The Rational Optimist (50 page)

p. 243 ‘to quote the ecologist E.O. Wilson’. Wilson. E.O. 1999.
The Diversity of Life
. Penguin.

p. 244 ‘as Peter Huber and Mark Mills put it’. Huber, P.W. and Mills, M.P. 2005.
The Bottomless Well: the Twilight of Fuel, the Virtue of Waste, and Why We Will Never Run Out of Energy
. Basic Books.

p. 244 ‘A modern combined-cycle’. A combined-cycle turbine uses burning gas itself to drive one turbine and then uses the heat to generate steam to drive another.

p. 245 ‘the Victorian economist Stanley Jevons’. Jevons, S. 1865.
The Coal Question: An Inquiry Concerning the Progress of the Nation, and the Probable Exhaustion of our Coal-mines
. Macmillan, p. 103.

p. 246 ‘Thomas Edison deserves the last word’. Edison in 1910, quoted in Collins, T. and Gitelman, L,
Thomas Edison and Modern America
. New York: Bedford/St Martin’s, 2002, p. 60. Source: Bradley, R.J. 2004.
Energy: the Master Resource
. Kendall/Hunt.

Chapter 8

p. 247 ‘He who receives an idea from me’. Thomas Jefferson letter to Isaac McPherson, 13 August 1813. http://www.let.rug.nl/usa/P/tj3/writings/brf/jefl220.htm.

p. 247 World product graph. Maddison, A. 2006.
The World Economy
. OECD Publishing.

p. 249 ‘said Ricardo’. Ricardo, D. 1817.
The Principles of Political Economy and Taxation
.

p. 249 ‘neo-classical economics gloomily forecast the end of growth’. Beinhocker, E. 2006.
The Origin of Wealth
. Random House.

p. 249 ‘As the economist Eamonn Butler puts it’. Butler, E. 2008.
The Best Book on the Market
. Capstone.

p. 250 ‘the failure of any particular market to match the perfect market no more constitutes “market failure”’. This point is made in Booth, P. 2008. Market failure: a failed paradigm.
Economic Affairs
28:72–4.

p. 250 ‘the science of ecology has an enduring fallacy that in the natural world there is some perfect state of balance to which an ecosystem will return’. Kricher, J. 2009.
The Balance of Nature: Ecology’s Enduring Myth
. Princeton University Press. ‘As a result of research over the past several decades, ecologists have come to understand the reality of ecosystem dynamics, and have largely abandoned the notion that nature exists in some sort of meaningful natural balance.’

p. 251 ‘No country remains for long the leader in knowledge creation.’ Indeed, so iron is the rule of ephemeral innovation that it has been given its own named law: Cardwell’s Law. See Mokyr, J. 2003.
The Gifts of Athena
. Princeton University Press. That said, William Easterly has pointed out that since 1000
BC
certain areas of the world have consistently stood at the forefront of technology and growth: Comin, D., Easterly, W. and Gong, E. 2006.
Was the Wealth of Nations Determined in 1000
BC
? NBER Working Paper no. 12657.

p. 252 ‘As Joel Mokyr puts it’. Mokyr, J. 2003.
The Gifts of Athena
. Princeton.

p. 253 ‘George Orwell was tired of the way the world appeared to be shrinking’. Orwell, G. 1944.
Tribune
, 12 May 1944.

p. 254 ‘when the credit card took off’. Nocera, J. 1994.
A Piece of the Action
. Simon and Schuster. (That said, there is little doubt that finance is one area of human activity in which too much innovation can be a bad thing. As Adair Turner has put it, whereas the loss of the knowledge of how to make a vaccine would harm human welfare, ‘if the instructions for creating a CDO squared [a collateral debt obligation of collateral debt obligations] had somehow been mislaid, we will I think get along quite well without it.’) See Turner, A. 2009. ‘The Financial Crisis and the Future of Financial Regulation’. Inaugural Economist City Lecture, 21 January 2009. Financial Services Authority.

p. 254 ‘Lewis Mandell discovered’. Quoted in Nocera, J. 1994.
A Piece of the Action.
Simon and Schuster.

p. 254 ‘Michael Crichton once told me’. M. Crichton, email to the author, June 2007.

