The Longest Version
INTRODUCTION
PART ONE: OVER 17 PROFILES OF LIFESAVING FOR-PROFIT ENTERPRISES
* Creativity in the Age of COVID – Makers of the COVID Vaccine
* Patrick and Paclitaxel – Patrick Soon-Shiong and His Cancer Drug
* The German From Genentech – Axel Ullrich and His Biotech Cancer Treatment
* Hooray for Herbert – Herbert Boyer, David Goeddel, and Genetically Engineered Insulin
* The Creation of CRISPR – Jennifer Doudna, George Yancopoulos, and Gene Editing
* Dr. Profit – Paul Offit and the Rotavirus Vaccine
* Men Against Meningitis – David Hamilton Smith and His Vaccine for Meningitis
* Capitalism Does Have a Heart – Wilson Greatbatch, C. Walton Lillehei, and Implantable Pacemakers
* What Can Be Scanned – Raymond Damadian and MRI
* Bravo for Baekeland – Leo Baekeland and Plastics in Hospitals
* Enemy of Arthritis – Percy Julian, Sr., and New Foam for Fire Extinguishers
* Duane and His Detector – Duane Pearsall and Smoke Detectors
* Excellent Electricity – Thomas Edison, George Westinghouse, the Air Brake, and Electric Heating
* Glorious Gail – Gail Borden and Condensed Milk
* Thomas Midgley, Now Depicted As Evil, “Has Saved Millions of Lives” – Thomas Midgley and Air Conditioners
* “Death Ray”? More Like “Life Ray” – Gordon Gould and the Laser
*Fritz and His Fertilizer – Fritz Haber, Carl Bosch, and Synthetic Nitrogen Fertilizer
PART TWO: HOW, CUMULATIVELY, BILLIONAIRES SAVE BILLIONS OF LIVES
* Value Added to Natural Resources
* Natural Fact One (of Two): Resource Substitution
* Natural Fact Two (of Two): Greater Utility From Fewer and Smaller Inputs
* The Carrying Capacity of Land
* Improved Productivity Helps People on the Lower Income Distribution
* Goods That Have Not Decreased in Real Price
* The Poor Get Richer
* What Capitalism Can Do for the Climate
* Capitalism Vs. Hunter-Gatherer Life Vs. Socialism
* Capitalism Vs. Taxpayer Funding for Basic Research and R-and-D
CONCLUSION
INTRODUCTION | ^
America’s billionaires are rich in their finances and poor in reputation. They have not been getting good press lately.
For much of the past few decades, the common attitude in America was that it is morally permissible to become a billionaire as long as one “gives back” in the form of philanthropy. That was the attitude formalized in The Gospel of Wealth penned by the richest man of its day, Andrew Carnegie. But over the past several years, the debate has shifted to whether it should be legal for any entrepreneur to become a billionaire at all.
Heralding this change was a January 2019 interview that left-wing writer Ta-Nehisi Coates conducted with then-freshman U.S. Sen. Alexandria Ocasio-Cortez. “Do we live in a moral world [if it is one] that allows for billionaires?” Coates asked her. “Is that a moral outcome?”
“No, it is not,” she replied. For this, she received uproarious cheers and applause.
She went on, “I do think a system that allows billionaires to exist — when there are parts of Alabama where people are still getting ringworm because they don’t have access to public health — is wrong.” Here she insinuates that an entrepreneur possessing billions of dollars’ worth of wealth somehow contributes to those Alabamans being too poor to receive adequate protection from, and treatment for, ringworm.
Sen. Ocasio-Cortez’s answer made headlines. It became apparent that many people in the United States and other countries agreed wholeheartedly with it. Almost as famously as his boss, AOC’s policy advisor and senior counsel Dan Riffle was quoted throughout the media proclaiming, “Every billionaire is a policy failure.”
Still more notorious than AOC is a man with seniority over her in the U.S. Senate, Bernie Sanders of Vermont. “There is something profoundly wrong,” he shouted in his announcement for his 2016 presidential run, “when in recent years, we have seen a proliferation of millionaires and billionaires [actually, ‘MILLIONAYAZ AND BILLIONAYAZ’] at the same time as millions of Americans are working longer hours for lower wages and we have shamefully the highest rate of childhood poverty of any major country.”
Note the implication here — as with Sen. Ocasio-Cortez — that the “lower wages” and “child poverty” are at least partially caused by this “proliferation of millionayaz and billionayaz.”
That billionaire entrepreneurs have such an unflattering image can be seen even in attempts to compliment them. Such can be gleaned a video essay by pop-culture commentator Lindsay Ellis. Despite her overall sympathies for the anti-capitalist message of the computer-animated movie adaptation of Dr. Seuss’s The Lorax, she found herself vicariously embarrassed that it was presented in such a ham-fisted manner. In a gesture of perfunctory evenhandedness, Ellis states what she apparently considers to be the strongest argument in favor of for-profit commerce: “...corporations employ people and make us stuff — maybe not necessary stuff, but stuff.”
The triteness of her evaluation would not be so concerning, except that it seems even many of the most prominent “defenders” of free enterprise tacitly agree with this characterization. The best that can be said of market economics, it is believed, is that businesses “make us stuff,’ stuff that is “not necessary.” The run-of-the-mill defense of capitalism is that it incentivizes the production of “stuff” much more effectively than do the State-owned enterprises of socialism. Socialism might manufacture not-necessary stuff, but capitalism elicits much more competence in the assembly of not-necessary stuff!
And as entrepreneurs become billionaires by hawking this not-necessary stuff, we are told, these same entrepreneurs add to “child poverty” and Alabamans “still getting ringworm” by hoarding all the wealth and resources for themselves.
As Ocasio-Cortez added in 2020, the billionaires “made that money off the backs of single mothers, and all these people who are literally dying because they can’t afford to live.”
Human beings are “literally dying” for the reason that billionaires “made that money”? It is no wonder their legacy is tarnished.
Yet there is more to this story. Uğur Şahin and Özlem Türeci — the scientific married couple who cofounded BioNTech of Germany — became billionaires from developing the first existing COVID-19 vaccine. Noticing this, entrepreneur Louis Anslow tweeted out a Time magazine cover featuring these two, and asked in his tweet, “Are you sure no one deserves to be a billionaire?”
Anslow’s is a worthwhile question. To explore it, this essay comes in two parts. Part One ascertains that there is indeed more that can be said for capitalism and entrepreneurial billionaires than that they “make us stuff.” That many of the free market’s putative advocates tacitly agree with Lindsay Ellis’s belittling of capitalism’s benefits can be inferred from what they have omitted from their “pro”-capitalism statements. What they refrain from stating plainly is that free enterprise — more than any other sort of political economy, socialist or otherwise — has provided the freedom and impetus for innovators to save, lengthen, and enhance human lives. Not just about making us “stuff,” capitalism saves lives. And that is the point that capitalism’s so-called proponents should be emphasizing. If capitalism’s lifesaving nature were obvious to most people, not even an ideologue such as Lindsay Ellis could have been so confident in stating, as a generally accepted platitude, that capitalism is all about producing “stuff” that is “not useful.”
Hence, Part One is a series of over seventeen case studies of this principle in action. Where they are available, the estimated number of lives that a for-profit enterprise saved shall be enclosed. Most of those case studies involve pharmaceuticals and medical devices, but there are other examples that are far less obvious. Electric heating, air conditioners, and even lasers save lives. It was capitalism that facilitated the invention, production, and adoption of these technologies.
To Part One, a detractor can reply, “Yes, that entrepreneurs produce medical devices is nice. But as the Earth consists of a fixed quantity of nonrenewable natural resources, it follows that one person owning a billion dollars’ worth of resources means there is less for everyone else. In that respect, if someone invents a life-saving medical device and gains a billion dollars from that, a billion dollars’ worth of resources all going into the possession of this one man still adds to other people’s poverty and the premature death that it brings.”
Such an assumption fails to understand the actual nature of wealth — economic value — and its origin. Consequently, Part Two considers the prospect that there is no inherent limit to the amount of economic value to benefit human beings. Further, insofar as citizens are free and peaceful with one another, someone gains ownership over a billion dollars’ worth of resources to the extent that she created economic value that was of at least that much worth to others. Part Two also summarizes how capitalism contributed to boosting living standards overall, sometimes even in the poorest countries where the government allows for relatively little capitalism. Whereas Part One focuses on specific inventor-entrepreneurs whose efforts have saved lives, Part Two ends with a summary of how peaceable commerce, in total, saves lives on an international scale.
With that, we take a journey into the past two centuries of entrepreneurship and its lifesaving.
The married couple of scientists, Uğur Şahin and Özlem Türeci, co-founded BioNTech in Germany and partook in a joint venture with the USA’s Pfizer to develop the USA’s first vaccine for COVID-19, one that is an mRNA vaccine. Various attempts have been made to attribute this success more to taxpayer funding than to the couple’s initiative. President Donald Trump tried to take credit for BioNTech’s achievement, proclaiming that it came from Operation Warp Speed, his administration’s program to provide federal funding to synthesize such a vaccine. Yet BioNTech and its American collaborator, Pfizer, did not receive money from this program.
Are you sure *no one* deserves to be a billionaire? pic.twitter.com/MYuSzH8TVf
— Louis Anslow (@LouisAnslow) July 27, 2021
PART ONE: OVER 17 PROFILES OF LIFESAVING FOR-PROFIT ENTERPRISES | ^
Creativity in the Age of COVID | ^The married couple of scientists, Uğur Şahin and Özlem Türeci, co-founded BioNTech in Germany and partook in a joint venture with the USA’s Pfizer to develop the USA’s first vaccine for COVID-19, one that is an mRNA vaccine. Various attempts have been made to attribute this success more to taxpayer funding than to the couple’s initiative. President Donald Trump tried to take credit for BioNTech’s achievement, proclaiming that it came from Operation Warp Speed, his administration’s program to provide federal funding to synthesize such a vaccine. Yet BioNTech and its American collaborator, Pfizer, did not receive money from this program.
I increasingly feel that the act of entrepreneurship and innovation is very much an act of immigration. Immigrants leave their comfort zone, expose themselves to the negativism in the face of “foreignness,” perceived hostility, just the fear of settling in a new place very often. . . .Timothy Springer was another one of those initial investors who placed cash directly into Moderna. As Forbes reports, “Springer was a founding investor of Moderna in 2010, when he put about $5 million into the company. Now, a decade later, that initial investment is worth nearly $870 million.” Langer as well, says Time magazine, was “one of the first” of Moderna’s direct funders. And even before their investments in Moderna, Timothy Springer and Bob Langer engaged in commercial ventures that improved health and human life.That journey is what innovators do, because any time you propose something that has no precedent, people basically criticize you. . . .
So I view immigration as kind of a philosophy of life, and that is to...leave one’s comfort zone, dare to try new things, to excel, and through that may cause progress to happen. And whether it’s physical immigrants or intellectual immigrants, it’s very much a big part of shaping my life.
Another lifesaving billionaire is Patrick Soon-Shiong, M.D. This story might seem, at first glance, to be one of taxpayer funding being the lifesaver. But soon Soon-Shiong arrives to provide the twist.
To be used along with docetaxel or nab-paclitaxel, there is yet another drug that has been of assistance to patients undergoing chemotherapy, this one being the first employment of recombinant genetic engineering for use against cancer. That is trastuzumab, going by the brand name Herceptin. From 1969 to 1980, scientists came upon a series of clues concerning the manner in which some inheritable genes are especially vulnerable to mutations that lead to cancer. These mutated genes are known as oncogenes. In 1982, a German-born scientist employed by Genentech Corporation, Axel Ullrich, identified a particular oncogene that would later be named Human Epidermal growth factor Receptor 2 —“HER-2.”
That Genentech’s executives were initially unsympathetic to the efforts of Axel Ullrich and Dennis Slamon is disappointing. It is also surprising as the company got its start through producing comparably revolutionary lifesaving treatments.
Since then, the exciting opportunities in biotechnology have expanded. The gene-splicing method of CRISPR takes advantage of a protein from bacteria called Cas9. Viruses such as bacteriophages prey upon bacteria, and bacteria have hence evolved their own immune systems to protect them. The chemical Cas9 is a weapon whereby the bacteria slice viruses into separate pieces, neutralizing the threat they pose.
Many vaccines other than the one for COVID have also been a blessing. Perhaps the vaccine creator to make the most news over the past several years has been Paul Offit of CHOP — the Children’s Hospital Of Philadelphia. Anti-vaccination activists castigate Dr. Offit as “Dr. Profit.”. And, sadly, Offit does not disagree completely about there being something shameful in that moniker.
Besides the ones for COVID-19 and the rotavirus, there are other profitable lifesaving vaccines. Among them is the one for the bacterium Haemophilus influenzaea Type B — “HiB,” for short. HiB has frequently caused childhood meningitis, which, in turn, often led to paralysis, deafness, blindness, developmental disabilities, and death.
Medical treatments such as vaccines, cancer drugs, and genetically engineered insulin are not the only lifesavers. Medical devices matter as well. Cardiac patients have benefited greatly from the feats of C. Walton Lillehei, Earl Bakken, Manuel “Manny” Villafaña, Wilson Greatbatch, and Kurt Amplatz.
The problem for a small inventor today is the FDA. So many laws have been written that a small operator can’t do something like a pacemaker. The regulations are so complex and the required testing is so expensive that a small company can’t do it. . . . If I did today what I did twenty years ago, I would go to jail. Imagine making pacemakers in a barn and taking them to a hospital and putting them into patients! But we did it, and it worked. It was done very ethically, and a lot of people are alive today because of that work.When it came to finding a firm to manufacture units of this invention, Greatbatch first approached Medtronic. Given the very machine that launched the company, this seemed a natural fit. Ironically, Medtronic ultimately rejected Greatbatch’s model. He then pitched his creation to one of Manny Villafaña’s corporations — Cardiac Pacemaker, Inc. (CPI).
Another medical technology not to be overlooked is magnetic resonance imaging (MRI). An MRI scan can detect cancers, brain injuries, multiple sclerosis, and even dementia. It can even detect some diseases that CT scans cannot, such as prostate cancer and uterine cancer. According to the American Chemical Society, the number of lives saved by MRI scans is in the “millions.”
Raymond V. Damadian was a great contributor to the creation of this technology. Sadly, his patents have not always been respected as well as they should have. In 1997, he won a patent infringement suit against General Electric for $128.7 million.
