Top Quotes: “The Rational Optimist: How Prosperity Evolves” — Matt Ridley
Introduction
“At some point, human intelligence became collective and cumulative in a way that happened to no other animal.”
“The evolutionary biologist Richard Dawkins in 1976 coined the term ‘meme’ for a unit of cultural imitation.”
“At some point before 100,000 years ago culture itself began to evolve in a way that it never did in any other species — that is, to replicate, mutate, compete, select and accumulate — somewhat as genes had been doing for billions of years. Just like natural selection cumulatively building an eye bit by bit, so cultural evolution in human beings could cumulatively build a culture or a camera. Chimpanzees may teach each other how to spear bushbabies with sharpened sticks, and killer whales may teach each other how to snatch sea lions off beaches, but only human beings have the cumulative culture that goes into the design of a loaf of bread or a concert.”
“The more human beings diversified as consumers and specialised as producers, and the more they then exchanged, the better off they have been, are and will be. And the good news is that there is no inevitable end to this process. The more people are drawn into the global division of labour, the more people can specialise and exchange, the wealthier we will all be. Moreover, along the way there is no reason we cannot solve the problems that beset us, of economic crashes, population explosions, climate change and terrorism, of poverty, AIDS, depression and obesity. It will not be easy, but it is perfectly possible, indeed probable, that in the year 2110, a century after this book is published, humanity will be much, much better off than it is today, and so will the ecology of the planet it inhabits. This book dares the human race to embrace change, to be rationally optimistic and thereby to strive for the betterment of humankind and the world it inhabits.”
“Markets in goods and services for immediate consumption — haircuts and hamburgers — work so well that it is hard to design them so they fail to deliver efficiency and innovation; while markets in assets are so automatically prone to bubbles and crashes that it is hard to design them so they work at all. Speculation, herd exuberance, irrational optimism, rent-seeking and the temptation of fraud drive asset markets to overshoot and plunge — which is why they need careful regulation, something I always supported. (Markets in goods and services need less regulation.)”
“By one estimate, the number of different products that you can buy in New York or London tops ten billion.”
“The average South Korean lives twenty-six more years and earns fifteen times as much income each year as he did in 1955 (and earns fifteen times as much as his North Korean counterpart).”
“Mao was starving his people so that he could use their grain to buy nuclear weapons from Russia.”
“Swedish birds’ eggs have 13 percent fewer pollutants in them than in the 1960s. American carbon monoxide emissions from transport are down 75 percent in twenty-five years. Today, a car emits less pollution traveling at full speed than a parked car did in 1970 from leaks.”
“Chronic illness before death is if anything shortening slightly, not lengthening, despite better diagnosis and more treatments — ‘the compression of morbidity’ is the technical term. People are not only spending a longer time living, but a shorter time dying.
Take stroke, a big cause of disability in old age. Deaths from stroke fell by 70 per cent between 1950 and 2000 in America and Europe. In the early 1980s a study of stroke victims in Oxford concluded that the incidence of stroke would increase by nearly 30 per cent over the next two decades, mainly because stroke incidence increases with age and people were predicted to live longer. They did live longer but the incidence of stroke in fact fell by 30 per cent. (The age-related increase is still present, but it is coming later and later.) The same is true of cancer, heart disease and respiratory disease: they all still increase with age, but they do so later and later, by about ten years since the 1950s.
Even inequality is declining worldwide. It is true that in Britain and America income equality, which had been improving for most of the past two centuries (British aristocrats were six inches taller than the average in 1800; today they are less than two inches taller), has stalled since the 1970s.”
“This is what prosperity is: the increase in the amount of goods or services you can earn with the same amount of work. As late as the mid-1800s, a stagecoach journey from Paris to Bordeaux cost the equivalent of a clerk’s monthly wages; today the journey costs a day or so and is fifty times as fast. A half-gallon of milk cost the average American ten minutes of work in 1970, but only seven minutes in 1997. A three-minute phone call from New York to Los Angeles cost ninety hours of work at the average wage in 1910; today it costs less than two minutes. A kilowatt-hour of electricity cost an hour of work in 1900 and five minutes today. In the 1950s it took thirty minutes work to earn the price of a McDonald’s cheeseburger; today it takes three minutes. Healthcare and education are among the few things that cost more in terms of hours worked now than they did in the 1950s.”
“So long as somebody allocates sufficient capital to innovation, then the credit crunch will not in the long run prevent the relentless upward march of human living standards. If you look at a graph of world per capita GDP, the Great Depression of the 1930s is just a dip in the slope. By 1939 even the worst-affected countries, America and Germany, were richer than they were in 1930. All sorts of new products and industries were born during the Depression: by 1937, 40 per cent of DuPont’s sales came from products that had not even existed before 1929.”
“Having consumed the labour and embodied discoveries of thousands of people, you then produce and sell whatever it is you do at work — haircuts, ball bearings, insurance advice, nursing, dog walking. But each of those thousands of people who work ‘for’ you is equally monotonously employed. Each produces one thing. That is what the word job’ means: it refers to the simplified, singular production to which you devote your working hours. Even those who have several paying jobs — say, freelance short-story writer/neuroscientist, or computer executive/photographer — have only two or three different occupations at most. But they each consume hundreds, thousands, of things. This is the diagnostic feature of modern life, the very definition of a high standard of living: diverse consumption, simplified production. Make one thing, use lots. The self-sufficient gardener, or his self-sufficient peasant or hunter-gatherer predecessor (who is, I shall argue, partly a myth in any case), is in contrast defined by his multiple production and simple consumption. He makes not just one thing, but many — his food, his shelter, his clothing, his entertainment. Because he only consumes what he produces, he cannot consume very much.”
