Abundance and Trade

Yesterday, I noted my first objection to Peter Diamandis and Steven Kotler's book Abundance. My second is perhaps more technical. In Chapter Four, the authors make the (entirely true) point that progress is cumulative. The more we progress, the easier progress becomes, primarily because ideas interact and complement each other. Although not quoted in the book, Matt Ridley's quote on this blog's sidebar makes the same point:

"The more we prosper, the more we can prosper. The more we invent, the more inventions become possible. The world of things is often subject to diminishing returns. The world of ideas is not."

However, in making this point, the authors quote Dean Kamen (previously featured here as the inventor of the Slingshot water purifier, although better known as the inventor of the Segway):

"In a world of material goods and material exchange, trade is a zero-sum game. I've got a hunk of gold and you have a watch. If we trade, then I have a watch and you have a hunk of gold. But if you have an idea and I have an idea, and we exchange them, then we both have two ideas. It's nonzero."

While Diamandis & Kotler's overall point is true, Kamen's quote is just plain wrong. Even in a purely material world, trade is not a zero-sum game. Kamen looks only at the physical objects, not the value the traders place on those objects. By trading, both parties increase the value they place on the objects they have, so trade is positive-sum even if it's solely material trade.

Kamen is trying to speak of opportunity cost. When he and I trade material goods, I have to give up the material good that he wants, and vice versa. The opportunity cost of the material trade is the value of the material good that I'm giving up. But the value of the material good I'm receiving is higher than my opportunity cost, otherwise I wouldn't agree to the trade. The same is true on his side. Both of us increase the value of the things we hold, and our trade is a positive-sum game.

By contrast, if Kamen and I trade ideas, neither gives up the idea that we share with the other. The opportunity cost may include the time it takes to teach an idea, the effort to write it out, the cost to publish a book, etc., but the opportunity cost does not include the idea itself. This makes combinations of ideas far more likely, which is what Kamen seems to be getting at.

This is not just semantics. Much of our government's trade and economic policy is based in the idea that trade is a zero-sum game. Too many people think that if another country is getting richer, we must be getting poorer. The same applies within countries as well--if the rich are getting richer, the poor must be getting poorer. This is used to justify everything from import tariffs and export restrictions to higher taxes and complex regulations. Getting the public to accept that trade is positive-sum, not zero-sum, is the first step towards better economic policy.

Abundance and Overpopulation

I've finally gotten around to reading Abundance: The Future Is Better Than You Think by Peter Diamandis and Steven Kotler. The book is divided into six parts, and so far, I've only read the first. What follows is, therefore, only my preliminary reflections.

You might expect a blog with "optimism" in the title to have a certain amount of mood affiliation for a book like Abundance, and it's true. Nevertheless, I have a few points of contention with the opening chapters. The first is overpopulation.

Overpopulation
In the first chapter, the authors approvingly cite Thomas Malthus, Paul Ehrlich and the Club of Rome. They say that among "scientists who study the carrying capacity of the Earth," the "wild-eyed optimists" think the carrying capacity is two billion, with the "dour pessimists" saying 300 million. Call me crazy, but I don't think someone counts as a wild-eyed optimist if they believe 5/7ths of the world's humans are doomed to die.

There is one simple reason I am not concerned about drastic overpopulation. With some exceptions, food is generally produced on an annual basis. Crops are planted in the spring and harvested in the fall. Some crops take longer, especially animal crops, but food production generally takes place on annual time scales. By contrast, food demand is daily for the vast majority of the population. Hunger strikes or religious fasts may put off food demand for short periods, but not for most people, and even then not for very long. (Although this guy may be an exception.)

If our population is really so much larger than the carrying capacity of the planet, why haven't we already died? Food is produced very slowly compared to our demand for it, so if we're really going to run out, it would happen quite quickly. We should start dying out when our population is just slightly larger than the carrying capacity, not when we're 3-20 times larger than the carrying capacity! There are more than 7 billion of us right now, most of us eating every day. The carrying capacity of the planet therefore has to be at least 7 billion!

Of course, the central premise of the book is abundance, and it's possible that the section on overpopulation is just a fluff tactic to get the majority who are (sadly) overpopulationists to lower their guard and be receptive to abundance. I will have to read the rest of the book to find out. But so far at least, the possibility of lower population through birth control is considered a good thing, and a static future population is cited as a reason for abundance. Diamandis and Kotler also don't seem to be the kind of authors to use fluff tactics in that way. Indeed, the third chapter explains that people often don't agree with abundance because they have cognitive biases preventing them from agreeing, which is not exactly a claim that would make someone lower their guard.