p. 254 ‘said William Petty in 1679’. Quoted in Mokyr, J. 2003.
The Gifts of Athena.
Princeton University Press.

p. 255 ‘in Alfred North Whitehead’s words’. Whitehead, A.N. 1930.
Science and the Modern World
. Cambridge University Press.

p. 255 ‘As the scientist Terence Kealey has observed’. Kealey, T. 2007.
Sex, Science and Profits
. William Heinemann.

p. 256 ‘the biggest advances in the steam engine’. Kealey, T. 2008.
Sex, Science and Profits
. William Heinemann. Kealey argues that Watt vehemently denied any influence from Joseph Black. Joel Mokyr (in
The Gifts of Athena
) quotes Watt to the contrary.

p. 256 ‘efforts by eighteenth-century scientists to prove that Newcomen got his insights from Papin’s theories have proved to be wholly without foundation’. Rolt, L.T.C. 1963.
Thomas Newcomen: the Prehistory of the Steam Engine
. David and Charles. Likewise, the establishment was so incredulous that the humble mine engineer George Stephenson could have invented a miner’s safety lamp in 1815 without understanding the principle behind it, that they effectively accused him of stealing the idea from the scientist Sir Humphry Davy. The reverse accusation is more plausible: that Davy heard of Stephenson’s experiments from the engineer John Buddle, who heard of them from the colliery doctor named Burnet, who had been told by Stephenson. See Rolt, L.T.C. 1960.
George and Robert Stephenson
. Longman.

p. 256 ‘the famous Lunar Society’. For more on the Lunar Society see Uglow, J. 2002.
The Lunar Men
. Faber and Faber.

p. 257 ‘a semi-directed, groping, bumbling process of trial and error by clever, dexterous professionals with a vague but gradually clearer notion of the processes at work’. Mokyr, J. 2003.
The Gifts of Athena
. Princeton.

p. 257 ‘It is a stretch to call most of this science’. Joel Mokyr has recently suggested (Mokyr, J. 2003.
The Gifts of Athena
. Princeton) that although the scientific revolution did not start the industrial, none the less the broadening of the epistemic base of knowledge – the sharing and generalisation of understanding – allowed a host of new applications of knowledge, which escaped diminishing returns and enabled the industrial revolution to continue indefinitely. I am not convinced. I think the prosperity generated by industry paid for an expansion of knowledge, which sporadically returned the favour. Even when, by the late nineteenth and early twentieth centuries, science appeared to make mighty contributions to new industries, the philosophers still played second fiddle to the engineers. Lord Kelvin’s contributions to the physics of resistance and induction were driven more by practical problemsolving in the telegraph industry than esoteric rumination. And though it is true that the physics of James Clerk Maxwell produced an electrical revolution, the chemistry of Fritz Haber spawned an agricultural revolution, Leo Szilard’s idea of a chain reaction of neutrons led to nuclear weapons and the biology of Francis Crick fathered biotechnology, it is none the less also true that these sages needed legions of engineers to turn their insights into things that could change living standards. Tinkering Thomas Edison, with his team of forty engineers, was more important to electrification than thinking Maxwell; practical Carl Bosch mattered more than esoteric Haber; administrative Leslie Groves than dreamy Szilard; practical Fred Sanger than theoretical Crick.

p. 258 ‘One of Britain’s advantages in the eighteenth century’. Hicks, J.R. 1969.
A Theory of Economic History
. Clarendon Press.

p. 259 ‘By contrast in France’. Ferguson, N. 2008.
The Ascent of Money
. Allen Lane.

p. 259 ‘fully one-third of successful start-ups in California between 1980 and 2000 had Indian- or Chinese-born founders’. Baumol, W.J., Litan, R.E. and Schramm, C.J. 2007.
Good Capitalism, Bad Capitalism
. Yale University Press.

p. 259 ‘A telling anecdote about glass repeated by several Roman authors’. Moses Finley, cited in Baumol, W. 2002.
The Free-market Innovation Machine
. Princeton University Press.

p. 260 ‘A Christian missionary in Ming China wrote’. Quoted in Rivoli, P. 2005.
The Travels of a T-shirt in the Global Economy
. John Wiley.

p. 260 ‘The proportion of GDP spent by firms on research and development in America has more than doubled’. Kealey, T. 2007.
Sex, Science and Profits
. William Heinemann.

