Not the entire population of Switzerland but definitely the business editor of Zürich's Neue Zürcher Zeitung, Gerald Hosp, June 29:
Resource scarcity not a doomsday scenario
When commodity prices skyrocket, it's not just mine owners and oil producers celebrating. Doomsday prophets also have their day in the sun. But there’s a flaw in this kind of thinking: Natural resources aren’t finite in the conventional sense.
At the moment, there is an abundance of scarcity. Companies complain that there are shortages of semiconductors, lumber, steel, plastics, chemicals, and other inputs and raw materials. The pandemic disrupted many international supply chains. This is because companies cut back production, and were then surprised by the strong demand for televisions, home fitness equipment, bicycles, laptops and furniture – sometimes resulting in long delivery times and rising prices for end consumers.
Soaring commodity pricesCommodities are experiencing a full-fledged boom. Previously, the prices of copper, crude oil and wheat had long been stuck in the doldrums. As the global pandemic gained strength, they fell further into a tailspin. For a short period of time, producers were even themselves forced to pay in order to dispose of a barrel of American crude oil. But those days are gone. Indeed, the opposite is today the case. A debate is currently underway – with consequences for monetary policy – as to whether commodity-market developments are fueling inflation.
The soaring commodity prices also serve as a reminder that even in an age when an ordinary smartphone seems to contain the entire world, natural resources remain the foundation of our economies. Cautionary voices argue that increasingly expensive raw materials reflect an overload on the planet. When world market prices rose more than 10 years ago, especially for food products, this led in some cases to social unrest, and even helped trigger the Arab Spring.
Some also see exploding raw materials prices as a symptom of the planet’s supposed ecological exploitation by a capitalist economic system. The climate-change discussion has given still more urgency to all these issues. For a number of years, the Global Footprint Network organization has been calculating the date of what it terms Earth Overshoot Day. On this day, the Earth’s natural and renewable resources have been used up for the current year. This year, that day is said to fall on July 29 for the world as a whole.
Predefined finitenessOn this issue, we find doomsday prophets and mine owners in a curious embrace. With shining eyes, raw-materials companies are already talking about a supercycle. This can be defined as a period of prolonged, sharply rising prices across a broad range of commodities. The last supercycle began with China's economic rise some 20 years ago. Those in the industry are now asking a critical question: Is the current rise in prices a cyclical, short-term upswing, or the beginning of a supercycle?
There’s much to be said for the first thesis. First of all, prices fell sharply last year due to the pandemic. This means that the subsequent percentage increase has been large, because the initial base value was low. Moreover, when inflation is factored in, prices in dollars are even lower today than they were in the period between the 1980s and 2008. In many cases, commodity markets also feature a relatively rigid supply that is unable to respond quickly to unexpected changes in demand – as is currently the case due to the government programs stimulating the economy.
Nevertheless, steep price increases are always impressive, provoking a mood of doom and gloom. This is driven by the idea that nonrenewable raw materials are by definition scarce. In this view, the shortage of natural resources drives up prices over the long term, with potentially devastating consequences for the global economy. To a certain extent, this also applies to renewable raw materials such as food products, which depend on scarce goods such as soil, water and fertilizer.
A bet on the future....
Also at NZZ:
Saudi palace intrigue jeopardizes CIA secrets
A tweet cost him his doctorate: The extent of China’s influence on Swiss universities