On account of his troubles, Damadian has become a public advocate for the rights of inventors. Coauthoring an op-ed in 2011 where he favorably cites Ayn Rand’s Atlas Shrugged, he expresses concern about changes in patent law that undermine the protections of independent inventors.
Damadian’s machine was excellent, but there was always room for improvement. One major difficulty has been that the MRI machine was so large that it would fill the space of an entire room. Yet many patients most in need of an MRI scan are severely disabled and cannot even be wheeled to that special room. For that reason, Jonathan Rothberg — the same man who contributed to gene-mapping technologies and co-invented home COVID test kits — decided to do something in this field, too. He had his company Hyperfine come out with Swoop, a portable MRI device that can be wheeled to the patients. Many hospitals in developing countries cannot afford to install a conventional MRI scanner, but they can afford a Swoop. It is $50,000, which is twenty times cheaper than is a conventional MRI.
As Fast Company magazine puts it, “This portable, affordable new MRI machine is already saving lives around the world.”
Bravo for Baekeland | Leo Baekeland and Plastics in Hospitals | ^
Something else which saves lives, but which is given much less credit for doing so today, is plastic. For the past several years, we have heard much about its products polluting the ocean and remaining a threat to animals for the very reason it has been a boon to humankind — that it is so durable. Sometimes it seems as though people have come to think of plastic as being an inherently bad material.
The reality is that the substance itself should not be blamed. There are technological remedies. Scientists have discovered microorganisms and arthropods that eat plastic. Theoretically, these organisms can be let loose upon plastics in landfills before the materials reach the ocean. More pertinent is that the properties of plastics — that they manage to be both lightweight and durable — has made them ideal for various medical devices. They provide the material for bags in which donated blood is stored.
ScienceHeroes.Com credits blood transfusions with saving 1.1 billion lives. The plastics in which the blood was stored definitely facilitated a larger number of those procedures. There would have been far fewer of them had it not been for modern storage techniques.
A National Geographic piece that is fashionably unflattering toward plastics nonetheless quotes University of Massachusetts Lowell engineer Bridgette Budhlall: “Plastics for biomedical applications have many desirable properties, including low cost, ease of processing, and [ability] to be sterilized easily.” The National Geographic piece then continues that Dr. Budhlall also mentions that plastics can be changed with coatings that make them especially resistant to contagion by microscopic organisms. On account of how they have allowed for medical professionals to maintain hygiene, NatGeo admits that “plastic has revolutionized the medical industry over the past century...”
The first plastics were invented by Belgian-born chemical engineer Leo Henrik Baekeland. Having been paid $1 million by George Eastman for his special photographic paper, he could have been content with early retirement. Indeed, his contract with Eastman Kodak contained a non-compete clause. It stipulated that Baekeland could not commercialize any new photographic papers for the next ten years. Therefore, he took to satisfying his curiosity in other matters of chemical engineering. There were still millions of practical problems to be solved.
Plugging his newfound riches into his second major scientific enterprise, he invented Bakelite, an early plastic that would serve as a model for the others to be created throughout the twentieth century. This made Baekeland richer still. At age seventy-five, he sold his plastics company to Union Carbide for $16.5 million.
As with other entrepreneurs profiled in this essay, Baekeland was an eccentric. While having a conversation on a hot day, he would make a habit of walking straight into his swimming pool or the ocean fully clothed as he continued speaking. He did this nonchalantly as if there was nothing unusual about it.
Enemy of Arthritis | Percy Julian, Sr., and New Foam for Fire Extinguishers | ^
Some innovators invent both pharmaceuticals and safety devices. One of them was Percy Julian, Sr., born in Montgomery, Alabama, in 1899, the grandson of slaves. In spite of the heavy discrimination, Julian put himself through school and became a prominent chemical engineer. He became director of research at the Glidden Company where he extracted chemicals from soy and synthesized them into new compounds. First at Glidden and then at his own firm Julian Laboratories, which he started in 1953, he produced steroids to treat the sufferers of rheumatoid arthritis.
Julian and his chemists were able to make gains in efficiency to the point where on some products they quadrupled production. On account of these gains, between 1950 and 1956, Julian was able to lower the per-kilogram price of progesterone, an ingredient in arthritis medication, from $4,000 to $400.
But Julian’s work did not merely relieve pain; it also cut down the number of fatalities. In the early 1940s, he made improvements on the substances contained in fire extinguishers. As recounted on the website of the PBS series Nova, at Glidden he “extracted a soy protein used in fire-fighting foam, which saved thousands of lives during World War II.”
In 1961 he sold Julian Laboratories for $2.3 million — $20 million in 2022 U.S. dollars. Much of the proceeds he would donate to the civil rights movement.
Duane and the Detector | Duane Pearsall and the Smoke Detecdtor | ^
Percy Julian’s activism is an inspiration, but the shiny light reflectors on the road are seldom cited as an inspiration for anything. Yet these reflectors make a big difference in their own right. They keep motorists’ eyes on the road and prevent fatality. They were invented and marketed by yet another Percy — Percy Shaw of the United Kingdom. When he died in 1976, he left behind an estate of £193,500. In 2022 money, that is 2 million U.S. dollars. With his fortune, he purchased a mansion in which, like Leo Baekeland, he showed off his quirks. He bought for television sets and placed them all in the same room. He had all TVs playing at once, each on a different channel, with the volume muted.
He said that this was because when guests came over, they all wanted to watch TV but couldn’t agree on the station.
Percy Shaw’s four TVs did not make a lot of noise, but that was the very purpose of the devices of our next inventor. For decades, inventors and engineers had been trying to figure out how to create an alarm that would warn a home’s residences of a fire before it grew too large for them to escape. These inventors and engineers concentrated on trying to make a machine that would detect heat. By the early 1960s, these heat detectors were already being installed in residences. They would continue to be selling well into the late 1970s.
Yet their weakness was in their unreliability. The detection of a high temperature was not always the same as identifying the outbreak of flames.
In 1963, even as heat detectors were on the market, home conflagrations continued to kill thousands of Americans. That same year, engineer Duane Pearsall had set his sights on something else. The presence of static electricity disrupted operations in factories and photographic laboratories.
To address that interference, he started the company Statitrol — short for “Static control” — and, with assistants, constructed a device to measure ions in the air. He dubbed it his “static neutralizer.” One day as he was tinkering with it, a colleague lit a cigarette. The rising smoke triggered in the neutralizer and it blared uncontrollably. Many other people would have dismissed this reaction as just another complication or inconvenience, and forgotten about it. And Pearsall might have been one of them, had he not mentioned the incident to an engineer friend from Honeywell Corporation. This colleague inferred that this could be ideal for warning homeowners of the presence of a fire.
It turned out that heat detectors were not the best in warning about any emerging blaze. A stronger indicator was smoke. This inspiration led Pearsall to take the knowledge he had already gained from his progress with the static neutralizer and to apply it to this new inquiry.
The models put out by Statitrol were impressive. Yet Pearsall still had to work out the kinks, and he still had to demonstrate that his smoke detectors provided an advantage that the already-established heat detectors did not. Independent investigators, though, noticed the difference. Writing in 1974 in an academic paper for the National Fire Protection Association (NFPA), National Bureau of Standards research engineer Richard G. Wright assessed, “...smoke detector technology has advanced to the point where the judicious installation of one or two smoke detectors could be more effective than a house full of heat detectors in alerting dwelling occupants to a fire” (page 71).
History has borne out Wright’s evaluation. Yet there was already evidence for it by 1962. In that year, J. H. McGuire and B. E. Ruscoe found that the lifesaving potential of the presence of heat detectors in a home was 8 percent, whereas it was 41 percent for smoke detectors (“The Value of a Fire Detector in the Home,” Fire Study no. 9 [November 1962].”
In 1972, the rate of mortality from house fires in the United States was 57 in a million people. As smoke detectors and other safety measures became more commonplace in the home, that rate reduced. By the year 2009, it was fewer than 12 in a million.
And in contrast to the heat detector installations being between $700 and $1,200,
Pearsall’s smoke detector debuted in the Sears Roebuck catalog two years earlier priced at $37.88.
Yet Pearsall could have lost his chance at saving lives had a reputed champion of safety and lifesaving succeeded in thwarting him. That was corporation-bashing crusader Ralph Nader. In 1976, the Health Research Group division of his group Public Citizen sent a letter to the Nuclear Regulatory Commission. The message was dire in tone. Sidney Wolfe, the medical doctor and activist leading the Health Research Group, noted that smoke detectors emit radioactivity. For that reason, Nader and Dr. Wolfe demanded that the NRC place a moratorium on its sale and use. Public Citizen denounced these gizmos as “mindless and dangerous,” followed by a demand that four million of these units be recalled.
Prior to Nader and Dr. Wolfe ever making a fuss, Pearsall already implemented precautions concerning the radiation. When Pearsall started out, his SmokeGard transmitted half a microcurie of Radium 226. Pearsall had already shrunken that to a single microcurie of Americium 241.
Fortunately for Americans who since have been warned of fires by their smoke detectors — and otherwise would have died — the wish of Public Citizen went unfulfilled. To its credit, the NRC rejected the demands of Nader and Wolfe. The NRC replied that the dosage level is what determines whether exposure to radiation and most chemicals is safe or dangerous, and that the dose of radiation from smoke detectors was too small to harm a household. The regulatory agency then noted that a person would already be exposed to over a hundred times more background radiation during a flight across the United States.
To that, Sidney Wolfe replied, rather unscientifically, “The issue is not how much radiation is released but why this extra amount of radiation exposure is necessary at all.” He was referring to how smoke detectors released slightly more radiation than did the heat detectors. He then insinuated that the heat detectors were already adequate in alerting people about fires. The figures on the reduction in deaths from house fires in the following years suggest something quite disparate from what Sidney Wolfe and Ralph Nader assumed.
Statitrol grew so much that, at one point under Pearsall’s leadership, the company boasted over one thousand employees. Yet Pearsall never forgot his hardships when he directed a team of just a few members. Following his success, he remained an advocate for small business. In 2004, the Worcester Polytechnic Institute gave him an award for “saving upwards of 50,000 lives from deadly residential fires over the past 30 years.”
Excellent Electricity | Thomas Edison, George Westinghouse, the Air Brake, and Electric Heating | ^
Even when the technology is not made for an explicit lifesaving purpose, but is instead intended for uses that are more general, it could save lives. That happens with electricity generation. Suffering from the cold at night has threatened human lives since the Stone Age. Deaths from cold annually outnumber those from heat.
Prior to the advent of indoor electric heating, people had to heat their homes by burning firewood. In developing countries, where there are still millions of people cannot access to electricity, such people still have to do it, sometimes with dung. Although there is romance to the image of relaxing before a warm fireplace, this practice carries its own hazards. The fumes can build up in the lungs and ultimately cause growths in them. This is “indoor air pollution,” and there are figures that illustrate the extent of the damage it does.
Worldwide, but mostly in the developing countries, this indoor air pollution proves lethal for large numbers of human beings. Among the higher estimates is 3.5 million per year. That is 200,000 more than the number of people annually killed by the outdoor air pollution that is more familiar to us. This also exceeds the annual death rates of both malaria and AIDS combined. Even the lowest estimates are around 1.6 million per year.
The total number of casualties from indoor air pollution is 260 million, which is almost twice as many as those from all of the twentieth century’s wars put together.
The scourge of indoor air pollution is evident even in rich countries where people have access to electricity but, for aesthetic reasons, opt for fireplaces anyway. Eight percent of Britons do this, and half of them are categorized as “affluent.” Such a small portion of the U.K. population still heating with fireplaces is enough to excrete three times more air pollution than do all the country’s automobile emissions. Wood-burning stoves in the U.K.’s urban areas account for almost 50 percent of Britons’ exposure to carcinogens in particles of air pollution.
Considering all of the perils of the heating methods that people must rely upon when they do not have electricity, this absence is identified properly as “energy poverty.” The flip side is that these dangers and deaths are eliminated when people do have proper access to electricity — especially, in this context, electric heating.
Eighty-seven percent of the global human population currently has access to electricity. And, according to Our World in Data, 4.1 percent of the global population dies from indoor air pollution. That means that out of the Earth’s 7.9 billion people, that is 6.873 billion with electric power. Were it the case that this 6.873 billion did not have electricity and therefore had to rely on fireplaces for heating, and 4.1 percent of them died from indoor air pollution, that would be 281.793 million killed.
This suggests that simply in having electric heating in their homes, at least 281 million people have been saved.
By creating the electricity generation industry, rivals Thomas Edison and George Westinghouse contributed to this lifesaving. And, prior to this, Westinghouse had already made his first fortune with a different lifesaving device.
As it was for his future adversary, invention had been a lifelong vocation for Westinghouse. A prodigy, at age fifteen he had already designed his own rotary engine. A few years later, he would come up with the idea for which he was most famous. Traveling via locomotive then was especially perilous. For a train to stop, a brakeman would have to ride on the roof of a car. This brakeman would have to apply the brake on each car separately and then move on to the next car until the brakes were applied on all of them. On account of this arduous sequence of tasks, the train would normally travel for an entire two miles between the application of the first brake and the time that the train finally ground to a halt. In one year, as many as 5,000 American brakemen were killed during this sequence.
As a young man, Westinghouse came to the rescue with his air brake system. The train’s wheels would be connected to a tube. When the brake was applied, it sent compressed air through the tube that acted on the wheels of all the cars simultaneously. The distance the train would continue to travel upon application of the brakes was now in hundreds of yards instead of thousands.
At age twenty-one, Westinghouse searched for investors. He went to railroad magnate “Commodore” Cornelius Vanderbilt, Sr., who had made his own financially risky innovations throughout his life and who, by this time, had become the richest man in the country, if not the world. Upon hearing Westinghouse’s idea, Vanderbilt cackled, “Do you mean to tell me that you can stop a railroad train by wind?”
Westinghouse replied, “Well, yes. Inasmuch as air is wind, I suppose you are right.”
Vanderbilt had heard enough. He concluded, “I have no time to waste on fools.”
The young Westinghouse remained undaunted. He introduced his air brake to the market in 1872. Twenty-one years later, Congress passed the Railroad Safety Act (RSA), mandating that railroads have their trains make use of both Westinghouse’s air brake and another lifesaving innovation, the Jenny coupler. However, there was a grace period; the statute would not go into full effect until 1900. Many media, such as the TV program Modern Marvels, credit this legislation with railroads adopting these safety devices.
