Book Review: The Rational Optimist: How Prosperity Evolves

Let me recommend a startling book to you, because whether you read a book a week or you haven’t picked one up since you discovered the wonders of the internet, this one deserves your attention. The book is The Rational Optimist: How Prosperity Evolves (438 pages) written by Matt Ridley and published by HarperCollins ($26.99). Ridley, a Brit, used to write for the Economist magazine and knows how to make abstract concepts accessible.

In this book Ridley challenges the precepts of most environmentalists. He argues that the less independent and less self-sufficient we become and the more we rely on others (people, companies, nations) for our needs, the better off we (humans, plants, animals, land, ecosystems) all are, and will be, forever. He says we are living better, living longer, and the planet is healthier because of our interdependence.

Arguing that life is improving, for us and earth’s biomes, is a tough sell. I know this from experience. Last April, I wrote a post (Happy 40th Anniversary Earth Day) about what has happened in the forty years since the first Earth Day; how we now have less pollution, more food, and fewer people in abject poverty. The post has a poll about whether the reader was now more optimistic, more pessimistic, or ambivalent about the future. Overwhelmingly, people were (and apparently are) pessimistic about the future of the earth. Mind you, this is a tiny sample and completely non-scientific, still I suspect it is pretty close to representative of the population. In fact, a 2010 CBS News poll reveals 57% of Americans believe the world’s environment will deteriorate further in a generation.

The reason circumstances have improved for us and our world is that we’ve moved from being hunter-gatherers needing lots of land, to being specialists needing much less land. And the big reason for this specialization was the invention of exchanging one thing for a different thing. No other animal on earth trades one thing for something else with an unrelated animal. Trade is quite different from reciprocity, which is “you scratch my back, then I’ll scratch your back.” Trade involves exchanging things that are different at the same time. And trade has allowed all who do it to specialize and be better off. You can now trade things you know how to make for things that you don’t know how to make or cannot make.

Trading meant that we no longer had to be good at a lot of skills; we only needed to do one thing. Of course, by doing only one thing we need to rely on others to do those other things. Ridley argues that self sufficiency is poverty and that interdependence is a good thing. “In truth, far from being unsustainable, the interdependence of the world through trade is the very thing that makes modern life as sustainable as it is…suppose your local wheat farmer tells you that last year’s rains means he will have to cut his flour delivery in half. You will have to go hungry.” Instead, you benefit from a global marketplace, “in which somebody somewhere has something to sell you so there are rarely shortages, only modest price fluctuations.”

Because he is a libertarian, Ridley is predisposed to look favorably on commerce. He believes in small government and free markets of goods and services with few rules. Critics pounce on this and point out when he was non-executive chairman of Northern Rock, his bank’s policies of high-risk lending and high risk borrowing contributed to the economic bubble that caused the major recession that much of the world is still dealing with. It’s a fair point: How can he be a rational optimist if he participated in, what in hindsight was, irrational exuberance?

I found Ridley’s ideas and arguments compelling. Trade and commerce make everyone richer, as long as someone is willing to pay for a service there is no such thing as unproductive work, and that in a generation we will be richer still and the earth in better shape. “The rational optimist invites you to stand back and look at your species differently,” writes Ridley in his book, “to see the grand enterprise of humanity that has progressed–with frequent setbacks–for 100,000 years. And then, when you have seen that, consider whether the enterprise is finished or if, as the optimist claims, it still has centuries and millennia to run.”

I dare you to be rationally optimistic.

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The Plundered Planet

Writing on NetGreen News, Paul Mackie, formerly of the World Resources Institute, provides a book review of Paul Collier‘s latest book, The Plundered Planet: Why We Must–and How We Can–Manage Nature for Global Prosperity. In general, he agrees with Oxford Economics Professor Collier’s assertion:

“The romantics (environmentalists) are right that we are seriously mismanaging nature and that our practices are indefensible. The ostriches (economists) are right that much of what is said about nature is ridiculously pious, casting the rich world as the villains and the rest of the world as their victims. But they are also each half wrong. Both will take us to oblivion, albeit by different routes.”

Professor Collier says they are “half wrong” because, (economists) believe nature is an asset “to be exploited for the benefit of mankind,” and well environmentalists (apparently) are rigidly pious.

According to the description on Professor Collier’s page:

“(We must confront) global mismanagement of nature. Proper stewardship of natural assets and liabilities is a matter of planetary urgency: natural resources have the potential either to transform the poorest countries or to tear them apart…(Collier) [o]ffers concrete suggestions for how to fix the problems–including global warming, food shortages, and violent conflict–that result from improper exploitation of natural resources…”

I will put Professor Collier’s book on my “to be read” list and give it a look. Not too long ago I would wholly have agreed with him.

Now, I think, in spite of our natures, we are taking far better care of the earth than ever before. I’m skeptical that the effects of food shortages and violent conflict are the result of “improper exploitation of natural resources.” People respond to incentives, if there is a demand for a good or service, producers react by trying to market that. Recall, the food shortages of 2008 were, in part, the result of the Kyoto Protocols causing nations to move toward biofuels which pulled farmland out of food production for biofuel (and caused deforestation for palm oil plantations). Technology, rather than being a force destroying the earth, has a benevolent effect as well.

One more thing about fixing the food shortages. Tim Worstall has this to say in a rebuke of Johann Hari’s speculation of the shortage’s cause:

The wise, omniscient and altruistic politicians and bureaucrats could send a fax to all farmers telling them to plant more. Signs could appear in every breadshop telling us all to eat our crusts.

Except, of course, those wise, omniscient and altruistic politicians and bureaucrats are precisely the fuckers that got us into the mess in the first place by insisting that we should put wheat into cars rather than people.

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