The Main Thing You Need To Know About Knowing History & Knowing People

I have a coin in my hand; on one side should be heads (H) and on the other side should be tails (T). I just spun my coin ten times - it returned H,H,H,H,H,H,H,H,H,H - ten heads in a row. Do you think I have a double-headed or weighted coin? One way to enquire is to ask, what are the chances of my throwing ten heads in a row?  Quite slim actually, it is (1/2)^10. That translates as one in two to the power of ten, which equals a 1 in 1024 chance.  Before you conclude that my coin was not a fair coin, let me say that I omitted some vital information - I actually spun my coin more than ten times and I returned a few tails as well. Amongst the H,H,H,H were a few Ts - but I deliberately didn't tell you about those, leaving you with the impression that I might have had a straight off 1 in 1024 experience. 

Here’s the moral of the story. When we cherry pick data and leave out parts we don't want others to see we can easily give the impression of something compelling or noteworthy or unique. For years drug trials were known to be biased - medical companies would share the findings that support the drug's efficacy and omit the findings that call it into question. The same is true of our perception of the aberrations in various collective environments, as media reporters or historical interpreters often capture an extreme situation and exaggerate it out of proportion. A few Middle Eastern dissidents caught on camera burning a flag in the marketplace can be made to look as though the whole city is in civil unrest; an instance of corporate malfeasance or ignominy or sexual perversion can make it seem like the whole corporation or political group or religion is corrupt; a few isolated incidents of perversion of justice in the police force can make one question whether many police officers can be trusted; and a reputed group of inquisitors or anti-science dogmatists or heretic hunters can sometimes be felt to be representative rather than unrepresentative of a group in some point in historical time.

Given this pervasive problem of getting things out of proportion, or focusing too much on headline-grabbing cases, it’s clear that caution must be exercised when interpreting history, particularly as so much of history is written by those in power and those on the winning side. If you'd like an analogy of what recorded human history is like, it's a bit like the fossil record across vast geological time, and the evolutionary relationships between taxa, in that it very much resembles a join the dots exercise. Most of human history is not recorded, just as most of biological evolution is not found in the fossil record. Our framework of understanding is based on extrapolations of comparably sparse data, like a few dots scattered on the page, and from which we attempt to join those dots to give exhibition to a fuller picture.  

The really interesting question, I think, is to ask; what does it mean to live in a world in which most of the events, thoughts and feelings that have ever happened are inaccessible to just about everyone who has ever lived? Is it just a trivial fact of life that that is how things are, or does it give us cause to think a bit more deeply about the security of our knowledge and views?

Human beings speak with much confidence on many subjects – but I think our epistemology is more anaemic than we care to realise. Most knowledge a person has outside of their own first-person sphere is far more tentative than many would care to admit. What knowledge of human history amounts to is a set of neatly packaged general assumptions that attempt to present a fact or an opinion by shaving off a great deal of the additional data that surrounds it. 

Take the following events; Nero’s death, the Council of Nicea, the book Beowulf, the Reformation, the English Civil War, the Enlightenment, Diderot's Encyclopédie, the Scientific Revolution, Romanticism, World War 2, the film On The Waterfront and the London 7/7 bombings. What they have in common is that if you take all the recorded facts known about each of those events you are still devoid of a far greater proportion of unrecorded facts or experiences, whether in people’s minds or in surrounding events. It is only when we shave off or never become aware of a great deal of the additional data, either by not knowing it or by rendering it extraneous, that we have any simplified version of history at all. This really ought to inform us not just about how we engage with history, but most importantly, how we let our historical perceptions shape our present interpretation of things. 

