the price surge, which he took as a signal that the world was using up its natural resources at an alarming rate. The result, he declared, would be a permanent shift where the prices of raw materials rise and shortages become common. Grantham also pointed to a slowdown in crop productivity, suggesting that it would be impossible to feed the world's burgeoning population. "How we deal with this unsustainable surge in demand and not just 'peak oil,' but 'peak everything,' is going to be the greatest challenge facing our species," he wrote. This week, Grantham took almost all of that back. Grantham, like a whole raft of professional doomsters, was declaring Peak Everything just as the latest economic super-cycle was cresting; many commodities' prices peaked the very year of his report and have been drifting downward ever since. Economic forecasting often seems little better than reading tea leaves or parsing the convolutions of a sheep's liver. Nevertheless, some economists argue that stepping back from the crises and volatilities of the moment and taking a longer view can shed light on how the economic future will likely evolve. Specifically, they have identified what they call economic super-cycles, which trace the steady downward trend of commodity prices as they have gone through a series of decades-long peaks and valleys. A 2012 study by economists associated with the Australian National University analyzed price trends from 1650 to 2010 and concluded that "relative commodity prices present a significant and downward global trend over almost the entire capitalist age." In their 2012 study "Super-Cycles of Commodity Prices Since the Mid-Nineteenth Century," economists Bilge Erten and José Antonio Ocampo—from Northeastern University and Columbia University, respectively—confirm that the commodity price increases in the first decade of this century were the result of a super-cycle upswing. Parsing real price data for nonfuel commodities such as food and metals from 1865 to 2009, they find evidence of four past super-cycles ranging in length from 30 to 40 years. The cycles they identify ran from 1894 to 1932, peaking in 1917; from 1932 to 1971, peaking in 1951; from 1971 to 1999, peaking in 1973; and the post-1999 episode, which is ongoing. The increases in commodity prices during these cycles are driven largely by increases in demand arising from strong periods of industrialization and urbanization, such as those experienced by Great Britain, Germany, and the United States in the 19th century, by Japan in the 20th century, and by China and other emerging economies at the beginning of the 21st century. Erten and Ocampo find that "for non-oil commodities, the mean of each super-cycle has a tendency to be lower than that of the previous cycle." In other words, the valleys after each super-cycle peak is lower than the preceding ones—commodities become cheaper over time. In their 2012 study, they noted that metal prices were still high, but observed that "the contraction phase of this cycle has not even begun yet, which can lower the mean of the whole cycle in the upcoming years." Four years later, metal prices are nearly back to their pre-boom values. If previous commodity trends they identify are right, then metal prices will continue to fall and eventually will reach a new nadir lower than their previous trough. The Dallas Federal Reserve economist Martin Stuermer tries to account for trends in commodities by looking at how prices have evolved for four miner[...]
Fri, 13 May 2016 13:30:00 -0400
(image) "Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever" was the title of an urgent report written by the legendary asset manager Jeremy Grantham in 2011. Grantham proclaimed the advent of a resource scarcity "paradigm shift" that was "perhaps the most important economic event since the Industrial Revolution." As evidence, he noted that "the prices of all important commodities except oil declined for 100 years until 2002, by an average of 70%." Since then, he continued, "this entire decline was erased" by the price surge, which he took as a signal that the world was using up its natural resources at an alarming rate. The result, he declared, would be a permanent shift where the prices of raw materials rise and shortages become common. This week, Grantham takes most of it all back.
