EDITOR’S NOTE: The following lecture was submitted as part of a conference entitled “Free Markets and the Environment” held on the campus of Grove City College on March 19, 2001.
There is almost certainly no issue of modern times in which Americans’ general beliefs about the state of affairs is so contrary to objective reality than in the area of the environment. Most Americans believe that because of industrialization, population growth and mass consumption, our air and our water are deteriorating and that our access to natural resources will soon run dry. We read stories about global warming, ozone depletion and the paving over of the planet and think that the environment must have been cleaner and more pristine 50 and 100 years ago.
In a recent poll, when Americans were asked what would be some of the greatest problems that mankind will confront over the next 50 years, the top two responses dealt with the environment. More than four of five said they feared “severe water pollution” and “severe air pollution” with three areas of environmental conditions: 1) air quality, 2) water quality and 3) availability of natural resources.
But here is the real state of the environment. Contrary to infamous doom and gloom reports of the 1960s and 1970s, we are not running out of energy, food, forests or minerals. The data clearly show that natural resource scarcity ¾ as measured by cost or price ¾ has been decreasing rather than increasing in the long run for all raw materials, energy and food, with only temporary exceptions. That is, resources have become more abundant, not less so. Even the U.S. government now apparently recognizes the errors of its judgments in the past. Reversing the forecasts of studies such as Global 2000, the Office of Technology Assessment in Technology and the American Transition has concluded: “The nation’s future has probably never been less constrained by the cost of natural resources.”
The major driving forces behind our improved environment are our greater access to natural resources, our affluence and our technology. Technological improvements and inventions have helped combat the worst kinds of pollution. The computer, for example, is arguably the most environmentally friendly invention in world history, by producing massive amounts of output with virtually no environmental costs. It is also true that a wealthier society is a healthier one. Wealthier societies can afford to devote more resources to combating pollution. We now know that the greatest environmental catastrophes of this century were caused by socialist nations. The communists in the Soviet Union were perhaps the greatest environmental villains in history. Prudent government regulation is necessary to protect the environment. But more important is a free market economy: one that protects property rights, produces wealth and encourages innovation.
The Reduction of “Pollution”
Most Americans today who believe that our environment has deteriorated over the past century or so, do not even understand the origins of the word “pollution.” It used to be that the term “pollution” meant disease. Tuberculosis, smallpox, the plague, typhoid fever, polio and influenza were all considered killer forms of pollution. They were generally a result of unsanitary conditions in cities, impure drinking water, the lack of modern sewage systems, filthy air and antiquated public health laws. These were pollutions that did not just inconvenience people through such symptoms as shortness of breath, eye redness or poor visibility, they were diseases that wiped out millions of human beings every year. They generally took their heaviest toll on children.
The greatest miracle of recent times has been that the United States and other rich countries have now experienced the almost complete disappearance of these major pollutions that have killed billions throughout human history. It is precisely because industrial nations have been so successful in eradicating these awful and major biological killers that Americans and Europeans now have the luxury of worrying about much less life-threatening forms of “pollution,” such as smog, minor chemical threats due to pesticides or arsenic in the water, and much more speculative and long-term threats such as global warming.
One of the major reasons we place a high premium on a clean and safe environment is for protection of our health. But every health trend has shown vast and uninterrupted improvement over the past century. The child death rate has fallen 20-fold. Life expectancy has leaped forward by 30 years in the U.S. and has nearly doubled in many developing nations such as India, China and Mexico. These statistics certainly call into question the premise that pollution is worse now than 50 or 100 years ago, given that the health of the world’s population has so dramatically improved over this time period.
Measuring Air Quality
But let us look at more direct evidence on the amount of air pollution in the U.S. The prevailing attitude of Americans, amplified by the media and academia, is that the giant leaps forward in industrial production have come at the expense of degrading our air and water quality. In the 1960s Harvard economist John Kenneth Galbraith wrote in his bestseller, The Affluent Society, that a fundamental tension exists between environmental and economic progress. Former Vice President Al Gore wrote more contemporaneously in his book, Earth in the Balance, that we have been mortgaging our environmental future through our mindless pursuit of economic growth. The surprising good news is that the economic progress of the last century has not come at the expense of clean air. Rather, economic growth has generally corresponded with improvements in the natural environment.
