Sunday, August 1, 2010

The Power of Negative Thinking!

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This a reworking of an older Post with the slightly torturous title "Doomsayers, Geniuses and the Nonsense of Scarcity Economics"

Despite the long winded title, there are a few morsels of insight that encompass the importance of mindset and perspective in determining the direction of our passions. Passion, focus and determination may bring accolades in the short term but they are often in hindsight proven to be utterly wrong!

Hope you enjoy'

You may never have heard of Paul Ehlrich or Thomas Malthus unless you have an interest in the economic principles of scarcity. That being the case I'm surprised to find you here reading this irreverent scribble!  In fact Malhus died back in 1834. His Principle the Malthusian Catastrophe however lives on. 

Mr Ehlrich published a couple of best selling books between 1968 and 1971, including ‘Population Explosion”, ‘Eco-Catastrophe-, (that word again!), and ‘the End of Affluence’. At the time they were the best selling environmental books to date, selling millions of copies.

So well regarded was his work that he received the ‘prestigious’ Macarthur Foundation Genius Award in acknowledgment of his ‘wisdom’. Why the parentheses you ask?

Well, remember the aforementioned Malthus? He was the 'genius' that declared in volumes of scientific rhetoric, that the price of societal improvement and welfare was impending doom, manifested as epidemic, pestilence, plague and starvation.

You see the principle of scarcity states that in a world of limited resources there can be no place for aspiration to achieve. Presumably we should live in huts and embrace a life of privation and subsistence. Happy times!

Paul Ehlrich inhabits the same doomsday world as Malthus. His best selling books that garnered him his reputation including his ‘genius’ award, predicted apocalyptic disasters on a scale never before seen.

Hundreds of millions would starve to death. Famine, plague and societal disintegration would become the norm. Indeed the world as we know it would collapse like a house of cards. When will this happen, you might ask? Ehlrich was remarkably specific. During the 1970’s!

I must admit to being perplexed as to the predictions his vanquished competitors came up with in the ‘genius’ award, if he won!

In a previous article I asked ‘Does Truth Exist?’ and facetiously postulated that truth is entirely contextual and biased by our subconscious belief and value systems, which are largely a factor of our cultural up-bringing.

Hindsight is a great ally when predicting and forecasting outcomes. 

At the other end of the Truth spectrum is Julian Simon, who won a famous bet with Ehlrich, that resources actually drop in price over time and therefore are not scarce, and by predicting that contrary to the assertion that we live in a world of scarcity, we actually live in a world of untold abundance. The air is cleaner. We use less land to produce more food, thanks to the ubiquitous Corn Economy that accounts for so much of our food and packaging. 

However despite the aclaim garnered by the two aforementioned geniuses, the real hero of the 20th century may be another unheralded character: Fritz Haber. It was he who managed to extract Nitrogen from the air in the form of Ammonia, the consequences of which form the basis for the abundance most Western countries enjoy today. That one innovation allowed mass fertilization to occur and the evolution of the Corn Economy.

The point is not to gloat over the misguided predictions of past scholars, but it is interesting that negative doom and gloom catastrophe and impending apocalypse is easier to sell than the more likely script, which is that the power of innovation to replace and refine our technologies is inevitably more likely.

All innovation starts with the seed of a ‘what can we improve’ question. 

Doomsayers prefer to build their audience on the Principles of Malthus and Ehlrich.

All thoughts appreciated-Cheers Kiaran 


Steve Shoemaker said...

Kiaran interesting post.

Its a good thing that these gentlemens vision of the future don't affect mine.

I wonder how it was to live your life with that in the back of your mind thinking it was all for naught.

All I know is that I attract what I think about and if I "think" the above is my future well guess what life gives me.

Steve Shoemaker

Peter Fuller MBA CA said...

Hello Kiaran

Love the post.

It is always easier to be a doomsayer, especially if you already have a low price position in say, gold :)

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