In this Feb. 6, 2019 episode of “Hawaii Together” on the ThinkTech Hawaii network, host Keli’i Akina talks with Gale Pooley about the BYU-Hawaii professor’s recent policy report, “The Simon Abundance Index: A New Way to Measure Availability of Resources.”
Written with researcher Marian Tupy, the report shows that instead of making resources scarcer, population growth has gone hand in hand with greater resource abundance.
Pooley, co-developer of the Simon Abundance Index, responds: “Abundance — the definition that we use — is the measurement of prices relative to population.”
He elaborates: “For example, when you think about a physical resource, think about a piano. A piano has 88 keys, but how many songs can you create with those 88 keys?”
Akina responds: “I would imagine it’s an infinite number of songs.”
Says Pooley: “It’s an infinite number. We live in this world where we have a physical limitation on the number of atoms that are on the planet, but we really have infinite ways that we can rearrange those atoms.”
Says Akina: “That’s very encouraging, because you’re moving economics away … from looking at scarce resources, which pits us against each other to compete for those scarce resources … into a realm in which we cooperate to take resources and bring out an infinite amount of abundance.”
Watch the interview below. A full transcript follows.
2-3-19 Gale Pooley with Keli’i Akina on “Hawaii Together”
Keli’i Akina: Aloha, and welcome to “Hawaii Together” on the ThinkTech Hawaii broadcast network. I’m Keli’i Akina, president of the Grassroot Institute.
Have you ever looked around Hawaii? Are we getting better or are we getting worse? How about the entire world? As we look at problems that face us today, sometimes we can become overwhelmed. Global warming, the rise of population, GMOs. We hear about these things all the time and a lot of people say it must be getting to be worse and worse to live in this planet. Some people have even decided they’re not going to bring children into the planet because they’re a drain on resources and the quality of life of everyone.
As you know, at the Grassroot Institute we like to base our beliefs upon data. We like to look at the actual research that is done into every field. Today I’m delighted that I have somebody who actually researches the quality of life. He’s an economist at the Brigham Young University-Hawaii. In that role, he studies actual data that tells us how we’re doing as people here on the planet and in the country and in Hawaii. My guest today is Gale Pooley, who is in the department of business and teaches economics at Brigham Young University. Please welcome him to the program. Welcome, Dr. Pooley.
Gale Pooley: Thank you.
Akina: Gale, I’m so glad you can be here.
Pooley: Great to be here.
Akina: You’re not a long-term Hawaii resident, you’ve decided to move here to paradise. How long have you been here and where did you come from?
Pooley: We came from Idaho, and I’ve been here for about a year and a half.
Akina: Tell me a little bit about your academic background.
Pooley: I have a Ph.D. and did undergrad in economics and did graduate work as well in that area.
Akina: What do you do up there at BYU?
Pooley: I teach economics.
Akina: All right. Let me not go any further than that, and just ask you a basic, basic question. I studied a textbook by a man named Paul Samuelson when I was a student at Northwestern University. That’s where I learned my economics, the study of the allocation of scarce resources. But you would teach people today, tell us what is economics in the simplest way we could possibly understand.
Pooley: Samuelson had a great book, it was the No. 1 selling book for three or four decades. His definition that he used is, “How do we allocate resources when we live in this world of scarcity?” That’s a very good foundation definition of economics. Today, however, we would probably expand that to, “How do people cooperate with each other to create value for one another?”
Akina: That’s a completely different question because if you’re looking at scarce resources from the beginning as the very basis for the study of economics, there’s a presumption there, that resources are scarce and becoming scarcer, and it’s almost a zero-sum game when you talk about the distribution of resources. Tell me more about your definition. It has more to do with creating value.
Akina: How does that get us beyond the resource-limitation question?
Pooley: We’ve always lived in a world of scarcity. We never have enough time, we never have enough. The question is: How do we measure that? The opposite of scarcity is really abundance. What is abundance? Our thinking currently is: Is there a definition of abundance that we can use to begin to measure changes in this relative scarcity?
Akina: Before you give me that definition, let me just point out the shift I’m hearing you talk about. Shifting from thinking of competing for scarce resources to the mode of creating abundance.
Akina: What is abundance?
Pooley: Abundance — the definition that we use — is the measurement of prices relative to population.
Akina: Say that again. Prices relative to population. Explain that.
Pooley: A traditional measurement might be, we want to know how much oil we have, so let’s go out and try to count up how many barrels we’ve got, and we have a quantity. Quantity is interesting, but it really doesn’t help us make the deeper decisions we need about the scarcity of that oil. We shift from quantity to prices. Prices, we believe, contain a lot more information than just a quantity number, because prices are basically information that buyers and sellers, market participants, are telling us about the relative scarcity of that particular item.
