What appalling nonsense. There is no trickle-down economics theory of wealth. This is another myth used by socialists to discredit the market². Capital accumulation is how countries generate real wealth. As a country increases its investments more and more complex stages of production are added to its production structure. The faster the structure expands, the faster real incomes grow, so long as per capita investment increases faster than population growth. This is the process that generates wealth and raises real incomes. It's also called economic growth.

The idea that capital accumulation is not sustainable is another piece of green propaganda. Capital accumulation can continue indefinitely so long as sufficient savings are made available. It should be made clear, though it rarely is, that capital accumulation does not mean the simple multiplication of existing producer goods and consumer goods. As the Austrian school of economics has continually stressed, economic growth lengthens the production structure.

This is brought about by adding longer and more productive stages to the structure, a process that the market coordinates. These stages contain capital goods embodying the technical knowledge that raises Labour's output. Greens would answer that finite resources would terminate this process. But resources are not finite. From any human perspective they are clearly infinite. The table below, which I have used several times, clearly demonstrates that resource depletion is the least of our problems.

Table S Measures of Mineral Consumption (in years)
Minerals	Known Reserves ÷ Annual Consumption	U.S. Geological Survey's Estimates of Ultimate Recoverable Resources (= I°k of Materials in Top Kilometer of Earth's Crust) Annual Consumption	Amount Estimated in Earth's Crust ÷ Annual Consumption
Copper	45	340	242,000,000
Iron	117	2,657	1,815,000,000
Phosphorus	481	1,601	870,000,000
Molybdenum	65	630	422,000,000
Lead	10	162	85,000,000
Zinc	21	618	409,000,000
Sulphur	30	6,897	NA
Uranium	50	8,455	1,855,000,000
Aluminum	23	68,066	38,500,000,000
Gold	9	102	57,000,000
Source:: Nordhaus (1974, p. 23)

The average thickness of the earth's crust under the continents is 31 kilometres and 5 kilometres meaning that there would even more resources to be had. Calculations by the Commodities Research Unit, London, estimated that the top mile of the earth's crust holds a million times more than the estimated reserves of most metals. There is also exists vast untapped quantities of methane hydrate and free methane gases, of which known reserves are virtually in inexhaustible.

The more intelligent greens are not ignorant of the above facts, they just choose to ignore them because they make a mockery out of green assertions that we are running out of natural resources. If the greens were right and we were exhausting the planet's resources then the trend in the prices of resources would be rising in response to increasing scarcity. They deliberately ignore the fact that increased efficiency means falling unit costs. Thanks to a continuing increase in economic efficiency the last 200 years or so have experienced a steady decline in the prices of natural resources.

The above chart is The Economist's inflation-adjusted industrial price index with 1845-50 = 100 as its base. One does not have to be a mathematician to see that by 2000 the index had dropped by 80 per cent. What needs to be noted is that this decline took place during a period of enormous population growth made possible by massive industrialisation, first in the West and then in Asia. So we find that the real prices of natural resources have been falling for decades because they have been becoming more abundant — and still the likes of Townsend preach that using these resources is a "zero-sum game", i.e., I win, you lose. If they really believed their own propaganda they would be going long on resource stocks.

Missing from the greens' strictures is any recognition of what defines a resource. Now there was a time when oil on anyone's land was only cause for regret. It was a sticky smelly substance that ruined good farming land. Technology changed that by transforming oil into a highly valuable asset. This illustrates that technology defines resources. In other words, resources are a largely function of technology. This means the earth's resources are highly responsive to changes in price. This is because genuine economic growth is also a resource-generating process. There are abundant examples of market processes finding new resource and developing substitutes: coal for wood and charcoal, steam for wind, animal and water power, kerosene for whale oil followed by gas for kerosene which was then superseded by electricity.

(This is not to argue that a simple change in prices will induce a technical change. This didn't work for Nazi Germany and it would not work for us)³.

