Tag Archives: Rational Optimist

The Remarkable Human Progress of the Last 200 Years II. What Has Caused It?

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In my last post, “The Remarkable Human Progress of the Last 200 Years,” I presented the findings of a new book by Johan Norberg, “Progress: ten reasons to look forward to the future.”  Mr. Norberg details how much human welfare has progressed in such fundamental ways as food availability, improvements in sanitation, increased life expectancy, poverty reduction, gains in literacy, decline of slavery, and equal rights for all.
This raises the obvious question: What is responsible for all of this enormous progress?

capture52An answer to this question is provided by Matt Ridley in his book, “The Rational Optimist: how prosperity evolves.”  First of all, Mr. Ridley points out that since the year 1800, income per capita has increased nine times (in constant dollars) and even though the rich have gotten richer, the poor have done even better.
But in addition it is the “invention of invention” attributed to the evolution of human nature which has led to the explosion of innovation in the past two centuries.  So what propels this explosion of invention?  According to Mr. Ridley:

  • It is not Driven by Science. In fact science is more like the daughter than the mother of technology.
  • Money is important to innovation but not paramount. For example, the pharmaceutical industry often simply buys small firms which have developed big ideas, rather than large companies developing their own products,
  • There is little evidence that Intellectual Property, i.e. patents, is what drives inventors to invent.
  • Government is bad at innovation. In fact it is more likely to crowd out resources which could be put to better use by the private sector.
  • In fact it is the ever-increasing Exchange of ideas which causes the ever-increasing rate of innovation in the modern world.

Conclusion. “The more you prosper, the more you can prosper. The more you invent, the more inventions become possible. … There is an inexhaustible river of invention and discovery irrigating the fragile crop of human welfare.”

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Optimism or Pessimism for the Future: Which Is More Justified?

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Comments from a blog reader:

I also am concerned about consumption and waste/pollution – plastic in oceans getting into the food chain, CO2 affecting climate with animals not adapting quickly enough so that we are in the 6th great extinction. Is there a non-debt based economy, or conservation/conserve (vs consumption encouraged) economy that we can transition to?

I am a financial conservative, but have lost faith in the business community and financial sector because of the obscene multiples of pay for upper management vs worker pay. Government is not efficient but there needs to be a counter weight to multinationals and the concentration of wealth. Service and products lose value when they are given to people so a monetary incentive is needed, but the current capitalist model trajectory is not sustainable.

This is why I disagree with your desire to replicate post WWII production increases and growth. The context has changed since we do not have to rebuild from the destruction and disruption of WWII. The continued push for people to consume and take on debt makes one a slave to debt.                                                                                                                             

My response to these thoughtful comments will be divided into two parts. First of all I refer to the book, “The Rational Optimist: how prosperity evolves” by Matt Ridley. Mr. Ridley makes a powerful argument that life all over the world is getting better all the time. The two evolved habits of exchange and specialization, starting thousands of years ago, have created a collective brain that sets human living standards on a rising trend.
Capture31For example, referring to the first paragraph above:

  • Emissions from U.S. air pollutants such as carbon monoxide, nitrogen oxides and sulphur dioxide have been cut in half since 1980.
  • Species extinctions are at most 2.7% per century.
  • Suppose that temperatures rise by the IPCC’s most likely scenario of 3 degrees C by 2100. This means that the sea level will rise by one foot, the Greenland ice cap will melt by 1%, fresh water will increase because of more evaporation, and in a warmer, wetter world habitat lost to cultivation will shrink from 11.6% today to 5% in 2100.
  • A revenue neutral carbon tax is by far the best way to sort out the optimal response to global warming.

Conclusion: The environment is likely to be much improved by 2100. The world will also be much more prosperous in 2100 as I will discuss in my next post.

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