“The cumulative accretion of knowledge by specialists that allow us to consume more and more different things by each producing fewer and fewer is, I submit, the central story of humanity. Innovation changes the world but only because it aids the elaboration of the division of labour and encourages.”
“Their ancestors had been making it to roughly the same design — hand-sized, sharp, double-sided, rounded — for about a million years. Their descendants would continue to make it for hundreds of thousands more years. That’s the same technology for more than a thousand millennia, ten thousand centuries, thirty thousand generations — an almost unimaginable length of time.
Not only that; they made roughly the same tools in south and north Africa and everywhere in between. They took the design with them to the Near East and to the far north-west of Europe (though not to East Asia) and still it did not change. A million years across three continents making the same one tool. During those million years their brains grew in size by about one-third. Here’s the startling thing. The bodies and brains of the creatures that made Acheulean hand axes changed faster than their tools.
To us, this is an absurd state of affairs. How could people have been so unimaginative, so slavish, as to make the same technology for so long? How could there have been so little innovation, regional variation, progress, or even regress?
Actually, this is not quite true, but the detailed truth reinforces the problem rather than resolves it. There is a single twitch of progress in biface hand-axe history: around 600,000 years ago, the design suddenly becomes a little more symmetrical. This coincides with the appearance of a new species of hominid which replaces its ancestor throughout Eurasia and Africa. Called Homo heidelbergensis, this creature has a much bigger brain, possibly 25 per cent bigger than late Homo erectus. Its brain was almost as big as a modern person’s. Yet not only did it go on making hand axes and very little else; the hand-axe design sank back into stagnation for another half a million years. We are used to thinking that technology and innovation go together, yet here is strong evidence that when human beings became tool makers, they did not experience anything remotely resembling cultural progress. They just did what they did very well They did not change.
Bizarre as this may sound, in evolutionary terms it is quite normal. Most species do not change their habits during their few million years on earth or alter their lifestyle much in different parts of their range. Natural selection is a conservative force. It spends more of its time keeping species the same than changing them. Only towards the edge of its range, on an isolated island, or in a remote valley or on a lonely hill top, does natural selection occasionally cause part of a species to morph into something different.”
“I am saying that barter — the simultaneous exchange of different objects — was itself a human breakthrough, perhaps even the chief thing that led to the ecological dominance and burgeoning material prosperity of the species. Fundamentally, other animals do not do barter.”
“This is in striking contrast to the Neanderthals, whose stone tools were virtually always made from raw material available within an hour’s walk of where the tool was used. To me this is a vital clue to why the Neanderthals were still making hand axes, while their African-origin competitors were making ever more types of tool. Without trade, innovation just does not happen. Exchange is to technology as sex is to evolution. It stimulates novelty.”
“If you are not self-sufficient, but are working for other people, too, then it pays you to spend some time and effort to improve your technology and it pays you to specialise. Suppose, for example, that Adam lives in a grassy steppe where there are herds of reindeer in winter, but some days’ walk away is a coast, where there are fish in summer. He could spend winter hunting, then migrate to the coast to go fishing. But that way he would not only waste time travelling, and probably run a huge risk crossing the territory of another tribe. He would also have to get good at two quite different things.
If, instead, Adam sticks to hunting and then gives some dried meat and reindeer antlers — ideal for fashioning hooks from — to Oz, acoastal fisherman, in exchange for fish, he has achieved the goal of varying his diet in a less tiring or dangerous way. He has also bought an insurance policy. And Oz would be better off, because he could now catch (and spare) more fish. Next Adam realises that instead of giving Oz raw antlers, he can give him pieces of antler already fashioned into hooks. These are easier to transport and fetch a better price in fish. He got the idea when he once went to the trading point and noticed others selling antlers that had already been cut up into easy segments. One day, Oz asks him to make barbed hooks. And Adam suggests that Oz dries or smokes his fish so it lasts longer. Soon Oz brings shells, too, which Adam buys to make jewelry for a young woman he fancies. After a while, depressed by the low price fetched by hooks of even high quality, Adam hits on the idea of tanning some extra hides and bringing those to the trading point, too. Now he finds he is better at making hides than hooks, so he specialises in hides, giving his antlers to somebody from his own tribe in exchange for his hides. And so on, and on and on.”
“Specialisation would therefore create and increase the opportunities for gains from trade. The more Oz goes fishing, the better he gets at it, so the less time it takes him to catch each fish. The more hooks Adam the reindeer hunter makes, the better he gets at it, so the less time he takes to make each one. So it pays Oz to spend his day fishing and buy his hooks off Adam by giving him some fish. And it pays Adam to spend his day making hooks and get his fish delivered by Oz.”
“Within species, too, there are clear gains from trade between cells of a body, polyps of a coral colony; ants of an ant colony, or mole-rats of a mole-rat colony. The great success of ants and termites — between them they may comprise one-third of all the animal biomass of land animals — is undoubtedly down to their division of labour. Insect social life is built not on increases in the complexity of individual behaviour, but instead on specialization among individuals. In the leafcutter ants of the Amazon rainforest, colonies may number millions, and workers grow into one of four distinct castes: minors, medias, majors and supermajor. In one species a supermajor (or soldier) may weigh the same as 500 minors.”