Don’t misunderstand; often our interpretations of events like the ones above are reliable enough, or sufficiently well researched (if not by us, by others) to reveal clarity-inducing knowledge – but often an oversimplification leads one into too narrow a perspective that skews one’s outlook. Pick up any semi-academic magazine – The Spectator, History Today, The Economist or The New Scientist - and it will be replete with instances of this. Dip in to almost any page and you’ll find sentences that contain expressions like…

“The stone age period was a time of…”

“The inquisitors subjected people to forced conversion…”

“The Labour leader is trying to bring back socialism…”

“15^th century Islam was more about conquering than converting…”

“Iran is a very unstable country…”

“Throughout the 2^nd World War the Axis powers…"

These and many more like them are examples of what I’m talking about – the expressions tend to over-simplify a series of events and are presented as neatly packaged general assumptions that demand further investigation.

Now, let’s be fair, I think such expressions are perfectly permissible within the realms of intelligent discourse – but they must always come with the caveat that they are a compressed version of a much bigger thing, and that the content is unavoidably anaemic.

In the spirit of fairness it has to be said we don’t have much of a choice when dealing with such subjects. These pale complexion examples of presentation are not easily avoided, because we are forced to resort to such anaemic language if we are to have any meaningful discussions - after all, when talking about history, society, religion, or any of the more intractable subjects, most of the data is unrecorded, inaccessible, and patchy, and thus beyond the purview of our own first–person comprehension of the situation. Our limitations compel us to engage in those aforementioned join-the-dots type of picture-making.

For that reason, it doesn’t mean that the way we tackle complex subjects is not meaningful and that it lacks practical utility – but it should be realised that we only handle these subjects with wisdom when we realise that many historical opinions we hold are mere epigrams that leave out the majority of the full picture. We make statements about various religions and political groups in certain periods of time in history as though we are only talking about a few people; we speak of a nation of millions of people as though the description is amenable to straightforward epigrammatic adjectival terms – terms like “oppressive”, “backward”, “liberated”, “draconian”, “prosperous”.

We all do it; we talk of North Korea as being ‘oppressive’, or of America as being ‘liberated’, or of China, Brazil and India as being 'increasingly prosperous’ – and those succinct descriptions serve to convey our perception of them. But if we are being strict - how can a nation of people be any of these things?  It can’t – a nation is too large, complex, diverse and multi-faceted to be amenable to such singular descriptions. Similarly, you’ll see this candid examination cropping up all over the political sphere too; how can a political party be “progressive”, or “right wing”, or “liberal” except in terms which severely comprise the vastness of the subject or object of study under scrutiny? 

In saying all that, one can of course also recognise a sense in which ‘oppressive’ does aptly describe Iran, and “liberal” aptly describes facets of a political party. The point is, it’s ok – that’s what we humans do. There’s no harm in doing it, so long as we are able to see a picture that extends beyond our compressed descriptions.  

A similar thing applies to an interpretation of people

Clearly we find the same thing occurring when describing people too. How easily we try to reduce a person to a few simple adjectives – happy, generous and kind, or mean, uncaring and pessimistic, or moody, discontent and dismissive – or combinations of all these things.  But that’s sometimes fine too – there are some people for whom the words ‘kind’ and ‘generous’ are apt compliments, and arguably some for whom terms like 'wretched' and 'insane' paint a pretty accurate picture too.

All we must always be aware of is that when we have views, opinions and beliefs, we are shaving off lots of external factors, and that much of what we intuitively feel about a belief system, a nation, or a person, is merely an intuitive focal point on which we have chosen to concentrate our gaze. This is part of our adaptive unconscious, and it requires the short-cutting of lots of key data to enable the mind to harbour succinct ideas about the world (as per the image of the join-the dots epistemology). 

Such is human personality, of course, that even if you were to focus on just one person you know – a neighbour or a work colleague or a friend – you could not justifiably reduce them to a few dozen simple statistics. To get anywhere near to ‘knowing’ that person you would have to spend a considerable length of time with them; you would have to see them happy, sad, at ease, ill at ease, under pressure, vulnerable, confident, upbeat, dejected, successful, unsuccessful, in mourning, pursuing intelligence, in the company of many different people, and in and out of their comfort zone. And even if we grant that that can happen over several months or years – you know as well as I do how much a person changes throughout their life – so even that level of scrutiny tells only a fraction of the picture. You have, I imagine, had situations where you’ve peered into a corner of someone’s life and felt a sudden acceleration of awareness about their character – perhaps from seeing their book collection for the first time, or seeing them with their parents or children for the first time, or seeing them lose their temper for the first time, or seeing them get drunk for the first time. There are obvious tell-tale signs that help us put people’s views into perspective – but they are not the full picture.