Akina: For example, in ancient Greece, it would cost you a fortune to have running plumbing in your house, to be able to flush your toilet without going outdoors to a community’s facility. But today, it’s relatively cheap. No one needs to have a lot of money to have that. Or, back in the day, when only the very wealthy could afford an iPad. Today, virtually anyone can afford a small little device that replicates what an iPad does. Is that what you’re talking about?
Pooley: Yes. Absolutely. When we think about this, it’s, “Are we being able to create things for one another that allow us to escape poverty? Are we lifting ourselves out of poverty?” This process of creating new things, innovation, is really what we think about today. For example, when you think about a physical resource, think about a piano. A piano has 88 keys, but how many songs can you create with those 88 keys?
Akina: I would imagine it’s an infinite number of songs.
Pooley: It’s an infinite number. We live in this world where we have a physical limitation on the number of atoms that are on the planet, but we really have infinite ways that we can rearrange those atoms.
Akina: That’s very encouraging, because you’re moving economics away, as we said earlier, from looking at scarce resources, which pits us against each other to compete for those scarce resources. You’re moving economics into a realm in which we cooperate to take resources and bring out an infinite amount of abundance.
Akina: My goodness, that’s some good stuff. [laughs]
Pooley: Here’s another thing. We look at an iPhone and we say it’s about four or five ounces of atoms, you’ve got four or five ounces of water, but these atoms have always been on the planet. We’ve just been able to come up with new ways to rearrange these atoms in ways that create value for one another.
Akina: In short, technology and innovation today are enabling us to take what we considered limited resources and unlock the infinite potential of these resources for a massive amount of abundance. Is that what you’re saying?
Pooley: It’s even deeper than that. It’s not just the technology, it is the conditions that you have to look at that allow people to have the freedom to pursue these ideas that technology comes out of.
Akina: I’m glad you said that, because we’re talking, then, about the rise of democracy and the spread of economic freedom across the world. Because without those, the technology would only be in the hands of a few.
Akina: This has been a great introduction, so that our viewers don’t doze off on us because I’ve pushed us into a theoretical realm. I want to ask you some practical questions that people are asking all the time. Is the world getting better, or is it getting worse? People will look at the rise of population, for example — later on, I’ll ask you a bit about your paper. But before we get technical, when people look at the rise of population and they think with the framework, “we have scarce and limited resources,” it can be pretty scary. You hear a lot of doomsday spoken of today. What is your thought about this?
Pooley: It’s interesting. A recent movie, the “Avengers: Infinity War” movie, the antagonist in that movie —
Akina: We’re giving them a royalty for that.
Pooley: Yes. The antagonist in that movie was a guy by the name of Thanos, and he said, “The universe is finite, its resources, finite. If life is left unchecked, life will cease to exist. It needs correcting.” That movie was all about —
Akina: That’s the gospel of scarcity.
Pooley: Yes. The same idea that, “Look, we live on this limited planet and we’re growing people, we’re going to run out of space and resources.”
Akina: What Thanos said is often cited as the condition for warfare. Some have even defined war as being the result of scarce resources and competition for those scarce resources. You’re talking about something very different. You’re challenging a mentality that has been with us for quite a while.
Pooley: Yes. The zero-sum game, that we have a limited number of resources that we have to divide up into — we have a limited size of a pie that we have to divide up with smaller and smaller slices as we have more and more people on the planet. That theory is not valid.
Akina: Let’s go to the presumption that the world is getting worse and worse, and resources are becoming more and more scarce. What does the data actually show?
Pooley: The data actually show, and the study that we looked at is, let’s just look at commodities, basic commodities: rice, wheat, oil, bananas, copper, iron ore. What have those commodities done over the past 30 or 40 years in terms of the price? We initially looked at the price, went back to 1980, looked at the price of those items, and compared the price today. In a nominal sense, the price tag, the price had gone up. We look around, looks like prices are going up. When you adjust for those prices and you remove the inflation, those prices, on the average, have gone down.
Akina: In other words, you’re saying it is actually cheaper to acquire those commodities today for the individual than it was years ago.
Pooley: On the average, if you purchased one of those items in 1980, the time it took you to earn the money to purchase that item in 1980, you could have 2.8 of those items today. Almost three of those items today.
Akina: That’s the pathway of abundance?
Pooley: That is the pathway of abundance.
Akina: How pervasive is that finding? In other words, did you just use some examples there that will make your case, or is there actually a pattern that we can see in terms of the ability to own, possess, acquire all kinds of things?
Pooley: What we did is we went to the World Bank. The World Bank actually reports on commodity prices each month, and we used their data. That’s how we form the foundation of the study. The additional thing that we did is we also took the price and divided it by average hourly income. For example, the way that we calculate this abundance is we look not only at the price of something but how much income required to purchase that item, because what we also observed is, as you see innovation happen, it not only lowers prices but it increases income.