“Just as the genes for digesting milk as an adult have changed in response to the invention of dairying, so the genes for flushing your brain with oxytocin have probably changed in response to population growth, urbanisation and trading — people have become oxytocin-junkies far more than many other animals.
Moreover, finding the underlying physiology of trust does little to explain why some human societies are much better at generating trust than others. As a broad generalization, the more people trust each other, the more prosperous that society is and trust growth seems to precede income growth. This can be measured by a combination of questionnaires and experiments leaving a wallet on the street and seeing if it is returned, for instance. Or asking people, in their native tongue, ‘generally speaking, would you say that most people can be trusted, or that you cannot be too careful in dealing with people?’ By these measures, Norway is heaving with trust (65 per cent trust each other) and wealthy, while Peru is wallowing in mistrust (5 per cent trust each other) and poor.
A 15% increase in the proportion of people in a country who think others are trustworthy,’ says Paul Zak, ‘raises income per person by 1% per year for every year thereafter.’ This is most unlikely to be because Norwegians have more oxytocin.”
“There is now a pretty well established rule of thumb (known as the environmental Kuznets curve) that when per capita income reaches about $4,000, people demand a clean-up of their local streams and air.”
“A single, routine, minuscule Wal-Mart decision in the 1990s — not to sell deodorant in cardboard boxes — saved America $50 million a year, half of which was passed on to customers. Charles Fishman writes: ‘Whole forests have not fallen in part because of a decision made in the Wal-Mart home office … to eliminate the deodorant box.’”
“In the conventional account it was agriculture that made capital possible by generating stored surpluses and stored surpluses could be used in trade. Before farming, nobody could hoard a surplus. There is some truth in this, but to some degree it gets the story the wrong way around. Agriculture was possible because of trade. Trade provided the incentive to specialize in farmed goods and to generate surplus food.”
“Can there be any doubt that it was woman, the diligent gatherer, rather than man, the dilettante hunter, who first had the idea of sowing grain?”
“Farming was quickly invented in at least six other places in a short time, driven by the same ratchet of trade, population growth, stable climate and increasingly vegetarian intensification. Squashes and then peanuts were cultivated in Peru by 9,200 years ago, millet and rice in China by 8,400 years ago, maize in Mexico by 7,300 years ago, taro and bananas in New Guinea by 6,900 years ago, sunflowers in North America by 6,000 years ago, and sorghum in Africa by around the same time. This phenomenal coincidence, as bizarre as finding that an aborigine, an Inuit, a Polynesian and a Scotsman all invented steam engines in the same decade of the eighteenth century without contact of any kind, is explained by the stabilising climate after the ice age ended. In the words of a recent paper, ‘agriculture was impossible during the last glacial, but compulsory in the Holocene’. It is no accident that modern Australia, with its unpredictable years of drought followed by years of wet, still looks a bit like that volatile glacial world. Australians were probably quite capable of farming: they knew how to grind grass seeds, burn the bush to improve kangaroo grazing and encourage favoured plants; and they certainly knew how to alter the flow of rivers to encourage and harvest eels. But they also knew, or found out the hard way, that farming does not work in a highly volatile climate.”
“It was also somewhere near the Baltic or the Black Sea between 6,000 and 10,000 years ago that a genetic mutation, substituting G for A in a control sequence upstream of a pigment gene called OCA2, gave adults blue eyes for the first time. It was a mutation that would eventually be inherited by nearly 40 per cent of Europeans. Because it went with unusually pale skin, it probably helped those people who were trying to live on vitamin-D-deficient grain in sunless northern climates: sunlight enables the body to synthesise vitamin D. The gene’s frequency speaks of the fecundity of farmers.”
“At the same time motorised transport was bringing land within reach of railheads. As late as 1920, over three million acres of good agricultural land in the American Midwest lay uncultivated because it was more than eighty miles from a railway, which meant a five-day trip by horse wagon costing up to 30 per cent more than the value of the grain.”
Agriculture
“If we all turned vegetarian, the amount of land we would need would be still less, but if we turned organic, it would be more: we would need extra acres to grow the cows.”
“To replace all the industrial nitrogen fertiliser now applied would mean an extra seven billion cattle grazing an extra thirty billion acres of pasture. (You will often hear organic champions extol the virtues of both manure and vegetarianism: notice the contradiction.) But these calculations show that even without vegetarianism, there will be a growing surplus of farmland.
So let’s do it: let’s continue to cut down the area of farmland per person to the point where we can begin to turn the rest over to wilderness.”
“This is what it would take to feed nine billion people in 2050: at least a doubling of agricultural production driven by a huge increase in fertiliser use in Africa, the adoption of drip irrigation in Asia and America, the spread of double cropping to many tropical countries, the use of GM crops all across the world to improve yields and reduce pollution, a further shift from feeding cattle with grain to feeding them with soybeans, a continuing relative expansion of fish, chicken and pig farming at the expense of beef and sheep (chickens and fish convert grain into meat three times as efficiently as cattle; pigs are in between) — and a great deal of trade, not just because the mouths and the plants will not be in the same place, but also because trade encourages specialisation in the best-yielding crops for any particular district. If price signals drive the world’s farmers to take these measures it is quite conceivable that in 2050 there will be nine billion people feeding more comfortably than today off a smaller acreage of cropland, releasing large tracts of land for nature reserves. Imagine that: an immense expansion of wilderness throughout the world by 2050. It’s a wonderful goal and one that can only be brought about by further intensification and change, not by retreat and organic subsistence. Indeed, come to think of it, let’s make farming a multi-storey business, with hydroponic drip-irrigation and electric lighting producing food year-round on derelict urban sites linked by conveyor belt directly to supermarkets. Let’s pay for the buildings and the electricity by granting the developer tax breaks for retiring farmland elsewhere into forest, swamp or savannah. It is an uplifting and thrilling ideal.”
