"The overall energy situation today looks a lot like a Cornucopian feast, as my colleagues Matt Wald and Cliff Krauss have recently reported."
Ummm... ya... that is a problematic statement, is it not? Energy prices are higher now than they were, and there are no clear signs that the rate of new production is going to outpace new demand in the near future. This is not an energy doomsday, but it's not a "cornucopia" either. Indeed, it's precisely this pressure that is going to incentivize new discoveries and whole new energy sources and ways of using energy, but that doesn't make the current energy situation or the situation in the foreseeable future a "cornucopia". And Brad said as much.
Don Boudreaux didn't like that very much - which I have to add isn't surprising because Brad called him "stupid", after all. The problem is, because Don was seeing red from being called "stupid" he went off the deep-end in interpreting DeLong's quite reasonable critique. He concluded that DeLong was taking the position of Paul Ehrlich, who predicted mass scarcity of resources, inexorably increasing prices, and that England "might not exist" by the year 2000 (I don't even really know what that means, but it doesn't sound pretty). At this point I want to invite readers to read DeLong's post in case you glossed over my earlier hyperlink. Is there anything in there that indicates he has any sympathy at all for the Ehrlich argument? Is there anything in there that even indicates the thinks there will be a dependable trend increase in prices? Of course not. Because Ehrlich was completely ignorant of economics and DeLong is one of the best informed economists out there. Don apparently did not take the time to read DeLong's post - I'm not sure he got past the title, because he certainly expected DeLong to take Ehrlich's side of the bet when he offered the classic Simon-Ehrlich wager to DeLong.
So what do I care? Well this is where I (probably unwisely) inserted myself. I told Don it was absurd for him to think DeLong would ever take this bet because it was absurd to think DeLong was sympathizing with Ehrlich in his critique of Tierney. I even pointed out an earlier DeLong post to Don where he agreed with Alex Tabarrok that neither Simon nor Ehrlich were especially wise in predicting such a persistent trend. And how did Don respond?:
"Daniel, you seem to read famous economists as if they are incapable of being dead wrong. Economists are too frequently slaves to their silly textbook and academic-journal models, having little ability to distinguish their models from reality, and fancying themselves wise and knowing because they've mastered complicated mathematical formulae and esoteric jargon. I'm certain that I'm wrong - even dead-wrong - quite often. But I've never, to my awareness, read any economist with such eagerness to excuse him or her from dumbshit error as you read the likes of Krugman, Keynes, and DeLong."
Well, it turns out I read DeLong exactly right on this point.
DeLong doesn't think the Ehrlich side of the bet is a wise bet because: "Falling expected extraction costs over time will impart a downward trend to resource prices even if net resource earnings are expected to be stable. Moreover, expected resource earnings are probably not expected to be stable: they are probably on a downward trend because most exhaustible natural resources are negative-beta assets--which means that investors ought to be willing to pay more for them than if they required a Treasury bond-like return. And most organizations that extract natural resources would like to be around for a while and think that their industry has a bright future--which means that it is at least plausible that they are likely to pump a little bit less than they should and so push today's prices up even further above the optimal Hotelling level."
All that, and he never initially claimed to take Ehrlich's side, of course. I want to re-emphasize that it's not especially notable that I was able to tell Don that DeLong thought this in advance of DeLong's response. It was written in plain English in everything DeLong has ever written about it. DeLong made a counter-offer. He reminded Don that his only claim was that we were not in an "energy cornucopia" where a flush supply of oil compensated for the increasing demand from developing economies. The absence of demand pressures usually manifests itself in lower prices, so DeLong instead suggested a put option for oil at $20/barrel.
You would think Don would show some humility after all this. To me, for framing my ability to read plain English as reading DeLong, Krugman, and Keynes with "eagerness to excuse him or her from dumbshit error" - but especially to DeLong for completely misreading him and absurdly associating him with 1960s vintage environmental-doomsday-dystopians. But there is no humility to be found - he's back on the attack, calling DeLong "not a nice man" because DeLong apparently read Don's response too fast and thought Don refused his counter-offer when he actually said he'd sleep on it.
Yawn. OK who cares? Am I missing something? That's an honest question because this is so absurd - am I missing something about why Don called him that? Don thinks that makes you "not a nice man"? DeLong apologized.
A new offer is on the table from DeLong, that the price of oil won't average $10/barrel for any five year period over the next twenty years.
I am not holding my breath for Don to embrace any of these offers, although I suppose it could happen. Don is only interested in painting anyone that disagrees with him as an extremist. If you offer him proof that you're not an extremist (as DeLong did initially, and then again, and now a third time), Don just hunkers down. Don is the kind of guy that looks for fights, and then when there is nothing to really disagree over, he invents positions for you. It's entirely transparent unless you're completely enraptured by him, as a lot of the commenters at Cafe Hayek are. And when I try to point out that the vast majority of people are not extremists - that there is not some cadre of environmentalist fanatics or statists out there - I get attacked by Don for being credulous.
DeLong likes to fight too (and I also enjoy heated debate - I'm not claiming to be a delicate flower that shuns heated debate in general). I still maintain calling people the "stupidest man alive" is not the most effective approach or the most polite approach. But it's also clearly a schtick and has to be understood as such. DeLong is not the one with egg on his face here. I've critiqued DeLong for a handful of things in the past, I've favorably cited considerably more, and it is still the position of Facts and Other Stubborn Things that he is among the few indispensable bloggers in the economics blogosphere.
I'm waiting for an apology from Don for claiming I eagerly defend "dumbshit errors" by famous economists, but I'm not holding my breath for that either, until he breaks out of his ideological bubble.
(Not Brad DeLong)