Bill Gates on “The Bet”

January 26th, 2014 at 2:00 pm by David Farrar

on “The Bet”:

The year 1981 was a big one in my business life. It was the year Paul Allen and I incorporated Microsoft in our home state of Washington.

As it turns out, 1981 also had big implications for my current work in health, development, and the . Right when Paul and I were pulling all-nighters to get ready for the release of the MS-DOS operating system for the brand new IBM-PC, two rival professors with radically divergent perspectives were sealing a bet that the Chronicle of Higher Education called “the scholarly wager of the decade.”

This bet is the subject of Yale history professor Paul Sabin’s new book. The Bet: Paul Ehrlich, Julian Simon, and Our Gamble over Earth’s Future provides surprising insights for anyone involved in addressing the world’s “wicked problems.” Most of all, it gave me new perspective on why so many big challenges get bogged down in political battles rather than being focused on problem-solving.

So what was the bet? University of Illinois economist Julian Simon challenged Stanford biologist Paul Ehrlich to put his money where his mouth was and wager up to $1,000 on whether the prices of five different metals would rise or fall over the next decade. Ehrlich and Simon saw the price of metals as a proxy for whether the world was hurtling toward apocalyptic scarcity (Ehrlich’s position) or was on the verge of creating greater abundance (Simon’s).

Ehrlich was the country’s, and perhaps the world’s, most prominent environmental Cassandra. He argued in books, articles, lectures, and popular television programs that a worldwide explosion threatened humanity with “the most colossal catastrophe in history” and would result in hundreds of millions of deaths from starvation and dire shortages not just of food but all types of raw materials.

Ehrlich is still preaching his doom and gloom.

Who won the bet? Simon. Definitively. Even as the world population grew from 4.5 to 5.3 billion in the 1980s, the five minerals that were included in the bet—chromium, copper, nickel, tin, and tungsten—collectively dropped in price by almost half. Ehrlich begrudgingly made good on the bet. But to this day he still does not concede that his predictions of Malthusian horrors have been off the mark. Similarly, he does not acknowledge that the discipline of economics has anything of value to contribute to discussions of population or the environment.

However he has inspired Green parties around the world to insist we need population control policies.

Even though I had gone back in recent years to read Ehrlich’s Population Bomb (1968) and the Club of Rome’s intellectually aligned book Limits to Growth (1972), The Bet was a stark reminder to me of how apocalyptic a big part of the environmental movement has been. Ehrlich claimed to have science on his side in all of his predictions, including how many people the Earth can feed. He stated as scientific fact that U.S. lifestyles were unsustainable, calling developed countries “overdeveloped countries.” Limits to Growth claimed the credibility of computer modeling to justify its predictions of apocalypse. …

We know now that Ehrlich was extremely wrong and that following his scientific certainties would have been terrible for the poor. He floated the concept of mandatory sterilizations. He pushed aggressively for draconian immigration policies that, if enacted, would have kept out much of the foreign talent that came into the U.S. over the past three decades and added greatly to the U.S. economy. Ehrlich and his fellow scientists criticized the Green Revolution’s agricultural innovations because, in his view, “we [will] have an even bigger population when the crash comes.”

On population, Ehrlich ignored the evidence that countries that developed economically dropped their birth rate. (The current view is that population will rise only modestly after hitting a bit over 9 billion by 2050.) Granted, population growth is a huge issue in some poor countries, where it creates locally some of the instability and scarcity that Ehrlich foresaw for the entire world. But fortunately, there is strong evidence that if we continue to produce innovative reproductive health tools and make them available to women who want them, and we keep pushing forward on economic growth, there will be fewer and fewer of these places in the decades ahead.

As incomes rise, births decrease. It’s ironic, but true.

The recent Economist special report on biodiversity makes a strong case that economic growth allows us to make environmental concerns a priority. It contrasts the environmental record of the rich countries with that of poor countries to say that economic growth is the best hope for environment protection. All of this suggests to me that we should be wary of broad attacks on economic growth. 

