The Cornucopia Thesis
The growth of population and of income create actual and expected shortages, and hence lead to price run-ups.
A price increase represents an opportunity that attracts profit-minded entrepreneurs to seek new ways to satisfy
the shortages. Some fail, at cost to themselves. A few succeed, and the final result is that we end up better
off than if the original shortage problems had never arisen.
Julian Simon, "More People,
Greater Wealth, More Resources, Healthier Environment"
Simon won a
famous wager by betting that the
prices of raw materials would fall over a ten-year period. He pointed out that prices of all consumer goods tend
to fall, leading to improved standards of living, and the prices of natural resources drop even faster.
The average cost of all consumer goods taken together—an index of consumer prices—has fallen over the years
in more-developed countries, measured in terms of what an unskilled worker can buy; this is proven by the
long-run increase in the standard of living. Therefore, if a raw material has not risen in price compared
to the average of goods, its "real" cost has fallen. In fact the price of mineral natural resources has
declined even more sharply than has the average price of other commodities.
Simon,
The Ultimate Resource 2
We wagered on the price of oil compared to the price of Big Macs in 2005, with a double-or-nothing repeat in 2016.
Second Wager double or nothing
WHEREAS on December 1, 2015, the price of one barrel of oil was $41.08, and the price of one Big Mac was $4.79,
their ratio stood at 8.58, and the wager entered on December 1, 2005
was decided
in favor of
wasoxygen. Furthermore, as the principles described by Julian Simon the Wise have been so clearly
demonstrated, that wasoxygen is content to enter a double-or-nothing wager, it is hereby RESOLVED that, on February 1, 2026,
should the cost in United States Dollars of one barrel of Light Sweet Crude Oil, today valued at $33.62, according to
321energy.com or some other mutually acceptable authority, divided by the average cost in the United States of one
Big Mac, today valued at $4.93, according to The Economist or some other reputable source, be greater than 6.82 then
wasoxygen shall consider the obligation of the 2005 wager forgiven, and if the ratio shall be less than 6.82,
uncanuck shall pay wasoxygen the amount of
TWO HUNDRED U.S. DOLLARS.
| Start |
1 February 2016 |
Barrel of Oil $33.62 |
6.82 Big Macs $33.62 |
| Finish |
1 February 2026 |
Barrel of Oil $-- |
6.82 Big Macs $-- |
Big Mac price
$5.51
on 11 July 2018
Big Mac Index
6.82 Big Macs
$37.578
First Wager
WHEREAS forum member wasoxygen has been quite convinced by Julian Simon the Wise that a Paradise of Plenty is nigh upon us,
when the streets shall flow with honey and any other Goods and Services which the Invisible Hand shall deem needful;
and member uncanuck believes this not necessarily so to be, it is hereby RESOLVED that, on December 1, 2015,
should the cost in United States Dollars of one barrel of Light Sweet Crude Oil, today valued at $58.75,
according to
321energy.com or some other mutually acceptable authority,
divided by the average cost in the United States of one Big Mac, today valued at $3.06, according to The Economist
or some other reputable source, be greater than 19.2, then wasoxygen shall pay uncanuck the amount of
ONE HUNDRED U.S. DOLLARS, and if the ratio shall be less than 19.2, uncanuck shall pay wasoxygen the same amount.
| Start |
1 December 2005 |
Barrel of Oil $58.75 |
19.2 Big Macs $58.75 |
| Finish |
1 December 2015 |
Barrel of Oil $41.08 (-30%) |
19.2 Big Macs $91.968 (+57%) |
Entire history