Yet long before the law went into effect, forward-thinking executives already knew that the hazards associated with locomotives made prospective passengers reluctant to ride and prospective employees skittish to apply to work for their railroads. By 1876 — over sixteen years prior to the Railroad Safety Act’s passage and over two decades prior to it going into effect fully — over 37 percent of railroad passenger cars in the United States already had Westinghouse’s air brake installed.
According to engineer Gary McCormick, this invention saved “hundreds of lives each year.” Sure enough, between the years 1890 and 1915, the fatality rate fell by more than 63 percent for railroad passengers and by more than 61 percent for employees. And that was the trend prior to the RSA going into full effect. Between 1890 and 1899, the fatality rate dropped by more than a third for passengers and by one-fourth for employees.
Having established himself as a successful salesman his air brake, Westinghouse turned his attention elsewhere. He took the millions he earned and invested them in other endeavors, such as competing against Thomas Edison in the market for electricity.
Something else which saves lives, but which is given much less credit for doing so today, is plastic. For the past several years, we have heard much about its products polluting the ocean and remaining a threat to animals for the very reason it has been a boon to humankind — that it is so durable. Sometimes it seems as though people have come to think of plastic as being an inherently bad material.
Some innovators invent both pharmaceuticals and safety devices. One of them was Percy Julian, Sr., born in Montgomery, Alabama, in 1899, the grandson of slaves. In spite of the heavy discrimination, Julian put himself through school and became a prominent chemical engineer. He became director of research at the Glidden Company where he extracted chemicals from soy and synthesized them into new compounds. First at Glidden and then at his own firm Julian Laboratories, which he started in 1953, he produced steroids to treat the sufferers of rheumatoid arthritis.
Percy Julian’s activism is an inspiration, but the shiny light reflectors on the road are seldom cited as an inspiration for anything. Yet these reflectors make a big difference in their own right. They keep motorists’ eyes on the road and prevent fatality. They were invented and marketed by yet another Percy — Percy Shaw of the United Kingdom. When he died in 1976, he left behind an estate of £193,500. In 2022 money, that is 2 million U.S. dollars. With his fortune, he purchased a mansion in which, like Leo Baekeland, he showed off his quirks. He bought for television sets and placed them all in the same room. He had all TVs playing at once, each on a different channel, with the volume muted.
Even when the technology is not made for an explicit lifesaving purpose, but is instead intended for uses that are more general, it could save lives. That happens with electricity generation. Suffering from the cold at night has threatened human lives since the Stone Age. Deaths from cold annually outnumber those from heat.
Edison’s ambition did not end with inventing and selling his practical incandescent lightbulb. People could only use it if their houses had electricity, something that no one possessed. For there to be demand for Edison’s lightbulbs, he had to make available the means to light it. For that reason, he set to work on providing a system for distributing low-voltage, high-current electricity — direct current.
It is misleading to say that Edison’s system made use of direct current (DC) whereas Westinghouse’s was all about alternating current (AC). Rather, Edison’s system made use of DC only, whereas Westinghouse’s made use of both DC and AC.
The issue with Edison’s system was that DC would only send electricity over relatively short distances — the length of a street. If all of today’s homes were lit only through DC, there would have to be a power plant on every city block.
Conversely, when alternating current is employed, the electricity can be transmitted over many miles, across entire U.S. states. A single power plant could transmit high-voltage, low-current electricity over mostly undeveloped terrain until reaching an urban center. Once the electricity reached the urban center, it would be sent to a transformer that would convert the electricity to DC — low voltage, high current.
In 1938 — five years before his own death — Tesla described Westinghouse as
For such efforts, by the time of Westinghouse’s death, his estimated net worth was $50 million. In 2020 U.S. dollars, that is $1.29 billion.
Dying in 1931, Thomas Edison had a net worth of $12 million. In 2020 U.S. dollars, that is $204 million, putting Edison a fifth on his way to being a billionaire.
Considering that at least 281 million lives have been saved by the proliferation of electricity throughout homes, these fortunes were well-earned. These are the billionaires maligned in Alexandria Ocasio-Cortez’s diatribes.
And though Westinghouse and Edison were unusual in many respects, they were not unusual in being nineteenth-century entrepreneurs whose ventures had saved lives. The same applies to Gail Borden.
Glorious Gail | Gail Borden and Condensed Milk | ^
Pasteurization had yet to become widely adopted. In the 1850s, Americans could consume milk only as it was raw. A devoutly religious entrepreneur named Gail Borden saw the disastrous consequences of this failure in sanitation up close during his efforts to market a different product, a dried meat biscuit he promoted at the 1851 London World’s Fair. On the ship voyage home to New York, he could not help but notice the dairy cows aboard the vessel for the passengers. Drinking the raw milk made many of the children sick; some died.
Returning to his laboratory in New York, Borden experimented with boiling milk at 212 º F to disinfect it. This always resulted in his milk ending up burnt and tasting horrible. Undaunted, he finally gained new inspiration upon visiting a colony of members of the Shaker religious order. He saw the Shakers boil their fruits in a special vacuum pan to dehydrate them. Everything else being equal, liquids boil at reduced temperatures when they are in an environment of lower pressure. Borden took to boiling milk in a similar vacuum pan, now able to do so at 136 º F without the burning the milk. Another effect was that it could be preserved over time, not being subject to spoilage.
The entrepreneur continued experimenting with different designs for vacuum pans. Upon devising one that was especially functional, he patented it in 1856. According to Vintage News, Borden’s technique at preservation “saved thousands of children and men.”
From his business choices, Borden had amassed assets worth over $100,000 — $2.7 million today.
Thomas Midgley, Now Depicted As Evil, “Has Saved Millions of Lives” | Thomas Midgley and Safer Refrigerators and Air Conditioners | ^
Just as George Westinghouse availed to people a safer way to protect themselves from the cold, Thomas Midgley availed to them a safer way to protect themselves from the heat. He did this through his improvements to air conditioning and refrigeration.
Attempts to control the temperature and air quality had been attempted before. In Florida in 1851, a medical doctor named John Gorrie had been treating fever in malaria patients. He invented an ice machine for cooling the room. It brought in air and compressed it. The air then ran through pipes, cooling as it expanded before reaching the patients. For this, newspapers denounced him and his invention as unholy. They considered it “natural” and God’s plan for people to bear the heat of the day. For Dr. Gorrie to help people avoid that was an unnatural tampering with nature and God’s will. Such thinking had long predated similar fears of genetic engineering.
When air conditioning was refined and made more sophisticated decades later, it was to address the problems connected to a particular type of heat — humidity. And this was not for general consuming public but for industrial applications. The concerned businesses were not as interested in doing anything about dry heat.
Although more strongly associated with a contraption that Willis Haviland Carrier assembled in 1902, the term “air conditioning” was coined four years later by Stuart W. Cramer, Sr. He had been designing and running cotton mills throughout North Carolina. Inspecting them, Cramer observed that in greater humidity, his mills’ wheels spun faster. He was resolute in hitting upon some configuration by which he could control the humidity to ensure that the wheels would rotate at the most consistent and convenient rate.
Air conditioning involves liquefied or gasified chemicals flowing through a box and warming or cooling the air inside it. A fan blows the treated air out of the box and to where the cooled or warmed air is desired. Use of gasified or liquefied chemicals flowing through tubes to control the temperature is also the principle behind refrigeration. In Cramer’s case, moisture was added and the vents blew moistened air throughout the mills.
Four years earlier in New York state, twenty-five-year-old Willis Carrier had been mulling over the opposite objective — how to remove moisture from the air. The Sackett and Wilhelms Lithography and Printing Company attempted to print newspapers in a multi-color format. It did so by a laborious process of one color at a time, whereby ink of that color was added in a single layer. In order for the page to be colored as planned, every application of a layer of ink had to align precisely with the others. Yet the humidity had unpredictable effects on the paper, which shrank or expanded in odd fashions. As several layers of different-color ink were added, the final result was a distorted image. To do something about the humidity, Sackett and Wilhelms went to Carrier’s employer at the time, the Buffalo Forge Company.
As Carrier’s invention blew temperature-controlled air through its vents, causing the air to circulate, metal plates inside of the machine collected and trapped the water droplets that had been circulating.
In 1915, Carrier left Buffalo Forge to start his own company, taking several other Buffalo Forge engineers with him. He had heard of Stuart Cramer’s speech from nine years earlier and adopted the term “air conditioning” for the name of his own company. He had credited Cramer as an inspiration for several ideas he was putting into practice. Carrier’s air conditioning gained greater recognition and appreciation when installing it in movie theaters during the summers of the Great Depression. Gradually, over time, the general public came to accept air conditioning, forgetting the crowing from decades past about how this technology was unnatural and sacrilegious.
Both Carrier and Cramer enjoyed commercial success. Once Edison and Westinghouse had established the technology, Cramer would go on to build several power plants that provided Texans with electric heating and thereby liberated them from the indoor air pollution that came from fireplaces. In this manner, Cramer protected customers from both the heat and the cold.
From these enterprises, Cramer had amassed enough cash that his descendants would be prominent figures of high society. His grandson, Stuart W. Cramer III, invested the inheritance into oil and competed with Howard Hughes for the romantic affection of not one but two Hollywood actresses — Jean Peters and Mighty Joe Young star Terry Moore.
Even as Carrier enjoyed success, there remained a tremendous disadvantage with air conditioners and refrigerators — the gases and liquids inside of them released fumes that were toxic to those who handled them. These gases and liquids were even flammable. They had caused fires that proved to be fatal. This problem was finally rectified in 1950 by a General Motors engineer in Ohio named Thomas Midgley.
If you run a quick Google search this instant on Thomas Midgley, in the results you will find that the man is routinely denounced as misguided at best and evil at worst. He invented leaded gasoline, which proved to be a major toxin. It usually goes unmentioned that Midgley’s work on air conditioning and refrigerants, which is demonized even more ferociously, has actually saved many lives.
At General Motors, Midgley reported directly to multimillionaire Charles F. Kettering, the engineer who invented the modern automobile’s self-starter. Kettering is the reason why car engines today turn on with a turn of the key. GM spun off a subsidiary company, Frigidaire, to refine air conditioners and refrigerators. Such technologies were connected due to GM’s interest in providing air conditioning in its vehicles.
Although leaded gasoline ended up being poisonous, in 1928 Midgley was genuinely interested in finding a technique to produce air conditioners and refrigerators that would not harm their users.
With two assistants, Midgley examined a pocket-sized periodic table. He knew the properties that were needed. Besides being nontoxic and nonflammable, it had to be stable with a boiling point within 0 to -40 º C. The element fluorine would work well except that it was toxic. He thus considered whether the fluorine could be rendered safe if it was bonded to some other elements to form a new compound. After all, hydrogen is dangerous all by itself as an element, but a reaction between two hydrogen atoms and a single oxygen atom results in relatively safe H2O. Likewise, fluorine would be rendered safe if bonded with chlorine and carbon. The seeming answer to the problem was CFCs — chlorofluorocarbons, with which GM tagged the brand name “Freon.”
Still, there was an issue of whether it might turn out later that CFCs did not function as well as they seemed. Hence, General Motors had a backup. Midgley and his team also considered another class of compounds — hydrofluorocarbons, or “HFCs” — that potentially bore the same beneficial qualities as CFCs without the same drawbacks. If ever there was an unforeseen problem with CFCs, then HFCs might serve as a replacement.
Because the gases in air conditioners and refrigerators had earned a reputation for being health hazards, in 1930 Midgley publicly demonstrated the relative safety of Freon. He lit a candle near the liquid. He boiled it in a bowl and inhaled the gases emerging from it. Then he blew the candle out. This presentation ended the public’s reluctance to purchase the new safe refrigerators and air conditioners.
Decades following Midgley’s death, other scientists discovered that sulfur dioxide emissions from the use of CFCs entered the Earth’s atmosphere and depleted the ozone layer. The federal government passed laws to phase out CFCs in the ensuing years. Yet, as science journalist Sharon Bertsch McGrayne notes, the HFCs that became the replacement in air conditioners and refrigerators in the 1990s were “all substitutes discovered by Midgley and his colleagues.”
In recent years, the HFCs have been blamed for posing yet another dilemma. Although they do not have the same effect on the ozone layer, they still contribute to greenhouse warming. Besides his invention of leaded gasoline, this is the other reason that Midgley has become widely denounced all over internet. For such reasons, it appears Pope Francis has revived the idea that this technology is sinful. He intones that the “growing ecological sensitivity” he desires in people still “has not succeeded in changing” the world’s most “harmful habits of consumption... A simple example is the increasing use and power of air-conditioning.” This is a vice that the pontiff deems “self-destructive.”
How capitalism itself can address the issue of greenhouse emissions from air conditioners and other machinery is a matter to which we shall revisit in Part Two.
With the public not yet conscious of ozone depletion or anthropogenic climate change, Midgley rendering air conditioners and refrigerators safe — at least in terms of coming into direct contact with them and handling them — was a boon to GM. This success had made Midgley a multimillionaire.
He was not able to enjoy his new wealth as much as he expected. Beginning in 1940, he was stricken with polio. He underwent intense physical therapy regularly in a swimming pool but he remained paralyzed from the waist down. Throughout his mansion, he set up a system of ropes and pulleys to help him go about independently. Yet one day his wife found him dead, strangled by these same hoists.
Many of the websites condemning Midgley frame this death as a fitting metaphor for the man’s life — Midgley was killed unexpectedly by one of his own inventions, just as he lacked the foresight on how his more-famous inventions would kill others.
Representative of this schadenfreude is YouTube presenter Matthew Santoro, who generally holds a reputation for being a nice guy. He cracks to his audience, “And I know a lot of you right now are like, ‘Aw, it should’ve been the lead poisoning that got him. That would’ve been poetic justice.’ And, to those of you, I say, ‘You’re kind of sick — and right.’” Yet chemistry professor and historian Carmen Giunta observes that Midgley’s own family and loved ones had concluded that Midgley had committed suicide with these ropes. The reason that they let the media report that this was an accident was that persons who killed themselves were stigmatized even more severely back then. By comparison, allowing the public to interpret Midgley’s death as an accident was to save face.
Furthermore, what is usually glossed over is that Midgley’s innovations in air conditioning and refrigeration saved lives very directly. This can be observed in the changes in heat-related mortality in Chicago over the course of a century. In 1901 in the windy city, there were 10,000 heat-related deaths. In 1955, that figure had dropped to 885. In the heat wave of July 1995, it was 300.
