Reasons to be Cheerful in 2011

Friday, Dec 31, 2010

With one tenth – well, 11% -- of the twenty-first century now consigned to history, what is the verdict so far? A terrorist mass murder, two long wars, a financial crisis and a deep recession: not great. So perhaps it would surprise you to learn that, according to respectively Steven Pinker of Harvard University and Xavier Sala-i-Martin of Columbia University, the last decade saw the lowest number of global deaths in war since records began in 1945 and the fastest ever reduction in global income inequality.

The economic growth of the past decade took a century to achieve in 1810 and took a millennium to achieve in 810. That acceleration shows no signs of stopping, indeed it may be about to redouble. The root cause of economic growth is the mixing of ideas: ideas on how to recombine the atoms and electrons of the world in such a way as to supply people’s needs and wants more efficiently. Bring down barriers to the mixing of ideas (barriers in trade, energy, communication and education) and you will cause faster growth whether you want to or not. Nothing has brought down barriers to the mixing of ideas faster than the internet.

What is growth? It means fulfilling more needs and more wants with a smaller amount of work. A kilowatt-hour of electricity cost an hour of work in 1900 for somebody on the average wage; it costs five minutes of work today.

What is more, this process generates virtue. The essence of virtue is co-operation: pro-social rather than anti-social behaviour. Study after study confirms that immersing people in commerce makes them nicer: le doux commerce, Montesquieu called it. Growth comes about through people working for each other. Self sufficiency is poverty; prosperity is mutual exchange and specialisation. The more you specialise in doing one thing for strangers and they each specialise in doing one thing for you, the better your productivity and the greater your standard of living. Millions of people you will never meet contributed to making for you each of the objects you use in your everyday life. Far from being a selfish creed, economic growth spreads collaboration.

Moreover, with growth come other non-material benefits. As people get richer so they demand that more money and attention be paid to what were once luxuries like clean water, clean air, clean energy and biodiversity. So it is not just child mortality and family size that fall rapidly with wealth; pollution and habitat destruction come tumbling down once incomes pass a level of about $8,000 a head. More and more countries are passing that threshold right now.

Not everything will go right. Because we are human, there will be wars, bubbles, recessions, disasters and superstitions, but just as the recent crisis failed to derail world growth, so it is unlikely that the great existential threats that each generation so warmly clutches to its pessimistic bosom will blow away this inexorable boom. Doom after doom, from eugenic deterioration of the race to the collapse of computers at the millennium, has turned out to be a mirage. Population growth is slowing, and will halt altogether around 2070. Both theoretically and empirically, climate change looks set to continue to happen too slowly to reach a dangerous pace, absent some implausible feedback or tipping point mechanism. Fossil fuels, especially gas, far from running out, will prove sufficiently abundant to fuel even the super-prosperity of this century, before giving way to cheaper forms of energy as scarcity eventually drives up their price. Great plagues, mega-volcanoes, asteroids and vengeful superintelligent computers are all possible, but improbable.

Reasons to be cheerful, Matt Ridley, January 1, 2011,