Aluminium is a particularly instructive example. A near-precious metal well into the nineteenth century, so expensive only the rich could afford it. But once the process to transform bauxite into aluminium had been discovered the metal's price plummeted, making aluminium pots, pans, etch., commonplace for even the very poor, adding another resource to the world's inventory. Rather than slowing down the process seems to be accelerating, with no slowdown in sight.

Townsend argued that economic growth can't be environmentally neutral. Now I freely admit to not knowing what he means by this. If he means that growth leads to changes in the 'natural' environment, then that is true. It is equally true that man, even at the most primitive level, has had a dramatic effect on his environment. It's an absurdity to argue that only economic growth could harm the environment. What do these greens think a collapse in economic growth would do? Their view ignores the important fact that growth generates the resources that lead to greater environmental sensitivity. Desperately poor nations don't have the kind of living standards that would allow them the luxury of devoting additional resources to environmental protection.

The last point is important because the likes of Townsend could mean that people do not have a right to trade off any part of their environment in order to improve their material standard of living. This is something that the green movement certainly believes. That it would condemn billions to abject poverty is not something that bothers environmental activists from rich countries.

But these people do have that right, whether the barristers like Townsend dispute it or not. Moreover, the environment is not static. Nature has done vastly more to change the planet's landscape than man has ever done or ever could do. This fact makes the notion of a ‘neutral' environment absurd. But lurking beneath the concept of ‘neutrality' is the belief that humans have no right to raise their welfare by changing the environment.

We now turn to alternative energy sources — what greens misleadingly call "soft energy" — like wind and solar that mendacious greens assure us would lead to an abundance of safe and clean energy. What they don't say is that these alternatives suffer massive diseconomies of scale that would result in an enormous hike in energy prices while simultaneously reducing the supply of energy. Another fact is that these alternatives waste high-grade energy by using it to manufacture products that will turn it into heat at low temperatures, i.e., solar collectors. Professor Klaus Knizia was very clear on this point:

If we strive for a maximum of life quality with a minimum destruction of the ordered states of the environment, then our task must be to extract a maximum of negentropy (higher-grade energy) from a given energy flux... It is, on the other hand, wasting energy to channel large amounts of negentropy into facilities of so-called ‘soft technology,' which will not give us a sufficiently great return of energy [extractable energy] to justify the investment of energy and raw materials in their construction. (Cited in Access to Energy, September 1981).

Like most greens Townsend argues that "sufficient resources are already being consumed to provide a job and a home for all Australians. . . ." This is really awful stuff. He doesn't grasp that it is not the so-called consumption of resources that creates jobs but market clearing policies. Where labour costs are raised above market clearing rates unemployment will emerge. Furthermore, it's downright hypocritical for an opponent of economic growth, the only process guaranteed to eliminate genuine poverty, to express sympathy for the unemployed and the poor of the Third World. To me that's like a criminal sending flowers to his victims. It only serves to mock their misery.

The world's present population owes its existence to economic growth. Stopping growth would literally be a sentence of death for several billion people. Dr Van den Bosch displayed the greens' contempt for the lives of others when he disdainfully dismissed those who expressed concern for "all those little brown people in poor countries". (Dixie Lee Ray, Environmental Overkill: Whatever Happened to Common Sense?, Regenery Gatway, 1993 p. 77)

1. Carbon taxes versus living standards

Why a carbon tax would hit living standards

Why is the Centre for Independent Studies supporting the destructive carbon tax?

2. How the Laffer curve really works: This article demonstrates how the tax cuts raise living standards.

3. John Jewkes, David Sawers and Richard Stillerman, The Sources of Invention, Macmillan & Co LTD, 1958.

Fernand Braudel, Civilisation & Capitalism: 15th-18th Century, 3 volumes, Phoenix Press, 1986)

Abbot Payson Usher, A History of Mechanical Inventions, Dover Publications Inc., 1982

T. K. Derry and Trevor I. Williams, A Short History of Technology from the Earliest Times to 1900, Dover Publications Inc., 1993.

Gerard Jackson is Brookesnews' economics editor