This has all happened before, and it will all happen again

Fellow sci-fi geeks might recognize this as a phrase that was repeated throughout the re-imagined Battlestar Galactica TV series.   It’s popped up elsewhere also.

Those words have crossed my mind repeatedly as I read Matt Ridley’s book The Rational Optimist.  In it, Ridley tells a history of the world made possible by trade.

A common theme is the stages of society.  A society emerges from decentralized trade.  I make fish hooks and give you some in return for a few fish.  We both come out ahead.  That allows enough gain in free time that some folks have time to do things other than hunt and gather food.  Some of those folks form government.  They offer up something of value at first, like protection.  But then tend toward more centralized control, more expansive power and more meddling.  That chokes off the gains from trade and the society dies.

Here’s a passage from page 182:

Empires, indeed governments generally, tend to be good things at first and bad things the longer they last. First they improve society’s ability to flourish by providing central services and removing impediments to trade and specialisation; thus, even Genghis Khan’s Pax Monglica lubricated Asia’s overland trade by exterminating brigands along the Silk Road, thus lowering the cost of oriental goods in European parlours.  But then, as Peter Turchin argues following the lead of the medieval geographer Ibn Khaldun, governments gradually employ more and more ambitious elites who capture a greater and greater share of society’s income by interfering more and more in people’s lives as they give themselves more and more rules to enforce, until they kill the goose that lays the golden eggs.  There is a lesson for today.  Economists are quick to speak of ‘market failure’, and rightly so, but a greater threat comes from ‘government failure’.  Because it is a monopoly, government brings inefficiency and stagnation to most things it runs; government agencies pursue inflation of their budgets rather than the service of their customers; pressure groups form unholy alliance with agencies to extract more money from taxpayers for their members.  Yet despite all this, most clever people still call for government to run more things and assume that if it did so, it would somehow be more perfect, more selfless, next time.

These changes happen over generations.  It’s interesting to look at the societies on Earth now and consider which stage each might be in.

Since the changes happen over generations, it’s hard to tell sometimes.  Sometimes we look at a society and think it’s doing okay and we mistake it for a successful experiment.  In reality, though, it might be just on that cusp between the benefits realized from trades of the past and the decay that will come from a centralized control.

We mistake the cause and effect.  Trade enabled the wealth of the nation and the government, not the other way around.

Some societies that we think of as primitive, may have been more advanced in the past.  China is catching up now, as its government favors decentralization, but it was once well ahead of the rest of the world.  Page 180:

China went from a state of economic and technological exuberance in around A.D. 1000 to one of dense population, agrarian backwardness and desperate poverty in 1950.  According to Angus Maddison’s estimates, it was the only region in the world with a lower GDP per capita in 1950 than in 1000.  The blame for this lies squarely with China’s governments.

What follows in the next few paragraphs in the book is a picture of what China had mastered in the 1000s “silk, tea, porcelain, paper and printing”, “multi-spindle cotton wheels, hydraulic trip hammers, umbrellas, matches, toothbrushes, playing cards and pig iron.”

Then Ridley describes impact the Black Death and natural disasters and centralized government control of the Ming Dynasty that caused China’s GDP per capita to be less than in was nearly 1000 years earlier.

These are the same stories told in Hayek’s The Road to Serfdom (though maybe he stopped short), Rand’s Atlas Shrugged and Orwell’s Nineteen Eighty-Four, except it’s for real.  It’s happened here on Earth many times before.  It’s happening right now many times and will happen many more times.

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6 thoughts on “This has all happened before, and it will all happen again

  1. You look a mean fool, invoking the name and ideas of a militantly socialist writer (Speaking of Orwell) for your empty supply-side rhetoric. And speaking as an Economics major, you clearly have no idea how far we (and capitalism/trade) have come since the Roman empire and Ghengis Kahn. If you think we are so easily susceptible to millenia-old problems that we have fixed in the past 250 years, you are the one not using your head enough and not the economists who talk of “market failure.” In fact, while you claim there is persistent and inherent government failure ontologically imbued in the very institution, visionary Economists like Hyman Minsky are quick to point out the inherent failures built-into financial market institutions. Please revise your false sense of worldview in accordance with such thoroughly well-researched and rigorously empirically proven advances in economic theory. Thank you.

    • Hi Genius – Thanks for the comment, though I’m not a big fan of fallacy. Your comment has several. I don’t find that they make for productive discussion.

      If you were to strip out the ad hominems (e.g. ‘your empty supply-side rhetoric’) , appeals to authority (e.g. ‘Economists like Hyman Minsky are quick to point out…’) and straw men (e.g. ‘If you think we are so easily susceptible to millenia-old problems…’), what points would you like make?

  2. Pingback: Bureaucrats vs. Innovation « Our Dinner Table

  3. Pingback: Matt Ridley on the Chan-Zuckerberg Initiative | Our Dinner Table

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