The Rational Optimist: How Prosperity Evolves

by Matt Ridley

The pharmaceutical industry, having tried again and again to instil a sense of radical thinking into its research departments, has largely given up the attempt and now simply buys up small firms that have developed big ideas. The history of the computer industry is littered with examples of big opportunities missed by dominant players, which thereby find themselves challenged by fast-growing new rivals – IBM, Digital Equipment, Apple, Microsoft.

‘This telephone has too many shortcomings to be considered as a means of communication. The device is of inherently no value to us,’ read a Western Union internal memo in 1876.

People get rich by selling each other things (and services), not ideas. Manufacture the best bicycles and you profit handsomely; come up with the idea of the bicycle and you get nothing because it is soon copied.

Intel’s dominance of the microchip industry, and 3M’s of the diversified technology industry, were based not on protecting their inventions so much as on improving them faster than everyone else.

The way to keep your customers, if you are Michael Dell, Steve Jobs or Bill Gates, is to keep making your own products obsolete.

First, no chef may copy another chef’s recipe exactly; second, if a chef tells a recipe to another chef, the second chef may not pass it on without permission; third, chefs must give credit to the original inventor of a technique or idea. In effect, these norms correspond to patents, trade secrecy contracts and copyright.

The perpetual innovation machine that drives the modern economy owes its existence not mainly to science (which is its beneficiary more than its benefactor); nor to money (which is not always a limiting factor); nor to patents (which often get in the way); nor to government (which is bad at innovation). It is not a top-down process at all. Instead, I am going to try now to persuade you that one word will suffice to explain this conundrum: exchange. It is the ever-increasing exchange of ideas that causes the ever-increasing rate of innovation in the modern world.

The secret of the modern world is its gigantic interconnectedness. Ideas are having sex with other ideas from all over the planet with ever-increasing promiscuity. The telephone had sex with the computer and spawned the internet.

the line between free and proprietary computing. After all, even the cleverest in-house programmer is unlikely to be as smart as the collective efforts of ten thousand users at the ‘bleeding edge’ of a new idea.

The wonderful thing about knowledge is that it is genuinely limitless. There is not even a theoretical possibility of exhausting the supply of ideas, discoveries and inventions.

If all transport depends on oil, and oil runs out, then transport will cease. If agriculture continues to depend on irrigation and aquifers are depleted, then starvation will ensue. But notice the conditional: if. The world will not continue as it is. That is the whole point of human progress, the whole message of cultural evolution, the whole import of dynamic change – the whole thrust of this book.

It is my proposition that the human race has become a collective problem-solving machine and it solves problems by changing its ways. It does so through invention driven often by the market: scarcity drives up price; that encourages the development of alternatives and of efficiencies.

The pessimists’ mistake is extrapolationism: assuming that the future is just a bigger version of the past. As Herb Stein once said, ‘If something cannot go on forever, then it will not.’

‘There is no reason anyone would want a computer in their home.’ Both remarks were true enough when computers weighed a tonne and cost a fortune.

The generation that has experienced more peace, freedom, leisure time, education, medicine, travel, movies, mobile phones and massages than any generation in history is lapping up gloom at every opportunity.

The endless modern laments about how texting and emails are shortening the attention span go back to Plato, who deplored writing as a destroyer of memorising. The

Of course, there are twerps and geeks in every generation, but today’s young are volunteering for charities, starting companies, looking after their relatives, going to work – just like any other generation, maybe more so.

have news for him: small children were more overworked, and fell a lot more ill, in the industrial, feudal, agrarian, Neolithic or hunter-gatherer past than in the free-market present.

Yet surveys consistently reveal individuals to be personally optimistic yet socially pessimistic.

large literature confirms that people much more viscerally dislike losing a sum of money than they like winning the same sum. And it seems that pessimism genes might quite literally be commoner than optimism genes: only about 20 per cent of people are homozygous for the long version of the serotonin transporter gene, which possibly endows them with a genetic tendency to look on the bright side.

There is immense vested interest in pessimism, too. No charity ever raised money for its cause by saying things are getting better. No journalist ever got the front page by telling his editor that he wanted to write a story about how disaster was now less likely. Good news is no news, so the media megaphone is at the disposal of any politician, journalist or activist who can plausibly warn of a coming disaster.

you teach children that things can only get worse, they will do less to make it untrue.

that cancer is caused chiefly by cigarette smoke, infection, hormonal imbalance and unbalanced diet – and that chemical pollution causes less than 2 per cent of all cases of cancer.

As the evolutionary biologist Paul Ewald has long argued, viruses undergo natural selection as well as mutation once established in a new species of host and casually transmitted viruses like flu replicate more successfully if they cause mild disease, so that the host keeps moving about and meeting new people. A victim lying in a darkened room alone is not as much use to the virus as somebody who feels just well enough to struggle into work coughing. The modern way of life, with lots of travel but also rather more personal space, tends to encourage mild, casual-contact viruses that need their victims to be healthy enough to meet fresh targets fleetingly.

Today you are far more likely to get the flu from a person who is well enough to go to work than one who is ill enough to stay at home.

Many of today’s extreme environmentalists not only insist that the world has reached a ‘turning point’ – quite unaware that their predecessors have made the same claim for two hundred years about many different issues – but also insist that the only sustainable solution is to retreat, to cease economic growth and enter progressive economic recession.

Aid to Africa doubled in the 1980s as a percentage of the continent’s GDP; growth simultaneously collapsed from 2 per cent to zero.

