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Malthus and Carter, Again?

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A front page Wall Street Journal article (subscription required) highlights the renewal of the “limits to growth” debate of the early ’70s:

Although a Malthusian catastrophe is not at hand, the resource constraints foreseen by the Club of Rome are more evident today than at any time since the 1972 publication of the think tank’s famous book, “The Limits of Growth.” Steady increases in the prices for oil, wheat, copper and other commodities — some of which have set record highs this month — are signs of a lasting shift in demand as yet unmatched by rising supply.

As the world grows more populous — the United Nations projects eight billion people by 2025, up from 6.6 billion today — it also is growing more prosperous. The average person is consuming more food, water, metal and power. Growing numbers of China’s 1.3 billion people and India’s 1.1 billion are stepping up to the middle class, adopting the high-protein diets, gasoline-fueled transport and electric gadgets that developed nations enjoy.

The result is that demand for resources has soared. If supplies don’t keep pace, prices are likely to climb further, economic growth in rich and poor nations alike could suffer, and some fear violent conflicts could ensue.

The article balances the gloom with some optimistic voices pointing out that human ingenuity has triumphed in the past over predictions of population-driven doom, but as a whole, the article paints a bleak future.

A second WSJ article is headlined “Political Pendulum Swings Toward Stricter Regulation,” and warns:

[I]t appears the question isn’t whether the government will enact tougher rules for various parts of the economy, but just how much stricter those rules will be. The new climate has some business groups girding for battle against what they fear could be onerous new requirements.

Taken together the hand wringing on limits to growth and the demand for government regulation of business suggests we are on the brink of reprising the ’70s, with Obama ready to take on the role of Jimmy Carter –the naive but smiling charmer-in-chief.

The key differences between then and now are distributed technology and the self-interest of the investor class. The former allows the latter to communicate and overcome any panic-driven lurch to the left. The government cannot solve issues of resource scarcity, only markets and capitalism can do that. And government regulators cannot remove risk from investments or introduce order to an economy that thrives on innovation. The campaign ahead may be a rerun of 1976 in some ways, but this time we know what happens when Democrats govern in a period of foreign policy peril and economic transition: You get ayatollahs in Iran, inflation and off-the-charts interest rates.


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