Trade Trumps Warlords, Kings and Congress
It's easy to get discouraged watching the fiscal slow motion train wreck consuming most western democracies. Will bankrupt Greece and Ireland take tottering France and Germany down with them? Will California and New York do the same to us here? As the electoral impetus to shower bankers with bailouts and voters with unfunded benefits empowers the profligate to eat the seed corn of the productive, only the long view offers respite from despair.
This makes Matt Ridley's "The Rational Optimist" the perfect read to start the New Year. Not since Julian Simon penned the "Ultimate Resource" has an author so perfectly captured the essence of why the human race will continue to progress despite the depredations of political overlords. Deftly refuting the pessimism of anti-trade zealots, neo-Malthusians, and eco-fundamentalists Ridley takes his readers on a wide ranging intellectual journey that explains how prosperity evolves.
At root lies a characteristic unique to the human species, what Adam Smith called the "propensity to truck, barter, and trade." Many animals kill to snatch their sustenance, as man is sometimes wont to do. But only man engages in voluntary exchange with complete strangers, to the mutual benefit of both. Draw enough people into a web of exchange and the innovative power of specialization allows a thousand talents to bloom. Prosperity is nothing more than the steady march of specializing production and diversifying consumption.
Ridley starts by reviewing paleontological evidence suggesting that it was just this factor that allowed a new hominid from Africa to displace the Neanderthals dominating Europe. Big-brained though they were, small bands of Neanderthals possessing tools invariably made from materials within an hour's walk never mastered the art of socially aggregating and compounding progress across space and time. Our own ancestors escaped the grinding poverty of self sufficiency by learning to profit from trade, launching an unprecedented explosion that continues to this day.
Flint, ivory, shells, steatite, bone, lignite, pyrite - early man's trade goods passed hand-to-hand over long distances, ultimately giving the best flint chipper a large enough market to devote the bulk of his time to what he did best, earning his meat and hides from the best hunters and tanners. Ridley makes it clear that untrammeled trade became the engine of discovery and invention that prepared the ground first for agriculture then for civilization, not the other way around.
Wherever trade and specialization flourished, so did man. Where trade withered and self sufficiency returned, regression set in. Progress was invariably bottoms-up, societies constantly re-discovering the timeless truth that freedom, property, and a small body of mutually agreed upon rules and customs invariably outperform any and all forms of coercive central planning.
Of course, accumulated prosperity also attracted parasites, and it wasn't long before man got his first lessons in what happens when thieves evolve into priests and potentates. In case after case civilizations fell when the ruling class sought the plunder of war or the safety of stasis, promulgating taxes to finance the former and rules and regulations to choke off innovations that might threaten the latter.
Yet new civilizations persistently arose whenever a nexus of free trade emerged outside the reach of established warlords and kings. Phoenicia, Venice, Holland, the United States, each new periphery went on to become the center. The cycle of decline was doomed to repeat when these new civilizations were captured by rent-seeking overlords. Alas, Ridley offers no remedy for this affliction. Yet one is consoled by the thought that as long as freedom is alive somewhere the baton of progress will be passed.
Most amusing is Ridley's account of the parade of discredited pessimists that have marched through history, particularly in modern times where McArthur genius grants and Nobel Prizes await those who shout catastrophe the loudest. Free trade and free minds have lifted more people out of poverty in the last 50 years than ever before, yet "The generation that has experienced more peace, freedom, leisure time, education, medicine, travel, movies, mobile phones, and massages than any generation in history is lapping up gloom at every opportunity." What does it mean when the president's science advisor can echo a Luddite statement like this and not be hooted off the national stage? "Isn't the only hope for the planet that industrialized civilizations collapse? Isn't it our responsibility to bring it about?"
Again and again history proves that the solution to secondary problems caused by technology is ... more technology. Nowhere is this more relevant than dealing with climate change. On this point Ridley is at his best. Taking the IPCC global warming predictions at face value he describes what the future might look like if the top-down remedies being prescribed by global elites are followed. He then compares this to a future where bottoms-up innovation is allowed to continue untrammeled.
Read it for yourself and decide which future you'd rather bequeath to your children.
