The Rational Optimist (P.S.)

by Matt Ridley

Everybody knows the population of the world is growing. But remarkably few people seem to know that the rate of increase in world population has been falling since the early 1960s and that the raw number of new people added each year has been falling since the late 1980s.

‘Most environmentalists still haven’t got the word. Worldwide, birth-rates are in free fall ... On every part of every continent and in every culture (...

Population growth is slowing even while death rates are falling.

the United Nations’ best estimate is that world population will probably start falling once it peaks at 9.2 billion in 2075, there is every prospect of feeding the world for ever. After all, there are already 6.8 billion on the earth and they are still feeding better and better every decade. Only 2.4 billion to go.

the entire world is experiencing the second half of a ‘demographic transition’ from high mortality and high fertility to low mortality and low fertility.

mortality falls first, causing a population boom, then a few decades later, fecundity falls quite suddenly and quite rapidly. It usually takes about fifteen years for birth rate to fall by 40 per cent.

Italy’s plunging birth rate (now 1.3 children per woman) in the pope’s backyard has always seemed moderately amusing to non-Catholics.

The more babies are likely to die, the more their parents bear. Only when women think their children will survive do they plan and complete their families rather than just keep breeding. This remarkable fact seems to be very poorly known. Most Western, educated people seem to think, rationally enough, that keeping babies alive in poor countries is only making the population problem worse and that ... well, the implication is usually left unspoken.

Having more income means you can afford more babies, but it also means you can afford more luxuries to divert you from constant breeding.

Probably by far the best policy for reducing population is to encourage female education. It is evolutionarily plausible that in the human species, females want to have relatively few children and give them high-quality upbringing, whereas males like to have lots of children and care less about the quality of their upbringing.

the best that can be said for sure about the demographic transition is that countries lower their birth rates as they grow healthier, wealthier, better educated, more urbanised and more emancipated. A typical woman probably reasons thus: now I know my children will probably not die of disease, I do not need to have so many; now I can get a job to support those children, I do not want to interrupt my career too often; now I have an education and a pay cheque, I can take control of contraception; now education can get my children non-farming jobs, I shall have only as many as I can support through school; now I can buy consumer goods, I shall be careful not to spread my income across too large a family; now I live in a city I will plan my family. Or some combination of such thoughts. And she will be encouraged by the examples of others, and by family-planning clinics.

Countries with very low birth rates have rapidly ageing workforces. This means more and more old people eating the savings and taxes of fewer and fewer people of working age. They are right to be concerned, though they would be wrong to be apocalyptic, after all, today’s 40-year-olds will surely be happier to continue operating computers in their seventies than today’s 70-year-olds are to continue operating machine tools.

‘Capitalism exterminated slavery.’

The Roman empire was built largely on human muscle power, in the shape of slaves.

Some things are finite but vast; some things are infinitely renewable, but very limited.

we can build a civilisation in which everybody lives the life of the Sun King, because everybody is served by (and serves) a thousand servants, each of whose service is amplified by extraordinary amounts of inanimate energy and each of whom is also living like the Sun King.

The plain fact is that the mechanisation of production in the industrial revolution raised incomes across all classes.

The tiny nation of Britain, with just eight million people in 1750, compared with twenty-five million in far more sophisticated France, thirty-one million in far more populous Japan and 270 million in far more productive China, embarked upon a phenomenal economic expansion that would propel it to world domination within a century.

The capitalist achievement, reflected Joseph Schumpeter a century later, ‘does not typically consist of providing more silk stockings for queens but in bringing them within reach of factory girls in return for steadily decreasing amounts of effort.’

It was coal that gave the industrial revolution its surprising second wind, that kept the mills, forges and locomotives running, and that eventually fuelled the so-called second industrial revolution of the 1860s, when electricity, chemicals and telegraphs brought Europe unprecedented prosperity and global power.

By 1870, the burning of coal in Britain was generating as many calories as would have been expended by 850 million labourers. It was as if each worker had twenty servants at his beck and call.

Two billion people alive today have never turned on a light switch.

Thanks mainly to new energy technologies, what took a textile worker twenty minutes in 1750 took just one minute in 1850. He could therefore either supply twenty times as many people in a day’s work, or supply each customer with twenty times as much cloth, or free his customer to spend 19/20ths of his income on some thing other than shirts. That was in essence why the second half of the industrial revolution made Britain rich. It made it possible for fewer people to supply more people with more goods and more services – in Adam Smith’s words, to make ‘a smaller quantity of labour produce a greater quantity of work’. There was a step change in the number of people that could be served or supplied by one person, a great leap in the specialisation of production and the diversification of consumption. Coal had made everybody into a little Louis XIV.

Since a reasonably fit person on an exercise bicycle can generate about fifty watts, this means that it would take 150 slaves, working eight-hour shifts each, to peddle you to your current lifestyle. (Americans would need 660 slaves, French 360 and Nigerians 16.)

You can regret the sinful profligacy of the modern world, which is the conventional reaction, or you can conclude that were it not for fossil fuels, 99 per cent of people would have to live in slavery for the rest to have a decent standard of living, as indeed they did in Bronze Age empires. This is not to try to make you love coal and oil, but to drive home how much your Louis Quatorze standard of living is made possible by the invention of energy-substitutes for slaves.