The national picture on air quality shows improvement for almost every type of pollution. Lead concentrations have amazingly fallen by more than 90 percent since 1976. In fact, the total volume of lead emissions was lower in 1990 than in 1940 (the furthest back we have reliable data) and was lower than in every intervening year. According to a 1999 report by the Pacific Research Institute, based on EPA air quality data, between 1976 and 1998 sulfur dioxide levels decreased 66 percent, nitrogen oxides decreased 38 percent, ozone decreased 31 percent, carbon monoxide decreased 66 percent, and particulates decreased 25 percent (between 1988 and 1997).
What about the smog levels in particular high-pollution cities? It was just a bit over 30 years ago that doomsayer Paul Ehrlich wrote in The Population Bomb, that “smog disasters” might kill 200,000 people in New York or Los Angeles by 1973. The reality is that air pollution in American cities has been falling for at least the past three decades. For example, air pollution, or soot, over Manhattan has fallen by two-thirds since the end of World War II. Air pollution over Chicago, Denver, Philadelphia and Washington, D.C., declined by more than 50 percent between 1972 and 1996. Perhaps the most gratifying environmental success story in recent years has been the rapid reduction in smog levels over Los Angeles in just the past decade. From 1985 to 1995, the number of days in the year of unhealthy air quality has fallen from about 160 to about 80. Pittsburgh’s air quality improvements over the past 40 years have been even more spectacular. In the 1920s, 30s, 40s and 50s, as the steel mills’ smokestacks belched out black soot, there were typically more than 300 “smoky” days a year. Since the late 1960s, that number has fallen to about 60 smoky days a year.
Water Quality Trends
One measure of the improvement in water quality over this century has been the dramatic reduction in outbreaks of disease from drinking water. At the start of the century, many life-threatening illnesses, such as diarrhea, were a result of Americans drinking and using impure water. In fact, waterborne diseases were a leading cause of death in the 19th century. In the 1930s and 1940s there were about 25 waterborne disease outbreaks a year. Nowadays there are almost none.
Unfortunately, there is not much reliable long-term data on the pollution levels of American lakes and rivers. Official measurements come from the Environmental Protection Agency and start around 1960 ¾ a decade or so before the Clean Water Act was signed into law. Over the past quarter century our lakes, streams and rivers have become much less polluted, and the trend is toward continued improvement. Since 1970 an estimated $500 billion has been spent on water cleanup. That spending has apparently paid off. The percentage of water sources that were judged by the Council on Environmental Quality to be poor or severe fell from 30 percent in 1961 to 17 percent in 1974 to less than 5 percent today.
We have made huge progress in purifying industrial and municipal waste before it is emitted into streams, rivers, and lakes. In 1960 only 40 million Americans ¾ 22 percent of the population ¾ were served by wastewater treatment plants. By 1996 that had risen to 190 million Americans, or 72 percent of the population. One consequence of these gains is that many streams, rivers and lakes which were at one time severely polluted are now much more pristine.
Nutrition and the Environment
Throughout history, man’s preeminent quest has been to feed himself. Famines have taken a horrid toll over the ages, in some cases wiping out as much as one-quarter of whole populations. Even when people did not starve to death, hunger and malnutrition have been routine parts of human existence for most people throughout most of history. In this century, food supply and consumption has increased rapidly. Food safety has improved immeasurably. Today, Americans are obsessed with minor risks associated with pesticides, irradiation, unsafe handling and rare diseases such as Mad Cow. But before the 20th century, food poisoning was common and milk was the carrier of tuberculosis and typhoid until pasteurization all but ended those risks.
The fear that man is running out of food has been with us for a very long time. It was just about 200 years ago that British economist Thomas Malthus issued his dreary and famous prediction that food supplies would run out because “the power of population is infinitely greater than the power of the earth to produce subsistence for man.” The more modern Malthusians predicted mass starvation on the planet by the year 2000. But what Malthus never envisioned was the coming green revolution that caused a meteoric rise in food production ¾ particularly in the U.S. Over the past 50 years, per capita food production has grown an astounding 40 percent, despite a doubling of the planet’s population.
One of the best measures of rising food supplies is the falling price of almost all agricultural commodities. Since at least the turn of the century, virtually every agricultural commodity ¾ from corn, to wheat, to milk and eggs ¾ is substantially more affordable today (relative to wages) than at any time in the past. On average the cost of agricultural commodities fell by more than 40 percent in the 1980s to an all-time low in the 1990s.
