How Serious Are Shortages?
IN THE past, little thought was given to the limits of our earth’s resources. Its wealth of raw materials was largely taken for granted. So for centuries its minerals, fossil fuels and other supplies have been exploited as though they were unlimited.
Today the story is different. No longer is the earth considered a source of never-ending material wealth.
Until recently, most economists accepted the ideas promoted by Britain’s John Maynard Keynes. His view was that economic problems, including depressions and unemployment, could be remedied by encouraging mass consumption of goods, even if people, businesses and governments had to go into debt to do so.
It was thought that the continual increase of demand for goods would require more production, hence more factories, jobs and income for all—thus “prosperity.” And for decades now, this has been the general policy followed in Western economic life.
But it has finally become apparent that there might be something drastically wrong with the idea of constant growth, aside from the fact that mounting debts could become an intolerable burden. What brought the matter to a head more quickly than anticipated was that the world’s population began to “explode.” This was due to a continued high birth rate and a new, dramatic decrease in the infant death rate through better disease prevention.
Especially after World War II, world population began to grow faster than ever before. Now there are nearly four billion people on earth, and almost 80 million are being added each year. At this rate, population would double in just thirty-five years. It appears to world leaders that the earth cannot indefinitely support such an “exploding” population.
Does this mean that the earth is running out of resources? No, not really. At least not now. The main problem is the way human society is presently constituted, with its emphasis on more and more industrialization.
A mining executive noted in Vital Speeches: “Since mineral resources are non-renewable, undeniably at some future date exhaustion of economic resources will occur—but that day seems quite distant. The shortages experienced in the last 15 months have not been caused by lack of available reserves.”
But while there are ample reserves still in the earth, getting sufficient quantities to the nations that need them, quickly enough and cheaply enough, is something else. What makes the matter critical for western Europe, Japan and even the United States is that now the best reserves of most minerals and energy sources they need are not found within the borders of these countries. And the reserves they do have are not enough, and are being used up faster and faster because of the enormous appetites these nations have. Thus, these nations are suffering a serious and growing shortage of raw materials.
Formerly, when the human family lived a largely agricultural life, the demand on earth’s resources was very small. But with the coming of the industrial age several centuries ago, demand for raw materials grew at a tremendous pace.
Industrial societies need factories, offices, apartment buildings, power plants, machines, transportation, energy. These things cannot be built without steel, aluminum, copper, concrete and other materials. And industrial civilization is fueled chiefly by petroleum.
In the industrial lands of western Europe, Japan and North America, the demand for all such resources has been growing several times as fast as their rate of population growth. But this growth in demand is getting another push—from the exploding populations in what is called the “underdeveloped” world.
People in these poorer lands also want the machines and other material goods that they see in the industrial nations. And their leaders are pushing those countries into the industrial age as fast as they can. An example of how much this can increase demand for all sorts of goods can be seen from just one item involving an industrialized land, as noted in the book Introduction to Geology: “The consumption of iron in the United States increased some twenty times while the population of the country doubled.”
Yes, when a nation becomes highly industrialized, its appetite for raw materials increases all out of proportion to its population increase. And in the poorer countries, there are billions of people demanding the goods turned out by industry. As ecologists Paul Ehrlich and Dennis Pirages state in their book Ark II: “This crisis of numbers is exacerbated by a worldwide revolution of rising expectations. Materialism has become a universal religion. Continued increases in production of artifacts are regarded as a necessity by almost everyone.”
Thus, the overall population explosion in the world, plus the insatiable demand of the already industrialized nations, and now the growing expectations of poorer nations all add severe strains on the availability of earth’s resources. How severe is noted by political scientist William Ophuls in Harper’s magazine:
“To accommodate world population growth, we must, in roughly the next thirty years, build houses, hospitals, ports, factories, bridges, and every other kind of facility in numbers that almost equal all the construction work done by the human race up to now. . . .
“Problems now develop so rapidly that they must be foreseen well in advance. Otherwise, our ‘solutions’ will be too little and too late. . . .