The Green Party philosophy is historically anti economic growth. They now cover this up with buzz words such as smart growth and green growth.

I’ve been meaning to read “The Bet” so must get around to it.

Tags: , ,

23 Responses to “Bill Gates on “The Bet””

  1. duggledog (1,439 comments) says:

    Green party philosophy here also turns out to be spending 90 million on low decile schools, providing free food, nurses etc, as they’ve just announced as election policy.

    Green philosophy has never made any sense to me. On the one hand, they abhor any type of meddling with nature, preferring it to be left alone so mother earth can do what she does best.

    But on the other hand when it comes to humans (which are part of nature) they engineer the very worst refuse of society – with all the very worst attributes – to breed and thrive (using other people’s money of course).

    Explain that one

    Vote: Thumb up 10 Thumb down 0 You need to be logged in to vote
  2. F E Smith (3,315 comments) says:

    Ehrlich claimed to have science on his side in all of his predictions, including how many people the Earth can feed. He stated as scientific fact that U.S. lifestyles were unsustainable, calling developed countries “overdeveloped countries.” Limits to Growth claimed the credibility of computer modeling to justify its predictions of apocalypse. …

    Y’know, that sounds awfully familiar…

    Vote: Thumb up 11 Thumb down 0 You need to be logged in to vote
  3. bhudson (4,736 comments) says:

    Ah, Ehrlich. In Population Bomb he claimed that India would never be able to produce enough food to feed its (then 200m) population.

    They achieved that milestone before the ink had dried on the book printing.

    Not at all too dissimilar to Wilkinson & Pickett in The Spirit Level, who claimed to have established scientifically that inequality is the cause of so many ills only to have their evidence thoroughly discredited by Pater Saunders who should that the data just did not support their arguments with sufficient statistical significance.

    None of that stops the Left (and particularly the Greens) lapping up the failures of these and their ilk and then trying to spout them as undeniable proof.

    But then truth and the Left are passing acquaintances at the best of times.

    Vote: Thumb up 12 Thumb down 0 You need to be logged in to vote
  4. gravedodger (1,528 comments) says:

    How quaint, a pointy headed doom merchant who happens to be the gospel for the c2014 luddites is proved wrong but, there is always a but ,is not diverted from his crusade that we are but lemmings heading for the cliff.
    OTOH an economist, many subscribe to the often substantiated theory, if all economists were laid end to end in a line they wouldn’t reach a conclusion, proves yet again, the total fallacy that greens c2014 predicate their philosophy on without questioning or even debating their nation damaging views.

    How many committed greens would survive in nature sans all the accoutrements progress has delivered them. Bloody mummy’s boy Gareth hughes would get very tired walking up and down to Dunedin to protest gas drilling eh.

    Vote: Thumb up 7 Thumb down 0 You need to be logged in to vote
  5. Scott Chris (5,981 comments) says:

    Y’know, that sounds awfully familiar…

    Yeah. Because he’s wrong any other bugger using computer models forecasting possible catastrophe must be wrong too. :?

    Be interesting to see how things would have turned out had this guy not come along. Maybe we just got lucky. Or maybe Ehrlich’s gloomy predictions spurred others (such as Gates) into action. Who knows?

    Vote: Thumb up 0 Thumb down 13 You need to be logged in to vote
  6. NgaioLes (1 comment) says:

    Norman Borlaug would, I suggest, fit precisely with Julian L Simon’s theory that the real and ultimate resource is human ingenuity. Try his book “The Ultimate Resource 2″ published in 1996 by the Princeton University Press.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  7. Fentex (909 comments) says:

    Ehrlich was the country’s, and perhaps the world’s, most prominent environmental Cassandra.

    Cassandra is a tragic figure because she was right but ignored and it’s an inappropriate name to apply to one believed wrong in thier predictions.

