This summer was filled with bad economic news. But let’s not dwell on the 9.5 percent unemployment rate. Let’s be optimistic -- rationally. After all, life is good, and getting better.
That’s the theme of a new book, “The Rational Optimist,” by Matt Ridley.
“Since 1800, the population of the world has multiplied six times, yet average life expectancy has more than doubled and real income has risen more than nine times,” Ridley writes. And, even with all those extra mouths to feed, “The United Nations estimates that poverty was reduced more in the last 50 years than in the previous 500.”
Why is that? Because humans keep getting better at producing and delivering food. Ridley is optimistic that we’ll keep right on feeding the multitudes, even as the human population peeks in the middle of this century.
Of course, Ridley is a rational optimist, so he admits there’s a catch: if big governments impose foolish policies, they may blunt international progress. Ridley cites biofuel mandates as an example.
“Between 2004 and 2007 the world maize [corn] harvest increased by 51 million tons. But 50 million tons went into ethanol,” he writes. So the extra food that should have been available to feed the hungry wasn’t there. “In effect, American car drivers were taking carbohydrates out of the mouths of poor people to fill their tanks.”
It’s the sort of policy that only a government could come up with, and Ridley has little use for such bureaucratic foolishness.
“Strong governments are, by definition, monopolies and monopolies always grow complacent, stagnant and self-serving,” he writes. “They also fall for the perpetual fallacy that they can make business work more efficiently if they plan it rather than allow and encourage it to evolve.” Look no further than the “recovery summer,” promised by the Obama administration.
Officials announced in June that they’d tour the country, highlighting successful projects funded by the president’s $800 billion-plus “stimulus” package. But the victory lap turned into a death march, as unemployment edged up and job growth remained slow.
In a farewell address before she left the administration to return to the academic world, Christina Romer, the head of Obama’s Council of Economic Advisers, admitted she had no idea why the stimulus package failed. “To this day, economists don’t fully understand why firms cut production as much as they did or why they cut labor so much more than they normally would,” she told reporters at the National Press Club in late August.
Well, some experts seem to understand what’s happening.