Matt Ridley on Government Don Boudreaux A friend points out that in _my discussion yesterday_ (http://cafehayek.typepad.com/hayek/2006/01/smith_bastiat_d.html) of the list of "dangerous ideas" _posted on Edge_ (http://www.edge.org/q2006/q06_index.html) , I missed _the post by Matt Ridley_ (http://www.edge.org/q2006/q06_11.html#ridley) . I'm chagrined, for Ridley is truly one of today's finest science writers -- and this post of his is spot-on. I paste it below in its entirety. And regardless of the role played by ocytocin, pheromones, serotonin, adrenaline, or athletes'-foot fungus in guiding human behavior, history as reviewed here by Ridley teaches powerful lessons. Government is the problem not the solution
In all times and in all places there has been too much government. We now know what prosperity is: it is the gradual extension of the division of labour through the free exchange of goods and ideas, and the consequent introduction of efficiencies by the invention of new technologies. This is the process that has given us health, wealth and wisdom on a scale unimagined by our ancestors. It not only raises material standards of living, it also fuels social integration, fairness and charity. It has never failed yet. No society has grown poorer or more unequal through trade, exchange and invention. Think of pre-Ming as opposed to Ming China, seventeenth century Holland as opposed to imperial Spain, eighteenth century England as opposed to Louis XIV's France, twentieth century America as opposed to Stalin's Russia, or post-war Japan, Hong Kong and Korea as opposed to Ghana, Cuba and Argentina. Think of the Phoenicians as opposed to the Egyptians, Athens as opposed to Sparta, the Hanseatic League as opposed to the Roman Empire. In every case, weak or decentralised government, but strong free trade led to surges in prosperity for all, whereas strong, central government led to parasitic, tax-fed officialdom, a stifling of innovation, relative economic decline and usually war. Take Rome. It prospered because it was a free trade zone. But it repeatedly invested the proceeds of that prosperity in too much government and so wasted it in luxury, war, gladiators and public monuments. The Roman empire's list of innovations is derisory, even compared with that of the 'dark ages' that followed. In every age and at every time there have been people who say we need more regulation, more government. Sometimes, they say we need it to protect exchange from corruption, to set the standards and police the rules, in which case they have a point, though often they exaggerate it. Self-policing standards and rules were developed by free-trading merchants in medieval Europe long before they were taken over and codified as laws (and often corrupted) by monarchs and governments. Sometimes, they say we need it to protect the weak, the victims of technological change or trade flows. But throughout history such intervention, though well meant, has usually proved misguided — because its progenitors refuse to believe in (or find out about) David Ricardo's Law of Comparative Advantage: even if China is better at making everything than France, there will still be a million things it pays China to buy from France rather than make itself. Why? Because rather than invent, say, luxury goods or insurance services itself, China will find it pays to make more T shirts and use the proceeds to import luxury goods and insurance Government is a very dangerous toy. It is used to fight wars, impose ideologies and enrich rulers. True, nowadays, our leaders do not enrich themselves (at least not on the scale of the Sun King), but they enrich their clients: they preside over vast and insatiable parasitic bureaucracies that grow by Parkinson's Law and live off true wealth creators such as traders and inventors. Sure, it is possible to have too little government. Only, that has not been the world's problem for millennia. After the century of Mao, Hitler and Stalin, can anybody really say that the risk of too little government is greater than the risk of too much? The dangerous idea we all need to learn is that the more we limit the growth of government, the better off we will all be. Posted in _Complexity and Emergence_ (http://cafehayek.typepad.com/hayek/complexity_and_emergence/index.html) | _Permalink_ (http://ca fehayek.typepad.com/hayek/2006/01/matt_ridley_on_.html) | _Comments (13)_ (http://cafehayek.typepad.com/hayek/2006/01/matt_ridley_on_.html#comments) | _TrackBack (0)_ (http://cafehayek.typepad.com/hayek/2006/01/matt_ridley_on_.html#trackback) January 05, 2006 Smith, Bastiat, Darwin, Hayek, Shermer Don Boudreaux Tyler at Marginal Revolution _mentions_ (http://www.marginalrevolution.com/marginalrevolution/2006/01/the_end_of_insi.html) this fascinating list of "dangerous ideas." Tyler does not, though, single out my favorite one; it's by Skeptic magazine's Michael Shermer. _Here the link_ (http://www.edge.org/q2006/q06_2.html) (you'll have to scroll down a bit); and here, below, is Shermer's entire idea. Where goods cross frontiers, armies won't Where goods cross frontiers, armies won't. Restated: where economic borders are porous between two nations, political borders become impervious to armies. Data from the new sciences of evolutionary economics, behavioral economics, and neuroeconomics reveals that when people are free to cooperate and trade (such as in game theory protocols) they establish trust that is reinforced through neural pathways that release such bonding hormones as oxytocin. Thus, modern biology reveals that where people are free to cooperate and trade they are less likely to fight and kill those with whom they are cooperating and trading. My dangerous idea is a solution to what I call the "really hard problem": how best should we live? My answer: A free society, defined as free-market economics and democratic politics — fiscal conservatism and social liberalism — which leads to the greatest liberty for the greatest number. Since humans are, by nature, tribal, the overall goal is to expand the concept of the tribe to include all members of the species into a global free society. Free trade between all peoples is the surest way to reach this goal. People have a hard time accepting free market economics for the same reason they have a hard time accepting evolution: it is counterintuitive. Life looks intelligently designed, so our natural inclination is to infer that there must be an intelligent designer — a God. Similarly, the economy looks designed, so our natural inclination is to infer that we need a designer — a Government. In fact, emergence and complexity theory explains how the principles of self-organization and emergence cause complex systems to arise from simple systems without a top-down designer. Charles Darwin's natural selection is Adam Smith's invisible hand. Darwin showed how complex design and ecological balance were unintended consequences of individual competition among organisms. Smith showed how national wealth and social harmony were unintended consequences of individual competition among people. Nature's economy mirrors society's economy. Thus, integrating evolution and economics — what I call evonomics — reveals that an old economic doctrine is supported by modern biology. (Hat tip to Steve Davies.) Addendum: My colleague _Kevin McCabe_ (http://neuroeconomics.typepad.com/) writes to me (in an e-mail) the following after having read Shermer's post: Actually, the link between oxytocin and trust is less clear. Oxytocin seems to be more related to social approach behaviors and less linked to response behavior. I think a better link is between market integration and trust. With increased trading opportunities why engage in mutually costly behaviors when you can trade? Dan [Houser] and I and Maria Paganelli are designing experiments to test this. Kevin. And a well-respected psychologist friend calls Shermer's intepretation of the oxytocin results "breathtaking" -- by which I don't think he means "amazingly brilliant"! So while I remain quite convinced that our human natures are such that we generally flourish best when free -- including economically free -- those of us who aren't professional biologists, psychologists, or neuroeconomists should remain humble in whatever use we make of these disciplines. Posted in _Complexity and Emergence_ (http://cafehayek.typepad.com/hayek/complexity_and_emergence/index.html) | _Permalink_ (http://cafehayek.typepad.com/hayek/2006/01/smith_bastiat_d.html) | _Comments (13)_ (http://cafehayek.typepad.com/hayek/2006/01/smith_bastiat_d.html#comments) | _TrackBack (1)_ (http://cafehayek.typepad.com/hayek/2006/01/smith_bastiat_d.html#trackback) * Yahoo! Groups is subject to the _Yahoo! 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