“Politicians can make my prediction fail. Should the world decide to go organic — that is, should farming get its nitrogen from plants and fish rather than direct from the air using factories and fossil fuels — then many of the nine billion will starve and all rainforests will be cut down. Yes, I wrote ‘all’. Organic farming is low-yield, whether you like it or not. The reason for this is simple chemistry. Since organic farming eschews all synthetic fertiliser, it exhausts the mineral nutrients in the soil — especially phosphorus and potassium, but eventually also sulphur, calcium and manganese. It gets round this problem by adding crushed rock or squashed fish to the soil. These have to be mined or netted. Its main problem, though, is nitrogen deficiency, which it can reverse by growing legumes (clover, alfalfa or beans), which fix nitrogen from the air, and either ploughing them into the soil or feeding them to cattle whose manure is then ploughed into the soil. With such help a particular organic plot can match non-organic yields, but only by using extra land elsewhere to grow the legumes and feed the cattle, effectively doubling the area under the plough. Conventional farming, by contrast, gets its nitrogen from what are in effect point sources — factories, which fix it from the air.
Organic farmers also aspire to rely less on fossil fuels, but unless organic food is to be expensive, scarce, dirty and decaying, then it has to be intensively produced, and that means using fuel — in practice, a pound of organic lettuce, grown without synthetic fertilisers or pesticides in California, and containing eighty calories, requires 4,600 fossil-fuel calories to get it to a customer’s plate in a city restaurant: planting, weeding, harvesting, refrigerating, washing, processing and transporting all use fossil fuel. A conventional lettuce requires about 4,800 calories. The difference is trivial.
Yet when a technology came along that promised to make organic farming both competitive and efficient, the organic movement promptly rejected it. That technology was genetic modification, which was first invented in the mid-1980s as a kinder, gentler alternative to ‘mutation breeding’ using gamma rays and carcinogenic chemicals. Did you know that this was the way many crops were produced over the last half-century? That much pasta comes from an irradiated variety of durum wheat? That most Asian pears are grown on irradiated grafts? Or that Golden Promise, a variety of barley especially popular with organic brewers, was first created in an atomic reactor in Britain in the 1950s by massive mutation of its genes followed by selection? By the 1980s, scientists had reached the point where, instead of this random scrambling of the genes of a target plant with unknown result and lots of collateral genetic damage, they could take a known gene, with known function, and inject it into the genome of a plant, where it would do its known job. That gene might come from a different species, so achieving the horizontal transfer of traits between species that happens relatively rarely among plants in nature (though it is common-place among microbes).
For example, many organic farmers happily adopted an insect-killing bacterium called Bacillus thuringiensis or bt, first commercialised in France as Sporeine in the 1930s, which they sprayed on crops to control pests. As a ‘biological’ not a chemical spray, it met their tests. By the 1980s lots of different variants of bt had been developed for different insects. All were regarded as organic. But then genetic engineers took the bt toxin and incorporated it into the cotton plant to produce bt-cotton, one of the first genetically modified crops. This had two huge advantages: it killed bollworms living inside the plant where sprays could not reach them easily; and it did not kill innocent insects that were not eating the cotton plant. Yet, though this was an officially organic product, biologically integrated into the plant, and obviously better for the environment, organic high priests rejected the technology. Bt cotton went on to transform the cotton industry and has now replaced more than a third of the entire cotton crop. Indian farmers, denied the technology by their government, rioted to demand it after seeing bootlegged crops growing in their neighbours’ fields. Now most Indian cotton is bt, and the result has been a near-doubling of yield and a halving of insecticide use — win/win. In every study of bt cotton crops across the world from China to Arizona, the use of insecticides is down by as much as 80 per cent and the bees, butterflies and birds are back in abundance. Economically and ecologically, good news all round. Yet merely to board a passing bandwagon of protest publicity, the leaders of the organic movement locked themselves out of a new technology that has delivered huge reductions in the use of synthetic pesticides. One estimate puts the amount of pesticide not used because of genetic modification at over 200 million kilograms of active ingredients and climbing.”
“Organic farmers are happy to spray copper sulphate or nicotine sulphate, but forbid themselves the use of synthetic pyrethroids, which swiftly kill insects but have very low toxicity for mammals and do not persist in the environment causing collateral damage to non-pests. They forbid themselves herbicides, which means they have to weed by hand, using poorly paid labour, or by tilling and flame-throwing, which can devastate soil fauna, accelerate soil erosion and release greenhouse gases. They forbid themselves fertiliser made from air, but allow themselves fertiliser made from trawled fish.
In her classic book Silent Spring, Rachel Carson called upon scientists to turn their backs on chemical pesticides and seek biological solutions’ to pest control instead. They have done so, and the organic movement has rejected them.”
