Source: COGNITIVE WORLD on Forbes

The New Optimists

Andrew McAfee wants to cheer you up. If you read his latest book with an open mind, he might well succeed. McAfee, an MIT economist, is joining the New Optimists (Bill Gates, Stephen Pinker, Hans Rosling and others) in trying to persuade us that the world is not going to the dogs. The central claim of “More From Less” is that capitalism and technological progress are allowing us “to tread more lightly on the earth instead of stripping it bare.” Unfortunately, he admits, this good news is hard for many people to believe because catastrophism has such a strong hold on our imaginations.

Catastrophism

For hundreds of years before 1700, England’s population oscillated between two and six million. When peace coincided with good harvests, the number would rise, only to slump again when our inability to feed the growing population brought famine back. Robert Malthus made the reasonable assumption that this pattern would continue, and issued a dire warning about the consequence of Britain’s fast-growing population in the early industrial revolution. He was wrong. Capitalism and technology changed the game entirely, enabling us to feed far larger populations than ever before. Malthus’ name became a synonym for dramatically inaccurate predictions.

Paul Ehrlich is Malthus’ intellectual heir. Since the 1960s he has been forecasting doom and disaster from the exhaustion of all the natural resources we depend upon. The first New Optimist, Julian Simon, offered Ehrlich a bet: choose any resource and any time-frame above a year. If the price of the resource rose, Julian would pay Ehrlich; if it fell, the reverse. Ehrlich chose five - copper, chromium, nickel, tin, and tungsten – and the prices of all five fell. Ehrlich is surprisingly unrepentant: after all these years of abysmal forecasting failure, he is still telling students at Stanford that disaster is just around the corner.

Ehrlich is not alone. Any number of environmentalists and lobby groups will tell you that we are polluting, deforesting, and generally destroying the planet, exhausting its natural resources, and driving most other species extinct. All this is making us sick, and crucially, the damage is accelerating.

Using fewer natural resources

Implausible as it will seem to many, the data shows the opposite. As we get richer, we are using resources more efficiently, using less energy, causing less pollution and cleaning up the pollution of the past. We are even re-foresting the earth and protecting other species. McAfee produces compelling data and numerous examples, but sadly, many people will refuse to believe him: good news is no news, and if it bleeds, it leads. We all love a good horror story.

The evidence about resource consumption in America comes from the US Geological Survey, a federal agency formed in 1879. It tracks seventy-two resources, from aluminum to zinc, and only six of them are not yet post-peak. Even energy usage is decreasing, down two percent in 2017 from its 2008 peak, despite a 15 percent growth in GDP between those two years.

America is getting more and more efficient. Milk and aluminum are two of McAfee’s examples. Between 1950 and 2015, US milk production rose from 117 billion pounds to 209 billion, while the herd shrank from 22 million cows to 9 million. This is a productivity improvement of 330 percent. When aluminum cans were introduced in 1959 they weighed 85 grams. This fell to 21 grams by 1972, and by 2011 it was down to 13 grams.

The information revolution has powered much of this improvement, as illustrated by the story of railcars. In the late 1960s, US railway companies owned thousands of these 30-ton beasts, and only about five percent of them moved on any given day. This was not because the other 95 percent needed to rest: it was because their owners didn’t know where they were. They knew that if they could increase the percentage of cars moving each day from 5 percent to 10 percent, they would need only half as many of them. Today, of course, every railcar reports its precise location to its owner several times a second - thanks to the information revolution.

It’s not just the US. In the UK, the Office for National Statistics publishes the annual Material Flow Accounts, and a 2011 paper entitled ‘Peak Stuff’ concluded that the UK reached maximum use of material resources in the early 2000s. Data from the EU’s statistical agency Eurostat show that Germany, France, and Italy have generally seen flat or declining total consumption of metals, chemicals, and fertilizer in recent years.

And no, before you ask, this reduction in natural resource usage is not just the result of our economies switching from goods to services. While goods have been declining compared to services as a percentage of total GDP, the output and consumption of products has carried on increasing in absolute terms. We are experiencing a great decoupling: we are de-materialising industrial production. (This is actually quite an old idea: it was called ephemeralisation by Buckminster Fuller back in 1927. You may remember him as the inventor of geodesic domes, which are very efficient structures.)