If that is the case with just one person – you can, I hope, now see (if you couldn’t already) how foolish it is to think you know enough about a person or group of people or a nation or a historical epoch from just a few quotes or articles or books about them by people who never met the individuals in question, or people who did but were, as we all are, selective in what they recorded.

Always be on guard

Be careful out there; so many people rashly think they have nailed a subject, or they hastily develop a worldview based on a few isolated and often decontextualised bits of information. It may be the best we can do with the tools we have, and that is fine, so long as we show epistemic humility when dealing with knotty subjects that require plenty of untangling. One of the key steps to wisdom is to understand that we must always hold views and profess knowledge with it in mind that most subjects outside of our realm of first-person experience are hugely intractable, and that our knowledge of those subjects is sparse and fragmented. 

Finally, you may now be wondering, if what I've said is the case, how can we justifiably hold religious beliefs, political views and other ideas containing complex data? We can hold them, but we must do so with our old friend epistemic humility. Part of that epistemic humility is in admitting that we are only doing what the psychologists call ‘thin-slicing’ – which is the ability to find patterns and formulate tentative knowledge based on only ‘thin slices’ of experiences.  When we assess a situation and say that Iran is unstable or that North Korea is totalitarian or Britain is too liberalised, we are attempting to compress the data into a succinct form of expression – but at an accelerated and exaggerated rate. We end up with what we feel is a fairly sophisticated judgement of something far more complex than our precipitations have accounted for.

The reason complex situations can be decoded with some aplomb is, I think, down to the fact that once we package a lot of data together we find that the sociological world has stable patterns. Hence, one can read about a country (or better still visit it) and use words like ‘unstable’, ‘totalitarian’ and ‘liberalised’ as pattern distillations that aid us in forming an compressed impression of complex situations. Realising we do this all the time is not just one of the first steps to wisdom, it is one of the first steps to correcting many of the faults that stand in the way of the clear thinking that engenders wisdom.

On Greece, And How George Monbiot Is Confused Yet Again

In his latest Guardian column, the perpetually befuddled George Monbiot wants to tell us that Greece's current problems are actually caused by an extreme version of what he calls 'neoliberal market fundamentalism'.

"The Maastricht treaty, establishing the European Union and the euro, was built on a lethal delusion: a belief that the ECB could provide the only common economic governance that monetary union required. It arose from an extreme version of market fundamentalism: if inflation were kept low, its authors imagined, the magic of the markets would resolve all other social and economic problems, making politics redundant. Those sober, suited, serious people, who now pronounce themselves the only adults in the room, turn out to be demented utopian fantasists, votaries of a fanatical economic cult."

It's incredible how, when you only have a hammer in your mental toolbox every problem seems like a nail. But it's also interesting to see how to hard left extremists things slightly less extreme yet still very economically left can seem to them to be right wing - a bit like how warm water feels hot when your hand has just been in very cold water.

I am completely at a loss as to how George Monbiot can think us neo-liberals - you know we who argue for small state interference, open global trade, the celebration of national diversity, and a drastic reduction in bureaucracy, can be to blame for the present day big top-down interfering, globally restrictive, nationally homogenous, stuffily bureaucratic European superstate and the problems of some of its struggling nations.

Because George Monbiot thinks neoliberal free markets are the cause of most of the world's ills, and because Greece is currently going through one of those ills, he assumes that the former must be the cause of the latter. But it just isn't so.  

Let's tell things as they are - the problem with this European superstate is that it is devoid of the open free market qualities that many of its countries so badly need. The federal state of Europe is an overblown political project, showing not the slightest reason to think that monetary unity could make it a successful economic project. The Greek situation shows the result of numerous poor decisions, but also it shows the danger of a fanciful idea of a European superstate with a single currency. I wouldn't be surprised if the EU breaks down in the future - but until then, a few comments about Greece as things stand.