In 2016, a team of scholars including Carnegie Mellon economist Karen Clay published a scientific assessment of heat-related mortality in the United States throughout the twentieth century. The team found that between 1940 and 2004, the statistical risk of dying from heat in the USA on a day of over-90-º-F temperatures had fallen by over 60 percent. Between 1930 and 2004, the risk of dying from the heat on over-80-º days reduced by three quarters. And what was the major reason for this reduction? The team admits that the adoption of “residential air conditioning explains essentially the entire decline in hot day–related fatalities.”
It is fortunate, then, that this technology has become increasingly affordable to those of lower income. In 1950, less than 18 percent of all U.S. households could access this technology. By 1997, over 68 percent of U.S. households below the official federal poverty line now had air conditioning. By 2005, among those under the federal poverty line, it was over 77 percent.
Midgley has much to do with how, as was said by Aperion Care and as was published on the World Economic Forum’s website, 2 million lives have been spared of heatstroke from 1950 onward.
Sharon Bertsch McGrayne details how Midgley’s refrigerants saved lives through other avenues.
In his final public speech, “The Future of Industrial Research,” which he gave over the telephone, Midgley spoke these words that meet with disapproval
from almost every biographer who quotes them:
“Death Ray”? More Like “Life Ray” | Gordon Gould and the Laser | ^
Yet another invention that saves lives in a manner far from obvious is the laser. Had this invention remained under the control of the military, it probably would have not have been applied as anything other than a weapon. Thankfully, businesses have been able to adapt it for peaceful civilian purposes.
Lasers are essential to biometric scanners that take in biological data as their inputs. A laser scans an object and enters its reading into a computer that processes the data. This is what happens with bar codes at the grocery store checkout counter. It was by the same principle that Craig Venter relied upon such lasers when mapping the human genome — a development that, as we have learned, saves 5 million lives each year.
Lasers can also be employed in rescue efforts. When firefighters rush into a burning building, they do not know what obstacles inside will hinder them. Worse, the smoke obscures their vision. There would be some relief in having an updated-to-the-minute map of the structure’s interior prior to entry. Modern technology is making this possible.
Sonar (SOund Navigation And Ranging) works on the principle that the machine can measure the distance a sound wave travels before bouncing off an object. Through sonar, sound waves provide a three-dimensional map of an environment. Radar (RAdio Detection And Ranging) applies that same principle but uses radio waves instead of sound waves. Likewise, lidar (LIght Detecting And Ranging) does the same with laser light. As I type this, firms are working on arranging for lidar to provide 3D models of rooms for firefighters.
Lidar is also being utilized in self-driving cars. If this automation can reduce the rate of fatalities and injury on the road, still more lives will be preserved. Aperion Care anticipates that this application will eventually save 1.5 million lives annually.
Early patents on lasers came from the academicians Charles Townes and Arthur Schawlow. By 1957, engineer Gordon Gould developed his own plans that he would go on to patent. Then in 1960, Theodore Maiman built the first working model of a laser while employed at Hughes Research Laboratories, which did R-and-D for Howard Hughes’s defense contracting firms. Soon after this breakthrough, Maiman bristled at news media describing his creation as a “death ray.” The very following year, Hughes Aircraft already began studying the possible applications for lidar. Maiman would leave Hughes to found several other companies, such as Korad. At the time that Union Carbide purchased all of Maiman’s shares in Korad, the corporation had a personnel force exceeding a hundred people and annual sales greater than $5 million.
Gordon Gould won $46 million in his lawsuits over his patents, and made millions of dollars from other enterprises prior to that judgment being rendered.
That was how Gould, once a member of the Communist Party of the USA, became an arch-capitalist whose invention in subsequent decades would reduce the mortality rate.
In 1988, Gould provided his thoughts on his start as an independent inventor:
Gould’s $46 million is an appropriate reward for making possible the mechanism that would enable human genome mapping that would save five million lives per annum.
It is ironic, then, that this invention that is most commonly imagined and depicted in media as a lethal weapon has done much to extend human life.
Fritz and His Fertilizer | Fritz Haber, Carl Bosch, and Synthetic Nitrogen Fertilizer | ^
And there is something else that is ironic. Recall that a website frequently cited throughout this essay, ScienceHeroes.Com, was created by Billy Woodward to promote his book Scientists Greater Than Einstein. Although he describes himself as a “businessman” in the About the Author section, the book conveys its author’s unflattering impression of capitalism and for-profit enterprise.
Upon describing an action by Merck that he judges unethical, Woodward hisses that such an action is one “that those teachers who believe in Ayn Rand’s laissez-faire capitalism can teach in business schools and those who revere less the principle of selfishness can explore in ethics classes.” This disparagement is taken farther still on ScienceHeroes.Com.
The book’s final chapter argues that the private sector cannot and will not finance medical research adequately, and therefore there needs to be greater taxpayer funding of science. Woodward frames such “a choice for our future” as one of “Our Health” versus “Our Wealth.”
Yet in totaling the numbers of people saved by scientific projects, ScienceHeroes.Com provides information that is not completely consistent with Woodward’s generally unfavorable estimate of capitalist greed. The scientific endeavor that Woodward’s own website ranks as the one to have saved the most lives is . . . a for-profit venture.
This was the venture by Fritz Haber and Carl Bosch in the industrial production of synthetic nitrogen fertilizer. It is well described on ScienceHeroes.Com in two articles penned not by Billy Woodward but by one of the writers assisting him, April Ingram.
Even for reasons other than his commercialism, Haber is not someone who would normally be described as a humanitarian. Prior to the ascension of the Nazis, Haber was a fervent German nationalist, especially in matters of military conflict. During World War One, Haber eagerly assisted the German government in weaponizing chlorine gas to be dispersed on French soldiers. Yet, even considering his role as one of the founders of chemical warfare, Haber instigated a project that holds the record in number of lives saved.
In 1899, the British scientist Sir William Crookes warned that the farms of the West were exhausting all the nutrients of their soil. Soon, they would not be able to grow any more, and the starvation would result. Haber took this to heart. A decade following Sir William’s dire prediction, Haber formulated methods to produce synthetic fertilizer, ammonium nitrate. As an executive of BASF, Carl Bosch refined those methods and applied them on an industrial scale. This became known as the Haber-Bosch process, and it made its namesakes very rich.
Still, the ascension of the Third Reich doomed both these men. Although Haber was a Christian, the Nazis held his Jewish ancestry against him and banished him from practicing any science. This was a crushing blow to someone previously so worshipful of the German state. Bosch went to Adolf Hitler directly to plead on Haber’s behalf. The industrialist informed the führer that purging Jewish scientists would set the country back on physics and chemistry for a hundred years. To that, Hitler simply replied, “Then we’ll just have to work 100 years without physics and chemistry!”
As the Third Reich held a tight grip on the national economy, it was easy for Nazi officials to inflict reprisals on Germans who did not express sufficient enthusiasm for their governance. As Bosch was highly critical of the Nazis, he was gradually stripped of his duties at BASF. Bosch sunk into depression and alcoholism.
Even decades after their death, the process of Haber and Bosch continued to change the world. After the famines imposed by Mao Tse-tung’s communism, China under Deng Xiaoping applied the process and ended the starvation.
ScienceHeroes.Com admits that the for-profit venture of Haber and Bosch has saved “over 2.3 billion lives.” In a Wired article from 2013, Bill Gates informed his readers, “Two out of every five people on Earth today owe their lives to the higher crop outputs” that the Haber-Bosch process “has made possible.”
All of the cases we have studied were about someone becoming obsessed with some problem or mystery and, in an attempt to solve it, exercised creativity in such a manner that resulted in saving people’s lives. This gives the lie to the claim by famous anti-capitalist Noam Chomsky, himself a multimillionaire who uses tax shelters, that it takes a “lack of curiosity and independence of mind...” for someone to reach “the high end” of “income distributions...”
A “lack of curiosity and independence of mind” sure does not describe Katalin Karikó, Jennifer Doudna, Percy Julian, Patrick Soon-Shiong, or any of the other innovators who struck it rich.
Value Added to the Natural Resources | ^
The author hopes that by now the reader is convinced that there are many instances throughout modern history of for-profit enterprises contributing to the extension of lives and the comforts within them. Yet those who look askance upon capitalism and billionaires are probably not satisfied. They can proclaim that these instances of lifesaving by billionaires such as Patrick Soon-Shiong and George Yancopoulos do not remove an inherently self-destructive attribute from commercial activity.
It is frequently stated that the global economy runs on nonrenewable natural resources. Such nonrenewable resources include petroleum, coal, tungsten, lithium, and silicon. The total quantity of such resources used as raw materials in goods and services only grows annually. Once these resources are used up, it is said, that will be the end of civilization. The persistence of this belief is a major reason why millions of people nodded in agreement as activist Greta Thunberg went before the United Nations to prevail upon various heads of State to abandon their “fairytales of eternal economic growth.”
The belief also feeds into Alexandria Ocasio-Cortez’s looking wistfully on the prevailing bias against capitalism that intellectuals had in the period between 1930 and 1979. She longs for a return to that “one point in time” where there was “almost a full consensus among our greatest thinkers in America that capitalism had an expiration date. This Late-Stage Hyper-Capitalism society of ‘just accrue’? This capitalism as an ideology of capital? And that ‘our number-one goal is to maximize profit at any and all human and environmental costs’? They knew that the idea was not sustainable.”
If the amount of wealth and prosperity is nothing more than a direct function of the quantity of nonrenewable natural resources, then the amount of wealth that can be enjoyed does come in a fixed quantity. It may be said that even if Patrick Soon-Shiong’s development of nab-paclitaxel saved the lives of cancer patients, the benefits came at the expense of everyone else in society. The resources that went into fighting metastatic breast cancer, and that went into the big fancy toys that Soon-Shiong and Jonathan Rothberg bought for themselves, are resources denied to everyone else. If Soon-Shiong and Rothberg own and have direct access over a total eight billion dollars’ worth of resources, that is eight billion dollars’ worth of resources less for the rest of Earth’s human population, especially its poorest.
Hence Alexandria Ocasio-Cortez pronounces, “No one ever makes a billion dollars. You take a billion dollars.” (emphases hers).
And she continues that “this system that we live in — life in capitalism — always ends in billionaires. This thing that we live in, starves people.”
To wit, the richer the billionaire is, the more it “starves people.”
That capitalism staves people is an odd claim to the employees of agribusinesses. It would have been news to Carl Bosch.
Yet Dan Riffle, the policy advisor and senior counsel to AOC who stated, “Every billionaire is a policy failure,” reinforces his employer’s zero-sum interpretation. After pretending to understand that more economic value can be created, Riffle makes it known that he will continue to deny, arbitrarily, the logical ramifications of such a fact. That is implicit in his proclamation that “it’s certainly the case that the bigger Jeff Bezos’s and Bill Gates’s slices of the pie are, the smaller everybody else’s slices of the pie are going to be.”
This is the same idea behind Bernie Sanders’s notorious proclamation, “You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country.” Bernie’s presumption is that the resources that went into producing the twenty-three different types of deodorant and eighteen models of athletic shoes were resources that otherwise would have gone into feeding kids starving in the USA. The number of choices in hygiene canisters and fancy footwear is inversely proportional to the ability of America’s youngsters to have enough to eat.
The belief has been expressed by Percy Bysshe Shelley in words that would become cliché soon after they were published: “The rich have become richer, and the poor have become poorer...”
That slogan’s enduring popularity derives from a flagrant misunderstanding of the nature of wealth. The wealth that distinguishes a grand living standard from an inadequate one has less to do with monetary units than with the goods and services for which those monetary units are exchanged. More than that, that wealth is not an inherent function of the quantity of nonrenewable natural resources available. Instead, wealth is in the efficiency of the methods employed to derive life-enhancing value from such resources. It is therefore fitting that the term capitalism comes from “capital,” which has its origin in the Latin capita, meaning “head.” It is fitting because entrepreneurial innovators must use their noggins to conceive and implement such strategies to improve the efficiency by which the natural resources are used.
Alexandria Ocasio-Cortez blares, “Usually if you’re a billionaire, it means that you control a massive system. It means that you own oil supplies. . . . And to be ethical — if you’re a billionaire today — the thing you need to do is give up control and power” over those resources.
She talks as if petroleum was always inherently worth being in everyone’s control collectively, and then a small cabal of billionaires came and usurped that control all for itself. In reality, the default was a gallon’s worth of crude oil in the Stone Age and even the 1700s was of relatively little advantage to anyone. From the Middle Ages to the eighteenth century, farmers hated it when they found the black sludge. The foul-smelling goop seeped and damaged their crops. The presence of oil on their land only reduced marketplace demand for the property. Striking oil only became a plus and not a minus when Canadian geologist, chemist, and entrepreneur Abraham Gesner discovered and publicized the properties of petroleum that made it an ideal as a source of fuel, one rivaling the utility of whale oil.
That is, a gallon’s worth of crude did not have an inherent value. It gained value subsequent to the fulfillment of two conditions. The first condition was for a scientist such as Gesner to apprehend how that crude oil can be made useful for human beings. And even the fulfillment of that first condition, by itself, was not enough. Once Gesner established that kerosene could be isolated from crude, and that kerosene could light a lamp, that still would not ultimately help anyone who wanted to light a lamp if not for someone bothering to separate the kerosene from the rest of the gunk.
There was nothing obvious about it. That brings us to the second condition that had to be fulfilled for the petroleum to become valuable — someone had to bother undertaking the task of separating the kerosene from the crude and bringing it to market. As anyone with unfulfilled dreams can attest, dreaming up a great plan is a cinch in comparison to following through on it and keeping the commitment. In this instance, someone had to bother setting in motion the separation.
The follow-through on an endeavor so complex often takes the effort of a team of specialists that must be directed by a leader who, while not knowing everything a specialist does, retains a contextually adequate understanding of those differing areas of specialty. The follow-through needs a leader who can take into account that adequate understanding of those different specialized areas and integrate all the comprehension into a plan that the leader must commit to executing. And it is the leader who assembled that team in the first place. The leader must wrangle the engineers who design the equipment that the laborers will operate manually. The leader must instruct both sets of employees so that each set complements the work of the other. That is the entrepreneurship introduced by pioneers in the industry such as Abraham Gesner and George Bissell, and which was taken to a more sophisticated level by John D. Rockefeller, Sr.
