The Case For Optimism

This article from the January 2014 edition of the IPA Review is by Author of the bestselling book ‘The Rational Optimist’, Matt Ridley.

Woody Allen once said that ‘we stand at a cross-roads. One path leads to despair and utter hopelessness; the other to total extinction. Let us hope we have the wisdom to make the right choice.’

All too often that is how almost everybody—conservative and socialist, old and young, rich and poor—speaks about the future of the planet. For the left, the world is going to hell in a handcart because of unrestrained greed. For the right, all is lost because of unrestrained government.

They are both wrong. Today’s prosperity and freedom are astonishing compared with what mankind has ever experienced before—but nothing compared with what our grandchildren could enjoy. Free-market liberals should, where possible, take a much more optimistic tone.

When William Shakespeare was growing up in Stratford in the 1560s his father was a chief alderman of the town. That gave him the duty to investigate any report of immorality even inside the home, to arrest servants who left their masters, or apprentices seen on the street after 9pm, to order the ducking of a wife who was accused of being a scold in the waters of the River Avon, to have vagabonds whipped, put in the stocks, branded and forced to labour as slaves, and to catch Catholic priests so they could be hanged, taken down while still alive, castrated, gutted and made to watch the burning of their intestines, then at last killed by beheading, and cut into quarters, the  pieces displayed as warning.

This was in one of the most free and civilized countries in the world. The golden age was not in the past. It is in the future.

At the time that Botany Bay was first seen by Captain Cook, the living standard of the average Brit was about the same as that of Mozambique today. People died of starvation and disease in their tens of thousands every winter.

As late as 1800, you had to work for six hours on the average wage to earn enough money to buy a candle that would burn for one hour. Today you have to work for less than half a second on the average wage to earn enough money to switch on a lamp for an hour.

Compared with any time in the past human beings today are almost immeasurably better off. In my lifetime, life expectancy has gone globally up by one third. Child mortality has fallen by two thirds. And income per head has trebled— in real terms. Both the rate of poverty and the number of people in poverty are falling faster than at any time in history.

We are not only wealthier and healthier than ever before—We are happier, safer, better fed, cleverer, cleaner, kinder, freer, more peaceful and more equal. The evidence on each of these points is clear:
■ Life satisfaction increases with wealth within and between countries;
■ Death rates from storms, floods and droughts have fallen by 98% since the 1920s;
■ IQ is increasing in most countries, so is participation in education;
■ Air and water pollution are dramatically reduced in the rich world; a modern car emits less pollution at 70mph than a parked car with the engine off in 1970.
■ People are giving more to charity as a proportion of income;
■ More people live in democracies and fewer in autocracies;
■ Fewer people died in warfare in the 2000s than in any other decade since the 1940s;
■ And people in poor countries are getting rich much faster than people in rich countries are getting rich, closing the global gap between rich and poor.

Now, maybe these trends will not continue. Maybe we stand at a turning point. Many people think so.

But they have always thought so. What I call ‘turning-point-itis’ is the belief that your generation is the one that will see things start to get worse, goes back all the way to ancient Greece.

Here’s Lord Macaulay, the historian and politician railing against a pessimist in 1830:

We cannot absolutely prove that those are in error who say society has reached a turning point, that we have seen our best days, but so said all who came before us and with just as much apparent reason … On what principle is it that with nothing but improvement behind us we are to expect nothing but deterioration before us?

He was fed up with the turning-point mob even then.

Global pessimism was a view I used to share. When I was a student in the 1970s, the grown-ups promised me unbroken misery in the future.

They said the population explosion was unstoppable, mass famine was imminent, a cancer epidemic caused by chemicals in the environment was going to shorten lifespan, the Sahara desert was advancing by a mile a year, the Ice Age was returning, oil was running out, air pollution was choking us and nuclear winter would finish us off.

By the time I was 21 years old I realized that nobody had ever said anything optimistic to me about the future of the planet and its people, at least not that I could recall. Doom was certain.

Here’s a quote from an article written by two young men in 1971, one of whom is now President Obama’s science adviser, while the other went on to win a genius award: John Holdren and Paul Ehrlich.

We are not, of course, optimistic about our chances of success. Some form of eco-catastrophe, if not thermonuclear war, seems almost certain to overtake us before the end of the century.

The next two decades were just as bad: acid rain was going to devastate forests, the loss of the ozone layer was going to fry us, sperm counts were falling, swine flu, bird flu and Ebola virus were going to wipe us out.