The Greek economy gave indications of going this way as far back as the 80s - in recent times it has been a country that doesn't focus on market-based wealth creation but more on wealth extraction through top down management. It's a great example of the failure of leftist economics - the focus on other people's money rather than small government and economic growth. A country's ability to generate growth is roughly commensurate with its ability to allow the market to facilitate that growth. That's why places like Greece, Portugal and Spain struggled after the crash and why England much less so. England has one huge advantage too - and that is, it has London.

If Greece could exit the Eurozone, revert back to the drachma (and a concomitant devaluation), there could be a slow climb. In real terms Greek wages and prices would sharply fall, and the Greek State would effectively be locked out of capital markets for a while, but if it learned how to create wealth it could then gradually price itself back into the global market. As things stand currently this looks unlikely.

By printing more of the drachma, this lowers the value of the currency in international markets, but it also makes Greek exports more competitive. Add to that the lowering of domestic interest rates, which then encourages domestic investment, and it can potentially make the servicing of their debts for Greek debtors more conducive too.

Alas, when you are locked in a shared monetary policy with the rest of Europe, this won't happen. The monetary policy of the European Central Bank is Germany-friendly, not Greece-friendly. It's Hobson's choice for the Greek people - massively increased debts, or Grexit and a depression that could last a long while longer. The IMF, which has a questionable record of international policy, has been loading Greece up to the waist with debts in exchange for austerity and huge tax increases, which only exacerbates things.

To recover in the long term, Greece needs an awful lot more of those things George Monbiot laments, not less of them. What Greece needs is not going to be likely under this current European superstate - its advocates have a lot resting on it working, and they don't want anything to spoil what they hope will be (but evidently won't be) an unspoiled legacy.

The Political Compass Test Isn't Very Good, Is It?

You may have seen the political compass test that's been doing the rounds - it looks to find where we are on the spectrum regarding whether we are to the left or right economically, and whether socially we lean more towards authoritarian or liberal. As you can see from the image above, the horizontal line is economically left or right and the vertical line is socially authoritarian or libertarian (meaning socially liberal), with the x and y coordinates (horizontal and vertical respectively) indicating where you fall on that spectrum after you’ve answered all the questions. Incidentally, it would have been better to have been labelled Authoritarian vs. Liberal, & Socialist vs. Economic Libertarian, but we’ll leave that and accept it as it is.

Alas, even aside from that slight quibble, whoever wrote the questions for the political compass test gives the impression that they are not very well informed. I will give a quick run down of the questions (in italic), including my answers/comments in bold (the choices are Strongly disagree , Disagree, Agree and Strongly agree), and also where the questions clearly needed revising.

If economic globalisation is inevitable, it should primarily serve humanity rather than the interests of trans-national corporations.  Daft Question

Trans-national corporations are made up of human beings, who by definition are also part of humanity.

I'd always support my country, whether it was right or wrong.   Strongly disagree

No one chooses his or her country of birth, so it's foolish to be proud of it.  Daft question

It's not the case of being proud or not proud - one can be proud of some things without being a fool or an extreme nationalist. For example, I'm proud of my country's literature, films and music, and many of its places.

Our race has many superior qualities, compared with other races.  Daft question

Daft by being loaded to the point of being meaningless. Every race/nation/culture (whatever you want to call it) has qualities that others do not have.

The enemy of my enemy is my friend.   Strongly disagree

Military action that defies international law is sometimes justified.   Agree

There is now a worrying fusion of information and entertainment.   Hmm …I don't really know what that question precisely means.

People are ultimately divided more by class than by nationality.   Sloppy question

I think the subtleties behind that are too involved to be a simple case of agreeing or disagreeing.

Controlling inflation is more important than controlling unemployment.   Sloppy question

Sloppy for reasons no one surely needs explaining.

