"I don’t want to concede that this proves that markets need government intervention or economic progress is a chimera."
Seems to me that this is what the whole Tupy-Progress project has been about for years now. The government is always trying to legitimize more intervention by leveraging human instincts about shortages and scarcity and implying a species of market failure that justifies the increased role and exercise of political power, and Tupy's job is to use the history of innovation to push back against such fearful impulses and encourage people to presume that under a dynamic instead of static analysis, we can reasonably extrapolate that trend into the future and expect it to continue, but only insofar as market incentives and mechanisms are allowed to operate without too much encumbrance.
The trouble is that this isn't actually an argument that real progress in certain fields will continue, as trends don't make for physical arguments tethered to empirical measurements and natural laws. There are indeed plenty of examples of exhaustable resources, there is no sense denying it. I'd go much further and say that for physical stuff, there is no such thing as an *inexhaustible* resource because everything is exhaustable in terms of there can only be so much of anything composed of matter which hasn't been reduced to its highest entropy. The universe started with a certain amount of negative entropy - the real "ultimate resource", it is going away, we can't do anything without spending at least a little of it down, and there's nothing anyone will ever be able to do about that. Try to use it wisely or 'effectively', I guess.
It would be better to stick to simple arguments based in straightforward economic reasoning that explains that in a normally functioning market with prices that clear demand and supply there is no such thing as a 'shortage' as a valid concept, that surprises and price swings happen as a normal incident of life, and that problems with prices and supply are much more likely due to various kinds of government failure than market failure.
For those of us that have worked in the exploration and production of minerals, what you call "unanticipated events" we call hard work coming to fruition.
Totally agree on luxury boxes. I don't see the appeal. The food is never good and the view is always worse. The Knicks have tried to create a courtside luxury box experience which works better than being in the "skybox" where you are far from the action. But it's still not compelling.
It is very important to NOT concede that any commodity price change "proves that markets need government intervention". Whether it's the (arbitrary & unusual) 38 years from 1980 to 2018, or 40 years from any two dates, it remains an interesting historical set of facts.
What WAS the price of bananas, or oil, or any specified basket of goods, in each year for the last 50 years and a comparison of 20 & 40 years later? I hope Tupy's book has more info about it.
It's also important to use median wage for the hour comparison, or an average of those who get paid by the hour for the #hours to earn that consumption basket.
Small gov't advocates need to accept that there WILL be some level of social safety net - but should be pushing for absolute levels. All working Americans can achieve the "American Dream of a single family home, a working car, and a chicken in every pot". For poor folk, the home won't necessarily be in a low crime, good school area - because the neighbors.
There will always be relative poverty as compared to the top.
Decades ago I learned about non-renewable resource economics, and see no advantage to prefer "exhaustible" as a phrase. (Unlike "Government Choice" over "Public Choice" theory, where this is a huge accuracy and connotation advantage in better labeling.)
Government protected ownership of all resources, renewable & not, combine with the desires of many humans, called "market demand", to determine a current price some buyers are willing to pay and some sellers are willing to sell at.
That market price is hugely influenced by government, both direct taxes & subsidies, as well as regulations. It's also hugely influenced by substitutes. Everything one can buy has some nearly identical or somewhat similar alternative good or service one could buy instead - and it is the offers for sale of these alternatives which push prices up or down.
The price of diamonds falsifies the Kling intuition that "prices of such resources will follow an upward path over time". Despite diamonds being very valuable, and consumable, in industrial uses as well as highly desired jewelry (some Swiss jewelry has masses of wonderful diamonds), the price of a 0.1 karat diamond has (probably?) not been going up as fast as wages since the development and popularization of Zircon and other substitutes.
Oil could be made from coal, as the Nazis did 80 years ago. Electrical energy can be created using non-CO2 producing nuclear power, if the gov't regulations allowed it (as well as continuing to support it with maximum legal liability coverage). Don mentions the Julian Simon truism that human creativity is the key resource.
In terms of "shortage", there has LONG been a shortage of 5 cent a gallon gas (like 100 years ago) - and no shortage of $50/ gal. gas.
We are almost certain (95%) to see the price of Lithium to continue to increase until some other battery tech has similar performance at that higher price. We'll never "run out" of Lithium, but it might well become too expensive to use as much as is being used now.
And such market price changes for a non-renewable, difficult to substitute for resource should NOT create calls for gov't intervention or control. As all of the writers (Arnold, Don; Marion Tupy & Gale Pooley) agree - to which I also agree (therefore they're all right!).
With all physical resources being interchangeable with energy, only the real cost of energy need be considered. With cheap energy every element can be found and concentrated from the oceans or everyday rock. A mixture of elements can be converted to all chemicals and minerals from oil to food.
“With diamonds, oil, or zinc, there is a viable option to leave the resource in the ground.” But one *always* has the option to do nothing, to postpone action until later. You seem to think it important to distinguish between cases where this *is* and cases where it *is not* a *viable* option. But, apparently, a *viable* option is simply one that is at least fairly close to the best option—one that is, at most, *slightly* sub-optimal. This is such vague concept that it cannot possibly be theoretically important.
When I studied resource economics in the 70s, the common terminology was "renewable" vs "nonrenewable" resources. Some authors characterized the distinction as "flow" vs "stock" resources.
It might be worth looking at both Price and Quantity over time. Reasoning from a price change is usually a bad idea, but if we see the price of bananas going down relative to labor and the quantity consumed increasing, that tells us we are much better at producing bananas, for example.
For things like oil, we might expect similar details to be useful, although we still have issues with governments limiting what we are allowed to access, which has nothing to do with how much is left in the ground but everything to do with price and quantity coming to market.