Cheaper food has meant less famine and hunger. Famine is less common now than in earlier eras, despite a much higher world population. For example, agricultural economist Gale Johnson of the University of Chicago estimates that fewer people died from famine in the 20th century than in the 19th century despite a near quadrupling of the earth’s population.
Only about 3 percent of Americans are underweight today. The major nutritional problem in the U.S. and most other developed nations today is obesity, the opposite problem of man throughout the ages. Even traditionally underfed China now has an obesity problem. The primary cause of the surge in food consumption has been the magnificent advances in food production. Consider this stunning statistic: the United States today feeds three times as many people with one-third as many farmers and one-third less farmland than in 1900. The problem that plagues the United States and most developed nations today is too much food grown. These days the U.S. government pays billions of dollars each year to farmers to stop growing so much food.
Are Minerals and Metals Scarce?
The United States is often criticized for consuming between 20 and 40 percent of the earth’s natural resources even though Americans account for only five percent of the world’s population. There is particular anxiety over future supplies of nonrenewable resources ¾ e.g., fossil fuels, copper, zinc, aluminum and electricity. The good news is that the long-term price trends relative to wages ¾ or how long we have to work to purchase these resources ¾ show decreasing scarcity for almost all minerals and metals. Minerals become less scarce over time for several reasons. One is that excavation technology continues to improve markedly over time, thus creating ever larger retrievable supplies. Second, we constantly develop cheap substitutes for minerals, thus lowering expected demand. A classic example is the substitution of satellites and fiber optics for copper wires in transmitting phone calls and information. The bottom line is that Americans are not resource destroyers; we are resource creators, leaving future generations with greater abundance of nature’s bounty.
The price trend for almost all natural resources has been falling over time. The experience of the 1970s, however, demonstrates that there is no inevitability of declining prices of natural resources. Unwise government intervention into the marketplace for natural resources can often have economically and ecologically debilitating consequences. For example, most economists today agree that a rash of new energy regulations introduced in the mid-1970s after the OPEC embargoes worsened the disruptions to the oil market in the ensuing years. They produced severe hardships for Americans as lines at the gasoline pump lengthened, home heating bills skyrocketed, and the pace of industrial production slowed to a crawl. It was the deregulation of oil and natural gas prices under President Reagan that created a wave of innovation in the area of energy exploration and helped generate today’s low prices.
The Age of Abundant Energy
Is there really a long-term energy crisis in America? Are we running out? In the early years of the 20th century there was a great scare over scarcity of oil. In the 1920s many geologists predicted that the U.S. faced certain depletion within 50 years. That never happened. But the gloomy prognostications continued. In late 1977 ¾ in the midst of the OPEC-created energy crisis ¾ President Jimmy Carter announced: “We could use up all of the proven reserves of oil in the entire world by the end of the next decade.” The Club of Rome predicted a few years earlier that oil prices would skyrocket to $100 a barrel. That never happened either. Energy prices plummeted in the 1980s and 1990s following a long-term trend of greater affordability of oil, gas and other fuels. Why? Because the world is not running out of energy. Recently, prices have risen, but still remain far below their historical price level.
Energy prices in the U.S. have fluctuated substantially since 1900. But the trend has been one of greater affordability. Adjusted for wage growth, oil today is about five times cheaper than in 1900 and roughly the same price as it was in 1950, notwithstanding the huge and temporary spike in the world price in the 1970s. Electricity prices have fallen more than eight-fold since 1900. Coal was almost seven times more expensive.
Before the 1950s it was almost unthinkable that oil could be drilled and extracted from the bottom of the sea. In 1965 one of the first off-shore oil rigs drilled oil from 600 feet deep off the coast of California. By the late 1980s the record for off-shore oil drilling reached 10,000 feet. It has been precisely this kind of innovation that has confounded the doomsayers who in the 1960s and 1970s predicted global oil shortages and even depletion.
Gasoline prices paid at the pump have been on a steady rate of decline since the 1920s, with the obvious exception of the 1970s. In 1920, the real price of gas (excluding taxes) was nearly twice as high as today. If the cost of gasoline relative to wages were what it was 75 years ago, we would be paying almost $10 a gallon at the pump.