    Vote: Thumb up 3 Thumb down 0 You need to be logged in to vote
  8. F E Smith (3,315 comments) says:

    Because he’s wrong any other bugger using computer models forecasting possible catastrophe must be wrong too.

    No, merely that it shows that we should learn to be more sceptical of people making predictions of a similar nature using similar methods. 

    As far as Ehrlich was concerned, the science was settled and computer modelling proved it.

    Vote: Thumb up 12 Thumb down 0 You need to be logged in to vote
  9. Fentex (909 comments) says:

    Not at all too dissimilar to Wilkinson & Pickett in The Spirit Level

    As a youth I read The Population Bomb, Limits To Growth and other prognosticating tombs like Toffler’s Futue Shock when they were published and they all annoyed me for their weak logic and shallow reasoning.

    They especially annoy me because the problems they consider are real but their reactions to them always seemed fearful and callow while pretending to maturity and wisdom making them foolish and a hindrance rather than help.

    The Spirit Level especially pissed me off. I personally think inequality is a real problem and when occurring in societies where competition should exist is suggestive of barriers, favouritism and regulatory capture and can only contribute to incentives to protect itself. So I was curious about what this book had to say and bought a copy.

    I threw it across the room about two pages in because I could not stomach the appalling presumptions, non-sequiturs and obvious predetermined rationalisations it opens with.

    Vote: Thumb up 7 Thumb down 0 You need to be logged in to vote
  10. wat dabney (3,724 comments) says:

    He pushed aggressively for draconian immigration policies that, if enacted, would have kept out much of the foreign talent that came into the U.S. over the past three decades and added greatly to the U.S. economy.

    This is also, of course, the agenda of this blog’s prolific lying monomaniac, hj.

    Take a bow, hj.

    Vote: Thumb up 3 Thumb down 2 You need to be logged in to vote
  11. Bob R (1,357 comments) says:

    ***“He pushed aggressively for draconian immigration policies that, if enacted, would have kept out much of the foreign talent that came into the U.S. over the past three decades and added greatly to the U.S. economy.”***

    @ Wat Dabney,

    Have you looked at how California is faring? Their productivity is heading downward due to importing low skill people who aren’t assimilating.

    “For a closer glimpse of what’s in store for California, look at the Los Angeles Unified School District, the largest in California and the second largest in the country. Of its roughly 700,000 students, almost three-quarters are Hispanic, 8.9 percent are white, and 11.2 percent are black. More than half of the Latino students (about 300,000) are “English learners” and, depending on whether you believe the district or independent scholars, anywhere between a third and a half drop out of high school, following significant attrition in middle school. A recent study by UC Santa Barbara’s California Dropout Research Project estimates that high-school dropouts in 2007 alone will cost the state $24.2 billion in future economic losses…

    Perhaps even more important than the collapse of educational achievement among the lower strata is a deterioration of the higher education that was for decades the basis of California’s preeminence in science and technology. California currently ranks 40th among the 50 states in college-attendance rates, and it already faces a significant shortage of college graduates. Studies have shown that the economy will need 40 percent of its workers to be college-educated by 2020, compared with today’s 32 percent. Given the aging white population (average age, 42), many of these new graduates will have to come from the burgeoning Latino immigrant population (average age, 26). By one estimate, this would require tripling of the number of college-educated immigrants, an impossibility if current trends hold. The state’s inability to improve the educational attainment of its residents will result in a “substantial decline in per capita income” and “place California last among the 50 states” by 2020, according to a study by the National Center for Higher Education Management Systems…

    ne myth is that because America is a country of immigrants and has successfully absorbed waves of immigration in the past, it can absorb this wave. But the argument neglects two key differences between past waves and the current influx. First, the immigrant population is more than double today what it was following the most massive previous immigration wave (that of the late 19th century). Second, and much more important, as scholars from the Manhattan Institute have shown, earlier immigrants were much more likely to bring with them useful skills. Some Hispanic immigrants certainly do integrate, but most do not. Research has shown that even after 20 years in the country, most illegal aliens (the overwhelming majority of whom are Hispanic) and their children remain poor, unskilled, and culturally isolated they constitute a new permanent underclass.”

