Daily Speculations

The Web Site of Victor Niederhoffer & Laurel Kenner

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8/10/04
Yishen Kuik: Human Progress

It is interesting to note that very broadly speaking, it seems that societies living nearer the poles have progressed faster than societies living nearer the equator. There is a lot of anecdotal evidence for this, but seeing it in statistics on a map is fairly provocative.

Not sure what the explanations are - certainly one who has visited the tropics can point to heat & lethargy as a reason.

Or, to borrow a line of reasoning from Jared Diamond, the excess of solar energy delivered to the tropics creates a bounty of food and comfort which robs the human animal of an urgency to innovate.

Not sure what the answers are, but thought I would point it out to the group.

Incidentally, Lee Kuan Yew of Singapore is on record as saying that the greatest invention of the 20th century is air conditioning.

8/10/04
Victor Niederhoffer Comments

One is most skeptical of all arguments relating to economic progress and human liberty like those of Jared diamond and those based on meteography that completely neglect the role of incentives due to the profit motive, the good character and innovation fostered by a strong property rights system and a freely fluctuating price system that provides the signals and allows supply and demand to harmonize, and a rule of law that enables participants to reduce uncertainty about the environment in which they are trying to better oneself. Explanations like those of Jared explain everything and predict nothing.

Thus, I attribute progress and the return on capital from stock investing to the degree of free enterprise, and sanctity of property, rather than religious or climatological factors as is so often adduced here by present and former members.

8/10/04
George Zachar Comments

If I might weigh in here, at great peril, the climatological and homo econimous arguments are not necessarily mutually exclusive.

The disparate physical environments humans inhabited eons ago likely influenced the types of social structures that developed and took hold...certainly there is ample evidence for this in comparative studies of hunter/gatherer cohorts vs. agricultural communities.

I would argue the interplay of geographic and social variables, combined with unfathomable chance and attitudinal inertia, accounts for the results to date.

And yes, I am aware this explains everything and predicts nothing...because we are dealing with sketchy data and numberless moving parts.

But I would counsel against, no offense intended, reflexive dismissal of narrow non-Mises factors that may, in fact, be important inputs to a complete analysis that would nonetheless satisfy an Austrian economist.

Or, as someone noted on one of the Mises web sites this morning:
     Q: How many Austrians does it take to change a light bulb?
     A: We don't make quantitative predictions.

8/10/04
Yishen Kuik: Responds

Victor,

I agree with the essence of your argument. I am more influenced by Hernando de Soto than Diamond. I threw him out because it was all I have.

It is hard to come up with a good explanation for the apparent correlation between latitude and economic progress and what hidden insights it may hold.

8/11/04
Art Cooper Comments

In "The Wealth and Poverty of Nations" (on your recommended list), David Landes points to climatological factors as important in helping progress to start faster in moderate vs. tropical areas. Specifically, the fact that more northern areas were less likely to suffer debilitating diseases allowed them to progress towards industrialization more quickly. I believe this is a positive factor, though far from a complete explanation.

8/11/04
Lloyd Johannesen

I would contend that northern areas required more persistent planned effort in order to survive. If you need to build shelter to get through the winter, store food etc. you are forced into long term planning and engineering; if we can survive day to day without a lot of planning man would do that. Industrialization may be a result of skills that were emphasized due to an inhospitable environment. I don't know if this is what David Landes meant by climatological reasons but I would think it would.

8/11/04
Kim Zussman Comments

Lloyd Johannesen said: "Industrialization may be a result of skills that were emphasized due to an inhospitable environment."

OTOH more temperate climes reduce the mystery of the main economic force; in that the thermic face of prolific female nudity reduces demand in the face of excess supply (http://tinyurl.com/6k6v9). It is not hard to imagine how easy sunbathing conquestables promote lesser selective forces than the furs, greatcoats, and bustles of the Northerly ambitious, and to notice that Wall Street is not in Los Angeles.

So if you ever come here, visit Venice beach: a visual, olfactory sensorioverdosage* of estrogen and testosterone disguised as anarchist merchants selling fortunes and telling hemp and henna banners, beating Bush, but pay, please.

*for bikinology experts (http://tinyurl.com/5dtaf)