Reducing harms

As well as using fewer natural resources, the developed world is generating less pollution. In the US, the Clean Air Act was substantially amended and strengthened in 1970, 1977, and 1990. The Clean Water Act was passed in 1972, the Safe Drinking Water Act in 1974, and the Toxic Substances Control Act in 1976. Other developed countries have their equivalents.

The results are impressive. McAfee quotes another member of the New Optimists, Matt Ridley: “A car today emits less pollution traveling at full speed than a parked car did from leaks in 1970.”

McAfee also denies that we are driving thousands of species extinct: “documented extinctions are relatively rare (with about 530 recorded within the past five hundred years) and appear to have slowed down in recent decades”. That is not to say that our impact on other species is altogether benign: “the biggest threat to animal species isn’t absolute extinction, but instead huge declines in population size due to over-hunting and habitat loss.” But even here the trend is encouraging. “Parks and other protected areas made up only 4 percent of global land area in 1985, but by 2015, this figure had almost quadrupled, to 15.4 percent. At the end of 2017, 5.3 percent of the earth’s oceans were similarly protected.” 

It turns out we are using less land for farming, and land that we no longer farm reverts to forest. “Throughout the developed world this process is now dominating any and all tree felling that is taking place, and overall reforestation has become the norm.” This not the case in the developing world, but “even with continued deforestation in developing countries and other challenges, a critical milestone has been reached: across the planet as a whole we have, as an international research team concluded in 2015, experienced a ‘recent reversal in loss of global terrestrial biomass.’ For the first time since the start of the Industrial Era, our planet is getting greener, not browner.”

As the world continues to grow richer, McAfee argues, we can expect this good news to spread. “In 1999, 1.76 billion people were living in extreme poverty. Just sixteen years later, this number had declined by 60 percent, to 705 million. Hundreds of millions fewer people are living in poverty now than in 1820, when the world’s total population was seven times smaller than it is today.” Happily, “the story of global poverty reduction isn’t a purely Chinese one. … Every region around the world has seen large poverty reductions in recent years.”

The Four Horsemen of the Optimist

If you can suspend your disbelief for a bit longer, you’ll be wondering what is causing these happy developments? McAfee identifies four drivers: Technology, Capitalism, Public awareness, and Responsive government.

Technology gives us new ways to solve old problems, and capitalism provides the incentive for people to invent these new ways and to implement them once they have been invented. As Abraham Lincoln put it, we add “the fuel of interest [capitalism] to the fire of genius [technology] in the discovery and production of new and useful things.” 

Sadly, capitalism is a hard sell in many quarters these days, so McAfee also provides a poignant example of how its great rival, socialism, often yields disastrous outcomes. The USSR was part of the 1946 international convention against whale hunting, but between 1948 and 1973 it killed 180,000 more whales than it reported. Unlike the Japanese, the Russians have no great appetite for eating whale flesh, and most of the animals’ bodies were thrown back into the sea. And why? Because the five-year plan demanded seafood tonnage, and it had no mechanism to incentivise the production (or in this case, hunting) of things that people actually wanted.

Technology and capitalism are not enough, of course. Some humans, capitalist or otherwise, will pillage and poison unless they are prevented from doing so. Public awareness and responsive government is needed to address the fact that markets often ignore what economists call negative externalities, and they often fail to support people who are unlucky and / or unsuccessful.

Nevertheless, McAfee insists that the spread of capitalism has improved the lot of humanity beyond recognition. Its partial adoption by India in “1991… deserves its spot in the annals of economic history alongside December 1978, when China’s Communist Party approved the opening up of its economy, or even May 1846, when Britain voted to repeal the Corn Laws.” “Between 1978 and 1991, more than 2.1 billion people—about 40 percent of the world’s 1990 population—began living within substantially more capitalist economic systems.” 

McAfee is confident that in the long run, the four horsemen will continue to ride. “Smartphone use and access to the Internet are increasing quickly across the planet. This means that people no longer need to be near a decent library or school to gain knowledge and improve their abilities.” And countries are unlike companies in that size does not necessarily beget bureaucratic sloth: our most valuable resource is human ingenuity, and “an economy with a larger total stock of human capital will experience faster growth.”

