I was in a Christian bookstore earlier today and noticed a couple of titles ringing alarm bells and tying fears of economic collapse and the end of oil to end-times prophecy. One of the reasons I love economics is that it forces us to be honest with ourselves about our beliefs. The well-worn objection to the “we’re going to run out of oil” thesis is that anyone who truly believes this should be loaded up on oil futures: falling future supply will ostensibly mean much higher prices, so anyone with better knowledge than other market participants about what is going to happen to the oil market can profit handsomely by acting on this knowledge. Yes, this depends on specific institutional conditions like well-functioning markets, but it highlights the fact that the social institutions and the incentives they generate are what matter, not the quantity of crude petroleum in the Earth’s crust.
In May, lots of people had a hearty laugh at the expense of Harold Camping, who had prophesied that the world would end on May 21, 2011. As I pointed out at the time, markets can help us “(p)rove all things” and “hold fast that which is good.” Specifically, superior knowledge relative to other market participants means profitable opportunities and, as Michael Munger points out in this EconTalk podcast, a golden opportunity to correct others’ mistakes. Are we to trust the superior wisdom of someone who is unwilling to act on it? One might be claiming to do so by publishing books and articles sounding the alarm bells, but as we all know, talk is cheap.
I also wondered how many of those laughing at Camping and his followers “nonetheless nod sagely, furrow their brows, and reach for their checkbooks whenever professional doomsayers in the environmental movement like Lester Brown and Paul Ehrlich warn of overpopulation, the end of oil, and the end of prosperity in spite of track records littered with doomsday predictions that failed to come true.”
The effect on flesh-and-blood human beings is not to be discounted. First, people have limited time and energy with which to worry about the end of the world. Second, as Christmas approaches, we do well to realize that Ebenezer Scrooge was wrong about the “surplus population.” As long as we have the institutions right, we aren’t going to run out of oil and we aren’t going to have “too many” people. The tragedy is that people who are attempting to change the institutions so as to conserve oil or curb population growth through non-market channels are undermining the very mechanisms that make society resilient to population pressure, political uncertainty, and other problems.
Doomsday prophecies crop up with distressing regularity. Here’s an idea for a graduate student looking for a paper or dissertation topic: look at the track record of alarmist books in the ECONOMAGEDDON genre. This might be a useful line of inquiry because ideology matters for the formation of economic and social policy. Paul Ehrlich’s The Population Bomb, for example, probably remains as (inexplicably) influential as it is (explicably) wrong. This would admit a potentially interesting test of the track record of Christian versus secular economageddon books. Do those who claim divine authority have a better track record than those who don’t?