“Of course, almost by definition, all crop plants are genetically modified’. They are monstrous mutants capable of yielding unnaturally large, free-threshing seeds or heavy, sweet fruit and dependent on human intervention to survive. Carrots are orange thanks only to the selection of a mutant first discovered perhaps as late as the sixteenth century in Holland. Bananas are sterile and incapable of setting seed. Wheat has three whole diploid (double) genomes in each of its cells, descended from three different wild grasses, and simply cannot survive as a wild plant — you never encounter wheat weeds. Rice, maize and wheat all share genetic mutations that alter the development of the plant to enlarge seeds, prevent shattering, and allow free threshing from chaff. These mutations were selected, albeit inadvertently, by the first farmers sowing and reaping them.”
“By 2008, less than twenty-five years after they were first invented, fully 10 per cent of all arable land, thirty million acres, was growing genetically modified crops: one of the most rapid and successful adoptions of a new technology in the history of farming. Only in parts of Europe and Africa were these crops denied to farmers and consumers by the pressure of militant environmentalists, with what Stewart Brand calls their “customary indifference to starvation.” African governments, after intense lobbying by Western campaigners, have been persuaded to tie genetically modified food in red tape, which prevents them being grown commercially in all but three countries (South Africa, Burkina Faso and Egypt). In one notorious case Zambia in 2002 even turned down food aid in the middle of a famine after being persuaded by a campaign by groups, including Greenpeace International and Friends of the Earth, that because it was genetically modified it could be dangerous. A pressure group even told a Zambian delegation that GM crops might cause retroviral infections.”
“Genetic modification provides an obvious solution: to insert healthy nutritional traits into high-yielding varieties: try ptophan into maize to fight depression, calcium transporter genes into carrots to help fight osteoporosis in people who cannot drink milk, or vitamins and minerals into sorghum and cassava for those who depend on them as staples. By the time this book is published soybeans with omega-3 fatty acids developed in South Dakota should be on the way to supermarkets in America. They promise to lower the risk of heart attacks and perhaps help the mental health of those who cook with their oil — and at the same time they can reduce the pressure on wild fish stocks from which fish oils are derived.”
Trade
“To argue, therefore, that emperors or agricultural surpluses made the urban revolution is to get it backwards. Intensification of trade came first. Agricultural surpluses were summoned forth by trade, which offered farmers a way of turning their produce into valuable goods from elsewhere. Emperors, with their ziggurats and pyramids, were often made possible by trade. Throughout history, empires start as trade areas before they become the playthings of military plunderers from within or without. The urban revolution was an extension of the division of labour.”
“The Mauryan empire in india seems to have harvested the prosperity of the Ganges valley to combine an imperial monarchy with expanding trade. It was ruled at its zenith in 250 sc by Asoka, a warrior who turned into a Buddhist pacifist once he had won (funny, that) and was as economically benign a head of state as you could wish. He built roads and waterways to encourage the movement of goods, established a common currency and opened maritime trade routes with China, south-east Asia and the Middle East, sparking an export-led boom in which cotton and silk textiles played a prominent part. Trade was carried on almost entirely by private firms (sreni) of a recognisably corporate kind; taxation, though extensive, was fairly administered. There were remarkable scientific advances, not least the invention of zero and the decimal system and the accurate calculation of pi. Asoka’s empire disintegrated before it had become totalitarian, and its legacy was impressive: for the next few centuries the Indian subcontinent was both the most populous and the most prosperous part of the world, with a third of the world’s people and a third of the world’s GDP. It was without question the economic superpower of the day, dwarfing both China and Rome, and its capital city Pataliputra was the largest city in the world, famous for its gardens, luxuries and markets. Only later, under the Guptas, did the caste system ossify Indian commerce.”
“Thanks to the discovery of the monsoon, which reliably blew ships eastward in summer and back westward in winter, the journey across the Arabian Sea was cut from years to months.”
“As Europe sank back into self-sufficiency, Arabia was discovering gains from trade. The sudden emergence of an all-conquering prophet in the middle of a desert in the seventh century is rather baffling as the tale is usually told — one of religious inspiration and military leadership. What is missing from the story is the economic reason that Arabs were suddenly in a position to carry all before them. Thanks to a newly perfected technology, the camel, the people of the Arabian Peninsula found themselves well placed to profit from trade between East and West. The camel caravans of Arabia were the source of the wealth that carried Muhammad and his followers to power. The camel had been domesticated several thousand years earlier, but it was in the early centuries AD that it was at last made into a reliable beast of burden. It could carry far more than a donkey could, go to places a wheeled bullock cart could not, and because it could find its own forage en route, its fuel costs were essentially zero — like a sailing ship. For a while even the Byzantine sailing ships of the Red Sea, waiting for the right winds and running the gauntlet of increasingly numerous pirates, found themselves at a competitive disadvantage compared with ‘ships of the desert’. With the route down the Euphrates disrupted by wars between Sassanid Persia and Byzantine Constantinople, the way was open for the people of Mecca, like dry Phoenicians, to become rich through trade. Spices, slaves and textiles went north and west; while metals, wine and glass went south and east.”
“China went from a state of economic and technological exuberance in around AD 1000 to one of dense population, agrarian backwardness and desperate poverty in 1950. According to Angus Maddison’s estimates, it was the only region in the world with a lower GDP per capita in 1950 than in 1000. The blame for this lies squarely with China’s governments.