Because corporations cannot be trusted to voluntarily protect the environment, they require regulation.   Agree

"From each according to his ability, to each according to his need" is a fundamentally good idea.   Agree

It's a sad reflection on our society that something as basic as drinking water is now a bottled, branded consumer product.  Disagree

Land shouldn't be a commodity to be bought and sold.   Strongly disagree

It is regrettable that many personal fortunes are made by people who simply manipulate money and contribute nothing to their society.   Sloppy question

If it were the case then it would be regrettable. However, in the vast majority of cases the biggest indication that your job is contributing to society is if someone is willing to pay you to do it. Crime is an exception, but I get the feeling the questioner thinks some non-criminal jobs contribute nothing to society, which is pretty much always false.

Protectionism is sometimes necessary in trade.   Strongly disagree

The only social responsibility of a company should be to deliver a profit to its shareholders.   Sloppy question

Technically that's the main purpose of a business - to deliver a profit (delivering a profit shows the company is running well and contributing value to society). However, while that's true, it is *desirable* that companies should be socially responsible.

The rich are too highly taxed.   Agree

I agree if the question is about what is most economically efficient in terms of growth. However, once we factor in what is best for the rich in terms of their behaviour, things get more involved (I'll do a blog on this at some point).

Those with the ability to pay should have the right to higher standards of medical care.   Strongly agree (although Sloppy question)

If by which we are supposed to mean, the right to purchase private health care - but surely hardly anyone denies this.

Governments should penalise businesses that mislead the public.   Agree (although Sloppy question).

It all depends on how they mislead the public - and that is the important point that is never considered.

A genuine free market requires restrictions on the ability of predator multinationals to create monopolies.   Agree

The freer the market, the freer the people.   Agree

At least, the conditions that engender freedom in society are likely to engender a freer market too.

Abortion, when the woman's life is not threatened, should always be illegal.   Strongly disagree

All authority should be questioned.   Strongly agree

An eye for an eye and a tooth for a tooth.   Strongly disagree

I'm assuming the questioner doesn't really understand this principle. In the Old Testament an eye for an eye does not mean if you do me wrong to the value of X then I am encouraged to reciprocate also the value of X. What it actually means is if you do me wrong to the value of X, the very most I can do to reciprocate is match the value of X. It's not an encouragement to take an eye for an eye - it's an instruction that the very most you should take is an eye for an eye. Jesus, of course, came up with something better (Matthew 5:38-48).

Taxpayers should not be expected to prop up any theatres or museums that cannot survive on a commercial basis.   Agree

Generally I agree, although government funded projects in the arts and in history can be beneficial.

Schools should not make classroom attendance compulsory.   Strongly disagree

 

All people have their rights, but it is better for all of us that different sorts of people should keep to their own kind.   Strongly disagree

 

Good parents sometimes have to spank their children.   Disagree (although poorly phrased question).

I put disagree. Although generally I feel one ought to avoid smacking, I could not put 'agree' because there are times when perhaps a light but very infrequent smack does more good than harm. The question was a bad one though - much better to have asked about people’s preferences for regular smacking.

It's natural for children to keep some secrets from their parents.   Agree

Possessing marijuana for personal use should not be a criminal offence.   Disagree

Although I'm almost 50/50 on this, I can see the pros and cons, but there's just something about me that disfavours drug use just enough to not want to legalise them. Only just though (in the case of cannabis).

The prime function of schooling should be to equip the future generation to find jobs.   Daft question

The prime function of schooling is education, which does equip the future generation to find jobs, but does so much more too.

People with serious inheritable disabilities should not be allowed to reproduce.   Strongly disagree

 

The most important thing for children to learn is to accept discipline.  Daft question

Children need to learn so much, of which discipline is a key part. It's daft to try to separate those qualities into a hierarchy as they all play vital, but different roles.

There are no savage and civilised peoples; there are only different cultures.   Sloppy question by being a false dichotomy.

We are all a heady mix of savage and civilised, and we all belong to varying cultures.

Those who are able to work, and refuse the opportunity, should not expect society's support.   Disagree

We must support them, but help them to be more dynamic and get to the root of why they are refusing opportunities.

