The Future is Back On, Thanks to Africa, Says The Rational Optimist
The West is creaking under the weight of its debt, unfunded pension liabilities, over-promised health care benefits. Yet, despite its best efforts, it won't go to hell in a hand-basket anytime soon, claims Matt Ridley in his latest column in The Times (London). And the reasons have nothing to do with the West's ability to solve its problems. Rather, globalization, technological progress and trade are such overwhelmingly positive forces that they can even overcome the West's stupidity to give it a better future and living standards than it perhaps deserves.
Writes Ridley:
[A] decade of economic stagnation while we pay down (or default on, or inflate away) our debts, if that is what we face, does not mean a decade of technological stagnation. The 1930s saw a rash of innovations that made life better -- from Neoprene to nylon, from Lego to Biro, from sliced bread to television -- and so will the 2010s. Economic growth works by shaving seconds off the time you must work to afford something you want, freeing you to spend that spared time satisfying a new need. The more we work for each other, and the more we amplify our productivity with gadgets and gas, the more wants we can each satisfy…
Much of Africa, having stagnated in the 1980s and 1990s, has begun growing like an Asian tiger, incrementally raising life expectancy and living standards, inexorably cutting birth rates and poverty. Since Africa holds many of the world's poorest people, this is great news for anybody who cares about humanity as a whole. There is a long way to go, but the pessimists who said Africa could never emulate Asia are increasingly being proved wrong…
Cold comfort for Britons, you say? Asian tigers have eaten our lunch: if African lions are joining the feast, what hope have we? A lot, actually. Sure, we could have grown faster too if we had borrowed less and trained engineers rather than overpaid community outreach coordinators. But trade is not a zero-sum game. Other people getting richer means more customers for our goods and services…
Think of technological change this way. Even if you time-travelled back to 1980 with your modern salary, and found yourself far richer than most people, you still could not find wheeled suitcases, mobile phone signals, hepatitis C vaccines or decaff mocha lattes on the high street. Likewise, time-travel forward to a prosperous 2040 without a wage increase and you might find yourself relatively poor. But think of the products you could find there, some of them supplied by newly rich and inventive Africans. Other people getting rich means other people working to invent things for you…
So it is only half the story to say that we need to get back to work if we are to work off the debt and afford the lifestyle we thought we already had. In the long run it is more positive than that. If we get back to work, productively, there is a gigantic opportunity – to sell enough goods and services to the consumers of the world so that we can afford to buy all the wonderful things they could supply us in return and thereby double our real per capita income yet again – as we have done three and half times since 1830…
This is of course the opposite of Peter Thiel's gloomy predictions and panicked calls for greater government spending on research and development that Ron Bailey reports below. Ridley might be a bit too sanguine about the opportunity cost of the West's profligate ways. Things might not turn out to be as bad as we fear right now. But they could have been infinitely better if the West had invested its wealth in building its human and physical capital, instead of squandering it on unsustainable pyramid schemes.
Still, I had to cap the day's thread with a touch of rational optimism. Ridley is on to something that we ought to keep in mind before we start mailordering pirated versions of Zoloft en masse from Africa.
Ridley's column, hidden behind a subscription firewall, here.
