Busting Out of Our 99,000 Year Economic Slump

Williamson asks, "Are you so sure that your preferred model of education or health care is the right one?" Yeah, I'm pretty sure. What's not to like? It's less expensive, no government agents force you to do anything, you get to keep your own doctor (or pick your own school), and there are no death panels (or soul-destroying political agendas).

"So sure that you'd be willing to stick a gun in somebody's face over the issue?" Nah. I would prefer that both be rooted in consumer choice and voluntary transactions, i.e., freedom and information and not power and coercion.

Again, going back to Gilder's thesis, power is a substitute for knowledge. Political power has always existed in the world. What has been lacking is information -- usually due to political power blocking its channels.

One source of human information is the genome. Let's stipulate that for all practical purposes it hasn't changed a great deal in the past 100,000 years or so. We might call it a low-entropy carrier, in the sense that it is quite ordered, and doesn't contain sufficient information to facilitate or account for any human advance. In this way, we are like any other species, which settles into an evolutionary niche and then stays there.

Which would explain why there was almost no human progress for roughly, oh -- rounding up -- about 100,000 out of those 100,000 years.

Focusing in on just the past two millennia, "If you make a chart of the world's GDP from A.D. 1 until now, you will see a flat line that lasts for the better part of two thousand years. And then the line goes vertical around 1750."

So if we want to be perfectly accurate, Homo sapiens was mired in a deep slump for about 99,737 years. Not a promising debut -- and if you were a betting man, you would have had no earthly reason to believe anything would suddenly change after 99,000 years of stasis.

Even the Obama economic slump -- and the FDR slump before that -- hasn't lasted 99,000 years. It just feels that way.

But the underlying reason for the slumps is similar: power over information. Why is this distinction so important?

I would say it is because what is really unleashed after 1750 is freedom -- i.e., ordered liberty -- and therefore human creativity, the latter of which is more or less infinite. Unlike the genome, which is obviously finite, the human mind is boundless. All progress is human progress; and power is just one type of noise that interferes with it.

First principles are important. Duh! In reality, poverty is the universal condition. Again, it has been man's fate nearly throughout his existence. Deviations from poverty are the rare exception. Therefore, we want to study quite closely the conditions that make this possible. I mean, right?

The left either ignores such questions, or turns them on their head. The leftist's first principle is envy, i.e., someone has more than I do, or something I want. Never mind how he acquired it. I want it!

But envy is a prime example of an ordering mechanism that destroys information. It's easy enough -- assuming sufficient power, i.e., violence -- to make everyone equal. At the cost of nullifying all the information in the system.

For example, we could have "full employment" tomorrow merely by forcing everyone to grow their own food. Or, at this rate, Obama will achieve full employment by forcing a sufficient number of workers -- each one a module of information -- out of the job market. Well played! That's what I call an organized community. Idle, but organized.

Another point the left forgets is that the real minimum wage is always zilch. Sure, you can pay a fast food worker more than he's worth, but here again, this will only destroy information, for example, information pertaining to a fast food worker's economic worth.

So, exactly what happened at 1750ish o'clock? "For the first time in history, the living standards of the masses of ordinary people... undergo sustained growth." And "Nothing remotely like this economic behavior has happened before" (Robert Lucas, in Williamson).

Such a leap certainly can't be explained by genetics; it's not as if "we were monkeys in 1749 and Ben Franklin in 1750."

And yet, a certain ontological -- or at least existential -- leap did occur around that time. Surely it cannot be a mere cosmic coincidence that Adam Smith's The Wealth of Nations was published the same year as the Declaration of Independence. For, taken together, these two texts delineate exactly what it took for man to finally bust out of his epic losing streak.

Seen in this context, we can see how a Karl Marx -- and all his intellectual spawn -- was the great echoing antithesis to the unleashing of human progress. You might say that he represents the voice of the primordial demon that would keep us shackled to our low-entropy state of existence, in which there is no income inequality because poverty is so evenly distributed.

More generally, everywhere Marxian ideas have reappeared in history -- say, in the figure of Obama -- it has been in the form of power trumping -- and humping and thumping -- information.

According to Gilder, the conventional account of our recent economic success doesn't even begin to do justice to the magnitude of the transformation:

"The central scandal of traditional economics has been its inability to explain the scale of per capita economic growth over the last several centuries. It is no small thing." He says that there has actually been "a 119-fold absolute increase in output in 212 years," and that conventional economic models can only account for about 20 percent of that.

What accounts for the rest?

To be continued...