Pause, first, to admire the exuberance. China’s best moments came when it was fragmented, not united. The economy first truly prospered in the unstable Zhou dynasty of the first millennium Bc. Later, after the Han empire fell apart in AD 220, the Three Kingdoms period saw a flourishing of culture and technology. When the Tang empire came to an end in 907, and the
‘Five Dynasties and Ten Kingdoms’ fought each other incessantly, China experienced its most spectacular burst of invention and prosperity yet, which the Song dynasty inherited. Even the rebirth of China in the late twentieth century owes much to the fragmentation of government and to an explosion of local autonomy. The burst of economic activity in China after 1978 was driven by ‘township and village enterprises’, agencies of the government given local freedom to start companies. One of the paradoxical features of modern China is the weakness of a central, would-be authoritarian government.
By the late 1000s, the Chinese were masters of silk, tea, porcelain, paper and printing, not to mention the compass and gunpowder. They used multi-spindle cotton wheels, hydraulic trip hammers, as well as umbrellas, matches, toothbrushes and playing cards. They made coke from coal to smelt high-grade iron: they were making 125,000 tonnes of pig iron a year. They used water power to spin hemp yarn. They had magnificent water clocks. All across the Yangtze delta the Confucian dictum ‘men plough; women weave’ was obeyed with industrious efficiency so that peasants were working for cash as well as subsistence and were using that cash to consume goods. Art, science and engineering flourished. Bridges and pagodas sprang up everywhere. Woodblock printing quenched a raging thirst for literature. The Song era had, in short, a highly elaborate division of labour: many people were consuming what each other produced.
Then came the calamities of the 1200s and 1300s. First the Mongol invasion, then the Black Death, then a series of natural disasters, followed by the all too unnatural disaster of totalitarian Ming rule. The Black Death spurred Europe into further gains from trade and escaping the trap of self-sufficiency; why did it not have the same effect in China, where it left the country half as populous as before and therefore presumably rich in surplus land to support disposable income? The blame rests squarely with the Ming dynasty. Western Europe only bounced back from the Black Death because it had regions of independent city states run by and for merchants, notably in Italy and Flanders. This made it harder for landowners to reimpose serfdom and restrictions on peasant movement after the plague had briefly empowered the labouring classes. In Eastern Europe, Mamluk Egypt and Ming China, serfdom was effectively restored.”
“Not only did the Ming emperors nationalise much of industry and trade, creating state monopolies in salt, iron, tea, alcohol, foreign trade and education, but they interfered with the everyday lives of their citizens and censored expression to a totalitarian degree. Ming officials had high social status and low salaries, a combination that inevitably bred corruption and rent-seeking. Like all bureaucrats they instinctively mistrusted innovation as a threat to their positions and spent more and more of their energy on looking after their own interests rather than the goals they were put there to pursue. As Etienne Balazs put it:
The reach of the Moloch-state, the omnipotence of the bureaucracy, goes much further. There are clothing regulations, a regulation of public and private construction (dimensions of houses); the colours one wears, the music one hears, the festivals — all are regulated. There are rules for birth and rules for death; the providential State watches minutely over every step of its subjects, from cradle to grave. It is a regime of paperwork and harassment, endless paperwork and endless harassment.
Do not be fooled by the present tense: this is Ming, not Maoist, China that Balazs is describing.
The behaviour of Hongwu, the first of the Ming emperors, is an object lesson in how to stifle the economy: forbid all trade and travel without government permission; force merchants to register an inventory of their goods once a month; order peasants to grow for their own consumption and not for the market; and allow inflation to devalue the paper currency 10,000-fold. His son Yong-Le added some more items to the list: move the capital at vast expense; maintain a gigantic army; invade Vietnam unsuccessfully; put your favourite eunuch in charge of a nationalised fleet of monstrous ships with 27,000 passengers, five astrologers and a giraffe aboard, then in a fit of pique at the failure of this mission to make a profit, ban everybody else from building ships or trading abroad.”
Population
“What Europe achieved after 1750 uniquely, precariously, unexpectedly — was an increasing division of labour that meant that each person could produce more each year and therefore could consume more each year, which created the demand for still more production. Two things, says the historian Kenneth Pomeranz, were vital to Europe’s achievement: coal and America. The ultimate reason that the British economic take-off kept on going where the Chinese — or for that matter, the Dutch, Italian, Arab, Roman, Mauryan, Phoenician or Mesopotamian — did not was because the British escaped the Malthusian fate. The acres they needed to provide themselves with corn, cotton, sugar, tea and fuel just kept on materialising elsewhere. Here are Pomeranz’s numbers: in around 1830, Britain had seventeen million acres of arable land, twenty-five million acres of pastureland and less than two million acres of forest. But she consumed sugar from the West Indies equivalent (in calories) to the produce of at least another two million acres of wheat; timber from Canada equivalent to another one million acres of woodland, cotton from the Americas equivalent to the wool produced on an astonishing twenty-three million acres of pastureland, and coal from underground equivalent to fifteen million acres of forest. Without these vast ‘ghost acres’ Britain’s industrial revolution, which was only just starting to raise living standards in 1830, would have already shuddered to a halt for lack of calories, cotton or coal.
Not only did the Americas ship back their produce; they also allowed a safety valve for emigration to relieve the Malthusian pressure of the population boom induced by industrialisation. Germany, in particular, as it industrialised rapidly in the nineteenth century, saw a huge increase in the birth rate, but a flood of emigrants to the United States prevented the division of land among multiple heirs and the return to poverty and self-sufficiency that had afflicted Japan two centuries before.