    http://www.npr.org/templates/story/story.php?storyId=112167023

    Vote: Thumb up 3 Thumb down 0 You need to be logged in to vote
  12. Bob R (1,357 comments) says:

    ***In Population Bomb he claimed that India would never be able to produce enough food to feed its (then 200m) population.***

    The Sub-Saharan African population is expected to double to 2 billion before 2050. How much Western aid will be required when the population reaches that point?

    Vote: Thumb up 3 Thumb down 0 You need to be logged in to vote
  13. wat dabney (3,724 comments) says:

    Bob,

    California’s problems are well known and immigration is not one of them, and stopping low-skilled immigration will do nothing to increase the supply of skilled workers.

    The state of California is becoming legendary for creating the most anti-business climate in the country because of its high taxes, excessive regulations, forced unionism, and bloated public sector. For the second year in a row, a large group of America’s CEOs recently rated California as the worst state in the country to do business in an annual survey conducted by Chief Executive Magazine. California currently ranks No. 49 among U.S. states for “business tax climate” according to the Tax Foundation’s 2011 State Business Tax Climate Index, and it ranks No. 48 for “economic freedom” according to a recent study by the Mercatus Center.

    It shouldn’t be any surprise then that companies are leaving the “Golden State” in record numbers this year for “golder pastures” and more business-friendly climates in other states. In just the last two years, the number of companies leaving California has accelerated more than five-fold, from one per week in 2009 to 5.4 per week this year, according to California relocation expert Joe Vranich.” [2011]

    http://www.aei-ideas.org/2011/07/companies-are-leaving-california-in-record-numbers-and-it-might-get-worse/

    Restricting the movement of workers can only make California an even worse place to do business.

    hj’s complaints about immigration are very like the first-world problems meme. They are the problems of success.

    If he wants to to know what real problems are he should imagine would NZ would look like without that talent coming here. It’d be the the Detroit of Australasia.

    Vote: Thumb up 1 Thumb down 3 You need to be logged in to vote
  14. Bob R (1,357 comments) says:

    @ Wat Dabney,

    Importing a lower skill population from Mexico is one of California’s main problems – it is also causing more skilled people to look elsewhere because the standard of living is going down with as a result.

    Also, why do you think California votes in Democrats who want high taxes/redistributive policies? Hispanics overwhelmingly vote left.

    This is something open borders Libertarians don’t seem to get! As Tino Sanandaji writes:

    “Modern libertarianism is a self-destructive ideology. This is because the unskilled immigrant population that open borders invites is an exceptionally infertile ground for libertarian values. Consequently open borders in a democracy will automatically lead to a welfare state as the immigrants sooner or later become the majority of voters.

    To no ones surprise, rather than becoming libertarian, immigrants loyally support the Social Democratic welfare state, as their economic self interests and the political culture of their societies would predicts. In the latest Swedish election, only 43% of Swedes but 77% of non-western immigrants voted for the left (this was an unusually bad year for the left, who got 92% of the immigrant vote in 2002!). In the United States, where while only 35% of non-Hispanic whites prefer higher taxes in return for more government services, the figure is 65% for first generation Hispanic immigrants, and 66% for second generation Hispanics.”

    http://super-economy.blogspot.co.nz/2011/03/intellectual-meltdown-of-libertarianism.html

    Vote: Thumb up 4 Thumb down 0 You need to be logged in to vote
  15. wat dabney (3,724 comments) says:

    Bob,

    Importing a lower skill population from Mexico is one of California’s main problems – it is also causing more skilled people to look elsewhere because the standard of living is going down with as a result.