Sat, 29 Aug 2015 08:00:00 -0400To me, nothing screams summer like picking and eating fresh berries. I know I'm not alone. Greg Visscher, head of the Montgomery County (Maryland) Young Republicans Club, has been picking berries with his family for years. So it was with some degree of surprise that Visscher found himself confronted last month by a trio of county park police officers and handed a $50 ticket for "destroying/interfering with plants to wit: berries. Without a permit on park property." The idea that the mere act of picking berries from a plant can be equated with "destroying" or "interfering with" a plant is bizarre. Picking berries (or tomatoes or apples, beans, peppers, or any other fruit or vegetable) does no harm to the flora upon which the food grows. The county's claimed need for a permit was news to Visscher—and to me. I live in Montgomery County, and just the day before Visscher was ticketed, I had picked raspberries in the county park nearest my home. I've spoken at length with Visscher by email, both for this column and for a book I'm writing that focuses in part on food laws that prohibit sustainable food practices like picking wild berries. Visscher tells me was picking raspberries in Wheaton Regional Park, a public space near where I live in Bethesda, when an officer approached him and issued him the aforementioned $50 citation. Two more officers soon appeared. Visscher also tells me the police made reference to a need to obtain a nebulous "permit" for harvesting berries—both verbally and on the ticket itself—a permit neither Visscher nor I have been able to identify. I spoke this week with Lt. Rick Pelicano of the park police, who had no information on Visscher's ticket or on the need for a foraging permit. Lt. Pelicano pointed me to the relevant rules, which pertain to a county prohibition on "destroy[ing] or interfer[ing] in any way with any... plants" on public property. Tickets like the one Visscher received are rare. "Charges under this section are infrequent," Pelicano told me by email. "Researching the last year we found three incidents that were cited related to this. Two resulted in a citation [while] one was a written warning." How could Visscher—or I—know that the county views picking some berries without a permit as verboten? "There is no sign anywhere saying that berries cannot be harvested," Visscher tells me. "To my knowledge, there is nothing in the park that even highlights this." I could not locate any such signage on a visit to the park on Thursday. A park staffer I spoke with could not point me to any. According to my reading of Maryland law, any such prohibition must be posted conspicuously. State code requires parks to "post the regulations outside each park headquarters building," among other notice requirements. It would be a violation of due process requirements, in my view, for the county to ticket anyone without first posting such notice. Regardless of the outcome of Visscher's case, the story stretches far beyond Maryland. Foraging has grown in popularity in recent years. But so too have efforts to limit the practice. Visscher's ticket for picking berries is hardly an outlier. In 2013, "an old man barely making it on Social Security" was ticketed $75 for picking dandelion greens in a Chicago-area park. The man, John Taris, had picked the greens to make a salad. New York City cracked down on foraging in Central Park in 2011 amid concerns the park couldn't sustain the growing number of people hauling off ginger, mushrooms, and even fish. That may make sense. "It's not difficult to distinguish between sustainable foraging, where a person like Greg Visscher harvests berries, nuts, fruits, mushrooms, seaweed, or some other renewable resource for their personal consumption, and foraging that involves real destruction of public property," I told the Daily Caller's Guy Bentley, a former Reason intern, earlier this month. "Ban the latter." Also, err on the side of letting people be people[...]
Tue, 07 Jul 2015 11:07:00 -0400
(image) This month Cato Unbound is hosting a discussion on the question: Is China Winning the Race for Resources? The first essay on the topic is by economist Dambisa Moyo, author of the New York Times bestsellers Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa and How the West Was Lost: Fifty Years of Economic Folly and the Stark Choices Ahead. Her third book is Winner Take All: China’s Race for Resources and What it Means for the World.
In Moyo's initial essay, "Winner Take All: China and the Global Race for Resources," she argues:
Over the last decade, China has been buying up mountains and mines, agricultural land and oil fields, thus ensuring that it will have the upper hand in the future struggle for the world’s resources. Scarce, finite, and rapidly depleting global supplies of land, water, energy and minerals – the inputs to foodstuffs, automobiles, mobile phones, computers, and other products of higher living standards – cannot match the demand emanating from a rising world population, rapidly increasing global wealth, and urbanization.
Despite the recent declines in commodity prices, the consequences of long-term fundamental supply and demand imbalances remain; the two most serious are substantially higher commodity prices and the rising risk of violent resource-based conflict. In the aftermath of the 2008 financial crisis, commodity prices increased 150 percent, and already there are around 25 conflicts raging around the world with their origins in commodities, with many more likely to occur over the next decade.
Besides me, the other participants in the discussion that will unfold over this month are Justin Logan, Cato's director of foreign policy studies and Ian Bremmer, the president and founder of Eurasia Group. The schedule of responding essays is by Justin Logan, July 8, Ian Bremmer, July 10; and Ronald Bailey, July 13. Discussion to follow through the end of the month.
Just a hint at my take: The current economic supercycle is now on the downward side and China's neo-imperialist version of mercantilism will turn out to be economically futile.
Thu, 11 Jul 2013 08:20:00 -0400
Will uranium ever be the new gold? Maybe... but not quite yet. Despite its recent plunge to below $40 per pound, which is the first time it has dipped that low since 2006, uranium inventories remain plentiful in the US and Europe. But that could soon change.
