The book we are going to talk about today is not quite unknown as the author has already given a TED talk about the subject, obviously not nearly as scientific and well-structured as the written work. The focus does not lie on investing, but moves from a macroeconomic to a historical approach to understanding how prosperity evolved during the development of civilization. It’s ‘The Rational Optimist’ by Matt Ridley.
The main subject of the book is to present ‘the case of sunny optimism’ and to show that ‘the world is networked, ideas are having sex with each other, the pace of innovation will redouble and economic evolution will raise the living standards of the twenty-first century to unimagined heights, helping even the poorest (…) to afford to meet their desires as well as their needs.’ The author states that ‘although such optimism is distinctly unfashionable, history suggests it is actually a more realistic attitude than apocalyptic pessimism.’ Let’s have a look at some of the most astonishing arguments:
The book starts by showing two fairly equally shaped objects: a hand axe from the Middle Stone Age and a computer mouse; the first being a tool that was made by one person from one material and did not evolve for about one million years; the other a gadget made from hundreds of materials made by thousands of specialized people that will be outdated in about five years. He chronologically shows how trade evolved and gave profit to everyone. I want to share one remarkable quote with you:
‘In Neolithic Europe, the smoke of fires must have hung heavy in the air as the expanding front of farming spread west. The carbon dioxide released by the fires may even have helped to warm the climate to its 6,000-years-ago balmy maximum, when the Arctic ice retreated from Greenland’s northern coast in summer. This is because early farming used probably nine times as much land per head of population as farming does today, so the small populations of the day generated lots of carbon dioxide per head.’
Another chapter discusses how coal changed from a production resource to a substitute for human work, enabling mankind to jump out of the Malthusian trap and eventually end slavery (while also cutting the carbon cost of energy production to a fraction, until oil and nuclear proved to be even more efficient). The chapter about industrialization comes with insights about inventions, how subsidiaries and patents can be effective – and how they can be destructive.
One last thought of the author that I want to share is that today we are taking advantage of hundreds of people’s services at the same time, empowering us to enjoy a living standard somewhat similar to Luis XIV (perhaps even higher). For an hour of reading light we now only have to work three seconds in average, compared to six hours in 1800; a fact that made reading after sunset unaffordable for the greatest part of civilization.
My conclusion is that the author promotes an optimistic way of looking at the past and future in a science-based and logical way. If you should decide to read this book (which I can highly recommend), expect some dense statistics, some great humor and possibly a certain chance to get brainwashed.