"I don’t want to concede that this proves that markets need government intervention or economic progress is a chimera."
Seems to me that this is what the whole Tupy-Progress project has been about for years now. The government is always trying to legitimize more intervention by leveraging human instincts about shortages and scarcity and implying a species of market failure that justifies the increased role and exercise of political power, and Tupy's job is to use the history of innovation to push back against such fearful impulses and encourage people to presume that under a dynamic instead of static analysis, we can reasonably extrapolate that trend into the future and expect it to continue, but only insofar as market incentives and mechanisms are allowed to operate without too much encumbrance.
The trouble is that this isn't actually an argument that real progress in certain fields will continue, as trends don't make for physical arguments tethered to empirical measurements and natural laws. There are indeed plenty of examples of exhaustable resources, there is no sense denying it. I'd go much further and say that for physical stuff, there is no such thing as an *inexhaustible* resource because everything is exhaustable in terms of there can only be so much of anything composed of matter which hasn't been reduced to its highest entropy. The universe started with a certain amount of negative entropy - the real "ultimate resource", it is going away, we can't do anything without spending at least a little of it down, and there's nothing anyone will ever be able to do about that. Try to use it wisely or 'effectively', I guess.
It would be better to stick to simple arguments based in straightforward economic reasoning that explains that in a normally functioning market with prices that clear demand and supply there is no such thing as a 'shortage' as a valid concept, that surprises and price swings happen as a normal incident of life, and that problems with prices and supply are much more likely due to various kinds of government failure than market failure.
For those of us that have worked in the exploration and production of minerals, what you call "unanticipated events" we call hard work coming to fruition.
Totally agree on luxury boxes. I don't see the appeal. The food is never good and the view is always worse. The Knicks have tried to create a courtside luxury box experience which works better than being in the "skybox" where you are far from the action. But it's still not compelling.
It is very important to NOT concede that any commodity price change "proves that markets need government intervention". Whether it's the (arbitrary & unusual) 38 years from 1980 to 2018, or 40 years from any two dates, it remains an interesting historical set of facts.
What WAS the price of bananas, or oil, or any specified basket of goods, in each year for the last 50 years and a comparison of 20 & 40 years later? I hope Tupy's book has more info about it.
It's also important to use median wage for the hour comparison, or an average of those who get paid by the hour for the #hours to earn that consumption basket.
Small gov't advocates need to accept that there WILL be some level of social safety net - but should be pushing for absolute levels. All working Americans can achieve the "American Dream of a single family home, a working car, and a chicken in every pot". For poor folk, the home won't necessarily be in a low crime, good school area - because the neighbors.
There will always be relative poverty as compared to the top.
Decades ago I learned about non-renewable resource economics, and see no advantage to prefer "exhaustible" as a phrase. (Unlike "Government Choice" over "Public Choice" theory, where this is a huge accuracy and connotation advantage in better labeling.)
Government protected ownership of all resources, renewable & not, combine with the desires of many humans, called "market demand", to determine a current price some buyers are willing to pay and some sellers are willing to sell at.
That market price is hugely influenced by government, both direct taxes & subsidies, as well as regulations. It's also hugely influenced by substitutes. Everything one can buy has some nearly identical or somewhat similar alternative good or service one could buy instead - and it is the offers for sale of these alternatives which push prices up or down.
The price of diamonds falsifies the Kling intuition that "prices of such resources will follow an upward path over time". Despite diamonds being very valuable, and consumable, in industrial uses as well as highly desired jewelry (some Swiss jewelry has masses of wonderful diamonds), the price of a 0.1 karat diamond has (probably?) not been going up as fast as wages since the development and popularization of Zircon and other substitutes.
Oil could be made from coal, as the Nazis did 80 years ago. Electrical energy can be created using non-CO2 producing nuclear power, if the gov't regulations allowed it (as well as continuing to support it with maximum legal liability coverage). Don mentions the Julian Simon truism that human creativity is the key resource.
In terms of "shortage", there has LONG been a shortage of 5 cent a gallon gas (like 100 years ago) - and no shortage of $50/ gal. gas.
We are almost certain (95%) to see the price of Lithium to continue to increase until some other battery tech has similar performance at that higher price. We'll never "run out" of Lithium, but it might well become too expensive to use as much as is being used now.
And such market price changes for a non-renewable, difficult to substitute for resource should NOT create calls for gov't intervention or control. As all of the writers (Arnold, Don; Marion Tupy & Gale Pooley) agree - to which I also agree (therefore they're all right!).
With all physical resources being interchangeable with energy, only the real cost of energy need be considered. With cheap energy every element can be found and concentrated from the oceans or everyday rock. A mixture of elements can be converted to all chemicals and minerals from oil to food.
“With diamonds, oil, or zinc, there is a viable option to leave the resource in the ground.” But one *always* has the option to do nothing, to postpone action until later. You seem to think it important to distinguish between cases where this *is* and cases where it *is not* a *viable* option. But, apparently, a *viable* option is simply one that is at least fairly close to the best option—one that is, at most, *slightly* sub-optimal. This is such vague concept that it cannot possibly be theoretically important.
When I studied resource economics in the 70s, the common terminology was "renewable" vs "nonrenewable" resources. Some authors characterized the distinction as "flow" vs "stock" resources.
It might be worth looking at both Price and Quantity over time. Reasoning from a price change is usually a bad idea, but if we see the price of bananas going down relative to labor and the quantity consumed increasing, that tells us we are much better at producing bananas, for example.
For things like oil, we might expect similar details to be useful, although we still have issues with governments limiting what we are allowed to access, which has nothing to do with how much is left in the ground but everything to do with price and quantity coming to market.