Age of Cassandra's!

April 22nd was Earth Day. Earth day was first commemorated in 1970. The 70's was a decade when pessimism was at it's peak. The environmentalists and socio-economists were up in arms against the system and predicting the imminent demise of human society as we knew it. Today i was reading a WSJ article and figured out how Cassandra's have once again overwhelmingly taken charge of public opinion. The WSJ article (and i am inclined to believe the magazine without taking the effort to verify the sources) says that

since 1970, data in the US shows that
CO emissions down 55%
Particulate emissions down 80%
SO2 emission down by 50%
Lead emissions down by 98%

Before going further, i will admit to being a sceptic when the environmentalists tell me that world is a) dis-integrating b) will soon run out of oil/food/basic materials etc..etc. If one looks just at the present situation, I am on shaky grounds. Oil is hovering around 75$/barrel. In India people havent fully been affected by the oil price (which was less than 30$/barrel just a few years back) as government has not increased prices because of the elections (but once this election season is over i am sure they will!). All most all metal prices, be it gold, silver, copper or aluminium, are at the peak seen in the last quarter centuary. Iron, the sole hold-out has also started to move up. People are once again saying that we are going to run out of oil/metals blah blah.


The current run-up in commodity prices was also seen in 1970's and there were no shortage of cassandra's then (as there is none today!). During those days the cassandra's were predictng massive over population (before the term "human resources" were coined and before population aging became the big issue), inability to produce enough food for the world population (today starvation, where it exists, is not due to lack of production but due to civil wars/crazy economic policies), GLOBAL COOLING (yeah imagine that!) and ofcourse the perennial "we will run out of oil" cry!.

Now i have no clue whether we are going to run out of all these things. But i get damn suspicious when people just come out and say we will need xxxx million barrels of oil/day in 2025 but only yyyy million barrels will be produced!. In a way, i am in a sort of forecasting job and we know how difficult it is to forecast. Even a forecast of what one single company will do 5 years hence is just sooo error prone. Then anyone who tries to forecast oil consumption 20 years later is either lying or stupid (more likely both!!). The problem with such long-term forecasts are that they assume "all other things remaining constant" which ofcourse never does.

Who would have predicted 25 years back that Soviet Union will not exist, internet and mobile phones would change the way world lives/works and plays!, Berlin wall will crumble, Japan would suffer a mind-blowing recession and closer home coupla un-heard companies based in Bangalore will change the way the world looks at India. Did any one person predict two out of these five events which had such a huge impact in the world?. And now these fellah's are out there again..predicting how global warming will kill so many people by 2100 or how our economies will forever be ruined by scarcity of oil!.

The problem with Cassandra's is lack of self-awareness!!. In fact several of the problems they foresaw did not happen because Society actually took them serious and made amends. They also did not account for human ingenuity which created innovative solutions to these problems before it happened. The classic incident about the failure of Cassandra's is the wager between Julian Simon (optimist) and Paul Ehrlich (pessimist), both very reputed sociologist/economists. You can read about the bet here. Basically, Simon challenged Paul to name any list of commodities (Paul claimed that commodity prices will go up in future as over-population and over-usage will depelete the resources) and decide on a date when the prices (adjusted for inflation) will decide the winner. Paul chose Copper, Chrome, Nickel, Tin and Tungsten and chose the period of bet as 10 years.

You probably guess what happened 10 years hence! The price of all the five items went down once they were adjusted for inflation. Infact price of three items actually fell even in absolute terms. So much for cassandra's!!

Long live Optimism

Cheers
MoC