200 years ago subsistence agriculture was the norm across the planet. Photo courtesy of DollarPhotoClub.com

200 years ago brutal poverty was the norm across the planet. Not so today. Photo courtesy of DollarPhotoClub.com

Previously mentioned when I look at long-term economic trends I am incredibly optimistic. When I look at the headlines this morning or news from the political world, I am very discouraged.

(Cross-post from my other blog, Nonprofit Update.)

To see one illustration of why I am so optimistic for the long-term, check out a column by Glenn Reynolds at USA Today: Actually, things are pretty good / Free markets and free inquiry have changed the historic ‘norms’ of poverty and violence.

Earlier post summarized in one paragraph what caused this radical improvement.

Here are a final two points from the article I’d like to highlight:

Second, it is possible for us collectively to turn back history.

If our political leaders or regulators so choose, or if all of us collectively decide to do so, we can go back to 94% of the people on the planet living in dirt-eating poverty.

Occasionally I’ll come across the following comment which illustrates the fragility of our current good times. Robert Heinlein said

“Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.

This is known as “bad luck.”

There is no guarantee the worldwide improvements in health and prosperity we enjoy will continue. We could get hit with “bad luck.”

A third point he makes is that mentally we have not adjusted to the changes in the last 100 or so years.

We are still locked in the caveman mentality that there are only so many antelopes around and if we capture a couple of deer for dinner everyone else (like the family living over the next hill and the three families living across the creek) won’t have anything to eat tonight.

Think about that comment and you may understand the attitude behind much of the political discussion in the news. I have recognized that attitude in play at the national level since I was in high school.

Prof. Reynolds says ancient cavemen attitudes

…produce the zeal for redistribution that is now marketed as socialism and the tribalism that is still a major part of politics.

We need to adjust our brains to realize that free markets, increased knowledge, transferable skills, and freedom in general allow us to create massive amounts of new wealth.

To see a specific example, we merely need to look at the shale oil revolution to see that new ideas on recovering oil have led to the extraction of 1 million barrels of oil every day in North Dakota. Thirty years ago that oil was absolutely untouchable. That is a massive amount of fuel to drive the economy which on a practical basis did not exist a generation ago.

A major result of fracking is that worldwide we are trying to sort out how to deal with a glut of oil. We have too much oil on the market.

Another description

Terry Jones, writing at Investor’s Business Daily, summarizes this issue as Sorry, Socialists, But Capitalism Is Killing Absolute Poverty.

He says it is not government that is radically reducing poverty. Actually, capitalism is doing the job.

His conclusion:

Chalk up a victory for the Industrial Revolution, the 20th century’s boom in capitalist factory production, the growth of global markets, the spread of cutting-edge technology and the profoundly liberating idea of personal freedom. These gifts of capitalism have enriched people the world over.

Economic freedom. Political freedom. I would add in religious freedom.

Amazing things happen when those things are combined.

Astoundingly moral things.

Final post in this series: Why I am so optimistic – 3.


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