Friday, August 26, 2005

Doomsters, Place Your Bets - if you dare

A couple of months ago, 21 May: "Oh No he Didn't Say that", I had good cause to critique an op-ed by John Tierney because he misunderstood reciprocity in early human societies and Adam Smith’s metaphor of the invisible hand (actually Shakespeare’s from Macbeth, 3.2: ‘thy bloody and invisible hand’). He claimed that the new "Star Wars" film was based on Smith's philosophy (which it isn't). In Wednesday’s International Herald Tribune (24 August 2005) he comes up with a cracker – a great piece on natural resources and sustainability (‘Oil prices: my $10,000 question’).

Matthew Simmons, a fellow columnist at the New York Times, said that ‘oil prices would soar into triple digits.’ Tierney called Simmons and asked him if he would back is doomster prediction with cash, to which Simmons promptly said ‘yes’ and the result: a $10,000 cash bet between them.

In undertaking the bet, Tierney is following in Julian Simon’s footsteps, who challenged environmental writers of ‘blockbusters’ predicting a continuing rise in oil prices as scarcity squeezed supply but not demand. Paul Erlich, author of the “Population Bomb” (I have two copies for some reason in my library) took a bet of $1,000 with Julian Simon that natural resources would be more expensive in real terms in 10 years time, i.e., by 1990. They weren’t and Julian Simon collected his winnings.

Simon wrote a book, “The Ultimate Resource” (I had a copy but cannot lay my hands on it) showing the naiveté of ‘environmentalists’ who do not understand either economics or the enviorment, and who have mechanical ideas about mathematical models (remember “Limits to Growth” and how the world would end as we know it in the 1980s? – I can see that book on my shelf from where I am writing this; I should explain that six years ago I moved most of my library to France and only this summer have I gotten round to organising the books in some sort of order on the new shelves I recently bought).

The bet is that average oil prices for a year will not be $200 a barrel in 2010 as adjusted for inflation. The winner takes the $10,000 from an escrow account plus any interest earned.

And Tierney has also extended his bet challenge to anybody: ‘If you think the price of oil or some other natural resource is going to soar, show me the money.’

Now, why don’t the doomsters, panic merchants, scare mongers and environmentalists rush their bets to Tierney – he can be found on email: Tierney(at) – but somehow I do not think he will be kept busy covering his bets.


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