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Thursday, March 7, 2013

7 March 2013

A month ago, we posted about how the exponential curve will eventually cause humanity to implode.

In the past 50 years, the global population has doubled in size, yet per capita output has tripled, life expectancy has gone up by 30%, per capita food production has gone up by a third and child mortality has plummeted.
Basically, we've "become more prosperous as we've become more populous".

How is it that humans have managed to get so far, despite having many, many more mouths to feed?

Today's Daily Quota is an incredibly thought-provoking TED talk by author and Oxford scholar Matt Ridley.
It's called When Ideas Have Sex, and it discusses how humanity has progressed so far because of exchange - exchange of ideas, knowledge and methods.

He refers to several economic and literary concepts in making his argument.
One of these is Adam Smith's 'invisible hand' theory. This discusses how our modern society is built by a number of 'invisible hands', from the labourers who extract minerals to the marketers and retailers who sell the final goods. Everything we own has passed through hundreds of hands, and each person has millions of others working for them.
This concept was immortalized in I, Pencil - a short story in the 1958 edition of The Freeman that discusses the lifespan of a pencil.
He uses the motif of a stone-age axe-head and a modern computer mouse. Both were built by man, and both were designed ergonomically - to fit perfectly in a human hand.
However, no one person knows how to manufacture a mouse from scratch
No one person knows how to extract the oils and commodities used, and also operate the machinery, and also design the product, and also calibrate the software, and you get the point.
It is a product of many, many 'invisible' hands.

This brings us to David Ricardo's theory of Competitive Advantage:
Adam takes 4 hours to make a spear and 3 hours to make an axe.
Oz takes 1 hour to make a spear and 2 hours to make an axe.
Oz is clearly more efficient in both, however, if Oz makes 2 spears and Adam makes 2 axes, and they trade, they will have both saved one hour of work than if they made both themselves.
Now, apply to everything else.

Yep, ideas having sex.
This talk is full of interesting facts about human achievement and progress. Ridley is an exceptional orator, and the content is very enlightening - not to mention, optimistic!
These are 16 minutes that you will not regret investing.


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