For example, pizzas, say, they’re $10 today and your hourly earning is $10 an hour. It would take you one hour to buy that pizza today. There’s two ways the pizza can get cheaper. The price can go down or your income can go up.
Akina: Then you can afford more pizza.
Akina: Why don’t you and I take a pizza break now.
Akina: In about 120 seconds, we’re going to be back. Dr. Pooley has some fascinating things to share, and I’m going to corner him and ask him to demonstrate that the world is actually getting better for the majority of people. You don’t want to go away. You won’t want to miss that. I’m Keli’i Akina with the Grassroot Institute. We’ll be right back after this short break on ThinkTech Hawaii’s “Hawaii Together.” Don’t go away.
Akina: Welcome back to “Hawaii Together” with ThinkTech Hawaii. I’m Keli’i Akina at the Grassroot Institute of Hawaii. I’m going to ask our professor today to tell us whether the world is getting better or getting worse for the majority of people. With that question, I think we’re going to dispel a lot of things people think, because we often go by our intuition, our feelings, or what the media says, or just peer pressure when we say, “Look around, we’re running out of things. The environment is depleted. How are we going to survive?” Let’s take a look at what the data says. Please welcome back Dr. Gale Pooley of BYU-Hawaii.
Gale, it’s a big question, and a lot of people are saying that we’re headed toward a cataclysmic doomsday. I remember back in my own high school days, way back in the 1870s, we had a guy named Thomas Malthus we studied who was considered the prophet of doom. Then a guy named Paul Ehrlich, who wrote a book called “The Population Bomb,” which convinced virtually everybody, except a few people on the planet, that we are heading for a catastrophe. That the world is getting so big that the people can’t be supported by its resources. That the only thing that will help us is if we kill each other off and then start all over again. What is your theory? Are we getting better? Are we getting worse?
Pooley: I think I went to the same high school you did —
Pooley: — because I read the same thing and went to the same conclusion. It wasn’t until the ’80s where I began to really dig into the data and began to read a few economics books where I really began to question that.
As I dug deeper, the data suggested actually the opposite was occurring, that things were getting cheaper, they weren’t getting more expensive. If we really do live on a planet that’s limited in size and we increased population, we should see two things happening: We should see prices go up and we should see life expectancy go down. Those two things, the opposite happened.
Akina: We are seeing prices go down and life expectancy go up.
Akina: What about the quality of life for those people who are living longer?
Pooley: That is a good question. I think the first quality of life is quantity of life. If you have more life, by definition your quality of life has got to be increasing.
Akina: You are saying the world is actually getting better. Can you give me another couple of examples?
Pooley: First of all, we look at prices of things. What commodity has gotten more scarce in the last 30 years? What fundamental foundation commodity that’s necessary for life, energy, food, minerals has actually become more scarce or has gotten more expensive? Our analysis of World Bank data indicates not one of the 50 that we looked at. So that would suggest that people on the bottom are actually benefiting the most when these foundation commodities become more abundant.
Akina: Today we are very readily exposed to the narratives of famine, drought, population growth within small regions and warfare, other things that are very destructive of humanity itself. Is that because they’re increasing, as some say, which you would not, or is that because perhaps today’s technology available on the media, instant coverage of these items, makes them readily apparent to us and so they get a disproportionate level of attention?
Pooley: Yes, I’d agree with you. I think we’ve always lived in this world where there’s risk. Today, however, because of our ability to innovate, because we’ve been able to escape poverty, we can anticipate these events, we can prepare for them. Think about the volcano that occurred here not too long ago. We anticipated it. The hurricane that was coming our way here, we were able to prepare for it, plan for it. As a consequence, our risk of having problems with that event — much, much lower than they’ve ever been in history.
Akina: I’ll tell you about the volcanic eruptions on the Big Island of Hawaii, I’m not aware of, I could be mistaken, but I’m not aware of any death that occurred as a result of that. I hope my viewers will correct me if I’m wrong. Yet, scenes of the volcano deluging homes and so forth were played over and over across national and global media. Whenever I traveled during the eruptions, people would ask me about it and would be under the impression that we were just inundated with this disaster all throughout the Hawaiian islands, and people were suffering and dying.
I don’t want to be insensitive to those who did lose their homes and did suffer much. But for the most part, we escaped, through the level of technology we have, the deaths of anyone.
Pooley: There is a great book that was just published called “Factfulness” by Hans Rosling, and Bill Gates actually highly recommended it last year. He gave a copy to every graduating college student. Hans makes the case that the media, we have to remember that they are in the profit-making business, and the way to make profit is to capture people’s attention and hold their attention. These stories that are really exceptional stories are what do that.
What we’ve noted is the ability to be able to scan the globe and find these really exceptional things is gotten really easy to do. Consequently, if you watch any of these networks, you’re just a continual crisis of something after something, but they’re really, really exceptional and rare. That’s why they make the news, is they are so exceptional.
