Worse Case Events and Human Progress: Julian Simon’s Insight Post-Harvey

“Material insufficiency and environmental problems have their benefits, over and beyond the improvement which they invoke. They focus the attention of individuals and communities, and constitute a set of challenges which can bring out the best in people.”

– Julian Simon, The Ultimate Resource 2 (1996), p. 587.

“We need our problems, though this does not imply that we should purposely create additional problems for ourselves.”

– Julian Simon, The Ultimate Resource 2 (1996), p. 588.

The rains from Hurricane Harvey presented a worst-case event for Houston, Texas, and the petroleum/petrochemical capital of the United States. As such, a lesser known part of the Julian Simon (1932–1998) worldview of human progress comes into play.

Simon argued that there was a driving force or condition for human improvement beyond the institutional framework (private property, voluntary exchange, the rule of law), based on the human potential of motivation, effective use of knowledge, trial and error feedback, etc.

This element is the very fact of problems and setbacks, which create challenges that (in a world of purely incremental improvement) human ingenuity might not need to confront and solve. [1]

I applied this insight  in August 2010 in the aftermath of the BP Deepwater Horizon explosion. “The recent Gulf oil spill was certainly not anticipated by anyone in government or in private industry.”

Yet it happened. And BOOM, the whole offshore industry had to lock heads to try to find the best way to contain the spill and to eventually stop the same. After 87 days, the runaway well was capped. After about 110 days, the cement held, and the well was entombed.

That was the short game.

And now will come a new generation of offshore technology to ensure that such an accident does not happen again. Whatever the combination of new regulation, insurance requirements, or just best practices for cost minimization, there must be sound, failsafe, redundant technology for safe, spillage-free deepwater exploration. The reprinted article before is one early recognition of this fact.

Offshore drilling and operations are safer now than they would have been without Deepwater Horizon. Post-Harvey, a rebuilt Houston, acting in response to insurance availability and premiums, will be far more flood-proof than pre-Harvey. And as oil and petrochemical complex comes back on line (virtually complete as of this writing), fuel prices are returning to pre-Harvey levels.

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[1] I was quoted in the New York Times’s obituary on Simon on this point: ”He believed that the world needs problems because they make us better,” said Robert L. Bradley Jr., president of the Institute for Energy Research in Houston. ”Problems make us better off than if they had never occurred.”