Just recently, I received a similar email to the one that led me to writing that post, from a reader named Craig. I wrote back and pointed him to that original post on staying happy, but have been thinking about the issue a bit more, after another reader, Mark B alerted us to a book review in the NY Times about the new book by Matt Ridley called The Rational Optimist. I haven't read it yet, but from the NY Times' review, it sounds like it fits nicely into the world view that we take around here, and should mix nicely with some of my favorite books.
One of my favorite books on economics, which I've recommended in the past, is David Warsh's absolutely fantastic book, Knowledge and the Wealth of Nations, which among other things, gives you a highly readable and entertaining history of economic thought from Adam Smith up to just about a decade ago, with a key focus on the economics of information. There are some points in the book where I think Warsh defers to Paul Romer's vision too much (and misses a key mistake in Romer's work...), but overall it's an absolutely fantastic work.
One of the key points it makes, in a rather humorous fashion, is how incredibly wrong the doomsayers of economic history always seem to be -- mainly because they were confused about the economics of information, and how that plays into economic growth. While most people know the hilariously wrong predictions of Malthus, Warsh's book also covers the lovely story of William Stanley Jevons, the 19th century economist:
More than ever, it seemed apparent that scarcity sooner or later was going to bring all economic growth to a halt. Jevons gained fame in England in the 1860s by explaining how the looming exhaustion of British coal mines would probably mean the end of improvements in wealth and power. (Oil was discovered in Pennsylvania four years later.) And after Jevons died, in 1882, his study was discovered to be filled from top to bottom with stacks of scrap paper. Soon enough England would be running out of paper too. He didn't want to be caught without.
One of the great parts of the book is its discussion of William Nordhaus' wonderful research into the history of lighting and productivity, which is pretty interesting if you geek out on economics stuff.
Anyway, I'm reminded of all this because it looks like Ridley's book also keys in on Nordhaus' work, and makes similar points about economic growth and progress. Ridley, rather ambitiously, appears to try to look back at the history of innovation, and finds that governments tend to get in the way more than anything. Innovation tends to come from more open markets and more ability to engage in free trade, without restrictions and protectionism:
Rulers like to take credit for the advances during their reigns, and scientists like to see their theories as the source of technological progress. But Dr. Ridley argues that they've both got it backward: traders' wealth builds empires, and entrepreneurial tinkerers are more likely to inspire scientists than vice versa. From Stone Age seashells to the steam engine to the personal computer, innovation has mostly been a bottom-up process.
And the key to all of this? As we've been discussing for years, Ridley claims it's the rapid combination and sharing of ideas:
'The modern world is a history of ideas meeting, mixing, mating and mutating,' Dr. Ridley writes. 'And the reason that economic growth has accelerated so in the past two centuries is down to the fact that ideas have been mixing more than ever before.'
And the only thing that gets in the way of that? Bad gov't policy designed to 'protect' where it is not needed:
Our progress is unsustainable, he argues, only if we stifle innovation and trade, the way China and other empires did in the past. Is that possible? Well, European countries are already banning technologies based on the precautionary principle requiring advance proof that they're risk-free. Americans are turning more protectionist and advocating byzantine restrictions like carbon tariffs. Globalization is denounced by affluent Westerners preaching a return to self-sufficiency.
But, he finds that innovation is likely to route around these kinds of restrictions in the long run, because the process of innovation cannot be stopped in the long run, merely slowed down:
But with new hubs of innovation emerging elsewhere, and with ideas spreading faster than ever on the Internet, Dr. Ridley expects bottom-up innovators to prevail. His prediction for the rest of the century: 'Prosperity spreads, technology progresses, poverty declines, disease retreats, fecundity falls, happiness increases, violence atrophies, freedom grows, knowledge flourishes, the environment improves and wilderness expands.'
Seem crazily optimistic? Perhaps, but I probably fall into that same camp as well. I agree that, in the long run, innovation does prevail, and it's worth being happy and optimistic. If so many of the stories on Techdirt often feel negative or frustrated over the actions of certain industries or politicians, it's mainly because their actions and the (un?)intended consequences of those actions only serve to get in the way -- temporarily, but sometimes significantly -- of that innovation, progress and prosperity from happening. So be frustrated and annoyed at what's happening, but recognize that overall progress is not stopped, it's just slower than it could be.
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