Coal makes the electricity that lights your house, spins your washing machine and smelts the aluminium from which your aeroplane was made; oil fuels the ships, trucks and planes that filled your supermarket and makes the plastic from which your children’s toys are made; gas heats your home, bakes your bread and makes the fertiliser that grows your food. These are your slaves.

Oil, coal and gas are finite. But between them they will last decades, perhaps centuries, and people will find alternatives long before they run out.

The poor, remember, spend 70 per cent of their incomes on food.

The pace of acceleration of returns lurched upwards around 10,000 years ago in the agricultural revolution.

The most fundamental feature of the modern world since 1800 – more profound than flight, radio, nuclear weapons or websites, more momentous than science, health, or material well-being – has been the continuing discovery of ‘increasing returns’ so rapid that they outpaced even the population explosion. The more you prosper, the more you can prosper. The more you invent, the more inventions become possible. How can this be possible? The world of things – of pecans or power stations – is indeed often subject to diminishing returns. But the world of ideas is not. The more knowledge you generate, the more you can generate. And the engine that is driving prosperity in the modern world is the accelerating generation of useful knowledge.

As Friedrich Hayek argued, knowledge is dispersed throughout society, because each person has a special perspective. Knowledge can never be gathered together in one place. It is collective, not individual.

There is no equilibrium in nature; there is only constant dynamism. As Heraclitus put it, ‘Nothing endures but change.’

Innovation is like a bush fire that burns brightly for a short time, then dies down before flaring up somewhere else. At 50,000 years ago, the hottest hot-spot was west Asia (ovens, bows-and-arrows), at 10,000 the Fertile Crescent (farming, pottery), at 5,000 Mesopotamia (metal, cities), at 2,000 India (textiles, zero), at 1,000 China (porcelain, printing), at 500 Italy (double-entry book-keeping, Leonardo), at 400 the Low Countries (the Amsterdam Exchange Bank), at 300 France (Canal du Midi), at 200 England (steam), at 100 Germany (fertiliser); at 75 America (mass production), at 50 California (credit card), at 25 Japan (Walkman). No country remains for long the leader in knowledge creation.

‘Prosperity and success led to the emergence of predators and parasites in various forms and guises who eventually slaughtered the geese that laid the golden eggs.’ Again and again, the flame of invention would splutter and die ... only to flare up elsewhere. The good news is that there is always a new torch lit. So far.

Very roughly, the best industry to be in as an innovator was: 1800 – textiles; 1830 – railways; 1860 – chemicals; 1890 – electricity; 1920 – cars; 1950 – aeroplanes; 1980 – computers; 2010 – the web.

Note that the greatest impact of an increasing-return wave comes long after the technology is first invented. It comes when the technology is democratised.

‘People don’t like change,’ Michael Crichton once told me, ‘and the notion that technology is exciting is true for only a handful of people. The rest are depressed or annoyed by the changes.’

They believe that the recipe for making new ideas is easy: pour public money into science, which is a public good, because nobody will pay for the generation of ideas if the taxpayer does not, and watch new technologies emerge from the downstream end of the pipe. Trouble is, there are two false premises here: first, science is much more like the daughter than the mother of technology; and second, it does not follow that only the taxpayer will pay for ideas in science.

The inescapable fact is that most technological change comes from attempts to improve existing technology.

The way to incentivise innovation, as any Silicon Valley venture capitalist will tell you, is to bring capital and talent together.

Silicon Valley owes much of its explosion of novelty to its venture capitalists on Sandhill Road.

California is not the birthplace of entrepreneurs; it is the place they go to do their enterprising; fully one-third of successful start-ups in California between 1980 and 2000 had Indian- or Chinese-born founders.

A Christian missionary in Ming China wrote: ‘Any man of genius is paralysed immediately by the thought that his efforts will bring him punishment rather than rewards.’

The proportion of GDP spent by firms on research and development in America has more than doubled, to nearly 3 per cent, over the past half-century.

Inventors will not invent unless they can keep at least some of the proceeds of their inventions. After all, somebody will not invest time and effort in planting a crop in his field if he cannot expect to harvest it and keep the profit for himself – a fact Stalin, Mao and Robert Mugabe learned the hard way – so surely nobody will invest time and effort in developing a new tool or building a new kind of organisation if he cannot keep at least some of the rewards for himself.

Yet intellectual property is very different from real property, because it is useless if you keep it to yourself. The abstract concept can be infinitely shared. This creates an apparent dilemma for those who would encourage inventors. People get rich by selling each other things (and services), not ideas.

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

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.

In the pharmaceutical industry, where government insists on a massively expensive regime of testing for safety and efficacy before a product launch, innovation without some form of patent would be impossible. In one survey of 650 R&D executives from 130 different industries, only those in the chemical and pharmaceutical industries judged patents to be effective at stimulating innovation.

Intellectual property is an important ingredient of innovation, when innovation is happening, but it does very little to explain why some times and places are more innovative than others.