“Only the most exquisite care will prevent the collapse of the technological society on which we all depend.”
The strain was clearly visible in 1973 and early 1974. Then, due to generally “booming” economies throughout the world, demand for goods rose swiftly. Governments had borrowed and pumped more and more money into their economies to sustain this prosperity. But while demand suddenly rose, newer factories and mines were not being built fast enough. Inventories were exhausted in a short time. A typical example was that of copper, which had an average production growth of about 4 percent a year since the early 1950’s. But in 1973 demand for copper in the Western world increased by more than 10 percent. Thus, demand for goods outstripped the ability to produce them, which also helped to bring about rampant inflation.
With inflation, the cost of borrowing money rose swiftly. This made it more costly to build newer production facilities. As U.S. News & World Report observed: “In one industry after another, shortages of materials and capacity are intensified by what is, perhaps, the most critical shortage of all—money. . . . Industry is hard pressed to find ways to pay for the manufacturing capacity to keep up with demand.”
Prices—Up, Up, Up
Prices, of course, fluctuate. Sometimes they go lower, especially when there is a surplus of certain goods. But the steady increase in demand year by year, the growing shortages, and competition for earth’s resources have put a generally upward pressure on prices. Examples of this can be noted in the accompanying chart of sample wholesale price increases.
But there is another reason that prices of metals and other materials have gone up. The “underdeveloped” lands that have the raw materials want more money for their products so they can buy the items they want from the industrial lands. The example of a fourfold increase in the price of petroleum is fresh on the minds of all nations. And this is also true of other commodities.
For instance, Jamaica and a few other lands, such as Guinea, Guyana and Surinam, have rich deposits of bauxite, the basic ore for making aluminum. Their prices have been rising significantly. Copper faces the same future, since Chile, Peru, Zambia and Zaïre supply most of the world’s exportable surplus. The same is true of tin, since about 70 percent of the exports come chiefly from Bolivia, Malaysia and Thailand. Many other basic commodities follow the same pattern.
Dependent on Imports
Few people in the industrial societies fully realize the growing degree to which their way of life depends on imports. Many of these imports are needed because shortages exist within a country and the product must be obtained elsewhere.
For example, the Netherlands imports most of its protein foods, all its cotton, and about 80 percent of its wool. It also imports all its antimony, bauxite, copper, gold, iron ore, nickel, phosphate and potash fertilizers, tin, zinc and many other commodities, including oil. Other European nations are in a similar situation.
Regarding oil, most of western Europe is totally dependent on oil imports, producing very little of its own. The oil embargo in late 1973 revealed how fragile the prosperity of these nations is. Interruption of oil imports could destroy their way of life in short order.
Japan is often looked to as an example of material progress. But it has been accomplished largely with the resources of other nations. In addition to importing much of its food supply, Japan imports most of the raw materials used in its industry. This includes 92 percent of its iron ore, 59 percent of its coking and bituminous coal, all its bauxite ore, 84 percent of its copper, and 99.7 percent of its petroleum. Yes, Japan’s “prosperity” too is built on a fragile foundation.
United States Imports More
The United States is regarded as the most productive nation on earth. Yet its predicament is now much the same as that of Japan and western European industrial lands. Hence, U.S. News & World Report stated:
“America—blessed in the beginning with a wealth of natural resources—is becoming a ‘have not’ nation.
“Hard facts show the U.S. is leaning more and more on other countries for the raw materials that are so vital to its status as the world’s most prosperous land. These materials, Americans are being told, will not be easy to come by in the future.”
Many of the “easiest” sources of raw materials in the United States already have been exploited. For instance, the rich iron deposits of the Mesabi Range in Minnesota are largely exhausted. Lower-grade ores are more expensive to mine. The “easiest” petroleum fields already have been tapped. That is why offshore oil drilling is expanding. Also, oil wells on land are being drilled deeper and deeper. And oil from Alaska will come in by pipeline. Even now the country imports about a third of the petroleum products it uses.
