The Rational Optimist (P.S.)

by Matt Ridley

Where modern hunter-gatherers have been deprived of access to a large population of trading partners – in sparsely populated Australia, especially Tasmania, and on the Andaman islands, for example – their technological virtuosity was stunted and barely progressed beyond those of Neanderthals. There was nothing special about the brains of the moderns; it was their trade networks that made the difference – their collective brains.

The archaeologist who first described the Tasmanian regress, Rhys Jones, called it a case of the ‘slow strangulation of the mind’, which perhaps understandably enraged some of his academic colleagues. There was nothing wrong with individual Tasmanian brains; there was something wrong with their collective brains. Isolation – self-sufficiency – caused the shrivelling of their technology. Earlier I wrote that division of labour was made possible by technology. But it is more interesting than that. Technology was made possible by division of labour: market exchange calls forth innovation.

As the British politician Lord Taverne puts it, speaking of himself: ‘a classical education teaches you to despise the wealth it prevents you from earning.’

Commerce is good for minorities, too. If you don’t like the outcome of an election you have to lump it; if you don’t like your hairdresser, you can find another. Political decisions are by definition monopolistic, disenfranchising and despotically majoritarian; markets are good at supplying minority needs.

Politically, as Brink Lindsey has diagnosed, the coincidence of wealth with toleration has led to the bizarre paradox of a conservative movement that embraces economic change but hates its social consequences and a liberal movement that loves the social consequences but hates the economic source from which they come. ‘One side denounced capitalism but gobbled up its fruits; the other cursed the fruits while defending the system that bore them.’

Companies have a far shorter half-life than government agencies. Half of the biggest American companies of 1980 have now disappeared by take-over or bankruptcy; half of today’s biggest companies did not even exist in 1980. The same is not true of government monopolies: the Internal Revenue Service and the National Health Service will not die, however much incompetence they might display. Yet most anti-corporate activists have faith in the good will of the leviathans that can force you to do business with them, but are suspicious of the behemoths that have to beg for your business. I find that odd.

A study by McKinsey concluded that the 1990s surge in the United States was caused by (drum roll of excitement) logistical changes in business (groan of disappointment), especially in the retail business and especially in just one firm – Wal-Mart.

In America, roughly 15 per cent of jobs are destroyed every year; and roughly 15 per cent created.

Tomorrow’s largely self-employed workers, clocking on to work online in bursts for different clients when and where it suits them, will surely look back on the days of bosses and foremen, of meetings and appraisals, of time sheets and trade unions, with amusement. I repeat: firms are temporary aggregations of people to help them do their producing in such a way as to help others do their consuming.

Nor can there be any doubt that the collective brain enriches culture and stimulates the spirit. The intelligentsia generally looks down on commerce as irredeemably philistine, conventional and lowering in its taste. But for anybody who thinks great art and great philosophy have nothing to do with commerce, let him visit Athens and Baghdad to ask how Aristotle and al-Khwarizmi had the leisure time to philosophise. Let him visit Florence, Pisa and Venice and inquire into how Michelangelo, Galileo and Vivaldi were paid. Let him go to Amsterdam and London and ask what funded Spinoza, Rembrandt, Newton and Darwin. Where commerce thrives, creativity and compassion both flourish.

The first tractors had few advantages over the best horses, but they did have one enormous benefit as far as the world was concerned: they did not need land to grow their fuel. America’s horse population peaked at twenty-one million animals in 1915; at the time about one-third of all agricultural land was devoted to feeding them.

Even the confinement of chickens, pigs and cattle to indoor barns and batteries, though it troubles the consciences (mine included) of those who care for animal welfare, undoubtedly results in more meat produced from less feed with less pollution and less disease. When bird flu threatened, it was free-range flocks of chickens, not battery farms, that were at greatest risk. Some intensive farming of animals is unacceptably cruel; but some is no worse than some kinds of free-range farming, and its environmental impact is undoubtedly smaller.

Think about this from the consumer’s point of view. Nobody in China can blow glass; nobody in Europe can reel silk. Thanks to a middleman in India, however, the European can wear silk and the Chinese can use glass. The European may scoff at the ridiculous legend that this lovely cloth is made from the cocoons of caterpillars; and the Chinese may guffaw at the laughable fable that this transparent ceramic is made from sand. But both of them are better off and so is the Indian middleman. All three have acquired the labour of others. In Robert Wright’s terms, this is a non-zero transaction. The collective brain has expanded across the entire Indian Ocean and lifted the standard of living at both ends.