    Sorry, but that’s just utter rubbish. The average standard of living might decline when the supply of low skilled immigrants increases, but the paradox is that, at the same time, just about everyone’s personal standard of living increases: the local skilled workers’ and the immigrants’. It’s win-win.

    California’s economy would collapse without a large supply of unskilled workers.

    This is a study of the subject, using official data. As I say, it’s win-win:

    http://www.aei.org/papers/society-and-culture/immigration/filling-the-gap-less-skilled-immigration-in-a-changing-economy/

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  16. Bob R (1,357 comments) says:

    ***California’s economy would collapse without a large supply of unskilled workers.***

    1. Above you noted California currently ranks No. 49 among U.S. states for “business tax climate” . If California hadn’t drastically altered its demographics via low skill immigration from Mexico it might still be a low tax/business friendly Republican strong-hold? That’s the paradox that you seem to be overlooking.

    2. The National Research Council, NAC (the research arm of the National Academy of Sciences, NAS) estimated the net cost of each low-skilled immigrant for the US. State is $130,000 in 2014 dollars.

    3. Given the achievement gap, which low skill immigration from Mexico contributes to, McKinsey find that in itself is the equivalent of a national recession. http://mckinseyonsociety.com/the-economic-impact-of-the-achievement-gap-in-americas-schools/

    4. The study you linked noted that the need for low skill workers is decreasing:

    “As the U.S. economy becomes more technology-intensive, there is less demand for low-skilled workers. But there will always be some need, and there are increasingly few Americans available to meet it. Educational attainment, comparative advantage, physical stamina and geographic mobility position low-skilled immigrant workers to fill this critical gap. Surely it’s only common sense to create a way for them to enter the country legally.”

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  17. wat dabney (3,724 comments) says:

    Bob,

    - “If California hadn’t drastically altered its demographics via low skill immigration from Mexico it might still be a low tax/business friendly Republican strong-hold? That’s the paradox that you seem to be overlooking.

    That doesn’t seem very likely, does it. Poor immigrants pushing for compulsory unionisation and a high minimum wage? Ever more red tape and expensive over-the-top environmental legislation?

    - “The National Research Council, NAC (the research arm of the National Academy of Sciences, NAS) estimated the net cost of each low-skilled immigrant for the US. State is $130,000 in 2014 dollars.

    You have to look at the whole picture:

    One frequently cited figure on the cost of low-skilled immigrants comes from the authoritative 1997 National Research Council study, The New Americans: Economic, Demographic, and Fiscal Effects of Immigration. The study calculated the lifetime fiscal impact of immigrants with different educational levels. The study expressed the impact in terms of net present value (NPV), that is, the cumulative impact in future years expressed in today’s dollars. The study estimated the lifetime fiscal impact of a typical immigrant without a high school education to be a negative NPV of $89,000. That figure is often cited by skeptics of immigration reform.

    What is less often considered is that the NRC study also measured the fiscal impact of the descendants of immigrants. That gives a much more accurate picture of the fiscal impact of low-skilled immigrants. It would be misleading, for example, to count the costs of educating the children of an immigrant without considering the future taxes paid by the educated children once they have grown and entered the workforce. The children of immigrants typically outperform their parents in terms of educational achievement and income. As a result, the NRC calculated that the descendants of a typical lowskilled immigrant have a positive $76,000 fiscal impact, reducing the net present value of the fiscal impact of a lowskilled immigrant and descendants to $13,000.

    Even that figure does not give the full picture. As the NRC study was being written, Congress passed the 1996 Personal Responsibility and Work Opportunity Reconciliation Act, otherwise know as the 1996 Welfare Reform Act. The act contains an entire title devoted to restricting immigrant access to means-tested welfare, limiting access of noncitizens to such public benefit programs as food stamps and Medicaid. When the NRC study accounted for the impact of the 1996 Welfare Reform Act, the fiscal impact of a single low-skilled immigrant and descendants was further reduced to $5,000 in terms of net present value.