Also, the United States now depends on other nations for nearly a third of all the minerals considered essential to its industry. It is felt that by 1985 this dependence would rise to one half. The cost? In 1970 production of minerals within the United States fell nearly 9 billion dollars short of its requirements. And a government official estimates that this deficit will reach 31 billion dollars by 1985, and 64 billion by the year 2000. All that must be made up by imports. And these estimates were made before the rampant inflation of prices in 1973 and 1974!
The United States also has a huge appetite for fresh water. Industry consumes enormous amounts, about 100,000 gallons being needed to manufacture just one automobile. At the present rate of usage, it is estimated that in only 25 years the country will need about 250 billion gallons of fresh water each day for production and another 450 billion gallons to carry off wastes. Yet, the present dependable flow of surface water is only an estimated 100 to 125 billion gallons a day.
Is there any industrial nation on earth today largely self-sufficient in natural resources? Yes. That nation is the Soviet Union, which still has incalculable material wealth to be tapped. And yet, its soil is not as rich as that of the United States, so the Soviets experience frequent crop setbacks and must import food.
Heading for a Change
The industrial nations, especially the highly developed ones of western Europe, Japan and the United States, have worked themselves into a trap. To sustain their present standard of living they now must import increasing amounts of the raw materials and energy sources they need. But the poorer nations that have these resources now demand more money for them.
The immediate result of this is that these industrial nations are going more and more into debt to pay for the things they need. Just the petroleum bill in the past year has staggered the economies of the entire Western world. Nation after nation is going deep in debt to pay the higher petroleum costs. Thus, aside from the fact that it is getting harder and harder to obtain the raw materials and to produce the things that are demanded by people, the financial situation of the industrial lands has become desperate.
Economists agree that it is not possible to continue in this way much longer. Something has to change. The deficits in the international balance of payments of these nations mean that soon a sharp readjustment must take place. While borrowing billions from the now wealthy oil-producing lands helps to stave off disaster for a while, such borrowing cannot continue indefinitely, since the sums needed are enormous. It could mean that these nations will simply no longer be able to afford all the imports to keep up their way of life. That would mean a drastic revision in the standard of living of the people.
The capacity of people to readjust to a lower standard of living is questionable. A hint of things to come may be this item carried by the New York Times recently:
“CAIRO, Aug 10 (Reuters)—Two people were killed and five injured in the rush to buy a piece of soap, which is scarce in Egypt these days, the newspaper Al-Ahram reported today.
“In a fight over the last piece of soap in a shop in Rozeik village, the grocer and his son were killed, the newspaper said.”
British historian Arnold Toynbee comments that the industrial nations “are going to find themselves in a permanent state of siege, in which the material conditions of life . . . will become progressively more severe.” He adds:
“Within each of the beleaguered ‘developed’ countries there will be a bitter struggle for the control of their diminished resources. . . .
“Consequently, in all ‘developed’ countries, a new way of life—a severely regimented way—will have to be imposed by a ruthless authoritarian government.”
It is apparent to many observers that a huge readjustment in world affairs cannot be far off. The problems have become too critical. The authors of Ark II put it this way: “We know that the old system will not hold together much longer.”
[Chart on page 18]
WHOLESALE PRICE INCREASES WITHIN THE UNITED STATES IN JUST ONE YEAR
COMMODITY MID-1973 MID-1974 INCREASE
Newsprint, ton $169.00 $205.00 21 percent
Steel scrap, ton 53.00 145.00 174 percent
Sulphuric acid, ton 31.00 41.00 32 percent
Tin, lb. 2.18 4.49 106 percent
Copper, lb. .60 .86 43 percent
Aluminum ingot, lb. .25 .33 32 percent
Zinc, lb. .21 .35 67 percent
Gasoline, gal. .14 .28 100 percent
Fuel oil, gal. .11 .23 209 percent
[Picture on page 17]
KEY FACTORS PRODUCING SHORTAGES
Emphasis on Industrialization
Depletion of Raw Materials