Because of its peninsulas and mountain ranges, Europe is much harder to unify than China: ask Charles V, Louis XIV, Napoleon or Hitler. For a while the Romans achieved a sort of European unity, and the result was just like the Ming: stagnation and bureaucracy.

China may be about to repeat some of Europe’s colonial exploitative mistakes in Africa, but in terms of being open to trade from the continent it puts Europe and America to shame. Farm subsidies and import tariffs on cotton, sugar, rice and other products cost Africa $500 billion a year in lost export opportunities – or twelve times the entire aid budget to the continent.

Sure, manufacturers will and do seek out countries that tolerate lower wages and lower standards – though, prodded by Western activists, in practice their main effect is then to raise the wages and standards in such places, where they most need raising. It is less of a race to the bottom, more of a race to raise the bottom. Nike’s sweatshops in Vietnam, for example, pay wages three times as high as local state owned factories and have far better facilities. That drives up wages and standards. During the period of most rapid expansion of trade and out-sourcing, child labour has halved since 1980: if that is driving down standards, let there be more of it.

In 2008 for the first time more than half the people in the world lived in cities. That is not a bad thing. It is a measure of economic progress that more than half the population can leave subsistence and seek the possibilities of a life based on the collective brain instead. Two-thirds of economic growth happens in cities.

Until 2002, the United Nations, when projecting future world population density, assumed that birth rates would never fall below 2.1 children per woman in most countries: that is the ‘replacement rate’, at which a woman produces enough babies to replace her and her husband, with 0.1 babies added in to cover childhood deaths and a slightly male-biased sex ratio. But in 2002, the UN changed this assumption as it became clear that in country after country the decline in baby-making went straight through the 2.1 level and kept on dropping. If anything, the decline may accelerate as the effect of small family size compounds. Nearly half the world now has fertility below 2.1. Sri Lanka’s birth rate, at 1.9, is already well below replacement level. Russia’s population is falling so fast it will be one-third smaller in 2050 than it was at its peak in the early 1990s.

Think of it this way. After the world population first hit a billion in (best guess) 1804, the human race had another 123 years to work out how to feed the next billion, the two billion milestone being reached in 1927. The next billions took thirty-three, fourteen, thirteen and twelve years respectively to arrive. Yet despite the accelerating pace, the world food supply in calories per head improved dramatically. The rate at which the billions are being added is now falling. The seven billionth person won’t be born till 2013, fourteen years after the six billionth, the eight billionth will come fifteen years after that and the nine billionth another twenty-six years after that. The ten billionth, it is now officially forecast, will never come at all.

So what might be the cause of these episodes of quite extraordinary downward shift in human fecundity? Top of the list of explanations, paradoxically, comes falling child mortality. 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.

So, all in all, the news on global population could hardly be better, though it would be nice if the improvements were coming faster. The explosions are petering out; and the declines are bottoming out. The more prosperous and free that people become, the more their birth rate settles at around two children per woman with no coercion necessary. Now, is that not good news?

It was fossil fuels that eventually made slavery – along with animal power, and wood, wind and water – uneconomic. Wilberforce’s ambition would have been harder to obtain without fossil fuels. ‘History supports this truth,’ writes the economist Don Boudreaux: ‘Capitalism exterminated slavery.’

This is not to imply that non-renewable resources are infinite – of course not. The Atlantic Ocean is not infinite, but that does not mean you have to worry about bumping into Newfoundland if you row a dinghy out of a harbour in Ireland. Some things are finite but vast; some things are infinitely renewable, but very limited. Non-renewable resources such as coal are sufficiently abundant to allow an expansion of both economic activity and population to the point where they can generate sustainable wealth for all the people of the planet without hitting a Malthusian ceiling, and can then hand the baton to some other form of energy. The blinding brightness of this realisation still amazes me: 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.

One recent study in the Philippines estimated that the average household derives $108 a month in benefits from connecting to the electricity grid – cheaper lighting ($37), cheaper radio and television ($19), more years in education ($20), time saving ($24) and business productivity ($8). Heck, it even affects the birth rate as television replaces procreation as an evening activity.

