Will the world run out of resources?

Only if you ask an ecologist.

"We are using 50% more resources than the Earth can sustainably produce, and unless we change course, that number will grow fast—by 2030, even two planets will not be enough," says Jim Leape, director general of the World Wide Fund for Nature International (formerly the World Wildlife Fund).

To get the right answer, ask an economist.  They will point out that when a good gets scarce, its price increases, which gives consumers an incentive to conserve or find substitutes, and producers an incentive to find more of it.

Until about 10 years ago, it was reasonable to expect that natural gas might run out in a few short decades and oil soon thereafter. If that were to happen, agricultural yields would plummet, and the world would be faced with a stark dilemma: Plow up all the remaining rain forest to grow food, or starve. 

But thanks to fracking and the shale revolution, peak oil and gas have been postponed. They will run out one day, but only in the sense that you will run out of Atlantic Ocean one day if you take a rowboat west out of a harbor in Ireland. Just as you are likely to stop rowing long before you bump into Newfoundland, so we may well find cheap substitutes for fossil fuels long before they run out.

REPOST from 2014

Remove barriers to progress!

Open Philanthropy's Progress and Growth Fund

• ...scientific and technological progress that creates ideas is the main driver of long-run growth...But ideas don’t automatically raise living standards; economic growth requires turning them into technologies that can disseminate throughout society. 
• Burdensome government regulations and institutional constraints are increasingly slowing the pace of this progress and creating artificial scarcity. 
• Restrictive zoning and land use regulations have created housing shortages in many major cities, driving up rents and preventing people from [moving to] to centers of economic growth and innovation. 
• Similar constraints hinder scientific and technological innovation — key institutional funders ...burden researchers with excessive paperwork and overly lengthy grant review processes, [leading to] low-risk, incremental research over higher-risk but potentially transformative ideas. 
• ...environmental review laws slow a wide variety of infrastructure projects, including green energy. [Irony is my favorite kind of humor.]

HT:  MarginalRevolution

Revealed Preference: people like inequality

 From Bryan Caplan's Bet On It:

“In their recent article,‘Why People Prefer Unequal Societies,’the psychologists Christina Starmans, Mark Sheskin, and Paul Bloom found that people prefer unequal distributions, both among fellow participants in the lab and among citizens in their country, as long as they sense that the allocation is fair: that the bonuses go to harder workers, more generous helpers, or even the lucky winners of an impartial lottery (Pinker 2019).“

And they move into neighborhoods with more inequality. From research by Prof Douglas Coate (Rutgers):

...I find that two-bedroom home sale prices are not adversely impacted by income inequality in favor of the well off in the community. In fact, the results show these prices may be slightly higher in communities where high quintile households receive a greater share of community income

Historical conservationists are the bad guys

 Economist:

[Cambridge, MA] is “becoming a barbell society,” ...The poor got help and the wealthy lived well, but ... young families leave for cheaper places. “One of the biggest signs that something was going wrong,” says Mr Azeem, is “when you can’t create space for the next generation.” 

But now, they are relaxing zoning to allow " six-storey residential buildings citywide ... People are waking up to the fact that land use regulation has something to do with housing costs”. 

But: “The minute someone tries to put a six-storey building in a residential zone that has historically been no higher than 35 feet, there’s going to be immediate negative pushback,” from "powerful historic conservationists"

Can income buy happiness?

 

Economist: 

The magazine article focuses on explaining "residual" happiness, the vertical distance between the line and the observation), i.e., how happy is a country controlling for its GDP. 

But elephant in the graph is the HUGE positive correlation between GDP and Happiness, likely caused by innovation, free markets, and less regulation, topics the left-leaning magazine doesn't want to talk about.

Compensating differentials: wind turbines

From MarginalRevolution:  Danish houses near wind turbines have 12% lower prices.

Foreign aid: "send a person a fish every day, and he forgets how to fish."

John Cochrane recommends the Economist article Aid cannot make poor countries rich.

From 2004 to 2014, foreign aid increased by 75%, but it didn't help:

• 2004, William Easterly: aid was just as likely to shrink the world’s poorest economies as to help them grow. 
• 2005, World Bank: grants and loans did not move the needle on growth. 
• 2019, IMF reached a similar conclusion. 
• 2025, Centre for Global Development, “There is no country that has really grown from aid.”

In what seems like evidence-based decision-making by the donors:

• President Trump has stopped much of US foreign aid.
• Sir Keir Starmer chopped Britain’s aid budget from 0.5% to 0.3% of GDP.
• France, the most generous Western donor after America, will this year reduce aid by 35%.
• Germany is considering cuts, too.

Effects of Tariff increases

Article by Joshua Hendrickson

The U.S. dollar is the world’s reserve currency, and the U.S. Treasury security is the global reserve asset. This means, respectively, that the dollar is the primary currency used in international trade, and that foreign central banks and other institutions store wealth in terms of dollars with Treasury securities.

...the dollar, because of its reserve status, tends to be overvalued. This makes foreign goods cheaper for U.S. consumers, but it also makes foreign labor and production cheaper ... a dynamic that has hollowed out America’s industrial base.

...

While imposing duties on imports will raise prices for American consumers, it will also appreciate the value of the dollar, ...

Tariffs might generate some revenue in the short run, but their larger effect—bringing countries to the negotiating table—could help the Trump administration achieve its [other] long-term objectives.

Software Deveopers and AI

I ran across this image that seems to support the idea capital/labor substitution in software development (see earlier post). Stack overflow is the preeminent site for software developers to get coding questions answered and/or find bits of code that will solve a current problem. But, being human intermediated, it could be slow and sometimes trolls will lead you astray. Its site volume seems to have started to decline with the advent of ChatGPT, the first, and most widely used LLM. Chat GPT can provide answers instantly, though some it may take some "prompt engineering" to get the specific answer you need.

Interestingly, much of the relevant training data come from stack overflow. Which means that asking ChatGPT is asking stack overflow but with computer intermediation. If ChatGPT allowing coders to get answers faster is leading to a decline in the demand for software developers, this suggest that AI is making software developers so much more productive that there is less demand for them. (edited)

Tariffs May Not Boost Domestic Investment

Alcoa would seem to benefit from an increase in demand for domestically produced aluminum from the imposition of 25% tariffs on steel and aluminum. All they have to do is ramp up existing US capacity. This quote from Alcoa CEO William Oplinger.in the WSJ suggests maybe not.

“We make decisions around aluminum production that have a horizon of 20 to 40 years,” he said. “We would not be making an investment in the United States based on a tariff structure that could be in place for a much shorter period of time.”

Who knows what tariffs would be under the next administration. Instead, he is bracing for a loss in 100,000 U.S. aluminum industry jobs due to tariffs targeting the metal. He is not explicit, but this would be the case if customers plan to cut back purchases due to their reduce operations or their ability to find cheaper substitutes.