They could find no evidence that aid resulted in growth in any countries. Ever.

To those who say that this would make an uncoordinated, unplanned business, I reply: exactly. Grandiose goals and centralised plans have just as long and just as disastrous a history in aid as they do in politics.

the same lesson applies. Give local people the power to own, exploit and profit from natural resources in a sustainable way and they will usually preserve and cherish those resources. Give them no share in a wildlife resource that is controlled – nay ‘protected’ – by a distant government and they will generally neglect, ruin and waste it. That is the real lesson of the tragedy of the commons.)

Little wonder that a staggering 98 per cent of Tanzanian businesses are extralegal.

I could plunge into the scientific debate and try to persuade you and myself that the competitive clamour of alarm is as exaggerated as it proved to be on eugenics, acid rain, sperm counts and cancer – that the warming the globe faces in the next century is more likely to be mild than catastrophic;

Your grandchildren will be that rich. Do not take my word for it: all six of the IPCC’s scenarios assume that the world will experience so much economic growth that the people alive in 2100 will be on average four to eighteen times as wealthy as we are today.

In short, the extreme climate outcomes are so unlikely, and depend on such wild assumptions, that they do not dent my optimism one jot.

The cost of the damage done by hurricanes has increased greatly, but that is because of the building and insuring of expensive coastal properties, not because of storm intensity or frequency. The global annual death rate from weather-related natural disasters has declined by a remarkable 99 per cent since the 1920s

Category 5 Hurricane Dean struck the well-prepared Yucatan in 2007 and killed nobody. A similar storm struck impoverished and ill-prepared Burma the next year and killed 200,000. If they are freed to prosper, the future citizens of Burma will be able to afford protection, rescue and insurance by 2100.

Likewise, a jump in tick-borne disease in eastern Europe around 1990, initially blamed on climate change, turned out to be caused by the fact that people who lost their jobs after the collapse of communism spent more time foraging for mushrooms in the forests.

But even if you accept these guesses, the WHO’s own figures showed that climate change was dwarfed as a cause of death by iron deficiency, cholesterol, unsafe sex, tobacco, traffic accidents and other things, not to mention ‘ordinary’ diarrhoea and malaria. Even obesity, according to the same report, was killing more than twice as many people as climate change.

Not only will the warmth improve yields from cold lands and the rainfall improve yields from some dry lands, but the increased carbon dioxide will itself enhance yields, especially in dry areas. Wheat, for example, grows 15–40 per cent faster in 600 parts per million of carbon dioxide than it does in 295 ppm. (Glasshouses often use air enriched in carbon dioxide to 1,000 ppm to enhance plant growth rates.)

Economists estimate that a dollar spent on mitigating climate change brings ninety cents of benefits compared with $20 benefits per dollar spent on healthcare and $16 per dollar spent on hunger. Keeping climate at 1990 levels, assuming it could be done, would leave more than 90 per cent of human mortality causes untouched.

Arguably, the orang-utan, being devastated by the loss of forest to palm oil bio-fuel plantations in Borneo, is under greater threat from renewable energy than the polar bear is from global warming.

But the threats to species are all too prosaic: habitat loss, pollution, invasive competitors and hunting being the same four horsemen of the ecological apocalypse as always. Suddenly many of the big environmental organisations have lost interest in these threats as they chase the illusion of stabilising a climate that was never stable in the past.

Take coral reefs, which are suffering horribly from pollution, silt, nutrient runoff and fishing – especially the harvesting of herbivorous fishes that otherwise keep reefs clean of algae. Yet environmentalists commonly talk as if climate change is a far greater threat than these,

But bleaching depends more on rate of change than absolute temperature. This must be true because nowhere on the planet, not even in the Persian Gulf where water temperatures reach 35°C, is there a sea too warm for coral reefs. Lots of places are too cold for coral reefs – the Galapagos, for example.

A child that dies from indoor smoke in a village denied fossil-fuel electricity is just as great a tragedy as a child that dies in a flood caused by climate change. A forest that is cut down by people deprived of fossil fuels is just as felled as one lost to climate change. If climate change proves to be mild but cutting carbon causes real pain, we may find we have stopped a nose bleed by putting a tourniquet round our neck.

Once solar panels can be mass-produced at $200 per square metre and with an efficiency of 12 per cent, they could generate the equivalent of a barrel of oil for about $30.

But the obvious way to go low-carbon is nuclear. Nuclear power plants already produce more power from a smaller footprint, with fewer fatal accidents and less pollution than any other energy technology. The waste they produce is not an insoluble issue. It is tiny in volume (a Coke can per person per lifetime), easily stored and unlike every other toxin gets safer with time – its radioactivity falls to one-billionth of the starting level in two centuries.

to interpret human society as the product of a long history of what the philosopher Dan Dennett calls ‘bubble-up’ evolution through natural selection among cultural rather than genetic variations, and as an emergent order generated by an invisible hand of individual transactions, not the product of a top-down determinism.

Somewhere in Africa more than 100,000 years ago, a phenomenon new to the planet was born. A Species began to add to its habits, generation by generation, without (much) changing its genes. What made this possible was exchange, the swapping of things and services between individuals. This gave the Species an external, collective intelligence far greater than anything it could hold in its admittedly capacious brain.

Consumption could grow more diversified, while production grew more specialised. At first, the progressive expansion of the Species’ culture was slow, because it was limited by the size of each connected population. Isolation on an island or devastation by a famine could reduce the population and so diminish its collective intelligence. Bit by bit, however, the Species expanded both in numbers and in prosperity.