When Asia experienced a population boom in the early twentieth century, it had no such emigration safety valve. In fact, Western countries firmly and deliberately closed the door, terrified by the ‘yellow peril’ that might otherwise head their way. The result was a typical Malthusian increase in self-sufficiency. By 1950 China and India were bursting with the self-sufficient agrarian poor.”
“As soon as it felt prosperity from trade, Asia experienced precisely the same transition to lower birth rates that Europe had experienced before.
Bangladesh today is the most densely populated large country in the world, with more than two thousand people living on every square mile; it has a population greater than Russia living on an area smaller than Florida. In 1955 Bangladesh had a birth rate of 6.8 children per woman. Today, fifty years later, that ratio has more than halved, to about 2.7 children per woman. On current trends Bangladesh’s population will soon cease growing altogether. Its neighbour India has seen a similar collapse in fecundity, from 5.9 to 2.6 children per woman. In Pakistan the birth rate did not start dropping till the mid-1980s, but its decline has been catching up its neighbours: it has halved in just twenty years to 3.2 children per woman. Between them these three countries account for about a quarter of the world’s population. If they had not seen their birth rates fall so fast, the world population boom would have become deafening.
Yet they are not alone. Throughout the world, birth rates are falling. There is no country in the world that has a higher birth rate than it had in 1960, and in the less developed world as a whole the birth rate has approximately halved. Until 2002, the began without any government family-planning policies in many countries, especially Latin America. China’s highly coerced (‘one child’) birth-rate decline since 1955 (from 5.59 to 1.73 children, or 69 per cent) is almost exactly mirrored by Sri Lanka’s largely voluntary one over the same time period (5.70 to 1.88, or 67 per cent).”
“What a happy conclusion. Human beings are a species that stops its own population expansions once the division of labour reaches the point at which individuals are all trading goods and services with each other, rather than trying to be self-sufficient. The more interdependent and well-off we all become, the more population will stabilise well within the resources of the planet. As Ron Bailey puts it, in complete contradiction of Garrett Hardin: “There is no need to impose coercive population control measures; economic freedom actually generates a benign invisible hand of population control.’”
Fossil Fuels
“The Lancashire cotton industry was rapidly converting from water power to coal. The world would follow suit and by the late twentieth century, 85 per cent of all the energy used by humankind would come from fossil fuels. It was fossil fuels that eventually made slavery — along with animal power, and wood, wind and water — uneconomic.”
“Fossil fuels cannot explain the start or the industrial revolution. But they do explain why it did not end. Once fossil fuels joined in, economic growth truly took off, and became almost infinitely capable of bursting through the Malthusian ceiling and raising living standards. Only then did growth become, in a word, sustainable. This leads to a shocking irony. I am about to argue that economic growth only became sustainable when it began to rely on non-renewable, non-green, non-clean power. Every economic boom in history, from Uruk onwards, had ended in bust because renewable sources of energy ran out: timber, crop land pasture, labour, water, peat. All self-replenishing, but far too slowly, and easily exhausted by a swelling populace. Coal not only did not run out, no matter how much was used: it actually became cheaper and more abundant as time went by, in marked contrast to charcoal, which always grew more expensive once its use expanded beyond a certain point, for the simple reason that people had to go further in search of timber.”
“There is a tendency to believe that pessimism is new, that our current dyspeptic view of technology and progress has emerged since Hiroshima and got worse since Chernobyl. History contradicts this. Pessimists have always been ubiquitous and have always been feted. ‘Five years have seldom passed away in which some book or pamphlet has not been published,’ wrote Adam Smith at the start of the industrial revolution, ‘pretending to demonstrate that the wealth of the nation was fast declining, that the country was depopulated, agriculture neglected, manufactures decaying, and trade undone.’”
“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. (Willingness to take risks, a possible correlate of optimism, is also partly heritable: the 7-repeat version of the DRD4 gene accounts for 20 per cent of financial risk taking in men — and is commoner in countries where most people are descended from immigrants.)”
Africa
“Easterly cites the example of insecticide-treated mosquito bed nets, which are a cheap and proven way of preventing malaria. A bed net costs about $4. Encouraged by a flurry of publicity at the Davos World Economic Forum in 2005 from Gordon Brown, Bono and Sharon Stone, bed nets became a fashionable icon of the aid industry. Unfortunately, when given out free by donor agencies, they often become fashion items instead, being sold on the black market for wedding veils or used as fishing nets. They undercut local merchants supplying them for money. One American charity, Population Services International, came up with a better idea. It sold the nets for fifty cents to mothers attending antenatal clinics in Malawi and subsidised this price by selling the nets for $5 to richer urban Malawians. The poor mothers who bought these nets with half a day’s wages made sure they were used properly. In four years, the proportion of children under five sleeping under such nets went up from 8 per cent to 55 per cent.”
“Take, therefore, one such typical African country. It is landlocked, drought-prone and has a very high population growth rate. Its people belong to eight different tribes speaking different tongues.
When freed from colonial rule in 1966 it had eight miles of paved road (for an area the size of Texas), twenty-two black university graduates, and only 100 secondary school graduates. It was later cursed by a huge diamond mine, crippled by AIDS, devastated by cattle disease, and ruled by one party with little effective opposition. Government spending has remained high; so has wealth inequality. This country, the fourth poorest in the entire world in 1950, has every one of Africa’s curses. Its failure was inevitable and predictable.
