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What Social Animals Owe to Each Other

Friday, September 16, 2022

TGIF: Question Intuition!

In the 1960s a popular button that New Left activists wore implored everyone to "Question Authority!" It was good advice, even though many kinds of authority exist. Some authority is chosen (for example, one's doctor) and others are compulsory (the government). But in either case, questioning it is reasonable. The button did not implore anyone to reject authority, only to question it.

What about intuition? I have the impression that people think their own intuitions need not be questioned because they are reliable. But is that wise? I don't think so.

First let's acknowledge that much of what people take for an intuition is often a mere claim heard repeatedly through the mass media or social networks. Something that seems like an intuition may not be one at all.

But ignore that distinction for this discussion. Some factual claims just feel true to people who have not read much about the matter. For example, many people are likely to say that it is intuitively true that a growing human population must bring a progressive depletion of natural resources (and the products embodying them) and thus scarcer supplies, higher prices, more hardship for poorer people, greater economic inequality, and other bad things. They feel this must be the case. How could it not be true? Resources are finite and nonrenewable, so if more and more people demand them, harm must follow.

But is it really true? Or is this a case of knowing something that isn't so?

It will shock many people to learn that we know empirically and theoretically that it is not true. If that sense of doom is an intuition, then intuition can be and often is wrong. Malthus got it exactly upside down. As Marian Tupy and Dale Pooley, building on the work of the late great Julian Simon, demonstrate, world population has grown dramatically -- one billion in 1800, eight billion today -- along with a dramatic fall in absolute poverty and a dramatic increase in the production of and access to food and all the other things we need and want.

More people are living longer and materially better lives than ever before. This simply cannot be denied. Tupy and Pooley emphasize a largely unknown fact among laymen: today it takes people on average everywhere less labor time to earn the money to buy all sorts of goods and the underlying resources than it took in the past, even the fairly recent past. In the time the average manufacturing worker labored to earn the money to buy one egg in 1919, he could buy 36 eggs in 2019. The time price of an egg thus had dropped to 1/36 of the earlier time price, roughly a 97 percent drop in the real price. And so on across the board.

Today, Tupy and Pooley say, average time prices have fallen to 2 percent of their 1850 level. (Quality improvements, which are hard to quantify, make this fall an underestimate.) Let that sink in, especially how that disproportionately benefits the poorest people. They have more time to buy more things or to enjoy leisure. That's new wealth. Industrious people at all levels have become smarter and more productive because of modern technology.

Tupy and Pooley call their new book Superabundance because, contra Malthus, the increase in resources has outpaced population growth. That's counterintuitive. We forget that while people are consumers, most are also net producers. (See the charts here.)

Exactly what accounts for that great progress? Two things, the authors say. The first is human intelligence, or as Simon called it, the "ultimate resource." This is an apt term. Contrary to intuition, there are no natural resources. Zilch. In the pilot of the 1960s TV show The Beverly Hillbillies, the backwoods farmer and hunter Jed Clampett discovers oil on his land. Does he cheer? No, he is unhappy. He sees it as a curse. When a city man offers to remove the oil, Jed says he can't afford to pay for the removal. The city man laughs and explains that Jed will be paid (a lot), not charged, for the removal. (Jed was really behind the times.) Obviously, that was not always the case.

What happened? Knowledge happened. Chemically, the crude was the same stuff as before. But in the 19th century, a chemist (in Canada, I believe) discovered that kerosene, which could fuel lamps, could be distilled from that oil. Then others discovered that oil could be pumped and refined economically, that is, cheaply enough to make a mass market. (John D. Rockefeller had a lot to do with this.) This solved a problem: the common fuel for lamps, whale oil, had been getting expensive because the whales were being killed off. Eventually, it was discovered that gasoline, which could fuel machines, also could be refined from oil, and we were off to the races.

What turned useless black gunk into useful "black gold" was human intelligence. This is true for all so-called natural resources. Nature provides stuff, but it neglected to furnish a user manual. People had to figure it out for themselves. And we all benefited immeasurably.

As important as human intelligence is to the creation of resources, something more is needed: freedom (or at least a good measure of it). If people are not substantially free to act and interact, peacefully, of course -- if society instead is planned from the top -- little if any innovation will take place to improve the lives of entire populations. Freedom and innovation go together.

A further implication, as Simon heroically taught, is that population growth (along with immigration, by the way) is good. More people means more ideas that can combine with other ideas to produce even better ideas. (Free speech is obviously crucial.)

The great economist Ludwig von Mises understood all of this. My favorite line in his magnum opus, Human Action, reads: "The fact that my fellow man wants to acquire shoes as I do, does not make it harder for me to get shoes, but easier." As the number of our fellow human beings increases, getting shoes and everything else becomes even easier -- if the government can be kept at bay.

Everything today is more plentiful and cheaper than in previous eras -- well, almost everything. The only thing that has gotten more expensive is labor, which indicates that people have become more scarce relative to consumer demand and resources. If a demographic problem for economic growth is looming, it's de-population in the most productive parts of the world. What's your intuition have to say about that?

Indisputably, then, free human beings have made the earth more, not less, hospitable. (For details on all these matters, see the works of Simon and Tupy and Pooley, as well as others, including Matt Ridley, Bjorn Lomborg, Alex Epstein, Patrick Moore, and Michael Schellenberger.)


Anonymous said...

Your observation about the declining labor required to provide one egg reminds me about how state control of money has deliberately eroded its purchasing power.

ActuallyHereNow said...

I think it's an important recognition that "more people are living better than ever." This happened, not simply on the watch of markets and capitalism but equally on the watch of robust collective and government action. I find it amazing that Libertarians so conveniently parse out the former from the latter. But one hasn't existed without the other. We can imagine that it could. But it hasn't.