When you are troubled, it's better not to think about it, but to keep busy with more cheerful things.  Disagree

Psychological indicators suggest that in doing this those troubles come back stronger. Experience backs this up.

First-generation immigrants can never be fully integrated within their new country.   Strongly disagree

 

What's good for the most successful corporations is always, ultimately, good for all of us.   Sloppy question

Given that 'always' is far too general, choosing either agree or disagree paints an inaccurate representation of the view. For example, technically I'd have to say 'disagree' because what's good for the most successful corporations is not, of course, *always* good for all of us. But generally it is - however, choosing 'disagree' is supposed to give the impression that generally it isn't, which distorts things.

No broadcasting institution, however independent its content, should receive public funding.   Agree.

 

Our civil liberties are being excessively curbed in the name of counter-terrorism.   Disagree (that is, I disagree specifically in terms of counter-terrorism rather than as a general statement)

 

A significant advantage of a one-party state is that it avoids all the arguments that delay progress in a democratic political system.   Strongly disagree

Although the electronic age makes official surveillance easier, only wrongdoers need to be worried.   Disagree

The death penalty should be an option for the most serious crimes.   Disagree

In a civilised society, one must always have people above to be obeyed and people below to be commanded.  Agree

Well, yes to laws and regulations, if that's what is meant.

Abstract art that doesn't represent anything shouldn't be considered art at all.   Sloppy question

Ah, this question is presumably intended as being one to tease out the authoritarians who want a critical monopoly on what art is. However, this is sloppy questioning - I think a lot of so-called art involves cases of Emperor's New Clothes critiquing, but I wouldn't want to say what should and shouldn't be art outside of my own personal subjectivism. There are some things I don't consider art that others do, but we each reserve the right to our opinions.

In criminal justice, punishment should be more important than rehabilitation.   Strongly disagree

Obviously to agree with that would be barbarism. Read Dostoyevsky's House Of The Dead if you're not convinced.

It is a waste of time to try to rehabilitate some criminals.   Strongly disagree

(see above comment)

The businessperson and the manufacturer are more important than the writer and the artist.   Sloppy question

Important for what, and for whom? They need to say. For human progression why separate the businessperson and the manufacturer from the writer – they need each other at various inextricable levels. To ask who is more important is a bit like asking which blade on a pair of scissors is more important. A much better question would have been: Which is more important for human progression, living standards and well-being, business and manufacturing or art? To which the answer would be business and manufacturing.

Mothers may have careers, but their first duty is to be homemakers.   Agree

That is, once you become a mother then until your child is old enough your primary duty (along with the father) is to look after and care for him/her.

Multinational companies are unethically exploiting the plant genetic resources of developing countries.    Agree

Another sloppily blunt question, but no question that is true in several cases.

Making peace with the establishment is an important aspect of maturity.  Daft question

Could they really not think of better questions than this?

Astrology accurately explains many things.   Strongly disagree

The one accurate thing astrology explains is that anyone who subscribes to it is gullible and uneducated about astronomy.

You cannot be moral without being religious.   Strongly disagree

Charity is better than social security as a means of helping the genuinely disadvantaged.  Disagree

Charity is great, but less reliable (I’m presuming the questioner does not mean government aid).

Some people are naturally unlucky.   Agree

I don't subscribe to luck generally, except to say that one's place of birth can be considered on a scale of lucky (England, for example) or unlucky (Somalia, for example) in terms of how your life will likely play out.

It is important that my child's school instils religious values.  Sloppy question

It's important my child learns facts about what religious people believe.

 Sex outside marriage is usually immoral.   Disagree

In the Christian sense, chastity is encouraged, but in terms of how the survey is framing the question, it would not be considered immoral.

A same sex couple in a stable, loving relationship should not be excluded from the possibility of child adoption.   Agree

 

Pornography, depicting consenting adults, should be legal for the adult population.   Agree

I don't like it, but making it illegal is a bit much.

