ARE NATURAL RESOURCES A CIMIT TO GROWTH.
Today, the world’s population is over 6 trillion, about four times what it was a century ago. At the same time, many people are enjoying a much higher standard of living than did their great-grandparents. A perennial debate concerns whether this growth in population and living standards can continue in the future Many commentators have argued that natural resources will eventually limit how much the world’s economies can grow. At first, this argument might seem hard to ignore. If the world has only a fixed grow over time? Eventually, won’t supplies of oil and minerals start to run out? When these shortages to occur, won’t they stop economic growth and, perhaps, even force living standards to fall Despite the apparent appeal of such arguments, most economists are less concerned about such limits other than one might guess. They argue that technological progress often yields ways to avoid the its. If we compare the economy today to the economy of the past, we see various way” in which the of natural resources has improved. Modem cars have better gas mileage. New houses have better insulation and require less energy to heat and cool them. More efficient oil rigs waste less oil in the process of extraction. Recycling allows some nonrenewable resources to be reused. The development fuels, such as ethanol instead of gasoline, a.lows us to substitute renewable for nonrenewable resources Fifty years ago, some conservationists were concerned about the excessive use of tin and copper At the time, these were crucial cornrnodities Tin was used to make many food container and copper make telephone wire. Some people advocated mandatory recycling and rationing of tin and copper that supplies would be available for future generations. Today, however, plastic has replaced tin as a mater for making many food containers, and phone calls often travel over cables, which are mad” sand Technological progress has made once crucial natural resources less necessary But are all these efforts enough to permit continued economic growth? One way to answer this question IS to look at the prices of natural resources. In a market economy, scarcity is reflected in market prices If the world were running out of natural resources, then the prices of those resources would be rising over time But in fact, the opposite is more nearly true. The prices of most natural resources (adjusted for overall intonation) are stable or falling. It appears that our ability to conserve these resources is growing more rapidly than their supplies are dwindling. Market prices give no reason to believe that natural
resources are a limit to economic growth.
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