I’ve always been fascinated by those who swim upstream against the prevailing wisdom of the day. Their counterintuitive insight is often much closer to reality than what the popular press parrots daily. Here are my favorite reads that clearly demonstrate that the world continues to improve and does so through human ingenuity and innovation.

George Gilder — Wealth & Poverty

My first introduction to this approach was reading George Gilder’s Wealth & Poverty. It was assigned reading by one of my graduate courses, Business Environment and Public Policy. Here’s the summary:

Gilder explains and makes the case for supply-side economics, proves the moral superiority of free-market capitalism, and shows why supply-side economics are more effective at decreasing poverty than government-regulated markets.

What it doesn’t comment on is his case that the basis of capitalism is giving. He points out the early Polynesian practice of throwing large parties to curry favor with key leaders. He shows how entrepreneurs invest their time, talent, and treasure to offer a product or service they hope will be accepted and purchased. It’s all at risk.

My favorite example is Apple Computer and the many innovative products that have made it one of the world’s largest corporations. But there were many stumbles along the way. Have you heard of Lisa, their first computer offering after the Apple II? It wasn’t a market success. How about the Newton? It was a handheld computing device. It failed. But the lessons learned from that failure went into the iPod and eventually the iPhone and iPad. They invested millions of dollars in attempting to offer products that met customer needs, sometimes needs that the customers didn’t know they had! Sometimes it failed.

Julian Simon — The Ultimate Resource

My other favorite is Julian Simon’s The Ultimate Resource. This is a very hefty read at 600 pages, and I found a few old airline boarding passes in my copy as that’s when I found the dedicated time to read. Here’s a summary:

In Simon’s view, the key factor in natural and world economic growth is our capacity for the creation of new ideas and contributions to knowledge. The more people alive who can be trained to help solve the problems that confront us, the faster we can remove obstacles, and the greater the economic inheritance we shall bequeath to our descendants. In conjunction with the size of the educated population, the key constraint on human progress is the nature of the economic-political system: talented people need economic freedom and security to bring their talents to fruition.

At the time, the popular press and pundits claimed that the Earth’s growing population would soon run out of food and every other resource. Their solution was to halt population growth by whatever means possible before a catastrophe.

That approach may be valid for the population of rabbits in nature, but it isn’t true for humans who use their neural wetware to find solutions to every challenge. But it first takes those humans to be born, nurtured, and educated. Lowering the population is not the solution, but it would easily become one of the worst problems. Here’s a quote from the book review:

Population growth and increased income put pressure on supplies of resources. This increases prices, which provides opportunity and incentive for innovation. Eventually the innovative responses are so successful that prices end up below what they were before the shortages occurred.

Marian Tupy and Gale Pooley — Superabundance: The Story of Population Growth, Innovation, and Human Flourishing on an Infinitely Bountiful Planet

The book Superabundance by Tupy and Pooley, published in August 2022, extends and builds on Julian Simon’s thinking and includes a foreword by George Gilder for good measure! I was so excited that I went out and bought the hardbound book. Here’s the summary from the book review:

After analyzing the prices of hundreds of commodities, goods, and services spanning two centuries, Marian Tupy and Gale Pooley found that resources became more abundant as the population grew. That was especially true when they looked at “time prices,” which represent the length of time that people must work to buy something.

To their surprise, the authors also found that resource abundance increased faster than the population―a relationship that they call superabundance. On average, every additional human being created more value than he or she consumed. This relationship between population growth and abundance is deeply counterintuitive, yet it is true.

Why? More people produce more ideas, which lead to more inventions. People then test those inventions in the marketplace to separate the useful from the useless. At the end of that process of discovery, people are left with innovations that overcome shortages, spur economic growth, and raise standards of living.

But large populations are not enough to sustain superabundance―just think of the poverty in China and India before their respective economic reforms. To innovate, people must be allowed to think, speak, publish, associate, and disagree. They must be allowed to save, invest, trade, and profit. In a word, they must be free.

I like their work on the time-price model. It eliminates the usual use of CPI or some other inflation index to compare the prices of goods over time. Instead, it examines the price compared to the amount of time it would take to buy the good or service using relevant wage data. The equation is nominal money price divided by nominal hourly income.

One of the examples they present, among many, is the availability of sugar (page 163). It was first refined from sugarcane in India and brought to Western Europe as a result of the Crusades. In 1319 it sold for two shillings for a pound in London. That price represented ten days of a skilled tradesman’s labor or 80 hours, provided they only worked eight-hour days. In 2021, British supermarkets were selling sugar for 30 pence, or 1.89 minutes of work, for someone earning Britain’s living wage of 9.50 English pounds per hour.

The authors point out that sugar remained highly expensive into the 1700s when a chemist discovered a way of extracting sugar from plants, resulting in the cultivation of sugar beets. The first sugar beet refinery was opened in 1802. Then the Napoleonic Wars and a British embargo on importing sugar cane from the French Caribbean islands boosted domestic production. By the end of the wars, 300 French factories were producing eight million pounds of beet sugar.

In the USA, in 1850, sugar was sold for 17 cents a pound. A factory worker earned 6 cents an hour. Meaning he had to work 2 hours and 50 minutes to buy one pound. In 2021, a pound of sugar sold for 32 cents a pound. A factory worker earned $32.54 per hour, resulting in 35 seconds of work to buy a pound of sugar.

There are two interesting side stories to this sweet story. First, the current global price of sugar is 17 cents, nearly half of the US price, due to tariffs and subsidies. Second, the advent of locally grown sugar beets brought about a significant change from importing sugarcane grown by slave labor. It comes back to the principle of “free markets, free people.” Regulation isn’t your friend, and the government is not here to help.

The authors review 50 commodities and many finished goods as well. They also examine the impact of adding to the world population, which they prove leads to ever-growing abundance.

This book is worth the time to better understand what is actually going on in our world versus what pundits would have you believe from their simplistic understanding of human growth and innovation.

What’s Next?

My next reading of this nature needs to take in Bjorn Lomborg’s The Skeptical Environmentalist. The subtitle is Measuring the Real State of the World. I’ve read several of his articles and like how he thinks about the environment and what to do about it. He, too, is counterintuitive and well worth reading and considering.

I hope you’re finding some good reading and continuing to learn and grow in your understanding of our marvelous world and the nearly unlimited opportunities around us.

Update November 5, 2022

Here’s a recent update from the skeptical environmentalist.

In today’s Wall Street Journal, Bjorn Lomborg provided an article titled Climate Change and the Lancet’s ‘Heat Death’ Deception. That should be a permalink that allows you to read the article for free.

The key details were that the study reported in the Lancet found that over the past two decades, the annual global heat deaths among older people rose by 68%. But they overlook or fail to report that the number of people 65 and older has risen by 60% during that same timeframe.

Lomborg goes on to note that around the world, far more people die each year from cold than heat. In the U.S. and Canada, between 2000 and 2019, an average of 20,000 people died from heat annually and more than 170,000 from cold. He goes on to state that with the current population size, higher temperatures cause about 17,000 more heat deaths in older people but more than half a million fewer cold deaths.

He further points out that lifting people around the world out of poverty and providing affordable sources of energy would not only reduce heat deaths via air conditioning but also provide heating that would help reduce the much greater threat of cold deaths.

Yes, of course, there is global warming. But presenting only part of the evidence and then proscribing solutions based on this faulty thinking will not help anyone.