What goes on in a private bedroom between consenting adults is no business of the state.   Strongly agree

No one can feel naturally homosexual.   Strongly disagree

 

These days openness about sex has gone too far.   Sloppy question

In some cases yes, in some no.

The End

FINAL COMMENT: Alas, could have been an interesting and pretty informative survey if the questions weren’t composed so sloppily.

 

 

 

The Unique Beauty Of Capitalism's Success Story

Think of a murmuration of starling birds preparing to roost, and a shot of Manhattan. Both are stunning images, and they are both the result of what's known in complex systems theory as self-organising structures, where each individual is contributing to the whole in looking after its own interests. The starlings are using basic rules determining how each individual of the flock responds to its neighbours. The most notable thing is that one doesn’t need any governing central planning principle to underpin the system – all that’s needed is the procedures for each bird to look after itself, and those beautiful flight patterns emerge in collective form. 

 

The starling murmuration tells us plenty about how we went from primitive hunter gatherers to citizens of places like Manhattan in just a few millennia, and how once the wheels of industry were in motion the acceleration of our progress exponentiated. The primary driving force of this has been trade, and the value created (signalled by prices and behaviour) in a supply and demand market

 

Think back to what the first transactions might have looked like. Once upon a time, a hunter-gatherer trades a piece of meat for some fur. The trade is beneficial to both parties because each gets something they value more than the thing they parted with. Nowadays, in this far more sophisticated age, each day involves millions of transactions, where value is created because for the buyers the price they pay is valued less than the item they are purchasing, and for the sellers the income they receive is valued more than the item they are selling.

 

This is the primary process that has led to our being much more advanced and prosperous humans in such a relatively short time: it is one of the most stupendous self-organising mechanisms the world has ever seen - so complex that it cannot possibly be controlled from on high, yet so efficient that it has been the driving force that has lifted tens of millions out of poverty, constructed things like the city of Manhattan, engendered an interconnected world of travel and information-sharing, brought us a rich variety of goods and services from a multitude of diverse cultures, paid for health care, education, social services, defence, armed forces, emergency services, medicine, science, the arts, roads, technological advances, and countless other illuminations on the vast circuit board of human progression.

 

It's always worth bearing that in mind when you have a downer on capitalism. The reality is, it almost resembles a miracle how through the local activity of individuals looking after their own local interests the wider results produce things as wonderful as Manhattan, worldwide travel and the Internet.

 

The way that trade and competition brings about self-interest for the good of humankind, where prices near-perfectly match supply and demand and create so much value and advancement, is one of the most uniquely beautiful things the human story has ever witnessed. What's particularly remarkable about it is that there is almost nothing else in the world quite so efficient - even biological evolution has no mechanism quite as spectacularly efficient as this.

 

 

 

 

 

 

 

The Myth That We're Running Out Of Resources

In response to my last blog on the fallacy of destroying the planet there have been a few misapprehensions floating around. Consequently, I feel compelled to tell you that we are not running out of resources. It's a myth, and quite a big one, as most people (apart from most geology experts and most economists) seem to believe it. For that reason I'm not surprised the above blog post turned out to be quite contentious.

The fallacy of depleting resources is usually comprised of a misunderstanding of the word 'resources' and the word 'reserves'. Usually when people tell us we're depleting the earth's resources at a precarious rate they are confusing reserves with resources.

Here's the difference. Reserves are the materials that have been planned for use in the coming decades, consistent with current mining technology at current prices. Depleting our reserves is quite normal. Resources on the other hand are of a much greater quantity - they are all the potential reserves that haven't been factored into the forecast of reserves. And those, we are not going to run out of. One of the reasons potential reserves remain as resources is because beyond a few decades we don't know how much we'll depend on them or what future our innovations will do for us in terms of our being weaned off current dependencies.

People who warn us that unless we are careful we are going to run out of resources are misunderstanding both numbers and resources, namely regarding what we've planned to use and what we actually have the potential to use. To give you an analogy. My wages give me an indication of what I have to spend each month. If I have a particularly expensive month, that doesn't mean I'm always going to be short of money, because future pay days will be forthcoming. My wages this month is my reserve, and my future potential earnings are my resources.

