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Reality-based optimism.

THE RATIONAL OPTIMIST: How Prosperity Evolves

by Matt Ridley

438 pages; HarperCollins, 2010


One of the strongest voices for reason and optimism in a congenitally pessimistic world was the late economist Julian Simon. In his magnum opus, The Ultimate Resource 2 (Princeton University Press, 1998), he made a powerful case that the world is getting better in almost (he probably would have cut the "almost") every way. Not just the world of the billion or so people living in developed countries, but also the world of the remaining billions who live in poor and even dirt-poor countries.

Simon was cut down by a heart attack at age 65. Fortunately, Indur M. Goklany added to the Simon-style literature with his 2007 book, The Improving State of the World. And now comes Matt Ridley with his book, The Rational Optimist, in which he adds greatly to the evidence that things are getting better virtually worldwide.

Why read Ridley if you have already read and absorbed Simon and Goklany? There are at least four reasons. First, Ridley is an incredible writer who keeps you turning the page to find out what happens next. Second, he gives a lot of evidence and fascinating stories that were not in the earlier books. Third, the book is a numerate delight. His calculations at key points in the argument show just how "ungreen" some supposedly environmental policies are, particularly organic farming and renewable energy. Fourth, Ridley shows, hilariously at times, that pessimism not only is the dominant attitude of today's intellectual class and much of society generally, but also was the dominant attitude in the last few centuries. I do have some quibbles--more on those later--but the book's strengths more than make up for them.

Progress Ridley starts by dealing a body blow to the idyllic view that so many writers have had of England before the Industrial Revolution. He paints the cliched scene of the family around the hearth enjoying each other's company, unencumbered by the hassles and luxuries of modern life. Then, with a thud, he makes the family's life painfully realistic. "Oh please!" he writes and then takes apart the idyllic scene frame by frame. Here is a small sample:
   Though this is one of the
   better-off families in the village,
   father's Scripture reading
   is interrupted by a bronchitic
   cough that presages
   the pneumonia that will kill
   him at age 53--not helped
   by the wood smoke of the
   fire. (He is lucky: life
   expectancy even in England
   was less than 40 in 1800.)
   The baby will die of the
   smallpox that is now causing him to cry;
   his sister will soon be the chattel of a
   drunken husband. The water the son is
   pouring tastes of the cows that drink
   from the brook.... Candles cost too much,
   so firelight is all there is to see by. Nobody
   in the family has ever seen a play, painted
   a picture or heard a piano.... Father's jacket
   cost him a month's wages but is now
   infested with lice.

Ridley then jumps to some astonishing data that show how much better off people are in today's low-income countries as compared to the best-off who lived in the most advanced countries of just a few decades ago:
   The average Mexican lives longer now
   than the average Briton did in 1955. The
   average Botswanan earns more than the
   average Finn did in 1955. Infant mortality
   is lower today in Nepal than it was in Italy
   in 1951.

Back to that family in 1800 that could not afford candles: Ridley also reports Yale economist William Nordhaus's ingenious way of measuring real wages: by using light. An hour of work in 1800, he notes, would have bought you only 10 minutes of reading light. Today, that hour would buy "300 days' worth of reading light." That is progress.

Ridley points out that the internal combustion engine was a huge factor in the growth of food production. How so? America's horse population in 1915 was 21 million, and those horses ate a lot. Thus, about one-third of all agricultural land at the time was devoted to growing food for horses. Once the car came along, the horses were not needed, freeing up a huge amount of land to grow food for humans.

Intensive farming, which is due, notes Ridley, to genetic engineering and heavy use of fertilizer, frees up a huge percent of land for other uses. Today, he writes, people farm 38 percent of the earth's land area. If yields from land were at their 1961 levels, before much of this progress, a whopping 82 percent of the earth's land would need to be farmed to feed today's population. Of course, with those lower yields, the price of wheat would be much higher and we would not have today's population. Were we to replace all the industrial nitrogen fertilizer with manure, as many believers in organic farming advocate, we would need an extra seven billion cattle on an extra 47 million square miles of land to produce that manure. That is just five million square miles less than the total land area of the six habitable continents. But we are already farming 22 million square miles of land. In other words, we could not switch to organic farming and still feed the current world's population. As for keeping nature preserves, jungles, and national parks, fugetaboutit.

What about renewable energy? To supply the current U.S. population with the same amount of power we use today, writes Ridley, would require "solar panels the size of Spain" or "wind farms the size of Kazakhstan" or "woodland the size of India or Pakistan." Moreover, wind turbines are a Cuisinart for birds. Writes Ridley: "Just one wind farm at Altamont in California kills 24 golden eagles every year; if an oil firm did that it would be in court." He quotes environmentalist Jesse Ausubel: "Renewables are not green."