Even as kerosene was isolated from the crude, Rockefeller noticed that the rest of this black glop was going to waste. He sought out and cooperated with experts who could discover uses for the rest of the substance. Then he sought out and cooperated with experts who devised the practical methods for making this waste into problem-solving products in their own right. Then he sought out and cooperated with parties who would conscientiously implement those methods. Rockefeller had to keep his eye on the big picture in the whole operation even as he had to ensure that every specific separate task in the operation went smoothly. He did this more competently than anyone before him did — cutting down the waste of every input of natural resource — and that is how he became the first billionaire in American history.
An example of the waste reduction has to do with sulfur. Much of the crude was found in sulfur deposits. Refiners such as Rockefeller were desperate to separate the kerosene they needed from this sulfur. But Rockefeller suspected that this sulfur could serve a valuable function as well, even if that function was not yet known. Ancient Romans collected it to heat baths, but no one had yet an ability to collect giant quantities of sulfur and apply it to an industrial purpose. That was until Rockefeller sought the assistance of German immigrant Herman Frasch.
Not only did Frasch remove the kerosene from the sulfur; he figured out new industrial sequences for extracting giant quantities of sulfur from natural deposits. Upon recognizing an underground sulfur deposit, he pumped giant quantities of heated water into it. The heated water liquefied the buried sulfur. Then Frasch blew compressed air into the deposit to push the sulfur up the well.
This newly accessible sulfur turned out to be an important ingredient in the first widely used antibiotic, sulfa, which went by the brand name of Prontosil. This medication saved thousands of soldiers’ lives during World War One.
As a consequence of his achievements, Rockefeller purchased Frasch’s patents and made him Standard Oil’s director of research. The German’s net worth at the time of his death in 1914 was $5 million, $128 million in 2018 U.S. dollars.
It was not obvious to Stone Age people that sulfur could be of use to them. It was a nasty, foul-smelling chemical. It took forward-thinking entrepreneurs to transform such a con into a pro. And this principle applies to so much more than petroleum and sulfur. The economic usefulness of various natural resources generally is far from obvious when those natural resources are first encountered.
It was not obvious to the ancient humans who first encountered petrified tree sap that one day it could be placed in telegraphs to have them transmit electrical signals. Nor was it obvious to the first caravans that the sand over which they traveled could be converted into cables that one day would enable one person to communicate instantly to someone else on the other side of the planet. And it was not obvious to the humans who first observed lithium that such a metal would be an excellent conductor in tiny rechargeable batteries powering telephones and computers fitting in their pockets. Nor was it obvious that such a metal one day would be invaluable to keeping hearts pumping, as do the lithium-iodide batteries in Wilson Greatbatch’s implantable pacemakers.
The extension or improvement of life that someone gets out of a good or service is what can be called “economic value.” That is wealth in its most direct form. And this economic value is not fixed and intrinsic to units of natural resources. It is instead to be found in human methods for making use of those resources. This realization was made at least as far back in time as the works of pioneering Enlightenment philosopher and medical scientist John Locke.
In Chapter 5 of his Second Treatise of Government, Locke points out that insofar as people want to a relatively decent life, scrounging in an untamed wilderness will not be adequate. Among hunter-gatherers who, for over 95 percent of our species’ history, tried to live off the land, there has been an infant mortality rate of 25 percent.
It is often claimed that observations of such hunter-gatherers having an average lifespan of 30 years is misleading. It is the high infant mortality rate that drags down the average, it is said, which would be much higher if not for that infant mortality rate.
To such a statement, it must be replied that the high infant mortality rate is not unimportant, especially to those of us who have children. Secondly, even among hunter-gatherers who survived infancy, the mode age of death was lower than that of modern industrial people. We will revisit this topic near the essay’s conclusion.
In accordance with Locke’s train of thought, it is the case that, to the extent that settlers in the wilderness want their homesteads to have an infant mortality rate far lower than 25 percent, they must make changes to this land. A farmer must dig crops and irrigate the terrain. Locke referred to such changes as “labor,” which Karl Marx and his followers tried to misconstrue as mere physical labor with one’s muscles, the sort of labor performed by a factory’s rank-and-file. Locke did not deny the importance of a homesteader making physical use of her muscles, but implicit in Locke’s argument is an even more important and value-adding form of labor. That would be intellectual labor. That is the intellectual effort of selecting which crops to plant during which seasons and of planning the routes of irrigation.
The “extent of ground is of...little value,” Locke wrote, in the absence of this creative entrepreneurial planning. In his mind,
The economic value that a business produces for its customers is called “output.” “Inputs” refer to the resources that must be used up in the process of generating the output. Inputs include both human labor and the natural resources that the operation entails.
As a firm must trade its own assets to acquire any input, every input adds to the firm’s expenses unless the firm is able to shift such expenses forcibly onto other parties. One example would be for the firm to steal its resources from someone else. That is consistent with the caricature of corporations being evil, but it actually clashes against the very principle of capitalism. Capitalism is contingent upon the enforcement of private property rights. To the extent that a firm coercively plunders someone else, the firm behaves in opposition to capitalism itself. Plunder is stopped to the extent that private property rights — and, with them, capitalism — are enforced consistently. We shall revisit that principle by the essay’s end with respect to pollution and industrial contributions to climate change.
Another method whereby a firm can elude paying the costs of its inputs is for the firm to receive direct taxpayer funding. Insofar as the firm successfully lobbies for this to happen, the firm is redirecting its own expenses onto the taxpaying public. This coercive redistribution is not pro-capitalism nor is this even, as it is often pegged, “pro-business,” “pro-corporation,” “corporationism,” or “corporatocracy.” The costs of a particular business or corporation may be reduced, but this is the result of resources being snatched from the owners of still other businesses and corporations. It is illogical to label this as if it were free capitalist enterprise, as that coercive intrusion leaves those other parties unfree to capitalize on their own enterprise. That is not pro-business any more than the State privileging one human at the forcible expense of another is “pro-human.” In effect, inasmuch as we want businesses to pay their own way, we must oppose direct taxpayer subsidies to them, even ones that perform work as salutary as Moderna’s.
To the extent that people are free and their private property rights are enforced, every input in an entrepreneur’s operations imposes a cost upon that entrepreneur. Thus, the entrepreneur downsizes her costs, and thereby upsizes her profits, insofar as she employs new techniques for producing at least as much economic value as she did before from ever-smaller and ever-fewer inputs of labor and natural resources. And she can also cut costs by producing at least as much economic value from smaller and fewer inputs of tools and machinery. Those tools were created by still other entrepreneurs in prior efforts at coordinating the laborers’ interactions with the natural resources. Hence, everything ultimately comes down to getting more value out of smaller quantities of labor and natural resources.
Since the late twentieth century, this argument has been most commonly associated with economist and business management professor Julian L. Simon, first in 1980 in the journal Science and then more famously in his classic book The Ultimate Resource. However, he was not the first intellectual to advance it. Decades before him in Denmark, from her own research the agricultural economist Ester Boserup induced similar insights. The power of her arguments has been noted even in the Proceedings of the National Academy of Sciences (PNAS). And the general idea behind the argument was advanced over a century earlier by Jean-Baptiste Say in a series of letters he wrote to that prophet of resource depletion, Rev. T. Robert Malthus. These letters were published for the public in 1821.
Such arguments have often been written off by the establishment. But someone co-won the 2018 Nobel Prize in economics for making a very similar case in mathematical form, Paul Romer. Romer is much fonder of taxpayer-funded basic research than Simon was, and there are issues with his presumption that scientific knowledge is a “public good” that cannot and should be privatized. Still, Romer is entirely correct in agreeing that the application of the human mind to improving efficiency in resource usage is the true creator of economic value and that it does the opposite of deplete mindlessly all the Earth’s resources.
Frustratingly, such considerations do little to deter those of a particular political ideology from intoning ominously that the size of the human population will outstrip the Earth’s bounty. These people dismiss, as naïve, the notion that firms can simply boost their profits by improving efficiency and reducing waste. Those people scoff because they grossly underestimate the extent to which, throughout history, such efficiency improvements and waste reductions have been a major source of growth in profits.
A case study of this is to be found in the evolution of electric dynamos. The power plant that Thomas Edison finished constructing in 1882 on Pearl Street in Menlo Park, New Jersey, had six Jumbo dynamos. Each of these dynamos weighed 54,000 pounds and generated 100,000 watts. That is 1.85 watts of electricity generated per pound of machinery. By contrast, a gasoline-powered 10,000-watt dynamo constructed by the firm Briggs and Stratton in 2020 generated 34.7 watts per pound.
Edison’s total investment in the Pearl Street power plant was $600,000. In 2020, U.S. dollars, that comes to $17.28 million. Hence, Edison generating 600,000 watts would cost him, in 2020 U.S. dollars, $28.80 per watt generated. In 2020, an entrepreneur could buy sixty Briggs and Stratton generators, each for $2,000. For that entrepreneur in 2020, generating a single watt of electricity would cost 20 cents.
Here we find that, due to efficiency improvements, a single pound’s worth of material comprising a dynamo in the year 2020 could generate more than eighteen times as many watts in electricity as Edison’s dynamos could, and at less than one percent of the cost.
And that is far from all. Consider the nonrenewable natural resource that is coal. Every few years during the early twentieth century, engineers introduced another model of coal-burning machinery that exerted greater thermal efficiency than did the older models. In the year 1900, more than seven pounds of coal had to be burned to power a 100-watt lightbulb for one hour. By the year 2000, for that same lightbulb to perform that same task required burning less than a single pound.
That principle can be expressed through other figures. Lumens are the units by which light is measured. In the year 1898, one watt powering an incandescent lightbulb would produce six lumens. In 1920, that watt produced ten lumens. In 2003, it would be 200 lumens.
That is less and less coal per lumen.
Recall the point from earlier about Edison’s dynamos. In 1898, a single pound’s worth of Edison’s dynamo would generate 11.16 lumens. By 2003, a single pound’s worth of a Briggs and Stratton dynamo could supply 6,940 lumens. In a little over a century, then, the number of lumens generated by that single pound of material had grown over 600-fold.
Indeed, steel has been used more efficiently over the course of the century. Over 68 percent of the steel put to work in the U.S. economy is recycled annually. When this alloy is newly produced and is being installed for the first time, it is called “virgin steel.” That is treated more economically as well. Steel still goes into automobiles, but not exactly in the same fashion as in previous decades. That is one reason why the weight of automobiles dropped by one fourth between the years 1970 and 2001. For such reasons, between the years 2000 and 2015, even as there was an increase in the quantity of products containing steel, total use of the alloy in the United States fell by 15 percent.
Virgin steel is set to work more efficiently than before and, in turn, it is produced more efficiently as well. Producing steel has always required that iron be heated to the extent that it takes on a molten form. At the opening of the nineteenth century, producers had to burn an average seven tons of coal to churn out a single ton of “blister” steel. This changed in 1856 with inventor-entrepreneur Henry Bessemer introducing the process named for him, wherein cold air would be blasted upon the super-heated iron. Then it took no more than 2.5 tons of coal, in super-heated “coke” form, to finalize a ton of higher-quality “crucible” steel. By the year 2020, putting out that same ton of steel required less than 0.86 tons of coal.
And coal is not the only resource being inputted more economically in steelmaking. Between the years 1930 and 1949, making a single ton of steel cost an average 200 tons of water. That figure decreased to 20 tons by the 1980s. By 2018, the most efficient plants could make a ton of steel from three to four tons. For-profit enterprises have produced technological improvements that conserve water in other aspects as well. Before 1997, the Oberti Olive Plant had to deplete over 10,000 gallons to turn out a single ton’s worth of product. Between 1997 and 2002, the same plant only had to consume 859 gallons to deliver that same ton.
In decades past, the flush of a toilet drained an average 20 liters. In 2018, that same flush drained six liters or fewer.
For most of the USA’s history, the total quantity of water used daily steadily increased. But that peaked around the year 1975 at 425 billion gallons per day. From then on, the quantity of water Americans washed down daily remained relatively stable, even as the population and industrial output both grew. From 1984 to 2004, the USA’s per-capita water usage actually dipped by twenty percent.
In the 1970s, every cubic meter of water consumed in Hong Kong generated an average 500 Hong Kong dollars’ worth of economic value. Adjusting for inflation, by the year 2000 that same cubic meter of water yielded twice as much Hong Kong dollars’ worth of wealth. Figures from the heavily populated areas of the United States point to a coinciding trend. In the year 1975, every cubic meter of water inputted for industrial purposes yielded, in 2004 U.S. dollars, an average eight dollars in utility. By 1999, also in 2004 U.S. dollars, that figure doubled.
Gasoline is another nonrenewable input that the market conserves. The inventor and engineer Soichiro Honda, for whom the famous auto company is named, thought that motorists deserved more out of their driving experience. He assembled a team of engineers, including future Honda president Tadashi Kume, to put out a more economical car, the Honda Civic with its CVCC engine. In 1973, before the CVCC engine existed, a motorist could travel 12.9 miles on a single gallon of gasoline. Starting in 1975, upon release of the CVCC, that same gallon would take that same motorist six miles farther. In 2014, that same gallon would take a car farther than 21 miles.
The trend has continued with electric vehicles. When the Tesla Model S came upon the market in 2012, it had a range of 250 miles per charge. By contrast, the Tesla Model S with a Long Range Battery Pack from 2021 had a 390 mile range per charge. Complementarily, in the Nissan LEAF, between 2011 and 2020 the range almost tripled with the number of miles per charge increasing from 73 to 215.
The automobile engines of 2002 were twice as powerful as were those from thirty years earlier. Yet they emitted half as much in exhaust fumes.
Other modes of transportation undergo the same evolution. Compared to one from 1970, a Boeing 747 commercial airliner in 2002 was half as loud and consumed 17 percent less fuel even as it worked at a quarter more horsepower at takeoff. In the duration of 1960 to 1990, the thrust-to-weight ratio in commercial jet engines increased from 4.2 to six. Similarly, between 1940 and 2000, the thrust-to-weight ratio of the gas turbines in these same airplanes lifted from 15 percent to more than 40 percent.
Pollutants that firms release into the air and water are waste byproducts — those are the part of the input that cannot be put into production. As firms gain in efficiency and put every part of the natural-resource input into production, that reduces the waste and therefore reduces the pollution. That is why in both the United States and United Kingdom, firms had been reducing their emissions of toxins in the air even prior to these countries each passing their own particularly strict Clean Air Act.