The new low looks like a low-risk entry point, as the long-term outlook for uranium is positive, supported by a renewed pro-nuclear movement on the near-term horizon. In Japan, concerns about air pollution and rising costs have quelled the nuclear opposition. Recently a pro-nuclear government was elected, so Japan's 48 inactive reactors should come back online sooner than expected.
Thu, 04 Oct 2012 14:08:00 -0400
It took less than an hour for Apple to sell out the initial supply of its new iPhone 5. It’s thinner, lighter, faster, brighter, taller than its predecessors, and yet it costs the same. That’s called progress.
Elsewhere, progress is met by protest rather than praise.
A suite of technologies has brought vast supplies of previously unrecoverable shale gas within reach of humans, dramatically expanding natural gas reserves in the U.S. and around the world. Horizontal drilling and hydraulic fracturing have produced a fuel that can at once promote a cooler planet and an expanded economy, essentially eliminating the tradeoff between climate change mitigation and the pursuit of other public projects and, perhaps, economic growth. But unlike the iPhone, the productivity gain embodied in shale gas technologies doesn’t attract a cult following and its benefits get obscured.
Tue, 12 Jun 2012 11:22:00 -0400Elinor Ostrom, an economist and political scientist famous for exploring how local groups manage natural resources, has died of cancer at age 78. Paul Dragos Aligica explained one of Ostrom's core ideas here in Reason in 2009, when she won the Nobel Prize in economics: When economists show that market arrangements fail, they usually make the simple recommendation that "the" state should take care of these problems. Elinor Ostrom has demonstrated empirically that "the" state may not be "the" solution. Her work argues for the wisdom of institutional diversity, looking to individuals to solve problems rather than relying on top down, one-size-fits-all solutions. The conventional wisdom assumes that natural resources and environmental problems should be solved in a centralized—and if possible, global—manner. Through innovative analysis in the field, in the experimental laboratory, and in theory, Ostrom's work has shown that creative solutions to problems such as the depletion of common pool resources exist outside of the sphere of national governments.... Ostrom has explored a new domain of the complex institutional reality of social life—the rich institutional arrangements that are neither states nor markets. These are for-profit or not-for-profit entities that produce collective goods for "collective consumption units." Examples of such "consumption units" abound. They are small and large, multi-purpose or just focused on one good or service: suburban municipalities, neighborhood organizations, condominiums, churches, voluntary associations, or informal entities like those solving the common-pool resources dilemmas studied and documented by Ostrom around the world. Yet, once the functional principle behind them was the identified, the very diverse forms could be understood as part of a broader pattern, and the logic of the institutional process involved could be revealed with relative ease. They could be seen as a "third sector" related to but different from both "the state" and "the market." Landing somewhere between Hayek and Kropotkin, Ostrom advocated "polycentric governance" -- in the words of her husband and frequent collaborator Vincent, a system where "many elements are capable of making mutual adjustments for ordering their relationships with one another within a general system of rules where each element acts with independence of other elements." The Ostroms applied these ideas to areas ranging from local government to climate change, pushing back against the idea that (in Elinor's words) "without a hierarchical government to induce compliance, self-seeking citizens and officials would fail to generate efficient levels of public goods." In fact, they found, a patchwork of private organizations and "multiple governmental units without a clear hierarchy" regularly outperformed centralized systems. We've run several items about Ostrom here at Reason -- besides the Aligica article quoted above, she was praised by Ron Bailey here and by John Stossel here and here. Radley Balko found her spirit in a scene from Curb Your Enthusiasm here, and I mentioned an essay that used her work to illuminate urban parking habits here.[...]
Wed, 30 May 2012 09:00:00 -0400
In the northernmost reaches of California's Ventura County, a two-lane rural road called Highway 33 runs into the rugged and mostly undeveloped Transverse Mountain Range. Though it's mostly raw wilderness, a few businesses catering to adventurous explorers have long existed there, some for more than a century.
But now the local government is shutting those businesses down, one by one, using arcane zoning and building-code laws to get the job done.
"If there isn't someone complaining, and there isn't really a serious public health and safety issue, why do they spend so much of their time pursuing these kinds of cases?" asks Lynne Jensen, executive director of the Ventura County Coalition of Labor and Business (COLAB).
Tom Wolf owns the Pine Mountain Inn, a restaurant that's been serving biker groups and local community organizations since the 1930s. Wolf temporarily had to shut the doors when he suffered a heart attack in 2002, and he was never able to reopen when the county informed him that his property had been rezoned as an "Open Space" back in the 1980s without his knowledge.