Today, the average person on the planet consumes power at the rate of about 2,500 watts, or to put it a different way, uses 600 calories per second. About 85 per cent of that comes from burning coal, oil and gas, the rest from nuclear and hydro (wind, solar and biomass are mere asterisks on the chart, as is the food you eat). 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.) Next time you lament human dependence on fossil fuels, pause to imagine that for every family of four you see in the street, there should be 600 unpaid slaves back home, living in abject poverty: if they had any better lifestyle they would need their own slaves. That is close to a trillion people.

The same false predictions of the imminent exhaustion of the natural gas supply have recurred throughout recent decades. Shale gas finds have recently doubled America’s gas resources to nearly three centuries’ worth.

To label the land-devouring monsters of renewable energy ‘green’, virtuous or clean strikes me as bizarre. If you like wilderness, as I do, the last thing you want is to go back to the medieval habit of using the landscape surrounding us to make power. Just one wind farm at Altamont in California kills twenty-four golden eagles every year: if an oil firm did that it would be in court. Hundreds of orang-utans are killed a year because they get in the way of oil-palm biofuel plantations.

But this I know: we will need the watts from somewhere. They are our slaves. Thomas Edison deserves the last word: ‘I am ashamed at the number of things around my house and shops that are done by animals – human beings, I mean – and ought to be done by a motor without any sense of fatigue or pain. Hereafter a motor must do all the chores.’

Newton had more influence on Voltaire than he did on James Hargreaves. The industry that was transformed first and most, cotton spinning and weaving, was of little interest to scientists and vice versa. The jennies, gins, frames, mules and looms that revolutionised the working of cotton were invented by tinkering businessmen, not thinking boffins: by ‘hard heads and clever fingers’. It has been said that nothing in their designs would have puzzled Archimedes.

The twentieth century, too, is replete with technologies that owe just as little to philosophy and to universities as the cotton industry did: flight, solid-state electronics, software. To which scientist would you give credit for the mobile telephone or the search engine or the blog? In a lecture on serendipity in 2007, the Cambridge physicist Sir Richard Friend, citing the example of high-temperature superconductivity – which was stumbled upon in the 1980s and explained afterwards – admitted that even today scientists’ job is really to come along and explain the empirical findings of technological tinkerers after they have discovered something.

And even the later stages of the industrial revolution are replete with examples of technologies that were developed in remarkable ignorance of why they worked. This was especially true in the biological world. Aspirin was curing headaches for more than a century before anybody had the faintest idea of how. Penicillin’s ability to kill bacteria was finally understood around the time bacteria learnt to defeat it. Lime juice was preventing scurvy centuries before the discovery of vitamin C. Food was being preserved by canning long before anybody had any germ theory to explain why it helped.

Where would Amazon, Compaq, Genentech, Google, Netscape and Sun be without Kleiner Perkins Caulfield? It is no coincidence that the growth of technology industries took off after the mid-1970s when Congress freed pension funds and non-profits to invest some of their assets in venture funds. 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.

Of course, there are some things, like large hadron colliders and moon missions, that no private company would be allowed by its shareholders to provide, but are we so sure that even these would not catch the fancy of a Buffett, a Gates or Mittal if they were not already being paid for by taxpayers? Can you doubt that if NASA had not existed some rich man would by now have spent his fortune on a man-on-the-moon programme for the prestige alone? Public funding crowds out the possibility of knowing an answer to that question. A large study by the Organisation for Economic Co-operation and Development concluded that government spending on R&D has no observable effect on economic growth, despite what governments fondly believe. Indeed it ‘crowds out resources that could be alternatively used by the private sector, including private R&D’. This rather astonishing conclusion has been almost completely ignored by governments.

For reasons I explained in chapter 4, famine is largely history. Where it still occurs – Darfur, Zimbabwe – the fault lies with government policy, not population pressure.

The history of the world is replete with examples of the extinction or near-exhaustion of resources: mammoths, whales, herrings, passenger pigeons, white pine forests, Lebanon cedars, guano. They are all, note, ‘renewable’. By striking contrast, there is not a single non-renewable resource that has run out yet: not coal, oil, gas, copper, iron, uranium, silicon, or stone. As has been said – the remark has been attributed to many people – the Stone Age did not come to an end for lack of stone.