Tuesday, May 8, 2012

Hayek On Exhaustible Resources

The ultimate resource is human ingenuity:*

The "fixed" character of minerals has been a siren song to economists who saw less when there was really more. The mineral economist should never forget that what resources come from the ground ultimately depend on the resources in the mind.

Hayek via Bradley via David Henderson of EconLog.

* This is why Paul Romer made the point that 40,000 years ago we were painting (cave walls) with iron oxides, while today we are painting (hard drives) with iron oxides. The capital in the raw material is the same, but technology has augmented the productivity we get out of it.

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