    If we accept the NRC estimates, then allowing an additional 400,000 low-skilled immigrants to enter the United States each year would have a one-time NPV impact on federal taxpayers of $2 billion. That cost, while not trivial, would need to be compared to the efficiency gains to the U.S. economy from a larger and more diverse supply of workers and a wider range of more affordable goods and services for native-born Americans.

    http://www.cato.org/publications/free-trade-bulletin/fiscal-impact-immigration-reform-real-story

    So, the very significant benefits of cheaper goods and services provided by immigrants needs to be considered; a figure which for America’s $14 trillion economy and 350 million-something consumers must surely dwarf $2 billion.

    The economic benefits are many and varied:

    http://reason.com/blog/2014/01/25/why-we-need-fewer-justin-beibers-and-mor

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  18. Bob R (1,357 comments) says:

    ***That doesn’t seem very likely, does it. Poor immigrants pushing for compulsory unionisation and a high minimum wage? Ever more red tape and expensive over-the-top environmental legislation?***

    Who pushes those things? Democrats – who Hispanics overwhelmingly vote for.

    Who do you think AEI or Cato would have preferred as President – Obama or Mitt Romney?

    If the US had the same demographics it had in 1992 – Romney would have won. Demographics matter in terms of elections and the policies you end up with.

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  19. Bob R (1,357 comments) says:

    *** The children of immigrants typically outperform their parents in terms of educational achievement and income. As a result, the NRC calculated that the descendants of a typical lowskilled immigrant have a positive $76,000 fiscal impact, reducing the net present value of the fiscal impact of a lowskilled immigrant and descendants to $13,000.***

    That’s the problem with the low skill immigration from Mexico though – there seems to be an underclass developing and lack of intergenerational progress relative to previous waves of migration.

    http://www.frumforum.com/the-future-costs-of-todays-cheap-labor/

    Sorry, here’s the link regarding Romney winning under the 1992 demographics.

    http://super-economy.blogspot.co.nz/2012/11/why-hispanics-are-natural-democrats-and_12.html

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  20. leftyliberal (642 comments) says:

    Interestingly, it turns out that Ehrlich was just unlikely: If you consider 10 year periods from 1900 through 2008 and make the bet in a random year, Ehrlich would have been right 63% of the time, and Simon would have been right just 37% of the time. The price of copper now is nominally the same as it was in 1980 for instance (it’s gone up rapidly in the past 10 years or so).

    Ofcourse, this has nothing at all to do with population growth, as these metals tend to be used in developed countries whose populations are growing very slowly, not the developed world where growth rates are higher (and dropping all the time).

    Vote: Thumb up 0 Thumb down 3 You need to be logged in to vote
  21. Tom Jackson (2,529 comments) says:

    So we are down to reading weird tomes published nearly 50 years ago in order to discredit today’s environmentalists. I guess we should discredit all psychological research because R D Laing was a bit of a crackpot.

    Vote: Thumb up 0 Thumb down 4 You need to be logged in to vote
  22. Camryn (551 comments) says:

    I highly recommend anything from the Copenhagen Consensus, especially for converting Greenies to capitalism (as the best route to being Green).

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  23. Fentex (909 comments) says:

    Have you looked at how California is faring? Their productivity is heading downward due to importing low skill people who aren’t assimilating.

    What an odd non-sequitur in a conversation about environmental predictions. And also somewhat confused I think – those immigrants are in California for a reason and that’s likely the opportunity to increase their wealth (as many are undocumented workers it isn’t other benefits of citizenship they can hope for).

    Someone who argues about economic efficiencies, presumably from a position of believing in economic incentives and benefits of competition ought not worry about self-correcting flows of workers seeking to capitalise on their comparative advantages.

    Besides which though some studies place California low in Business Friendliness due it’s regulations and taxes most also place it high on likelihood for growth because unsurprisingly what you like or dislike and find friendly or not is not necessarily the same as what works or not.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote

Leave a Reply

You must be logged in to post a comment.