In 1992, the United Nations Earth Summit in Rio de Janeiro opened its agenda for the twenty-first century with the words ‘Humanity stands at a defining moment in history. We are confronted with a perpetuation of disparities between and within nations, a worsening of poverty, hunger, ill health and illiteracy, and the continuing deterioration of the ecosystems on which we depend for our well-being.’

Actually poverty, hunger, ill health and illiteracy were all retreating fast and the improvement was about to accelerate.

By the 1990s I had begun to notice that this terrible future was not all that bad. In fact every single one of the dooms I had been threatened with had proved either false or exaggerated. The population explosion was slowing down, famine had largely been conquered except in war-torn tyrannies, India was exporting food, cancer rates were falling not rising when adjusted for age, the Sahel was greening, the climate was warming, oil was abundant, air pollution was falling fast, nuclear disarmament was proceeding apace, forests were thriving, and sperm counts had not fallen. And above all, prosperity and freedom were advancing at the expense of poverty and tyranny.

As Bjorn Lomborg and twenty-one other top economists have recently shown in a new book, How much have global problems cost the world?, ‘the cost of poor health at the outset of the twentieth century was an astounding 32% of global GDP. Today, it is down to about 11%, and by 2050 it will be half that.’ The cost of pollution, gender inequality and many other barnacles on the hull of human progress has been falling fast.

Even climate change is currently benefiting the world more than it is harming it, and will continue to do so for the next seven decades, according to Professor Richard Tol.

Yet if anything, despite the failure of their predictions, the pessimists only grew more certain, shrill and apocalyptic in the 1990s and 2000s. We were facing the ‘end of nature’, the ‘coming anarchy’, a ‘stolen future’, our ‘final century’ and a climate catastrophe.

My optimism is not based on the fact that things turned out better than expected. It is based on why they turned out better than expected.

The answer to that question is very simple: exchange and specialisation. The miracle of economic growth is driven by trade— intercontinental, and international, intercity, intervillage, interpersonal trade. You do what you are good at, somebody else does what he’s good at and you swap. You are both better off, and you are both working for each other.

Thomas Sutcliff Mort, the wool trader who began exporting frozen mutton from Sydney in 1874, put it this way:

The time has arrived…when the various portions of the earth will each give forth their products for the use of each and of all; the overabundance in one country will make up for the deficiency of another. Science has drawn aside the veil, and invention has done the rest.’

These benefits of trade, already mostly obvious to Adam Smith in 1776, and to David Ricardo in 1817, are blindingly so today. Living standards rise in places that open themselves up to world trade. The ancient Phoenicians, classical Greeks, Ashokan Indians, Song Chinese, Abbasid Arabians, Renaissance Italians, seventeenth century Dutch, Victorian British, 1960s Japanese, 1970s Hongkong Chinese, 2000s Brazilians and Indians—they all got rich through open free trade.

The connection between trade and innovation goes back to the old Stone Age. Tasmania became an island 10,000 years ago when sea levels rose at the end of the Ice Age. The people on Tasmania not only failed to share in innovations that occurred after that date—they never got the boomerang, for example—they actually gave up some of the technologies they already had. Bone tools, for instance, were no longer made after a few thousand years. Tools became simpler and fewer.

The same did not happen to the inhabitants of Tierra del Fuego, an even more inhospitable island of similar size and even higher latitude. So the simplification of the Tasmanian toolkit had nothing to do with climate.

As the anthropologist Joe Henrich has concluded, it was caused by isolation, by lack of trade. Fuegians traded with mainland south Americans across the narrow Magellan strait as Tasmanians could not trade across the much wider Bass strait.

So Fuegians could get objects and even ideas from other people. They did not have to rely on their own resources. Tasmanians were stuck with self-sufficiency, with subsistence. The parallel with North Korea is striking.

It is exchange that drives innovation. We can see this right from the start of human history, more than 100,000 years ago, when the first hints of trade begin to appear in Africa—objects moving inland long distances from the sea. The result is technological diversification. Wherever we see trade we see innovation. In trading we  specialize; in specializing we innovate; and in trading and specialising we combine ideas to make new ideas.

So, as the economist Deirdre McCloskey reminds us, we must not slip into apologizing for markets, for saying that they are necessary despite their cruelties. We should embrace them precisely because they make people less selfish and they make life more collective, less individualistic.