Akina: You’ve written a paper based upon the work of Julian Simon. It refers to the Simon Abundance Principle or Index. Tell us about that, and tell us what “superabundance” means.
Pooley: We actually said, there’s this relationship between population and resources — what is that relationship? Using the World Bank data, we were able to determine that, as population went from about 4.5 billion people in 1980 to over 7.5 billion today, we added 3 billion people to the planet. What happened to these resource prices? Our finding, based on this World Bank data, is that the time-price, the time it takes a person to earn the money to buy one of these items, had fallen by about 65%. Population increases by almost 70%, prices fell by 65% — clear relationship between the two.
The theory that we really used to explain that is that human beings are idea creators, and if they’re free to create these ideas and act on them, they make everybody around them wealthy. In other words, when I come up with a new idea, I’d benefit from it, but everybody around me also benefits from it. So if we can create this environment where people have this ability to be creative, be inventive, and have markets that they can go test their ideas out with, and they have a culture that allows this to happen, then we see this tremendous flourishing of human ingenuity.
Think about China. In 1990, 70% of the Chinese population lived on $2 a day. Today, it’s less than 2%. How did that happen? It happened because the Chinese culture allowed their entrepreneurs, who were there all the time, to bloom. Really, it was this great awakening of Chinese entrepreneurship that has lifted China from where they were to where they are today. There’s really no reason to not believe that that can’t happen in India, it can’t happen in Africa if we can take these fundamental principles that recognize human creativity and allow those things to be part of these different countries.
Akina: I want to go back to something you said earlier, particularly because you’re talking about China. You mentioned that it is far more than technology or innovation or even human creativity that is responsible for the growing abundance. It’s also the conditions under which these processes can thrive, conditions that really are defined by the political environment. I think you’re talking about freedom, you’re talking about liberty. You want to tell me a little bit more about that?
Pooley: Yes. If we dig deep into this innovation process, the foundation is human beings and freedom, and a little bit of freedom actually can go a long ways.
Akina: When you talk about a little bit, I think of China. China did not change its political structure in the past 30 or 40 years, but it’s allowed pockets of entrepreneurship and innovation to flow through its system. When you say a little bit of freedom can make a difference. I do think of places like China that have introduced a little bit of freedom. What happens when people are allowed to have an abundance of freedom, an abundance of liberty, right to self-determinism?
Pooley: Then you see Hong Kong, you see Singapore, you see South Korea. We can look at North Korea and South Korea. Fly over that peninsula at night and the light will tell you how much freedom is there.
Akina: We’re talking about economic prosperity, abundance and the opportunity for human flourishing?
Pooley: Yes, indeed.
Akina: You’ve come up with a term, or you use a term, maybe Simon came up with it, of “superabundance.” We’re going to close off our program now. We’ll talk a little bit about doing economics with a framework of superabundance.
Pooley: When we began to analyze abundance, we actually came up with four different abundance zones: Decreasing abundance, which is scarcity; emerging abundance, where population is increasing but prices are not increasing at the same rate; then we have a zone called increasing abundance, where we note that prices actually begin to fall as population goes up; and then superabundance is where prices are actually falling faster proportionally to population.
For example, let’s say we have Thanksgiving here and you invite over 10 of your friends, and the cost per person is $10 to buy the food for Thanksgiving dinner. Your total grocery bill is going to be $100, right? 10 people at $10.
Pooley: If the number of people you invite is increased by 70%, and the prices had fallen by 70%, what would your grocery bill be? Would it be more or less? It’d actually be significantly less.
Akina: You’d have experienced superabundance.
Akina: We’re about to close off the program, but you —
Pooley: I’ve got to come back.
Akina: You have to come back. You make me think about some people who say this world is becoming so bad and lacking in resources, it would be a crime to bring children into this world because they wouldn’t have an abundance. How about you, Dr. Pooley? How many children do you have?
Pooley: I have seven.
Akina: Seven. There you go.
Pooley: Seven, and we’re trying to increase the abundance on the planet.
Akina: There you go. I’m glad you’re making the world more abundant. I’m glad to be partnering with you.
Pooley: All right.
Akina: Thank you for being with us.
Pooley: Very good. Thank you.
Akina: My guest is Gale Pooley, who is a professor at Hawaii BYU campus, up on the north part of Oahu, where we live. It has just been fascinating. I’m just searching for words to describe my elation at the fact that we can switch from a model of thinking about scarcity, and limited competition for that scarcity, to a model of creating an abundance of everything in this world with the quality of life for all people based upon freedom. That’s what it’s all about. I’m Keli’i Akina on ThinkTech Hawaii’s “Hawaii Together.” We’ll be with you next week again. Aloha.