Review of The Rational Optimist: How Prosperity Evolves

The Rational Optimist: How Prosperity EvolvesThe Rational Optimist: How Prosperity Evolves by Matt Ridley

My rating: 3 of 5 stars

This is a book that I gave 3-stars to because parts of it are 5-star and parts are 1-star, so this is how it averages out. If you are reading to the right stuff, it is invaluable, but if you read it uncritically you would be making a big mistake.

First, the good stuff. Ridley does a great job of puncturing the “doom-and-gloom” view that everything is going wrong and the world is on a downhill slide. He points out that people having been saying this for a very long time, and events tend to prove them wrong. I’m reminded of the quote that was making the rounds in my youth about “kids these days…” and it turned out to have been written in ancient Greece over 2,000 years ago. Plus ca change, plus c’est la meme chose. A lot of that dim view comes form thinking unclearly. For instance, an example he notes is the famous Club of Rome report published in 1972 called The Limits to Growth. This book showed how we would be clean out of every resource you could name by the late 80s to mid-90s. How many of you remember when we had no oil, no steel, no copper, etc.? I don’t remember it either, because it never happened. And Ridley is very clear on just why this is so, and he gets it right. The reason is that when a non-renewable resource starts to get into short supply the price rises, and this rising price causes conservation on the demand side, a search for substitutes, and the increased exploration for new supplies. And this is exactly what happened in the 1970s and 1980s when oil seemed to be in short supply. This is not a new observation, Hotelling wrote about this in the early 20th century, but it is a good idea to keep basic economics in mind when addressing resource issues.

Where he goes wrong, in my view, is taking this basic insight into an extreme of Panglossian optimism that says all problems we might think exist are simply figments of our over-active imaginations, and that if we would just relax and let free markets take over everything would be wonderful. In the end he seems to say that you should ignore scientists on issues such as global warming because what do they know really? He has a view that unrestricted capitalism and markets will solve all problems, which probably plays well in Libertarian circles, but is more extreme than even most economists would go.

So, if you read it for a useful guide to the many things that do go write in the world, that is good. And reminding us of the very definite benefits of markets, specialization, and exchange is always useful. But on this topic Adam Smith did it better and with more nuance in the 18th century.

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