Davies says:
“What this misses is that in a competitive market economy, as any resource becomes more costly, human ingenuity will find alternatives.
We should draw two lessons from this. First, human beings, left to their own devices, will usually find solutions to problems, but only if they are allowed to; that is, if they have economic institutions, such as property rights and free exchange, that create the right incentives and give them the freedom to respond. If these are absent or are replaced by political mechanisms, problems will not be solved.
Second, the sheer difficulty of predicting the future, and in particular of foreseeing the outcome of human creativity, is yet another reason for rejecting the planning or controlling of people’s choices. Above all, we should reject the currently fashionable “precautionary principle,” which would forbid the use of any technology until proved absolutely harmless.
Left to themselves, our grandparents solved the great horse-manure problem. If things had been left to the urban planners, they would almost certainly have turned out worse.”
http://www.fee.org/pdf/the-freeman/547_32.pdf
· In the modern day, there are doomsayers who take current trends and extrapolate them into the future as means of predicting ultimate ruination.
Sometimes such messages are accompanied by the suggestion that we have the means of averting doom if we change our ways, often at the cost of personal liberty.
Take your pick:
o global warming;
o pollution;
o greenhouse gases;
o population increase;
o nuclear weapons proliferation;
o increasing world tensions;
o diminishing fish stocks in the oceans.
According to Davies:
“The fundamental problem with most predictions of this kind, and particularly the gloomy ones, is that they make a critical, false assumption: that things will go on as they are. This assumption in turn comes from overlooking one of the basic insights of economics: that people respond to incentives. In a system of free exchange, people receive all kinds of signals that lead them to solve problems.”
This has been adopted by quite a number of supporters and commentators.
· The problem with Davies’ view is that it can be used as a justification for inertia: do nothing because something or someone will come along and solve it.
In discussing this topic with my wife, she made the pertinent observation that even the doomsayers perform a valuable function, by presenting the problems for consideration by and alerting people to them.
She also pointed out that sometimes the very fact of doomsaying is enough to result in change, especially when there is no magic bullet that may or may not happen.
· Furthermore, the automobile was not intentionally invented to alleviate the horse manure crisis.
What would have happened had the automobile not been invented, or if the technology had not been practical, or it had been too expensive to mass produce?
According to one commentator who does not agree with Davies’ philosophy:
“Necessity may well be the mother of invention but counting on providence to resolve pressing issues is not a prudent way to run a nation much less a business. He needs to take a course on Cost/Benefit analysis because his “que sera sera” attitude may work when applied to philosophy or watching brain tripe like “Pollyanna” but fails miserably when applied to economics and science.”