"[The county] wanted everybody out of here," says Wolf. "And they wanted a complete open space with nothing but deer and frogs... and no people."
No matter how hard Wolf tried to comply with the ever-changing codes, the county just wouldn't relent, at one time even ordering him to remove a chicken coop that had never actually existed on the property.
Wolf isn't alone, says Jensen. Several other small businesses along Highway 33 have been hit by multiple county agencies for no apparent reason.
"They had every department hit us with violations to make sure that they shut us down," says April Hope, who, along with her husband Bob, owns a bed and breakfast called The Wheel, which has existed in the area since the 1890s.
Since the Hopes purchased The Wheel in early 2000, they've never been able to open it to the public. While officials from the county supervisor's office and the planning department refused to speak with ReasonTV for this story, Jensen says that the county is using code enforcement to drive these businesses off the land without compensation.
"This rezoning is really a way to get around eminent domain, because eminent domain means you give up your entire property. And here, you only give up part of your rights," says Jensen.
Invoking eminent domain to seize private property would not only require the county to compensate landowners, but also to demonstrate that the taking served a "public use."
"They have been very successful in taking people's property in a number of different ways without compensation as long as they don't take ownership of it," says Jensen.
About 5.30 minutes.
Written and Produced by Zach Weissmueller. Camera by Alex Manning, Tracy Oppenheimer, and Weissmueller.
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Thu, 15 Mar 2012 00:00:00 -0400
Can a Masai Warrior in Africa today communicate better than Ronald Reagan could? If he's on a cell phone, Peter Diamandis says he can.
Peter Diamandis is the founder and chairman of the X Prize Foundation, which offers big cash prizes "to bring about radical breakthroughs for the benefit of humanity." Reason's Tim Cavanaugh sat down to talk with Peter about his new book Abundance and why he think we live in an "incredible time", but no one realizes it. Peter thinks that there are some powerful human forces combined with technological advancements that are transforming the world for the better.
"The challenge is that the rate of innovation is so fast..." Peter says, "the government can't keep up with it." If the government tries to play "catch up" with regulations and policy, the technology with just go overseas. Certain inovations in "food, water, housing, health, education is getting better and better." Peter "hopes we are not going to be in a situation where, entrenched interests are preventing the consumer from having better health care."
Filmed by Sharif Matar and Tracy Oppenheimer. Edited by Sharif Matar
About 15 minutes
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Thu, 08 Mar 2012 08:00:00 -0500The decision in the Supreme Court case Sackett v. EPA, due later this spring, could very well affect the meaning of property rights and due process in the United States. So how did a small-town couple from Northern Idaho ever become the center of such a momentous case? Reason.tv talked with the Sacketts and their attorney to find out. Mike Sackett dreamed of building a home on Idaho's Priest Lake ever since he camped there with friends in high school. "I remember coming home, told my mom and dad that I was going to move to Priest Lake, and they just said, 'Oh, no you're not.' And I said, 'Oh yeah. Yeah I am,'" Sackett said. Years later, Sackett realized that dream when he and his wife, Chantelle Sackett, bought a plot of land near Priest Lake and started to build. After securing the necessary permits from local authorities, the Sacketts were only three days into the process of clearing the land when officials from the EPA showed up and put their dreams on hold. The EPA informed the Sacketts that they suspected they were building on wetlands and had to cease work immediately. The Sacketts were stunned because their property was a completely landlocked lot within an existing subdivision. When Chantelle Sackett asked for evidence, the EPA pointed her to the National Fish and Wildlife Wetlands Inventory, which showed them that their lot... was not on an existing wetland. The EPA responded issued what's known as a compliance order, which said that the Sacketts were in violation of the Clean Water Act and subject to fines of up to $37,500 a day. "You go to bed with that on your mind every night," said Mike Sackett, who owns a contracting company. "It's been painful personally. It's been painful on our business." The EPA refused to offer any documentation or evidence for its position, even after the Sacketts hired their own scientists to refute the wetlands claim. Feeling they had no other choice, they tried to take the EPA to court. Unfortunately, not even this was an option, because the EPA maintained that a compliance order is nothing more than a warning and that they cannot be challenged until they actually enforce the fines, which were racking up by the day. "The only way the Sacketts could get judicial review that way, was by ignoring the compliance order," said Damien Schiff, attorney for the Pacific Legal Foundation, which took up the Sacketts' case. "EPA still might just sit on its hands and let the possible fines pile up." Schiff and the Pacific Legal Foundation lost to the EPA in lower courts, but this afforded them the opportunity to take the case to the Supreme Court, which heard arguments in early January 2012. Schiff and the Sacketts both felt heartened by what transpired there. "I was surprised by some of the questions that came from the justices," said Mike Sackett. "They were questions that we would've asked." If the Sacketts do win in the Supreme Court, they will then have the opportunity to actually challenge the EPA's compliance order in the lower courts. Just having the opportunity to challenge that, says Schiff, would be a major victory for property rights and for due process of law. "The agency says it doesn't want to go into court, it shouldn't have to go into court," said Schiff. "The chutzpah, the arrogance, is, frankly, almost unimaginable." About 7.30 minutes. Produced by Zach Weissmueller. Camera by Sharif Matar. Additional camera by Paul Detrick, Tracy Oppenheimer, and Weissmueller. Additional footage courtesy of the Pacific Legal Foundation. Music: "Water" by Big Blood, "City Night Line" by Cobra avec Panther, "The River Who Drinks All I've Had" by Makunouchi Bento, "Film 1" by Torture Super Sonic. Scroll down for downloadable versions and subscribe to Reason.tv's YouTube channel to receive automatic notifications when[...]
