Tuesday, March 01, 2011

The Rational Optimist *** by Matt Ridley

This book has a very interesting and thought provoking hypothesis: that humans transformed themselves culturally and developmentally because of our ability to exchange and trade. Exchange has been a driving force behind our cultural evolution, and has led us from simple tools to specialization, agriculture, cities, technology, the internet and beyond. Coupling this with Jared Diamond's geographical hypothesis on human development over the past 50,000 years, a very interesting way to view our species' history.

It is my contention that looking inside our heads, we would be looking in the wrong place to explain this extraordinary capacity for change in the species.. It was not something that happened within the brain. It was something that happened between brains... At some point, human intelligence became collective and cumulative in a way that happened to no other animal. P4

At some point before 100,000 years ago culture itself began to evolve in a way it never did in any other species – that is to replicate, mutate, compete, select, and accumulate – somewhat as genes had been doing for billions of years. P5

Exchange is to cultural evolution as sex is to biological evolution. By exchanging, humans discovered the division of labor, the specialisation of efforts and talent for mutual gain... Specialisation encouraged innovation because it encouraged the investment of time in a tool making tool. That saved time, and prosperity is simply the saving of time. The more humans diversified as consumers and producers, and the more they exchanged, the better off they have been, are, and will be. P7

Getting richer is not the only way or even the best way of getting happier. Social and political liberation is far more effective; the big gains in happiness come from living in a society that frees you to make choices about your lifestyle – about where to live, who to marry, how to express your sexuality, and so on. P28

The most striking example of technological regress is Tasmania. A population of less than 5000 hunter gatherers divided into 9 tribes after reaching this island over 35,000 years ago. They fell steadily and gradually back into a simpler toolkit purely because they lacked the numbers to sustain their existing technology... They had no bone tools, no cold weather clothing, no barbed spears, no fish traps, no spear throwers, no boomerangs... Most of these had been made and used by the very first Tasmanians. The first Tasmanians caught and ate plenty of fish, but by the time Westerners first contacted them, they not only ate no fish, but had not eaten any in over 3000 years. P78

Perhaps the first steps to trade with strangers began as individual friendships. A woman could trust her daughter who married into an allied band within the same tribal grouping. Then perhaps the woman's husband could learn to trust his son-in-law... Step by step, the habit of trade began to grow alongside the habit of xenophobia, complicating the ambitions of men and women. P91

Oxytocin is common to all mammals... so the chances are that is available to underpin trust is almost any social mammal... It is highly likely that during the past 100,000 years humans developed pecularily sensitive oxytocin systems, much more ready to fire with sympathy, as a result of natural selection in a trading species. P97

Humans began tentatively to trade, capturing benefits of comparative advantage and collective brains, which in turn encouraged evolution to favor mutants with a mind capable of trust, empathy, and even to do so cautiously and suspiciously. P98

The lesson of the last two centuries is that liberty and welfare march hand in hand with prosperity and trade. Countries that lose their liberty to tyrants today (through military coups typically), generally experience a per capita income loss of 1.4%. p109

Walmart causes a 13% drop in its competitor's prices and saves its customers nationally $200B/year. P113

Firms are temporary aggregations of people to help them do their producing in such a way as to help others do their consuming. P115

Americans can draw upon 10x as much more intangible capital as Mexicans, which explains why a Mexican who crosses the border can quadruple his productivity almost immediately. P117

Agriculture was possible because of trade. Trade provided the incentive to specialize in farmed goods and to generate surplus food. Agriculture started to appear independently in the Near East, Andes, Mexico, China, New Guinea, Brazil, Africa – all within a few thousand years. Something made it inevitable, almost compulsory around this time. P124

In search of extra calories people started to move down the food chain... 23,000 years ago there is evidence of milling barley seeds and stone ovens for baking. So bread is far older than farming, and people captured the benefits of cereals -milled and baked starch – long before they took on the hard graft of farming them. Why spend months tending your own field of corn, when you can spend a few hours harvesting a wild one? P124

The wastefulness of irrigation is a product of the low price of water. Once it is properly priced, water is not only used more frugally, but its very abundance increases through incentives to capture and store it. P148

The sudden emergence of an all conquering prophet in the middle of a desert in the 7th century is rather baffling as the tale is usually told – one of religious inspiration and military leadership. What is missing are the economic reasons that the Arabs were suddenly in a position to carry all before them. Thanks to a newly perfected technology, the camel. Camel caravans were the source the wealth that carried Muhammad and his followers to power. It wasn't until the early middle ages that the camel was made into reliable beast of burden which could carry far than a donkey, and go places a wheeled cart could not – and it could find its own forage en route reducing fuel costs to essentially zero – like a sailing ship. With the route down the Euphrates disrupted by Byzantine and Persian conflicts, the way was open for the people of Mecca to become rich through trade. P177

