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Hellfire and Brimstone on a Tuesday Afternoon

October 6, 2009

Hellfire and Brimstone on a Tuesday Afternoon

The first afternoon at the World Business Forum, our after-lunch speaker was David Rubenstein, billionaire investor and founder of the Carlyle Group, former Carter advisor and generally very bright guy. His rapidly delivered speech was like a ticker-tape coming almost too fast to read, fact and stat, fact and stat, stat stat stat stat. Recession is way worse than most people think. Taxes will increase substantially following recovery. Government will continue too involved with business for a long time. NYC will no longer be the world's financial capital. The dollar will cease to be the world's primary reserve currency. On the other hand, he says, a downturn like this creates great investment opportunities, and lots of room for innovation. His was a rapid, bleak, but fairly balanced presentation. Sobering, disturbing, worrisome, and factual.

Jeffrey Sachs, on the other hand, gave what can only be described as a disappointingly shallow and politicized analysis of the world's problems in his "Economics for a Crowded Planet" talk.

The problems Sachs pointed to were apocalyptic, insurmountable, and man-made, but apparently immune to any technological fixes. His talk would have been worthy of Malthus, but unfortunately it was not worthy of the 21st Century. To justify his position, Sachs even said something like "because it's my job to know the arithmetic" - which could almost be Malthus talking directly from the grave. This talk represented the triumph of left-wing pessimism over the human race's experience of economic and technological progress. His starting premise was that we now use more resources per person than ever before in history, and that this cannot continue. Oh, really? How many acres of land do you need for your family's farm, Jeffrey? I can pretty much guarantee that your great-great-grandfather's family needed way more of it than you do, per person.

Yes, we need to be good stewards of our resources, but if history is any guide at all, the more people are available to solve problems and innovate, the faster these intractable environmental problems will be solved. Start by remembering that the pace of progress has actually accelerated with population growth. The average human being subsisted on the modern equivalent of about $500 a year for the 100,000 or so years before the Industrial Revolution. Then, just ten generations ago, in the late 1700's, the standard of living (in industrializing countries) began to increase by an unprecedented 0.75% per year, fueling a more rapid growth of population. (This was the point at which Malthus made his famously inaccurate prediction of mass starvation. Like Sachs, Malthus ignored the effects of technology.) By the beginning of the 20th Century, however, rather than starvation, our economic growth rate had increased to 1.5% a year, and around 1960 it accelerated again, to around 2.3% a year. This is not inflation. This is real income, the result of technology and innovation.

These two speakers, for different reasons, reminded me of a Deep South hellfire-and-brimstone preacher, threatening damnation to all unless we repent of our sins. But luckily, the afternoon then proceeded with T. Boone Pickens's colorful turns of phrase, Kevin Roberts's clever and sometimes hilarious TV commercials, and then George Lucas's artistic genius and refreshing passion. So the congregation left feeling saved, after all.



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