But Botswana did not fail. It succeeded not just moderately well, but spectacularly. In the thirty years after independence it grew its per capita GDP faster on average (nearly 8 per cent) than any other country in the entire world — faster than Japan, China, South Korea and America during that period. It multiplied its per capita income thirteen times so that its average citizens are now richer than Thais, Bulgarians or Peruvians. It has had no coups, civil wars or dictators. It has experienced no hyperinflation or debt default. It did not wipe out its elephants. It is consistently the most successful economy in the world in recent decades.
It is true that Botswana has a small and ethnically somewhat homogeneous population, unlike many other countries. But its biggest advantage is one that the rest of Africa could easily have shared: good institutions. In particular, Botswana turns out to have secure, enforceable property rights that are fairly widely distributed and fairly well respected. When Daron Acemoglu and his colleagues compared property rights, with economic growth throughout the world, they found that the first explained an astonishing three quarters of the variation in the second and that Botswana was no outlier: the reason it had flourished was because its people owned property without fear of confiscation by chiefs or thieves to a much greater extent than in the rest of Africa. This is much the same explanation for why England had a good eighteenth century while China did not.
So give the rest of Africa good property rights and sit back and wait for enterprise to work its magic? If only it were that easy. Good institutions cannot usually be imposed from above: that way they are oxymorons. They must evolve from below. And it turns out that Botswana’s institutions have deep evolutionary roots. The Tswana people who conquered the native Khoisan tribes in the eighteenth century (and still do not necessarily treat them well) had a political system that was remarkably, well, democratic. Cattle were privately owned, but land was owned collectively. The chiefs, who in theory allocated land and grazing rights, were under a strong obligation to consult an assembly, or kgotla. The Tswana were also inclusive, happy to bring other tribes into their system, which stood them in good stead when a collective army was needed to repel the Boers at the battle of Dimawe in 1852.
This was a good start, but Botswana then had a stroke of good fortune in its colonial experience. It was incorporated into the British empire in such a half-hearted and inattentive fashion that it barely experienced colonial rule. The British took it mainly to stop the Germans or Boers getting it.”
“After independence, Botswana’s first president, Seretse Khama, one of the chiefs, behaved like most African leaders in setting out to build a strong state and disenfranchise the chiefs, as well as to win all future elections (so far so good for his party under two successors). This, together with the extreme poverty of the country and its dependence on foreign aid, foreign labour markets (in South Africa) and the sale of mineral rights to de Beers surely boded badly. Yet Botswana went from strength to strength by carefully investing its cattle export income and then its diamond windfall to develop other parts of the economy. Only a devastating AIDS epidemic, which lowered life expectancy between 1992 and 2002, mars the picture, and even that is now retreating.”
“The slums of Nairobi and Lagos are terrible places, but the chief fault lies with governments, which place bureaucratic barriers in the way of entrepreneurs trying to build affordable homes for people. Unable to negotiate the maze of regulations that govern planning, developers leave the poor to build their own slums, brick by brick as they can afford them, outside the law — and then await the official bulldozers.”
“Entrepreneurs who start businesses in the West usually finance them with mortgages, and you cannot get a mortgage on an illegal dwelling. The Peruvian economist Hernando de Soto estimates that Africans own an astonishing $1 trillion in “dead capital’ — savings that cannot be used as collateral because they are invested in ill-documented property.”
“The importance of property rights can even be demonstrated in the laboratory. Bart Wilson and his colleagues set up a land of three virtual villages inhabited by real undergraduates of two kinds — merchants and producers — making and needing three kinds of unit: red, blue and pink. Since no village can make all three units, the subjects had to start trading among themselves and did. Unlike in a previous, simpler experiment they graduated to impersonal, market-like exchange. But when the players had a history of no property rights — i.e., they were able to steal units from each other’s caches — the trading never flourished and the undergraduates went home poorer than if they had a history of property rights.”
“In Kenya, despairing of state-controlled landlines, one-quarter of the population acquired a mobile phone after 2000. Kenyan farmers call different markets to find the best prices before setting out with their produce, and are better off for it. Studies of rural villages in Botswana find that the ones that have mobile reception have more non-farm jobs than the ones that do not. Mobile phones not only enable people to get work, but also to pay for and be paid for services — mobile phone credits having become in effect a form of informal banking and payments system. In Ghana, manufacturers of T-shirts can be paid directly by American buyers using phone credits. 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.”
“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. The scenarios assume that the entire world will have a mean standard of living somewhere between today’s Portugal and Luxembourg, and even the citizens of developing countries will have incomes between those of today’s Malaysians and Norwegians. In the hottest scenario, income rises from $1,000 per head in poor countries today to more than $66,000 in 2100 (adjusted for inflation). Posterity in these futures is staggeringly wealthier than today, even in Africa — an interesting starting assumption for an attempt to warn us of a terrible future. Note that this is true even if climate change itself cuts wealth by Stern’s 20 per cent by 2100: that would mean the world becoming ‘only’ two to ten times as rich.”
“In measuring health, note that globally the number of excess deaths during cold weather continues to exceed the number of excess deaths during heat waves by a large margin — by about five to one in most of Europe. Even the notorious one-off death rate in the European summer heat wave of 2003 failed to match the number of excess cold deaths recorded in Europe during most winters.”