The Roman empires chief source of wattage (energy) was human muscle power from slaves. The period that followed the fall of Rome, especially in Europe, saw the widespread replacement of that muscle power with animals. The invention of dry grass hay enabled northern Europeans to feed oxen through the winter. Slaves were replaced by beasts, more out of practicality than compassion. Oxen, and horses eat simpler food, complain less, and are stronger than slaves. In turn, oxen and horses were soon replaced by water and wind mills. By 1300, there were 68 mills on a single mile of the Seine in Paris, and others floating on barges. Wind mills spread in areas where water power was not an option. Soon, the Dutch discovered they could burn peat (drained of course from the wind mills) to fuel the brick, ceramic, beer, soap, salt and sugar industries. Hay, water, and wind are simply ways of drawing on the sun's power. Timber is a way drawing on store of the sun's energy laid down in previous decades. Peat is an older store, laid down over millennia. Coal, which enabled the British to move forward with the industrial revolution, is solar energy laid down over 300M years ago... Gradually, erratically, more and more of the goods people made were made with fossil energy – not slaves. p216 Fossil fuels eliminated slavery.

Once fossil fuels joined in, economic growth truly took off, and became almost infinitely capable of bursting through the Malthusian ceiling and raising living standards... This leads to a shocking irony. I am about to argue that economic growth became sustainable (ever growing) when it began to rely on non-renewable, non-clean, non-green power. Every economic boom in history had ended in bust because renewable sources eventually could not meet the economic growth of a swelling populace. Coal didn't run out, no matter how much was used (this is still true!). And it actually became cheaper and more abundant over time (still true too!), in marked contrast to all renewable sources which became more expensive over time because of scarcity. P216

By 1870, the burning of coal in Britain was generating as many calories as would have been expended by 850M laborers. The capacity of the countries steam engines alone was the equivalent of six million horses or 40M men, who would have otherwise eaten 3 times the country's entire wheat crop. P231

Today the avg person on the planet consumes 2500 watts (or 600 calories/second), and 85% of the power comes from fossil fuels (mostly coal), the remaining 15% come from nuclear, and hydro. Since a reasonably fit person on an exercise bike can generate 50 watts, this means it would take 150 slaves, working 8 hour shifts each, to peddle you to your current lifestyle (American would need 660 slaves actually since we use much more power. The French only 360, and Nigerians only 16). The next you lament our dependence on fossil fuels, pause to imagine that for every family member, there should be over 600 unpaid slaves toiling in abject poverty to maintain your lifestyle. You can take this reductio ad absurdum two ways. You can regret the sinful profligacy of the modern world, which is the conventional wisdom, or you can conclude that were it not for fossil fuels, 99% of the people would have to live in slavery for the remaining 1% to have a decent standard of living, as indeed they did in the Bronze Age. P236

To supply the 300M inhabitants of the US with their 10,000 watts each (2400 calories per second) using non-fossils sources would require:

  • Solar panels the size of Spain

  • Wind farms the size of Kazakhstan

  • Woodland the size of India and Pakistan, cut down annually

  • Hayfields for horses the size of Russia and Canada combined, harvested annually

  • Dams with catchments (reservoirs) 1/3 larger than all of the world's continents put together!

As it is, a clutch of coal and nuclear power stations and handful of oil refineries and gas pipelines supply the 300M Americans with nearly all of their energy from an almost laughably small footprint – even taking into account the land despoiled by strip mines. P239

Property rights explains an astonishing 75% of economic growth... This explains why Botswana [in Africa] is no outlier. It flourished because its people owned property without fear of confiscation by chiefs or thieves to a much greater extent than in the rest of the Africa... So give the rest of Africa good property rights and sit back and wait for enterprise to work its magic? If only it were that easy. Good institutions can't usually be imposed from above; they must evolve from the bottom up. P321

On a typical day in a southern Indian village, 11 fisherman landed good catches, but the local market was sated and the price of perishable sardines was zero. Just 10 miles away in either direction that same morning, there were 27 willing buyers who were leaving the markets empty handed because they could find no sardines, even at the inflated price of 10 rupees per kg. Had the fisherman known they could have pocketed an average of 3400 rupees each after fuel costs. By simply giving the fisherman mobile phones, they could call ahead to find out where the best place to land their catch. The result was that profits rose 8%, and prices to consumers fell 4%, and wastage fell from 5% to nearly 0%. Everybody gained. P327

Once solar panels can be mass produced at $200 per square meter with an efficiency of 12%, they could generate the equivalent of a barrel of oil for about $30... Arizona gets about 6 kilowatt hours of sunlight per square meter per day so it would take only 1/3 of the state to supply American with all of their energy. P345

Nuclear plants already produce more power from a smaller footprint, with fewer fatal accident and less pollution than any other energy technology. The waste they produce is not an insoluble problem (1 coke can per person per lifetime), easily stored and unlike every other toxin gets safer with time – its radioactivity falls to one billionth in 200 years. P345