Nikola Tesla invented the polyphase induction motor with which Westinghouse transmitted his high-voltage alternating current over miles. As, in his old age, Tesla frittered away his wealth on an unworkable scheme and continued to live expensively in the Hotel New Yorker, Westinghouse took care of him. Subsequent to George Westinghouse’s death in 1914, executives from his company continued to pay $125 monthly to cover Tesla’s room and board.
the only man on this globe who could take my alternating system under the circumstances then existing and win the battle against prejudice... He was a pioneer of imposing stature, one of the world’s true noblemen of whom America may well be proud and to whom humanity owes an immense debt of gratitude.
Pasteurization had yet to become widely adopted. In the 1850s, Americans could consume milk only as it was raw. A devoutly religious entrepreneur named Gail Borden saw the disastrous consequences of this failure in sanitation up close during his efforts to market a different product, a dried meat biscuit he promoted at the 1851 London World’s Fair. On the ship voyage home to New York, he could not help but notice the dairy cows aboard the vessel for the passengers. Drinking the raw milk made many of the children sick; some died.
Just as George Westinghouse availed to people a safer way to protect themselves from the cold, Thomas Midgley availed to them a safer way to protect themselves from the heat. He did this through his improvements to air conditioning and refrigeration.
His safe refrigeration freed us from levels of food poisoning now known only in developing countries. Without Thomas Midgley, millions of infants would have died of diarrheal diseases, vaccination would have been ineffective, and fresh food could not be shipped around the world.
McGrayne notes that prior to 1931, vaccines kept at room temperature were effective for no longer than one week. As a repercussion, the one for smallpox was the only vaccine used routinely; the others were not because they expired too quickly. Conversely, subsequent to 1931, it was Midgley’s safe refrigeration that made it possible to preserve vaccines. It was Midgley who made possible the sweeping vaccination campaigns beginning in the 1940s. It was Midgley who made it possible for Kenneth Murray to save 15 million lives from hepatitis B, for David Hamilton Smith and Porter Anderson to save 5 million from Haemophilus influenzaea type B, and for Paul Offit to save 2,000 a day from rotavirus.For this reason, Sharon Bertsch McGrayne reminds her readers that Midgley’s safe refrigeration itself has “saved millions of lives.”
Some of those millions could be in an area she had not mentioned. Once blood is donated, it is preserved through safe, nontoxic refrigeration. ScienceHeroes.Com attributes the saving of 1.1 billion lives to blood transfusions. Many of those transfusions would not have taken place had it not been for Midgley’s initiatives.
We are the only species of living creatures that even conceives of exerting any control over the environment thrust upon it. Admittedly, this control is far from complete. Its extension is greatly to be desired.
Yet another invention that saves lives in a manner far from obvious is the laser. Had this invention remained under the control of the military, it probably would have not have been applied as anything other than a weapon. Thankfully, businesses have been able to adapt it for peaceful civilian purposes.
It’s certainly true that the amount of knowledge in almost any field of science is getting enormous, and that tends to support the idea of teams. But there are still a few areas where I can imagine big breakthroughs coming about through the work of one or two individuals.
He also worried about the “dead weight created by all that red tape” that the State imposes on technology. “Government regulations are even worse than industrial lab regulations at deadening invention, and they certainly deaden entrepreneurship.”
And there is something else that is ironic. Recall that a website frequently cited throughout this essay, ScienceHeroes.Com, was created by Billy Woodward to promote his book Scientists Greater Than Einstein. Although he describes himself as a “businessman” in the About the Author section, the book conveys its author’s unflattering impression of capitalism and for-profit enterprise.
PART TWO: HOW, CUMULATIVELY, BILLIONAIRES SAVE BILLIONS OF LIVES | ^
The author hopes that by now the reader is convinced that there are many instances throughout modern history of for-profit enterprises contributing to the extension of lives and the comforts within them. Yet those who look askance upon capitalism and billionaires are probably not satisfied. They can proclaim that these instances of lifesaving by billionaires such as Patrick Soon-Shiong and George Yancopoulos do not remove an inherently self-destructive attribute from commercial activity.
...let any one consider what the difference is between an acre of land ...sown with wheat or barley, and an acre of the same land...without any husbandry upon it, and he will find, that the improvement [by creative entrepreneurial initiative and invention]...makes the far greater part of the value. . . ....let us but trace some of the ordinary provisions of life, through their several progresses, before they come to our use, and see how much they receive of their value from human industry. ...whatever bread is more worth than acorns,...and cloth or silk, than leaves, skins or moss, that is wholly owing to...industry; the one of these being the food and raiment which unassisted nature furnishes us with; the other, provisions which our industry and pains prepare for us, which how much they exceed the other in value, when any one hath computed, he will then see how much labour [creative entrepreneurial effort] makes the far greatest part of the value of things we enjoy in this world: and the ground which produces the materials, is scarce to be reckoned in, as any, or at most, but a very small part of it . . . [emphases Locke’s].
Following in Locke’s intellectual tradition were two French intellectuals who explained this as well, and whom Thomas Jefferson resultantly identified as being even more sophisticated in their understanding of political economy than was Adam Smith. These men were Jean-Baptiste Say and his mentor Antoine-Louis-Claude Destutt de Tracy.
Jean-Baptiste Say starts off by elucidating that “the mass of matter, of which this globe consists,” is not “capable of increase or diminution.” This is for the reason that entrepreneurial humans “neither create nor destroy a single atom.” Thus, what make the difference in enriching human beings beyond Stone-Age subsistence, Say reckons, are, first, the rational mind’s understanding of nature, and, second, the rational person’s practical application of that comprehension. “What is the whole of our industry, but the employment of the laws of nature? It is by obeying nature, says [Sir Francis] Bacon, that we learn to command her” (emphasis Say’s).
Rather than produce a net increase in matter in the universe, what entrepreneurial creativity does is apply practical original designs to “re-produce existing materials under another form, which may give them a utility they did not before possess, or merely enlarge one they may have before presented.” The latter method is for the entrepreneur to take an existing invention and improve its efficiency in its consumption of natural resources. Say continues that the entrepreneurial implementation of practical original designs, then, “is a creation, not of matter, but of utility; and this I call production of wealth” (all of the emphases were Say’s).
Antoine-Louis-Claude Destutt de Tracy was cognizant of this as well:
These intangible designs, so appreciated by Say, are codified in patents. On account of this, despite his falling prey to several fallacies I debunked elsewhere, Say acknowledges that patents are something “no one can reasonably object to...” In the end, patents are something from which consumers in particular and human beings in general “derive prodigious advantage.”
That the the entrepreneur’s planning and coordination of production adds a net increase in value to resources is an important consideration missing from AOC’s tirades. If more than half of the oil resources are controlled by entrepreneurs such as Gesner and Bissell, and later Rockefeller, it is because they are the ones who made the hard choices that gave more than half of the oil resources the value that they have.
And as efficiency improves, a person can obtain just as much — or even more — economic value from a good or service even as smaller quantities of resources need to be used up in the provision of this good or service.
Natural Fact One (of Two): Resource Substitution | ^
Insofar as individuals are free to enterprise peaceably, several facts of Nature guard against the depletion of resources. The first fact is that many different types of resources can be applied for the same use. That means that as one resource used for a particular purpose grows scarcer in current availability, human beings can switch to an alternate resource to substitute it. That is not unlike Dr. Kati Karikó’s substituting pseudo-uridine for uridine in her mRNA vaccines, and not unlike Moderna president Stephen Hoge substituting the MERS spike protein for the SARS-CoV-2 one. For much of the nineteenth century, people harvested liquids from sperm whales to light their lanterns. It was as whales grew scarcer and their oil gained in price, that Abraham Gesner discerned that kerosene could be marketed as a cheaper substitute. And copper provides another example.
Since the nineteenth century, copper wire had been used to conduct electricity in telecommunications equipment. It was in telegraph wires and then telephone lines and eventually in satellites. From 1960 to 1969, the price-per-pound for copper climbed, in 2020 U.S. dollars, from $2.83 to $3.35. This motivated firms to search for a cheaper substitute. In 1970, three engineers from Bell Laboratories found it in the form of fiber-optic cables made from glass that itself came from sand. To this day, copper continues to be installed in satellites and other telecommunications equipment, but many parts previously cast from copper have been replaced by the fiber-optics. The inflation-adjusted real price of copper then decreased again. By 1990, copper was priced, in 2020 U.S. dollars, at $2.44.
This ability to make use of substitutes has done well to hold off the depletion of resources.
The excellent 1987 book The Doomsday Myth, by Charles Maurice and Charles W. Smithson, provides case studies of such a phenomenon throughout history. During the 1600s, the British stopped burning wood to heat their homes and opted for coal. In the late nineteenth century America, railroads used less timber for tracks and used more iron and steel. Amid World War Two, the shortage of rubber trees led American engineers to produce synthetic rubber from petroleum. It was also from this book where I learned the details of whale oil being phased out in favor of kerosene to light lanterns.
Even the advent of agriculture illustrates this principle. For ancient hunter-gatherers, the price of food was the hard work it took to hunt and forage. This drove many species to extinction, and led to food shortages. The cheaper substitute was for the farming of grains to become the main source of sustenance.
Interestingly, the real price of copper has again ascended throughout 2021 and 2022. Insofar as engineers are free to innovate, we may again witness engineers devising still other replacements for copper in machinery.
Natural Fact Two (of Two): Greater Utility From Fewer and Smaller Inputs | ^
...whence come all...goods? . . . It is from the just...employment, according to the laws of nature, which we make of our [rational] faculties. . . . We do not possess a good field or a good utensil, but because we have well recognised the properties of the first material, and rendered easy the manner of making it useful. We have no provision whatsoever, or even a shelter, but because we have simplified the operations necessary for forming the one, or for constructing the other. It is then always from the employment of our [rational] faculties that all these goods arise.
In the process of converting natural resources to useful products, Say observes, “all that we add” to the natural resources themselves is rationality-based “change” to the “combinations” by which those resources are composed, a change that results in a net increase in economic “value...”
Insofar as individuals are free to enterprise peaceably, several facts of Nature guard against the depletion of resources. The first fact is that many different types of resources can be applied for the same use. That means that as one resource used for a particular purpose grows scarcer in current availability, human beings can switch to an alternate resource to substitute it. That is not unlike Dr. Kati Karikó’s substituting pseudo-uridine for uridine in her mRNA vaccines, and not unlike Moderna president Stephen Hoge substituting the MERS spike protein for the SARS-CoV-2 one. For much of the nineteenth century, people harvested liquids from sperm whales to light their lanterns. It was as whales grew scarcer and their oil gained in price, that Abraham Gesner discerned that kerosene could be marketed as a cheaper substitute. And copper provides another example.
Yes, continue the enemies of capitalism, human being can use their engineering know-how to substitute a scarce resource with a more plentinful one. Still, they ask, how does economics reward entrepreneurs from guarding against the depletion of nonrenewable natural resources on the whole? The answer has to do with the entrepreneurs’ costs being a function of the quantity of natural resources they drain. Thus, we come to the second pertinent fact about preventing the depletion of resources. As humans gain a greater degree of scientific knowledge about their resources, they are indeed able to improve the efficiency of how these resources are expended. And this principle applies even when a more abundant resource cannot be acquired as a substitute for a scarcer one.
↑ Profit = Economic value to customers (Revenue from sale) – ↓ Cost of natural-resource inputs
That involves the development of technologies that improve efficiency.
A doubter might say, “Maybe for every unit of a good produced, less of a particular substance is used. But it doesn’t follow that, in the end, smaller quantities of matter as such are used per unit produced.” Actually, it does follow. That is demonstrated in the reduction of the total mass per unit for particular goods.
A ten-story office building constructed in the year 1999 weighed less than one constructed in 1890. Former Federal Reserve chair Alan Greenspan explains the reasons for this. “Advances in architecture and engineering, as well as the development of lighter but stronger materials, now give us the same working space but in buildings with significantly less concrete, glass, and steel tonnage than was required in an earlier era.”
In 1992, he also noted, “Our radios used to be activated by large vacuum tubes; today we have pocket-sized transistors to perform the same function.” The development of these transistors was responsible for an even more drastic change in the size of computers.
In the 1950s, a mainframe would take up the space of an entire room, sometimes even an entire building. In 2020 U.S. dollars, the cost of assembling and maintaining such a machine was in the millions. A single digital watch today priced at $35 exercises more computing power than did any of those mainframes. A pocket calculator from the year 2000 already computed 350 times faster than did the computers involved in the Apollo 11 mission. Inventor-engineer-entrepreneur Ray Kurzweil makes an even more impressive comparison. He says that in the 1970s, considering the state of technology at the time, it would have taken trillions of U.S. dollars’ worth of resources to build a computer with the same amount of computing power as those of the smartphones that African villagers were carrying around in 2013.
Speaking of mobile phones, from 1990 to 2011, the average weight of one shrank from twenty-one ounces to four ounces. That is, a mobile phone from 2011 was less than one-fifth the weight of one from two deaces prior. Much of this trend has to do with the aforementioned improvements in efficiency of the lithium-ion batteries inside these mobile devices. Between 2008 and 2015, the quantity of kilowatt hours generated per liter of lithium-ion doubled from 200 to 400. And between 2010 and 2017, the quantity of watt hours per kilogram of lithium-ion almost tripled from a little over 100 to 300. Stated in other terms, a mobile phone manufactured in 2015 could perform the same tasks as one from 2008 on just half the amount of lithium.
Using the weight as a proxy in measuring mass, we can discern that a particular product today can produce the same output as that product’s counterpart from decades ago even though the product of today uses up a smaller quantity of mass from natural resources.
That is visible in a case we mentioned earlier, that of Jonathan Rothberg’s portable and wheeled MRI machine, the Hyperfine Swoop. Compared to a standard MRI scanner from 1977, Rothberg’s Swoop is ten times lighter in weight and consumes 35 times less energy.
This likewise happens with household tools. The first power drills came out in Germany in 1895. Each weighed seventeen pounds and was only slightly more powerful than a hand-cranked drill. To operate it, someone had to grab its two handles and hold it up to one’s chest. The on-off switch was far away from the machine. To turn it off, the operator had to take his hand off the tool itself. That way, the operator could lose control of the machine and injure himself. In 1917, the American inventors Samuel Duncan Black and Alonzo G. Decker, Sr., introduced a variant that was eight pounds — less than half that of its predecessor — and was easier to use. It had a trigger like a gun that, when pulled, turned the drill on. They priced it at $230, which is over $5,000 in 2020 U.S. dollars.
