The Rational Optimist: How Prosperity Evolves

by Matt Ridley

One solution is for companies to try to set their employees free to behave like entrepreneurs.

General Electric under Jack Welch managed it for a while by fragmenting the company into smaller competing units.

told its technologists to spend 15 per cent of their time working on their own projects and by harvesting customers’ ideas.

There is no legal protection for recipes: they cannot be patented, copyrighted or trademarked. But try setting up a new restaurant in Paris and pinching the best recipes from your rivals and you will rapidly find that this is not common land. As Emmanuelle Fauchart discovered by interviewing ten chefs de cuisine who had restaurants near Paris, seven with Michelin stars, the world of haute cuisine operates according to three norms, unwritten and unenforceable by law, but no less real for that. 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.

Something similar happens in mobile telephony, where the big mobile firms have to fight their way through patent thickets to bring any innovation to market. At any one moment these firms are involved in scores of lawsuits as plaintiffs, defendants or interested third parties. The result, says one observer, is that ‘lobbying and litigating may be a more profitable way to win market share than innovating or investing’. Today, the biggest generators of new patents in the US system are ‘patent trolls’ – firms that buy up weak patent applications with no intention of making the products in question, but with every intention of making money by suing those who infringe them. Research in Motion, the Canadian company that manufactures BlackBerries, had to pay $600m to a small patent troll called NTP that did no manufacturing itself but had acquired contested patents with the aim of profiting from their defence.

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.

even the cleverest in-house programmer is unlikely to be as smart as the collective efforts of ten thousand users

‘free-revealing lead users’: customers who are happy to tell manufacturers of incremental improvements they can suggest,

Lead users are often happy to free-reveal, because they enjoy basking in the reputation of their peers.

the knowledge that different-sized paper cups in coffee bars can still have the same-sized lids, saving cost in manufacture and confusion in the shop

In 1995 the otherwise excellent scientist and writer Jared Diamond fell under the spell of fashionable pessimism when he promised: ‘By the time my young sons reach retirement age, half the world’s species will be extinct, the air radioactive and the seas polluted with oil.’ Let me reassure his sons that species extinction, though terrible, is so far under-shooting that promise by a wide margin. Even if you take E.O. Wilson’s wildly pessimistic guess that 27,000 species are dying out every year, that equates to just 2.7 per cent a century (there are thought to be at least ten million species), a long way short of 50 per cent in sixty years. As for Diamond’s other worries, the trends are getting better, not worse:

given that I am roughly the sixty billionth person to live upon this planet,

the gung-ho rhetoric of some military commanders.

Given how most arms races end,

In 1984, he proclaimed that ‘the slim margin between food production and population growth continues to narrow’. Wrong again. In 1989 ‘population growth is exceeding farmers’ ability to keep up.’

he claimed he was ‘goaded’ into it).

Embracing dynamism means opening your mind to the possibility of posterity making a better world rather than preventing a worse one. We now know, as we did not in the 1960s, that more than six billion people can live upon the planet in improving health, food security and life expectancy

At a time when glass fibre is replacing copper cable, electrons are replacing paper and most employment involves more software than hardware,

the pioneers of in-vitro fertilisation, Robert Edwards and Patrick Steptoe,

terrible inherited diseases like Tay-Sachs or Huntingdon’s.

The human race was due a culling.

H5N1 strains of the virus (‘bird flu’) jumped into human beings via free-range ducks on Chinese farms and, in 2005, the United Nations predicted five million – 150 million deaths from bird flu. Yet, contrary to what you have read, when H5N1 did infect human beings it proved neither especially virulent nor especially contagious. It has so far killed fewer than 300 people worldwide.

the H1N1 swine flu epidemic of 2009 that began in Mexico

viruses undergo natural selection as well as mutation

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.

it is no accident that water-borne and insect-borne diseases such as typhoid, cholera, yellow fever, typhus and malaria are so much more virulent, because they can spread from immobilised victims. Malaria spreads more easily if its victims are laid low in a darkened room – bait for mosquitoes.

weapons in the physician’s armoury

poorest countries on the planet – most of which are African

at present there is no way to make Africans as rich as Asians except by them burning more fossil fuels per head.

bottom-up evolutionary solutions.

Micro-finance banking, mobile telephony and the internet are now merging to produce systems that allow individuals in the West to make small loans to entrepreneurs in Africa (through websites like Kiva), who can then use their mobile phone credits to deposit receipts and pay bills without waiting for banks to open and without handling vulnerable cash. These developments offer opportunities to the poor of Africa that were not available to the poor of Asia a generation ago. They are one reason that Africa saw economic growth rise to Asian-tiger levels in the late 2000s.

presented as undiluted bad news.

66,000 in 2100 (adjusted for inflation).

they do not dent my optimism one jot.

even the highest estimates of Greenland’s melting are that it is currently losing mass at the rate of less than 1 per cent per century. It will be gone by ad 12,000. Of course, there is a temperature at which the Greenland and west Antarctic ice caps would disintegrate, but according to the IPCC scenarios if it is reached at all it is certainly not going to be reached in the twenty-first century.

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.

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.

Even with tripled bicarbonate concentrations, corals show a continuing increase in both photosynthesis and calcification.

Even in 6,000-turbine Denmark, not a single emission has been saved because intermittent wind requires fossil-fuel back-up

a Spanish study confirms that wind power subsidies destroy jobs: for each worker who moves from conventional electricity generation to renewable electricity generation, ‘two jobs at a similar rate of pay must be forgone elsewhere in the economy,

quite soon engineers will be able to use sunlight to make hydrogen directly from water with ruthenium dye as a catalyst – replicating photosynthesis, in effect. Clean-coal, with its carbon dioxide reinjected into the rocks,

A big contribution will surely come from solar power, the least land-hungry of the renewables. 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.

Most of Arizona gets about six kilowatt-hours of sunlight per square metre per day so, assuming 12 per cent efficiency, it would take about one-third of Arizona to supply Americans with all their energy:

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.

extracting 99 per cent of uranium’s energy, instead of 1 per cent as at present,

The Italian engineer Cesare Marchetti once drew a graph of human energy use over the past 150 years as it migrated from wood to coal to oil to gas.

The way to choose which of these technologies to adopt is probably to enact a heavy carbon tax, and cut payroll taxes (National Insurance in Britain) to the same extent. That would encourage employment and discourage carbon emissions.

economic evolution will raise the living standards of the twenty-first century to unimagined heights,

‘It is the long ascent of the past that gives the lie to our despair,’ said H.G. Wells.

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