Every so often, almost like clockwork, the story goes around that natural resources are running out. In 1968, Paul Erlich published The Population Bomb, in which he claimed

The battle to feed all of humanity is over. In the 1970s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now. At this late date nothing can prevent a substantial increase in the world death rate…

I’m sure you all vividly remember the huge population drop in the 70s. Hundreds of millions of people died as predicted, and worse, thousands of pizzerias closed their doors. [The government tried to blame the deaths on mass suicides to escape disco music.]

In 1980, Julian Simon – who stated  the human mind the “ultimate resource” and that there are no natural resources until humans figure out a way to use them – called Erlich out. They wagered on whether the prices of five metals would rise or fall by 1990. Simon won the bet.

Some have claimed that if the bet had been longer, or for a different time frame, Ehrlich would have won. Tim Worstall of  Forbes explains why this isn’t so –

The end result of all of this is that yes, it is true that Ehrlich could have, would have, won the bet depending upon the starting date. But note that it would have been either political actions, or teething problems with new technology, that would have allowed that. None of these metals faces an actual shortage as yet. Further, note that over variable time scales Simon is still correct: it really is true that new technologies of extraction are developed and these increase supply and push prices down.

Oil is a perfect example of how human innovation transforms worthless material into valuable resources. Alex Epstein wrote –

It is almost impossible to overstate the dramatic and near-immediate positive effect of a group of scientists and businessmen discovering that “rock oil,” previously thought to be useless, could be refined to produce kerosene—the greatest, cheapest source of light known to man. In 1858, a year before the first oil well was drilled, only well-to-do families such as that of 11-year-old Henry Demarest Lloyd could afford sperm whale oil at three dollars per gallon to light their homes at night.

The “teething problems with new technology” plagued the early business of kerosene – fires and explosions were not uncommon. Standard Oil owner John D. Rockefeller innovated numerous methods of improving efficiency, such as transporting oil in tank cars instead of filling railroad cars with barrels. Chemist Samuel Andrews refined Standard Oil’s formula for purifying distilled kerosene. Costs went down, not only for Standard Oil, but for everyone else too. The price of kerosene dropped by more than half – from fifty-eight cents in 1865 to twenty-six cents in 1870.

Chris Mayer of The Daily Reckoning quotes Joseph Schumpeter and makes his prediction for 2013 –

The great economist Joseph Schumpeter’s (1883-1950) criticism of the Malthusian position still holds. On Malthus and his ilk, he wrote: “The most interesting thing to observe is the complete lack of imagination which that vision reveals. Those writers lived at the threshold of the most spectacular economic developments ever witnessed.” Yet they missed it.

So here is my prediction: I believe we are on the cusp of even greater levels of innovation and development — another industrial revolution is in progress right now.

I think he’s right. Deep Space Industries just announced their plan to send out spacecraft called “Fireflies” into space to seek out resources for exploitation (no word yet on whether River Tam will be aboard). And they aren’t the first. Last year, Planetary Resources announced a similar undertaking. Rand Simberg raised a question at Deep Space Industries recent press conference

Is there room for two such companies? At the press conference, I asked if they saw themselves as complementary to, or in pure competition with PR.

“We love Planetary Resources,” said Rick Tumlinson, chairman of the board. “One company may be a fluke, but two companies showing up, that’s the beginning of an industry.”

Don’t believe anyone who claims the future is all doom and gloom. The future may not be all sunshine and flowers, there are far too many Black Swans in the water to just assume it’s all downhill from here.