Superabundance

I recently read “Superabundance” at the recommendation of a friend who shares my optimism and enthusiasm for technology. Co-author Marian Tupy was generous enough to take some time to discuss the book with me. “Superabundance” explores how human innovation leads to increased resources and better living standards, challenging the traditional views on scarcity and global population growth.

Simon-Ehrlich wager

The premise is based on a continuation of a famous bet between pessimist Paul Ehrlich and optimist Julian Simon. Ehrlich argued in his famous book The Population Bomb that the population has exceeded natural resources and is headed for inescapable disaster. This view is informed by many biological examples where the unchecked growth of any population – from bacteria to animals – consistently trends toward collapse once the population exceeds resources. It’s an intuitive, simple and persuasive argument.

Before Ehrlich, there was Thomas Malthus, whose famous 1798 work is often quoted in political discourse (Mathusian). Malthus posited that success allows for more people, which only adds more strain on the overall system and ultimately ends in famine and suffering at increasing scales. For what it’s worth, Malthus failed to predict the Industrial Revolution’s contribution to population growth and resource availability. He underestimated the emergent phenomenon that more people actually leads to more innovation and greater overall abundance and quality of life. That is what allows us to delay the perpetual threat of a Malthusian/Ehrlich population catastrophe where other species fail.

Simon argued this resource-constraint framework does not apply to humans. He argued that we would not only survive but also thrive. Simon bet Ehrlich in 1980 that commodity prices would fall, a sign of increasing overall abundance, and ultimately won the wager in 1990.

Gale Pooley and Marian Tupy

“Superabundance,” published in 2022, focuses on time prices as an alternative to traditional measures like inflation and as a metric of how time – a fixed resource – relates to purchasing power. Time prices compare the amount of time a person must work to afford goods or services. Prices have gone up, but so have incomes and time savings from automation like the washing machine to ChatGPT.

The result is people can acquire more today after fewer working hours than any time in history. In other words, we are living in increasingly superabundant times. Pooley-Tupy estimate that overall time price abundance has increased by roughly 3.12% per year from 1850 to 2019. This makes sense when you consider the volume of products and services available today and it’s a compelling way to measure the progress of quality of life and resource efficiency.

Innovation potential is not capped

We don’t know how to measure the total global supply of any given commodity, so we can’t really know where the limits are. Lithium is often thought of as scarce, but it’s actually abundant. The challenge lies in economically viable extraction, which is a technology issue rather than a scarcity issue.

I like this Pooley-Tupy quote related to innovation potential: “a piano may have a fixed 88 keys, but those keys can be played in a nearly infinite variety of ways… The Earth’s atoms may be fixed, but the possible combinations of those atoms are infinite. What matters then, is not the physical limits of our planet, but human freedom to experiment and reimagine the use of resources we have.”

Freedom as a Prerequisite

Free markets are far better at systematically promoting what works and shutting down what doesn’t. No single individual can consistently decide what is best for the collective. This free-market system is crucial to the US’s economic growth, innovation engine and resource allocation. Marian Tupy grew up in communist Czechoslovakia, an experience that he says drives his passion for protecting American and global freedoms critical for continued human progress.

Recall that China’s government curtailed the influence of its most successful entrepreneur, Jack Ma, when he grew too influential. This action had a chilling effect on China’s entrepreneurial engine.

Investing implications

Translating this to investing, Marian did not write this book from an investment standpoint but I think it has strong investment implications aligned with what I’ve been writing about for many years. Semiconductors are the largest industry in the S&P 500 today and “tech” as a general term has nearly swallowed every sector. The tech-related Nasdaq and the S&P 500 have almost completely converged. We would almost certainly be in a recession today or in a depression this decade if not for the rise of MAANG stocks and their many smaller companions.

One of my favorite Simon-Ehrlich quotes is when Ehrlich said: “Julian Simon is like the guy who jumps off the Empire State Building and says how great things are going so far as he passes the 10th floor.” Confidently skeptical people are dangerously effective when it comes to persuasion and influence. No one wants to look foolish on the backend of blind optimism. Nonetheless, it’s important to exercise caution and confidence. You want your flight attendants to be pleasant, calm and confident in communication and your pilots to be sharp, focused and borderline paranoid regarding risk management and execution. Too much paranoia leads to persistent anxiety and lack of risk-taking, while too much optimism leads to permanent investment losses, like the SPAC boom and bust starting in 2021, which led to significant losses for many investors.

Excessive anxiety can lead people into a loop of anti-human, anti-children and anti-growth fatalism, a trend observed among younger generations overly exposed to pessimistic narratives about the future. The superabundance time price analysis shows that incredible progress has happened and continues to happen, even in the face of recent price inflation, which can feel a bit disheartening. It’s an important and optimistic message worth spreading. Marian documents his continued work on time prices and superabundance on HumanProgress.org, and Gale Pooley maintains a substack called Gale Winds.