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.
In June almost 100 economists drafted a letter to the president explaining that his policies are impeding economic growth. Peter Roff summarized their views in a U.S. News & World Report blog post.
“There are, they say, a series of hurdles ahead on the road to economic recovery including the new burdens being placed on small business by the federal government, the threat of tax hikes, and the newly-enacted healthcare law, which will discourage hiring, increase the deficit and, the chief actuary of the U.S. Department of Health and Human Services recently concluded, raise healthcare costs,” Roth wrote.
Exactly the sort of big government interference that could derail the economic growth humanity needs to build a better future.
“Economists are quick to speak of ‘market failure,’ and rightly so, but a greater threat comes from ‘government failure.’ Because it is a monopoly, government brings inefficiency and stagnation to most things it runs,” Ridley writes. “Yet despite all this, most clever people still call for government to run more things and assume that if it did so, it would somehow be more perfect, more selfless, next time.”
Still, Ridley is confident we can overcome bureaucracy and build a better future for our children. Over the flow of time, he notes, life has gotten better for rich and poor alike.
“The rational optimist invites you to stand back and look at your species differently, to see the grand enterprise of humanity that has progressed -- with frequent setbacks -- for 100,000 years,” he writes. “When you have seen that, consider whether that enterprise is finished or if, as the optimist claims, it still has centuries and millennia to run. If, in fact, it might be about to accelerate to an unprecedented rate.”
A better future awaits us. Let’s get there.