By 1921, Arno H. Petersen made a version that was still more ergonomic. Instead of putting the trigger where it would go on a gun, Petersen put it on a handle behind the motor. This put less stress on the forearm of the person operating it. And it was four pounds, and sold each unit at $42. That is $609.32 in 2020 U.S. dollars. Petersen’s version, christened the “Hole Shooter,” serves as the general model for those being manufactured in 2022, being roughly the same weight and largely the same in design. In short, the power drills at the time of this writing generate the same output as those from 1895 but are less than a quarter of their weight and sell for less than one percent of their real price.
In 2001, science journalist Ronald Bailey provided other examples of consumers receiving the same or greater economic value from products that consisted of less mass, overall, than did their counterparts from prior decades. That year, food cans were half the weight that they were in 1951. Likewise, plastic soda bottles were only seventy percent the weight of those being sold in the 1970s, and the ones from the 1970s were already lighter than the glass bottles they replaced. And Ronald Bailey returns to our example of copper wire in satellites giving way to fiber-optic cables.
We can dispel any notion that the reduction in the quantity of one category of natural-resource inputs in every unit produced simply shifts to an increased used of a different natural-resource input for that unit. We can do so by examining how much energy altogether is expended on creating an average unit of economic value. This can be done by looking at overall energy intensity. This is how much energy in total — coal, oil, nuclear, and renewables combined — go into the production of economic value. Energy intensity measures the quantity of megajoules that had to be generated to produce an average inflation-adjusted dollar’s worth of economic value. A reduction in the energy-intensity ratio over time means that smaller and smaller quantities of natural resources must be converted into energy to generate the same amount of economic value.
And that is what we find. From 1880 to 2000, the number of megajoules that had to be generated in the USA to bring forth a constant 1990 U.S. dollar’s worth of economic value shrank from 50 to 15. For the United Kingdom in the year 1830, 35 megajoules had to be generated to produce a constant 1990 U.S. dollar’s worth of value. By the year 2000, it was 15.
It may be said that even if a specific unit of a good has shrunk in mass, such as computers getting smaller, the total quantity of natural resources consumed annually has expanded on account of the number of units produced growing annually as well. But, no, the improvements in efficiency have even preempted a major increase in the total quantity of natural resources consumed per year.
Economists calculate the weight of all the goods and services circulating through the U.S. economy. Once again, we use the weight of objects as a proxy in measuring their mass. Alan Greenspan notes that since 1977, the estimated real goods output of the United States annually has maintained a relatively stable weight.
It reached high points of 1.2 billion metric tons in the separate years of 1979 and 2013.
Rockefeller University scholar Jesse Ausubel writes that among 100 commodities studied by Paul Waggoner, Iddo Wernick, and himself, the total annual usage of 36 of them —including steel, timber, paper, asbestos, and chromium — peaked in 1970 and then dropped off since then.
All this happened even as the American economy experienced a net growth since 1979. The increase in wealth is due not to the natural resources themselves as much as how smartly those natural resources are being utilized.
The Carrying Capacity of Land | ^
“That may be all well and nice,” one reply may go, “but there is still an important commodity of which you cannot produce any more units, no matter how cost-effective are. There really is a fixed quantity of land. Its carrying capacity —the number of people who can safely fit on it and live — is finite.” Yet market economics have indeed increased the carrying capacity of that. This is in two respects. First, technological improvements have allowed for a larger number of people to live peaceably on the same square acreage as before. Secondly, the same plot of land can grow greater quantities of food than it has in centuries past.
Let us first begin with how technological innovation has enabled a greater quantity of people to live and work on the same the square footage of land. Throughout the nineteenth century, the U.S. population grew for two reasons. First was the influx of immigrants from Southern and Eastern Europe, masses seeking new opportunity. Second was that the improvements in living standards from industrialization were already beginning to reduce the death rate. Yet this led not to crowding alone but also an increase in the real price of housing. Rents would go up. Entrepreneurs observed that profit was to be made by finding a novel solution to this. It would come in the form of a change in housing itself.
For much of the past several thousand years, human beings had difficulty with high-rises. And that was with good reason. Most buildings were structures supported by their outer walls. The taller the structure was, the greater a burden the structure put on its base. The base had to be the widest section, much wider than the building’s top. Hence, most tall artifices, be they in Egypt or in Mesoamerica, had to be constructed in the shape of pyramids. The walls having to be wide reduced the space on the interior, and there was less interior space still near the top of the structure.
This was dealt with in the late nineteenth century. This was when, due to greater economic freedom than in centuries past, such figures as George Westinghouse and John D. Rockefeller, Sr., thrived. It was this environment that created opportunities for a pioneer in the designing of skyscrapers, William LeBaron Jenney.
One day upon looking at his wife’s bird cage and the bars on the outside, inspiration breathed new life into Jenney. Limitations were placed on a building’s height exactly because of how architects had traditionally relied on the outer walls supporting the structure. Instead, Jenney reasoned, the structure should be supported by a metal frame — a sort of skeleton — inside the inner walls. The construct, then, would not need to be pyramid-shaped; the highest story could be just as spacious as the lowest.
Two other innovations of the Industrial Era made Jenney’s a practicable one. First was Elisha Graves Otis’s development of elevators — more specifically, safe elevators. Apparatuses for hoisting people up high had already existed, but they could easily collapse. What made people willing to trust in Otis’s device was its brake and other features improving safety. Otis’s first elevators were mechanical hoisting devices that had to be manned very directly.
At New York’s Crystal Palace Exhibition, Otis personally demonstrated the precautions he took. Before a crowd of exhibition-goers, he had himself lifted up in his own elevator by an axman. Then he ordered that the very rope suspending him be severed. Just as it was cut, Otis fell only a short distance before the safety brake was triggered, sparing him. The nation was duly impressed.
Near the turn of the twentieth century, an electrical engineer formerly employed by Thomas Edison added another improvement. Starting his own company, Frank Sprague produced some of the earliest electricity-powered elevators. The same principles by which he used electricity to push a box vertically could also be used to push it horizontally. Through similar means, Sprague also developed the electric railways, resulting in the New York City Subway. Once these practical elevators presented an option other than always taking the stairs, apartment high-rises became attractive to would-be occupants.
The other industrial innovation that helped Jenney was the method of producing the steel that went into the very “skeleton” that Jenney conceived. As mentioned earlier, steel was a rare alloy forged by blacksmiths until Henry Bessemer introduced his method for producing it much more economically and therefore cheaply. Through employing the Bessemer process and later the use of open-hearth furnaces, such industrialists as Andrew Carnegie and Henry Clay Frick and Charles M. Schwab made affordable steel abundant enough for skyscrapers to be built all over the city.
This greatly increased the carrying capacity of land. As noted by London’s Economic Development Office, “Accommodating the same number of people in a tall building of 50 stories as in a large building of five stories requires roughly one tenth of the land.”
Many great technologies enabled farmers to grow more food per acre of earth. This trend, too, greatly took off with the industrialization of the nineteenth century. At the start of that century, many crops went to waste. At harvest time in 1831, it took six workers all day to harvest a single acre with their sickles, and they could not reap all of the crops when they were ready. The ones that could not be reaped rotted where they stood. That was solved by farmer Robert McCormick and his more-famous son, Cyrus, Sr. Together with autodidactic engineer Jo Anderson — who, sadly, was their slave — they invented a mechanical reaper. In 1834, with no more than two men moving it, the machine could harvest ten acres in a single day. As this reaper was incorporated into farming practices, U.S. wheat production ascended. Between 1847 and 1994, production went from four to ten bushels per U.S. resident.
Yet another innovation that improved farmland’s productivity was the synthetic nitrogen fertilizer we discussed earlier. Since that time, the pattern has continued. From 1950 to 2001, corn yields per acre in the United States tripled. In that very duration, scientists such as Norman Borlaug started the Green Revolution, crossbreeding crops that would resist harsh environmental changes. Borlaug did this under the auspices of the Rockefeller Foundation with capital provided initially decades earlier by John D. Rockefeller, Sr. And further refinements in chemical engineering add to this, such as in hydroponics — the practice of growing crops not in soil but in chemically treated nutrient solution. Now the introduction of a single acre of nutrient solution is able to yield fifty times the amount of lettuce that would otherwise be grown on the same amount of soil.
As Johan Norberg points out in his book Open, Locke himself touched upon this principle in Chapter 5 his Second Treatise of Government. Locke did so as he wrote that a homesteader or other entrepreneur who improves upon a plot of land and then takes it as private property “does not lessen,” but instead expands upon the total quantity of economic value available to
Yet the program of repealing the price controls, beginning at the end of the Carter administration and being implemented more completely under President Reagan, brought an end to the shortage. This undermined the influence of AOC’s precious consensus. France, Sweden, and the United Kingdom privatized many of their State-owned enterprises and brought forth a more liberalized economy. Still, the fears about overpopulation remained. Today, overpopulation continues to be cited as a vice of capitalism by The World Without Us author Alan Weisman and by left-wing YouTube commentators. It is a sad state of affairs that the intellectuals’ consensus against capitalism is experiencing a resurgence in clout.
Tellingly, the threat of overpopulation has become less of a burning issue among environmentalist scientists themselves — at least as far as resource depletion is concerned. And that is with good reason. To a large extent, the more careful environmentalists have had to concede, albeit grudgingly and with qualifications, that Julian Simon’s argument about resources per person has held up remarkably well.
Peter Kareiva, chief scientist and vice president of the Nature Conservancy, has had to admit in Conservation magazine, “...I know there is no clear analysis behind that conclusion” that there are too many people, as such, on Earth. He admonishes, readers, “...don’t automatically nod in agreement when a colleague says: ‘The problem is, there are too many people on the planet.’ People can be the solution as well as the problem.” Barry W. Brook and Erle C. Ellis — geography professors at the University of Tasmania and University of Maryland, respectively — reach a similar conclusion. As Ellis elaborates in the New York Times,
Improved Productivity Helps People on the Lower Income Distribution | ^
Citing a 2004 study by Erik Rauch at MIT, utilizing U.S. Bureau of Labor Statistics data from 1947 to 2000, Silicon Valley tech writer Andy Kessler observes that by the year 2000, someone would only need to work eleven hours a week to attain the equivalent value of what someone earned from a full forty-hour work week in 1950. To put it into perspective, Kessler writes that “we could have knocked 30 minutes off the average work week every year since 1950” and by the year 2000, “still maintained our 1950 standard of living.”
And, indeed, even as lithium is employed more efficiently in machines, its real price keeps falling. Between 2010 and 2019, its price per kilowatt hour in 2019 U.S. dollars descended from $1,183 to $156. In nine years, that was a more-than-fivefold decrease.
A copper wire can transmit 24 voice channels or about 1.5 megabytes of information per second. Far thinner and lighter optical fiber can transmit more than 32,000 voice channels and more than 2.5 gigabytes of information per second. The first American communications satellite, Telstar 1, was launched in 1962 and could handle 600 telephone calls simultaneously. Modern Intelsat satellites can handle 120,000 calls and 3 TV channels at the same time.
Alan Greenspan observes that this even happens with our clothing. “The development of the insights that brought us central heating enabled lighter-weight apparel fabrics to displace the heavier cloths of the past.”
It reached high points of 1.2 billion metric tons in the separate years of 1979 and 2013.
“That may be all well and nice,” one reply may go, “but there is still an important commodity of which you cannot produce any more units, no matter how cost-effective are. There really is a fixed quantity of land. Its carrying capacity —the number of people who can safely fit on it and live — is finite.” Yet market economics have indeed increased the carrying capacity of that. This is in two respects. First, technological improvements have allowed for a larger number of people to live peaceably on the same square acreage as before. Secondly, the same plot of land can grow greater quantities of food than it has in centuries past.
mankind: for the provisions serving to the support of human life, produced by one acre of inclosed and cultivated land, are (to speak much within compass) ten times more than those which are yielded by an acre of land of an equal richness lying waste in common. And therefore he that incloses land, and has a greater plenty of the conveniencies of life from ten acres, than he could have from an hundred left to nature, may truly be said to give ninety acres to mankind: for his labour now supplies him with provisions out of ten acres, which were but the product of an hundred lying in common.
Much of what I have written above contradicts the conventional interpretation that has been the rage since the early 1970s. That was the decade when environmentalists fretted over overpopulation. They stressed that as the human population grew, there would not be enough nonrenewable natural resources to sustain everyone. The American citizenry took the era’s shortages of petroleum and other raw materials as proof that the perils of overpopulation and resource depletion had arrived. This was the consensus about which Alexandria Ocasio-Cortez spoke, and for which she wishes a return — the consensus on commercial and industrial society’s inevitable self-destruction. Citizens did not know that the shortages were actually the result of restrictions on prices that President Nixon had imposed that cut into the producers’ profit margins, driving the producers out of the market. Rather than price controls, the American populace blamed industrial capitalism itself as unsustainable.
Our planet’s human-carrying capacity emerges from the capabilities of our social systems and our technologies more than from any environmental limits. . . . There is no need to use any more land to sustain humanity — increasing land productivity using existing technologies can boost global supplies and even leave more land for nature — a goal that is both more popular and more possible than ever.The only limits to creating a planet that future generations will be proud of are our imaginations and our social systems.
And the result of all the aforementioned entrepreneurial ingenuity has been improved living standards. Moreover, with the exception of one category of product we will discuss later, this has led a reduction in real prices over most consumer goods, especially food.
Here we must emphasize the distinction between nominal prices and real prices. Nominal prices are the price of a product taken at face value. A candy bar priced at two cents in 1904 was 44 cents in 2009. The nominal price in the latter year was twenty-two times that of the former year.
The main cause of inflation is the U.S. Treasury and U.S. Federal Reserve putting more and more monetary units in circulation. When the quantity of monetary units increases at a rate that exceeds that rate at which the quantity of goods and services increases, that is more monetary units chasing after the same goods and services. Vendors have to raise the nominal prices of their goods; otherwise, there will be a shortage. This inflation hurts most the parties that are living on savings and fixed incomes, such as senior citizens collecting their retirement. That is why policymakers should listen to free-market advocates concerned about the Treasury and the Fed devaluing the currency. But that is another essay for another time.
Germane to this particular essay, because inflation obscures actual changes in prices, we need another metric by which to judge the extent to which prices have changed over the decades. Many economists rely on something called the “consumer price index” in order to measure inflation. With it, they calculate how much economic value a U.S. dollar from today could have purchased in past years, be they 1930, 1940, or 1950, and vice versa. What a single nominal U.S. dollar could purchase in 1900, for example, was the equivalent of what a nominal $31.10 could purchase in 2020. A price that is calculated to account for inflation is known as “real price.”