Doom and gloom One thing I found interesting is that the pessimists seemed prominent in all eras. Ridley quotes Adam Smith's statement in The Wealth of Nations that five years do not go by in which someone does not publish a book or pamphlet "pretending to demonstrate that the wealth of the nation was fast declining, that the country was depopulated, agriculture neglected, manufactures decaying, and trade undone." In 1830, British poet Robert Southey claimed that people were worse off than even a thousand years earlier. Fortunately, England had its 1830 version of Ridley in the poet and essayist Thomas Babington Macaulay. Macaulay wrote:
   As to the effect of the manufacturing system
   on the bodily health, we must beg
   leave to estimate it by a standard far too
   low and vulgar for a mind so imaginative
   as that of Mr. Southey, the proportion of
   births and deaths.

Macaulay went on to point to the enormous progress by 1830 that no one in 1720 would have imagined.

Exchange and progress One of the most upsetting parts of Ridley's book is his mention of President Obama's science adviser, John Holdren, and his proposal to "de-develop the United States." Maybe that explains the president's economic policies.

Seriously, though, why has the world worked out so well, and why does Ridley think it is likely to get even better? A major part of his theory is the powerful role of trade. Trade allows people to produce a good or service in which they have a comparative advantage. Princeton economist Paul Krugman, in his clearer-thinking days, referred to this principle as early 19th-century economist David Ricardo's "difficult idea," one that very few non-economist intellectuals understand. The more extensive the trade, the finer and more productive is the degree of specialization. Also important, writes Ridley, is the role of ideas and technology. In his provocative phrasing, "ideas have sex." Translation: when people have ideas, they often combine those ideas into something better. The telephone, for example, "had sex with the computer and spawned the internet." The capsule endoscope, commonly known as the camera pill, developed out of "a conversation between a gastroenterologist and a guided-missile designer." With the lower cost of transportation and communication, itself due to technology, there are more people with ideas who can get together more easily and "mate" their ideas. Thus, trade is important even in the realm of technology. (Disclosure: I am slightly biased here because Ridley quotes from Paul Romer's article on economic growth in my Concise Encyclopedia of Economics. Romer's article has become a modern classic.)

Given the important role of trade in Ridley's theory, and given his obvious understanding of trade, it is surprising that he makes a jarring misstatement: "For barter to work," he writes, "two individuals do not need to offer things of equal value. Trade is often unequal, but still benefits both sides." The correct statement is: "For barter or trade to work, individuals must offer things of unequal value." If I valued what I give up the same as what I get in return, there would be no point in trading. Trading is always an exchange of unequal values.

Easterly's criticisms In his New York Times review of The Rational Optimist, foreign-aid critic William Easterly, who I would have expected to like the book, was extremely critical. Why our different reactions? Easterly jumped on Ridley's theory of the interaction between trade and technology. I took Ridley to be suggesting this rather than saying it was the final word on the subject, although I grant that at times Ridley does go overboard. Easterly seemed to get his hackles up because of Ridley's over-certainty.

But that is not all. Easterly gets upset at Ridley for using "the word 'even' when he mentions Africa." For example, writes Ridley: "[E]ven Nigerians are twice as rich" as they were half a century earlier. Directly after criticizing Ridley for this--I am still not sure why--Easterly discloses, "Ridley approvingly cites my own work on aid to Africa." Note to self." make sure you do not cite Easterly's work approvingly.

A related problem Easterly has with the book is that Ridley fails to address inequality. Well, yes. But it seems odd to criticize a book demonstrating that--I'll say it--even Nigerians are getting wealthier, for not noting that Americans' wealth is growing even more quickly. Easterly wants a book, he writes, that "confronts honestly all the doubts about the 'free market.'" Really? All the doubts? I do not know if such a book could be written with the requisite amount of evidence and have under 3,000 pages. And a book that "only" shows us how economic freedom makes most Americans and many people in other countries wealthier in important respects than John D. Rockefeller, a book that "only" shows that we can have somewhat higher population and higher living standards for most of the world, a book that "only" tells us how to have both more food and more land for wilderness, a book that "only" offsets the dreary, people-hating pessimism that is all around us and is now even in the mind of the White House science adviser? That is not worth a lot? Psshaw. But I will end by letting Ridley answer. He writes:
   It is precisely because there is still far
   more suffering and scarcity in the world
   than I or anybody else with a heart would
   wish that ambitious optimism is
   morally mandatory.

David R. Henderson is a research fellow with the Hoover Institution and an associate professor of economics at the Graduate School of Business and Public Policy at the Naval Postgraduate School in Monterey, CA. He is the editor of The Concise Encyclopedia of Economics (Liberty Fund, 2008). He blogs at
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Title Annotation:The Rational Optimist: How Prosperity Evolves
Author:Henderson, David R.
Article Type:Book review
Date:Sep 22, 2010
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