 Climate change and its solutions

To establish that he is no climate change denier, McAfee cites the mantra, “it’s warming; it’s us; it’s bad; and we can fix it.” But once again, he argues that the trend in the developed world is much better than most people think. In the US, “greenhouse gas emissions have gone down even more quickly than has total energy use. This is largely because we have in recent years been using less coal and more natural gas to generate electricity.”

How can we entrench and spread this positive trend? McAfee proposes two solutions: first, cap and tax carbon emissions, and allow companies to trade permits. Second, rehabilitate nuclear energy. “Nuclear power doesn’t deserve its bad reputation. As is the case with vaccines, glyphosate, and GMOs, public awareness around nuclear power is broadly out of step with reality.”

Inequality and Populism

Despite all this good news, the world is undeniably grumpy. People in many countries have elected Populist governments, and in some places, especially rural America, “deaths of despair” like suicide and the mis-use of drugs and alcohol are rising. McAfee thinks that growing inequality plays a significant role in this, but the data from his favourite source, the excellent website “Our World in Data” suggests otherwise. Inequality is certainly not growing on a global level, as developing countries have been growing much faster than developed ones. And while the Gini coefficient, the usual yardstick of inequality, has become slightly worse in the US, the same is not true elsewhere in the developed world, where the coefficient has remained fairly steady at just under 40 since the early 1990s. (100 is perfectly unequal and 0 is perfectly equal.)

The real villain of the piece is not inequality, but the perception of unfairness, which is something people actually care much more about. As McAfee himself notes, “people prefer fair inequality over unfair equality.” Populists have risen to power on the back of resentment. McAfee quotes a book on America’s Tea Party: “Blacks, women, immigrants, refugees – all have cut ahead of you in line. But it’s people like you who have made this country great. The line cutters irritate you. They are violating rules of fairness.”

Pluralists and authoritarians 

The roots of the perceived inequality lie in the remarkable success of social liberalism in recent decades. Rightly or wrongly, many people feel this has gone too far: it is “political correctness gone mad”. The culture wars are being fought by pluralists and authoritarians. As McAfee puts it, “most countries are becoming significantly more pluralistic—they’re seeing more ethnic diversity and immigration, gender equality, support for gay marriage and other non-traditional lifestyles, and related changes that enhance diversity. A fascinating stream of recent research finds that a large percentage of people in all countries studied have an innate intolerance for this greater diversity. [They] want a strong central authority to enforce obedience and conformity.”

This battle between pluralists and authoritarians is raging all over the world, and it has eclipsed traditional loyalties of class, and the ideologies of the left and the right. How can this battle be won, or at least resolved? McAfee is clearly a pluralist, but he discounts the possibility of persuading authoritarians by rational argument. “It’s particularly important not to try to win arguments with them. … A better way is to start by finding common ground.”

This seems an unpromising approach. As he admits, “more and more people are choosing to have fewer ties to people with dissimilar values and beliefs, opting instead to spend more time among the like-minded. The journalist Bill Bishop calls this phenomenon ‘the big sort.’” Perhaps a better way to respond to the fear and anger which authoritarians breathe is simply to make pluralism the more attractive option, using fun and humour. This should not be hard, since pluralism is inherently more optimistic, although it often trips itself up by taking itself too seriously, and engaging in self-righteous circular firing squads.

Automation and abundance

McAfee is probably best known for his 2014 book “The Second Machine Age”. In that book, he and his co-author, fellow MIT academic Erik Brynjolfsson, argued that many jobs will be automated by artificial intelligence, and that although many new jobs will be created, societies must get better at re-skilling and re-training people to move from the old to the new.

I agree that for the next two or three decades there will be a Big Churn in the job market, but I have been trying for some time to persuade Brynjolfsson and McAfee to cast their minds further forward, and take seriously the idea that after two or three more decades of exponential improvement, our machines will be cheaper, better, and faster at pretty much everything that most of us can do for money. In which case, technological unemployment will become a reality.

McAfee makes little reference to the theme of automation in “More From Less”, which is ironic, because it helps to answer this big question: if machines do take all the jobs, how do we pay for the humans? The answer may well be to reduce the cost of all the goods and services we need to almost zero. 

This is called the economy of abundance, and “More From Less” is invaluable in showing some of the ways it could materialise.

TL;DR

“More From Less” is a well-written and convincing book. If it makes a few of us more optimistic, it will also be remembered as an important one.