However, in recent years, we have stumbled onto many of the same energy policy mistakes of the past and are now paying a price for those blunders. Our current “energy crisis” is a political problem, not a technological problem. U.S. energy policy has foolishly overemphasized uncompetitive alternatives to oil and natural gas, has subsidized energy use, and has left the U.S. captive to OPEC production cutbacks and price spikes. In many states, environmentalists have restricted oil drilling, power plant construction and electricity generation lines. Given current technological capabilities, the world is awash in oil, but our political rules currently prevent us from tapping that unlimited potential to lower energy costs. History is very clear on one point: the current conditions of rising prices won’t last for long.
Trends In Energy Efficiency
The recent price hikes in oil and electricity have also renewed calls in Washington, D.C., for a greater emphasis on energy efficiency in the workplace and at home. Environmentalists portray Americans as irresponsible over-consumers of energy. Wrong. The United States today may well be the most energy-efficient society in the history of man. Energy efficiency continued to surge so much in the 1990s that today we produce almost twice as much output per unit of energy as in the first half of this century. One often overlooked benefit of the digital and the information age is the huge gain registered in energy efficiency in the world economy.
Economic development and free markets are the keys to increasing energy efficiency. In 1986, a few years before the collapse of the Berlin Wall, the U.S. and other developed countries used less than half the amount of energy per dollar of GDP (Gross Domestic Product) than did the socialist economies. Communist North Korea still uses roughly three times as much energy to produce a dollar output than does South Korea.
Our modern society has also become much more efficient in waste disposal. Solid waste in the U.S. slightly more than doubled from 1960 to 1990. Yet over this same time period the amount of recycling rose by 96 percent. About 70 percent, a record high, of physical waste now generated in America is biodegradable.
Lost Land and Trees
We sometimes hear it said that economic progress in the United States has come at the expense of one of our most treasured national assets: our land. Suburbanization and increasing population is said to be imperiling our ability to feed ourselves in the future as we pave hundreds of thousands of additional acres in concrete every year. From 1960 to 1990 the number of acres classified as “urban land” has more than doubled from 25 million to 56 million. Yet the percentage of land in the United States that is devoted to urban/suburban use is only about three percent of the total land area of the continent. The rate at which land is being converted to suburban development is about 0.0006 percent per year, which is hardly a worrisome trend. In fact, protected lands from development have outpaced urban land conversion over recent decades.
While there may be some cause for concern about preserving tropical rain forests in Brazil and other developing nations, the U.S. forests are not shrinking. Currently, the Forest Service reports that the U.S. is growing about 22 million net new cubic feet of wood a year and harvesting only 16.5 million ¾ a net increase of 36 percent per year. This contrasts with the situation in the early years of this century, where about twice as many trees were cut as were planted.
The evidence presented above shows that, on average, Americans of each generation create a bit more than they use up. Not only must this be true to account for the increase in our wealth and numbers, but if this were not so ¾ if we used up a bit more than we create, and our assets deteriorated ¾ we simply would have become extinct as a species. The essential condition of fitness for survival of our species is that each generation creates a net surplus on average, or at least breaks even. Since we have survived and increased, this condition must have been present. The question then immediately arises: Must not we, like other species, cease our growth when we have filled up our niche ¾ that is, reached the limit of the available resources? One cannot answer this question with assurance, of course, because with each increase of wealth and numbers, we proceed into a situation with which we have no prior experience.
But as can be seen in the evidence of the increasing availability of natural resources throughout history as measured by their declining prices ¾ especially food, metals and energy ¾ there apparently is no fixed limit on our resources in the future. There are limits at any moment, but the limits continually expand, and constrain us less with each passing generation.
All of this is to say that the gains in environmental progress and resource abundance are a result of the most precious resource of all: the human intellect. This is the primary reason that we should be optimistic that the gains that have been made in the past 100 years will continue in the 21st century rather than reverse themselves. This is because almost all of the progress noted in the previous sections is primarily the result of the wondrous advances in the storehouse of human knowledge that has accumulated in this century.
We now stand on the shoulders of our ancestors, able to draw upon the accumulated knowledge and know-how of the past two centuries. This knowledge is our communal wealth. Much more than the power to enjoy gadgets, our wealth represents the power to mobilize nature to our advantage, rather than to just accept the random fates of nature. We now have all the evidence at hand to say definitively that Malthus was wrong, and so were his legions of modern-day doomsday followers.