p. 261 ‘The pioneer venture capitalist Georges Doriot said’. Quoted in Evans, H. 2004.
They Made America
. Little, Brown.

p. 262 ‘as Don Tapscott and Anthony Williams call it’. Tapscott, D. and Williams, A. 2007.
Wikinomics
. Atlantic.

p. 263 ‘The dye industry relied mostly on secrecy till the 1860s’. See Moser, P. 2009. Why don’t inventors patent? http://ssrn.com/abstracts= 930241.

p. 264 ‘Emmanuelle Fauchart discovered by interviewing ten
chefs de cuisine
’. Fauchart, E. and Hippel, E. von. 2006.
Norm-based Intellectual Property Systems: the Case of French Chefs
. MIT Sloan School of Management working paper 4576-06. http://web.mit.edu/evhippel/www/papers/vonhippelfauchart2006.pdf.

p. 264 ‘Yet there is little evidence that patents are really what drive inventors to invent.’ There is a lively debate going on about whether James Watt’s aggressive enforcement of his broadly worded patents on steam engines in 1769 and 1775 actually shut down innovation in the steam industry. See Rolt, L.T.C. 1960.
George and Robert Stephenson
. Longman. (‘With coal so readily available, the north country colliery owners preferred to forgo the superior economy of the Watt engine rather than pay the dues demanded by Messrs. Boulton and Watt.’); also www.thefreemanonline.org/featured/do-patents-encourage-or-hinder-innovation-the-case-ofthe-steam-engine/; Boldrin, M. and Levine, D.K. 2009. Against intellectual monopoly. Available online: http://www.micheleboldrin.com/research/aim.html; and Von Hippel, E. 2005.
Democratizing Innovation
. MIT Press. The contrary view, that Watt’s patent did little to hinder innovation and that without it he would never have attracted Boulton’s backing, is put by George Selgin and John Turner: Selgin, G. and Turner, J.L. 2006. James Watt as intellectual monopolist: comment on Boldrin and Levine.
International Economic Review
47:1341–8; and Selgin, G. and Turner, J.L. 2009. Watt, again? Boldrin and Levine still exaggerate the adverse effect of patents on the progress of steam power. 18 August 2009, prepared for the Center for Law, Innovation and Economic Growth conference, Washington University School of Law, April 2009.

p. 264 ‘the list of significant twentieth-century inventions that were never patented is a long one’. Cited in Shermer, M. 2007.
The Mind of the Market
. Times Books.

p. 264 ‘the Wright brothers effectively grounded the nascent aircraft industry’. Heller, M. 2008.
The Gridlock Economy
. Basic Books.

p. 264 ‘a logjam in the manufacture of radios caused by the blocking patents held by four firms’. Benkler, Y. 2006.
The Wealth of Networks
. Yale University Press.

p. 265 ‘the biggest generators of new patents in the US system are “patent trolls” – firms that buy up weak patent applications’. I am indebted to R. Litan for this information.

p. 265 ‘Research in Motion, the Canadian company that manufactures BlackBerries’. Baumol, W.J., Litan, R.E. and Schramm, C.J. 2007.
Good Capitalism, Bad Capitalism
. Yale University Press.

p. 265 ‘Michael Heller’s analogy for the patent trolls is to the state of the river Rhine between the decay of Holy Roman imperial power and the emergence of modern states’. Heller, M. 2008.
The Gridlock Economy
. Basic Books.

p. 266 ‘In one survey of 650 R&D executives from 130 different industries’. Von Hippel, E. 2005.
Democratizing Innovation
. MIT Press.

p. 266 ‘most of the money goes towards me-too drugs for diseases of Westerners’. Boldrin, M. and Levine, D.K. 2009. Against intellectual monopoly. Available online: http://www.micheleboldrin.com/research/aim.html.

p. 267 ‘only one country had allowed the copyrighting of music’. Boldrin, M. and Levine, D.K. 2009. Against intellectual monopoly. Available online: http://www.micheleboldrin.com/research/aim.html.

p. 267 ‘Just as newspapers have derived little of their income from licensing copyrights’. Benkler, Y. 2006.
The Wealth of Networks: How Social Production Transforms Markets and Freedom
. Yale University Press. (Benkler’s book, true to his argument, is available free online.)