Fool Me Once ...

The current mania about the imminent end of society reminds me of a scene from Star Trek where Scotty gets deceived.

From the Wikipedia summery of the episode 40 Friday's Child:

Meanwhile the Enterprise receives a distress call from the S.S. Deirdre. Mr. Scott takes the Enterprise out of orbit to find the ship, but when it arrives at the coordinates, he finds nothing. He notes the call strangely asked for the Enterprise by name, and no civilian ship would have direct knowledge of the Enterprise's whereabouts. Realizing he had been duped he races back to Capella IV, but receives another distress signal along the way, this time from the U.S.S. Carolina. Scotty ignores it saying "fool me once, shame on you, fool me twice, shame on me."

Have you ever been fooled? I was in the early 70's about the end of the world. I read books like Famine 1975! America's Decision: Who Will Survive? by William and Paul Paddock,  and The Population Bomb by Paul R. Ehrlich.  These books predicted that millions would starve during the 1970's. Only America could save some. Mostly they proposed that America "write-off" countries that were doomed--countries like China and India. These very countries are now booming and this is now a big problem for the good ol’ USA.

No doubt 100 years from now there will be books that declare:  Famine 2075! China's Decision: Who will survive? Here is the first sentence from Erlich's book:

The battle to feed all of humanity is over. In the 1970s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now. At this late date nothing can prevent a substantial increase in the world death rate ...

A decade later Paul Ehrlich made a bet with futurist Julian Simon. Ehrlich picked 5 metals. He "purchased" $200 of each of these metals. At the end of ten years Ehrlich discovered that the prices of the 5 metals had declined and he sent Simon a check for $576.07. The doomsters have been consistently wrong for 100 years, although few of them failed as spectacularly as Paul Ehrlich.

Oddly enough, the main reason that Simon won the bet had nothing to do with the issues he and Ehrlich disagreed on. It was more a function of Paul Volker's monetary policy. I expect that if a similar bet were placed today the outcome would be quite different, especially factoring in the inevitable inflation we will have over the next few years. Ben Bernanke is no Paul Volker.

The irony is that while Ehrlich would win that bet in 2021, he would win for the exact opposite reason that Ehrlich predicts (he still fights the "good" fight of the 60's). It will not be because of the poverty of India and China, it will be because of the millions who are entering the middle class in these countries, and they want meat (well maybe not the Hindus). They want iPods (and the Chinese make them!). It is the wealth of these countries, not their poverty, that will raise commodity prices.