I did some research on this matter a few months ago, consulting the works of several experts in this field - and they all said the same. They are the source of much of what I've said above. People with a green agenda, like George Monbiot and the Green Party, tell us differently - they tell us that we are in dire straits. What do you think is more likely: that the experts have got it wrong, or that amateur, agenda-driven green people have not grasped the difference between reserves and resources? Please note, I am not aiming this point at people who are merely green-conscious - for they are often caring people without a hidden agenda or a self-serving ideological drive.

Anyway, let's suppose you're still not sure who to believe. There is, as it happens, an economic way to test who is right out of the experts vs. the greens, and that is with the world's best mechanism for measuring the supply and demand levels of resources. I'm talking about prices. Prices are the key. If there were precarious times ahead with scarcer quantities of  paper, oil, gas, manganese, copper, zinc, bauxite, tin and chromium - you wouldn't find prices continuing to drop, you'd find them increasing, particularly if demand increases. But the reason they continue to fall is twofold - in part because supplies are not scarce, but also because newer technology reduces the demand. Remember too, all supply and demand markets are transitory - we don't continue indefinitely to rely on the same resources with the same level of demand. As I pointed out in this Blog post:

Because of the limitation of the earth’s resources, supply-side initiatives in the free market engender innovation, which creates value, but also brings about a change in the way we use the earth’s resources. For example, we used to burn a lot more coal than we do now. Currently the technology for electricity, gas, and solar energy has weaned us off coal dependency, which means we use less of it. Another example is paper. We used to use a lot more paper. Currently the technology for digital interfaces (laptops, mobile phones, iPads) has weaned us off much of our paper dependency (with much more still to come), which means….. you guessed it…. we use less of it. So when we see economic growth, and increased prosperity, as well as people continually being lifted out of poverty because of it - that growth is not defined as a calibration of any single resource we consume - it is the value created consistent with how the market most efficiently allocates the ever-changing use of varying resources.

When resources do actually become genuinely scarce (remember, 'resources', not reserves), the prices rise, which provides a signal to consumers that they should use less of them, and to manufacturers that they should look to alternate technologies. Or if possible, that suppliers should find ways to produce more of the scare resources. Thankfully, as far as I know, there isn't a single known resource in the world that we are predicted to run out of - not just because we have so much in terms of potential supplies, but also because there isn't a single resource that we are going to have to depend on for longer than our capacity to wean ourselves off it.

One last thing, all this doesn't mean we have to deny that bad things are happening and that people are misusing our planet in all sorts of cruel, careless and wasteful ways. But what we must never do is what it is easiest to do - to look at incidents of bad things happening and make that the entire argument. Of course if you only focus on the bad then pretty much everything is negative. But it just won't do.

What's always needed is a proper cost-benefit analysis that factors in everything - that is, all aspects of human progression, and all aspects of human retrogression (or to the best of our ability). The moment a balanced view is attempted, things change a great deal - and I must admit, I find it bizarre, given the incredible progression-explosion that has occurred, that people find it so easy to focus so much on the costs.

Don Boudreaux has a neat illustration for this progression explosion - what he calls "The Hockey Stick of Human Prosperity"- so named because if you graphed the living standards and life expectancy of humankind over the last few millennia, they would mostly be flat until the exponential advances that occurred in the aforementioned progression-explosion in the past two hundred years.

It is vital to emphasise just how good the hockey stick illustration is in conveying two important things - not just in conveying the benefits of becoming advanced at the point in human history at which the hockey stick's heel and toe curves upwards, but in conveying just how comparably bereft human beings were for so many centuries when they were without the things we take for granted. One can see the astonishing progression-explosion not just by how much we've reaped the benefits of capitalism, industry, science and technology in the past two centuries, but by the absence of these things in every century that pre-dated the Industrial Revolution, and in all the present day countries that lack the qualities of free enterprise, and a basic political structure, stable government, rule of law, and the conditions and technological capabilities to lift them out of poverty as quickly as we'd like.