Fri, 06 Jan 2012 11:00:00 -0500
Reason's Damon W. Root appeared on Fox News' Freedom Watch with Judge Andrew Napolitano to discuss the EPA's use of administrative compliance orders, which are government commands that allow the agency to control the use of private property. Root discusses a specific situation in Idaho where a couple was barred from building a house on their own land.
Original airdate: 01-05-2012
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Mon, 27 Jun 2011 12:00:00 -0400
Hydraulic fracturing - or "fracking" - is a fast-growing source of natural gas used to create electricity, heat homes, and more. It involves forcing water, sand, and chemicals into super-deep wells and then recovering the gas released during the process.
Fracking is also highly controversial, with viral video hits such as "The Fracking Song" and the 2010 documentary Gasland contending that the process leads to polluted drinking water, home explosions, and worse.
Fracking has been around for more than 60 years and over 100,000 gas wells are dug per year, most of them in sparsely populated areas in the western U.S. With the discovery of the Marcellus Shale in the eastern part of the country, fracking is increasingly common in populated parts of Pennsylvania, Ohio, and New York, leading to heightened tensions between drillers and environmentalists. Indeed, the attorney general of New York has called for a moratorium on the practice in the Empire State.
Is fracking safe? And what are the potential benefits that will be forfeited if the practice is ended? Reason's Nick Gillespie sat down with science correspondent Ronald Bailey to learn the truth about fracking. Bailey reports that the cases of contaminated water supplies were the result of poorly designed wells that had nothing to do with fracking itself. As important, he notes that the gas generated by fracking would not only massively increase American energy supply, it would do so with a relatively clean and cheap fuel.
Shot by Jim Epstein and Josh Swain; Edited by Swain.
Approximately 5:34 minutes.
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Tue, 10 May 2011 00:00:00 -0400
Which does a better job of protecting the environment:
governments or markets?
Reason Foundation's Vice President of Research Julian Morris spoke at Reason Foundation's annual Reason Weekend and challenged the idea that regulations and energy subsidies will save us from environmental disasters. In fact, they help cause them.
When people are driven by profits and protected by property rights, Morris argues, environmentally friendly products will develop naturally.
Morris is the author of dozens of scholarly articles on issues ranging from the morality of free trade to the relationship between institutions, economic development and environmental protection.
Approximately 28 minutes.
Filmed by Alex Manning and Paul Detrick; Editded by Joshua Swain
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Wed, 20 Apr 2011 09:00:00 -0400
For this year's Earth Day celebration, Reason.tv is proud to
present "The Top Five Environmental Disasters that Didn't Happen."
The environmental movement began in 1962 when Rachel Carson
published her best-selling book Silent Spring. And ever
since, chicken littles have warned us about imminent environmental
disasters that ultimately didn't happen.
We all worried needlessly about acid rain, expanding deserts and global cooling, but these failed predictions weren't quite dire enough to make our list. To find out which prophecies of doom did make our list, you'll need to watch Reason.tv's "Top Five Environmental Disasters that Didn't Happen."
Approximately 7 minutes.
Produced by Feine, Manning, Jensen, Bragg, Swain, Epstein and Gillespie. Narrated by Melissa Palmer. Special thanks to Ron Bailey and Julian Morris.
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