Economist W. Michael Cox, formerly of the Federal Reserve Bank of Dallas, has another approach. He asks his fellow citizens to consider the average amount of time someone had to spend at work in order to purchase a particular good.
By that standard, the trend has been for important goods to get cheaper and cheaper. For someone in the year 1930 to afford 100 miles’ worth of air travel, that person would have to do the equivalent of twelve hours and 46 minutes’ worth of work. By 1990, one could purchase that same 100 miles of air travel by working one hour and two minutes. In 1900, affording 100 kilowatt hours of electricity would entail working for 107 hours and 17 minutes. By 1990, that quantity could be earned by spending 43 minutes at work.
The same trend is seen with food. In 1940, a person had to spend one hundred hours on the job to be able to purchase a three-pound chicken. By 1990, that chicken could be purchased after spending fewer than twenty minutes. The downward trend in prices here cannot be attributed properly to federal legislation such as the Fair Labor Standards Act of 1938. The price of chicken was already falling. Between 1900 and 1930, the number of hours one had to labor to obtain this three-pound chicken fell from 160 to 110.
For many consumer goods today, a single hour of work will buy for someone in the First World a larger quantity of theese consumer goods than that same hour of work would have fetched for any previous generation. That is a net gain in wealth for everyone in the First World.
In the United States, a household falling under a certain income threshold puts it under the official federal poverty line. Whether the household is in poverty is calculated by the U.S. Department of Health and Human Services according to the household’s income and the number of people living in it. As of this writing, a family of four is under the poverty line if it brings in less than $26,500 annually. Even many households under this poverty line provide evidence of how living standards improve to the extent that people are free. In 1950, fewer than 80 percent of all U.S. households possessed a refrigerator. By 1997, a refrigerator was in 90 percent of U.S. households falling under the federal poverty line.
Goods That Have Not Decreased in Real Price | ^
The general trend for units of consumer goods is not only for smaller quantities of natural resources to be inputted into their creation but also for them to decrease both in real cost for the manufacturers and real price for consumers. All these reductions are the consequence of improved industrial efficiency. Yet one may notice that the general price decreases do not apply to most of the pharmaceuticals and medical devices I mentioned in Part One of this essay. Genentech’s human insulin reduced costs for producers but it did not substantially shrink in real price for diabetic patients. Nor were there big price reductions in cancer drugs after the release of those from Patrick Soon-Shiong and Axel Ullrich. That is because, sadly, there is one large, general category of product to which the reductions in real price have not applied. This is actually not a failing of laissez-faire free market principles, however.
The products that have not decreased, but which instead have often increased, in real price include health care, pharmaceuticals, medical devices, higher education, and residential homes. What these goods and services have in common is how much of a financial commitment they all are. And they have something else in common. It is that the federal government has instituted measures to help people obtain cash or credit to procure these goods and services. Medicare and Medicaid assist in paying for health care, prescription drugs, and medical devices. Federal loans assist in obtaining higher education and housing — two goods so great in expense that they are paid for in installments.
These are taxpayer subsidies. Even if the borrower pays back the federal loan’s principal plus interest, there remains, on a net balance, a taxpayer-funded payment to the borrower. The reason for that is that the interest rate the federal government charges is always less than the interest rate that would have been charged by a privately owned lending institution. The difference between the government’s and the private lenders’ interest rates is absorbed by taxpayers.
What happens is as follows. First, a particular good in this category is considered too costly. The government then provides taxpayer subsidies to assist in purchasing these goods. However, this raises demand, and the providers of these goods respond to this rise in demand by raising prices. Paying for real estate grows more daunting, as it does with university tuition. As these prices ascend, activists and the general public clamor for larger subsidies to cover these new higher prices. Taxpayer subsidies purported to make a particular good more affordable therefore ultimately make that good more expensive.
Although other writers such as economist Richard Vedder have described this phenomenon before he did, Robert W. Tracinski gives an apt name for this — the Paradox of Subsidies.
Laissez faire is not to be blamed for this predicament. Nor does it follow that these goods and services would not decrease in real price if none of the taxpayer subsidies existed. Cosmetic surgery and LASIK eye surgery, for example, are not covered by health insurance or taxpayer subsidies. Exactly for that reason, such procedures have plunged in real price over the past 15 years.
Recall that throughout the 1950s, Percy Julian was able to reduce the price of progesterone tenfold. By contrast, the legislation in 2006 to ensure that Medicare pay for prescription drugs has only driven up the real price of medication.
Food purchases are also subsidized in the form of food stamps, now called the supplemental nutritional assistance program (SNAP). But all of those who are concerned about food prices should be thankful that these subsidies go to a minority rather than the majority of the population. If the vast majority of Americans paid for their sustenance with SNAP, the real prices of food would be steadily increasing as well.
Laissez faire not being the culprit for the rising real price of taxpayer-subsidized goods, we see that in areas where markets are freer, the freedom of enterprise to improve efficiency has shrunk the quantity of natural-resource inputs used and has lowered real prices for goods and services.
The Poor Get Richer | ^
Yet most of the world’s human population persists in being poorer than it should be. As discussed earlier, there are still many casualties from people breathing — as they try to keep warm — the fumes rising from their fireplaces. The main reason for the holdup in development is that most countries have kleptocratic governments. People practice commerce but their governments usually refrain from protecting them from theft. Often on a whim, the State itself will seize the people’s meager belongings. But as to the extent that they have experienced any liberalization, such as the country becoming more open to international trade and direct investment, the perks of liberalization have conferred improvements in living standards upon the developing world’s residents.
Consequently, average living standards have climbed in both the rich countries and the developing ones over the past half-century. It is here often interjected that the statistical mean, the average among all the numerical figures, is not always the statistical mode —the numerical figure that, among all the cases, recurs most often. If the mean global annual income shot up, what if all the gains went to the wealthiest one percent of the population? Maybe inflation-adjusted incomes for everyone else has remained the same or fallen? The economists David Dollar and Aart Kraay looked into this. They found, “When average income rises, the average incomes of the poorest fifth of society rise proportionately.” A trio of academic economists led by John Luke Gallup had a corroboratory result. They discerned “a strong relationship between overall income growth and real growth of the income of the poor.”
We can gain insight into these changes by observing what the United Nations defines as life-threatening absolute poverty. Someone falls under that threshold if that person makes less than $1.90 per day in inflation-adjusted 2019 U.S. dollars. This should not be confused with the U.S. federal government’s criterion for falling under the country’s official poverty line. Someone can be under the U.S. poverty line but still be out of absolute poverty by the U.N.’s standard.
Overall, the rate of life-threatening absolute poverty has been slashed, even in the developing countries. Between 1981 and 2008, the share of the global human population in life-threatening poverty dropped from 52 percent to 22 percent. That is a figure sliced by more than half.
And China’s ascension to wealth is not sufficient to explain this decline. Professor Max Roser of Our World in Data scrutinized what the results were when China was excluded. In 1981, 29 percent of the non-Chinese human population was in absolute poverty, whereas in 2013 the figure was 12 percent. For such reasons, Georgetown University economics professor Steven Radelet finds it necessary to emphasize that the “improvements” in living standards among the developing countries “go well beyond China.”
Many find it tempting to attribute this poverty reduction to taxpayer-funded foreign aid and to charitable NGOs. They have played a role, but as U2 front man Bono notes, something else has more to do with it. “Commerce — entrepreneurial capitalism,” he told an auditorium of Georgetown University students, “takes more people out of poverty than aid.” The data corroborate Bono’s assessment. Columbia University’s Howard Steven Friedman inquired into how much, between the years 2000 and 2013, the taxpayer-funded U.N. Millennium Development Goals (MDG) had to do with the developing countries’ gains in living standards.
It turns out the MDG had very little to do with the improvements; it was mostly for-profit commerce and private charity. In the few cases where some taxpayer-funded government project helped, such as with the construction of municipal roads, that came from municipal government and municipal taxation, not taxpayer-funded aid from the rich countries.
The World Bank does not attribute trade as the prime reason for the poverty reduction, but the trade does contribute to what the World Bank determines is the prime reason. As the World Bank explains, “the creation of millions of new, more productive jobs, mostly in Asia, but also in other parts of the developing world, has been the main driving force” behind the fact that “poverty has declined in the developing countries.” After all, “the private sector is the main engine of job creation and the source of almost 9 of every 10 jobs in the world.”
Among those jobs are those that capitalism’s detractors have reviled as exploitation. These would be initially low-paying jobs in factories established through foreign direct investment, factories often derided as “sweatshops.” From the 1950s onward, Asians opted for these sweatshops in the city because they paid two to three times as much as those in the village or country. Contrary to modern assumptions, in countries that are more politically liberalized we find that the trend is not for the majority of the workforce to be stuck in low-paying drudgery for decades on end. Reason magazine has profiled a factory in Taiwan that, during the 1970s, manufactured Barbie dolls. The workers in such factories saved their money and sent their children to schools to hone other skills. That is how countries such as Japan and Taiwan arose from destitution to First-World affluence. A similar phenomenon took off in India in the early 1990s with its deregulation of information technology.
The World Bank’s 2013 findings on poverty reduction corroborate Ayn Rand’s observations from over three decades earlier. She already noted that insofar as it has been implemented, capitalism has “raised the standard of living of its poorest citizens to heights no collectivist system has ever begun to equal, and no tribal gang can conceive of.” For such reasons, Rand related elsewhere, “If capitalism had never existed, any honest humanitarian should have been struggling to invent it.”
Although she did not know about him as she wrote those words, Ayn Rand seems to be anticipating the epiphany that Bono has had about global economics. Taking his Catholicism seriously, Bono had always concerned himself with the plight of the poor. When he first rose to fame in the 1990s and exercised his celebrity status to bring attention to this plight, he originally went by the conventional interpretation of capitalism being evil. One day at a conference, he met African development economist George Benjamin N. Ayittey, who implored him to consider it from another angle. As Bono observed over the decades which antipoverty measures worked and which did not, it was exactly his concern for the well-being of the poor that his impressions about capitalism had changed. He imparted to Rolling Stone magazine, “If you told me twenty years ago that commerce took more people out of poverty than aid and development, I’d have scoffed.” He is not scoffing anymore. Instead, he laughs in his speech to the Georgetown students, “ ‘Rock star preaches capitalism.’ Wow! Sometimes I hear myself, and I just can’t believe it!”
We often hear that capitalism must be fought by antipoverty programs. Yet capitalism is the antipoverty program.
That cliché that Percy Bysshe Shelley popularized about the rich causing the poor to become poorer is economically illiterate. To the extent that people are free to enterprise, the rich get richer and the poor get richer.
From the relative liberalization in the nineteenth century, and as a result of its consequent Industrial Revolution, the average lifespan in the United Kingdom, Western Europe, and North America ascended from 27 years in 1800 to 77 years by 1988. Starting in the late twentieth century, the developing countries began to experience comparable effects to the extent that they have been exposed to the gains of liberalization.
Georgetown University economist Steven Radelet points out that between 1980 and 2015, “the rate of child death has declined in every single developing country in the world where data are available. There are no exceptions” (emphasis Radelet’s).
And, as Max Roser notes at Our World in Data, the boost in average lifespan is due not only to reductions in the infant mortality rate. Thus, contrary to the final chapter of the book ScienceHeroes.Com was created to advertise, there is no conflict between “Our Health” and “Our Wealth.” Each of those reinforces the other.
Throughout Part One, we learned of how illustrious entrepreneurs organized the creation and distribution of specific products that saved lives. Here, in Part Two, we begin to see how all those efforts add up.
What Capitalism Can Do for the Climate | ^
Capitalism’s doubters continue to shake their heads. Even if they concede that capitalism drives innovation, they fret that something can reverse this progress. Anthropogenic climate change is frequently cited as the foremost exhibit of unregulated capitalism run amok. The famous progressive journalist Naomi Klein wrote an entire book to propound as much. The idea is right in her book’s subheadline: Capitalism Versus the Climate. To favor capitalism, she inveighs, is to be against the climate.
The assumption is that if energy companies emit carbon dioxide unimpeded, that is the complete exercise of free enterprise and private property rights. But this is actually an initiation of force. It is an initiation of force when industrial CO2 emissions wreak harm on human habitats on account of the emissions contributing to the globe warming by a margin that otherwise would not have occurred.
Despite the aforementioned gains in productivity among industries that emit fossil fuels, they still emit more CO2 than Earth scientists deem to be safe. John D. Rockefeller benefited us with oil that made possible Leo Baekeland’s lifesaving plastic medical equipment and Thomas Midgley’s lifesaving refrigerants. But these men did not anticipate the downside to fossil fuel emissions. These emissions will not cause the catastrophic end to civilization as depicted in Hollywood scare stories, but they will disrupt the climate to such an extent that they will impose more hardships on people, including in the developing countries, than would otherwise would have to be faced. This needs to be addressed.
More companies could gasify their coal and pump this gasified coal through pipelines. That would not eliminate CO2 emissions completely but it would reduce them. But, as the situation currently stands, it is still usually cheaper for that company to refrain from gasifying its coal. And in contributing more CO2 emissions than it otherwise would, that company is contributing to the destruction of waterfront properties. It is also making it more difficult for farmers to produce their output. Hence, the CO2-emitter is cutting its own costs by imposing those costs on other parties, damaging their private property.
I have written on this before.
As those private parties' private property is being damaged, they should be able to sue the CO2-emitter for compensation. They are transferring the costs back to the CO2-emitter. We can reach a point where it becomes cheaper for the CO2-emitter to adopt methods that reduce CO2 emission, rather than continue with the status quo. Then the market shall signal how much more profitable it would be to adopt more-efficient technologies that produce consistent output while cutting the CO2 emissions.
A proposal aiming at similar results is the levying of a tax on CO2 emissions. That, too, is about returning those costs to the CO2 emitters. My issue with this recommendation is that it hands control over this matter to a government agency that will approach everything from the top down. The government agency will be collectivist in claiming to represent the victimized parties as a faceless whole.
There is no guarantee that the revenue collected from a carbon tax would reimburse the specific individuals who have been harmed by CO2 emissions. Even if politicians promise that the revenue collected will go specifically to the parties harmed, these parties will be treated as a collective — everyone in the group in general, and no one in particular. In contrast to individuals filing lawsuits, such a carbon-tax-collection program would result in greater mismatches between who was most hurt by CO2 emissions and who receives the most money in damages.
Justice is likelier to result from specific individuals filing lawsuits. This is a more from-the-bottom-up, private-property-oriented capitalist approach.
A common concern is that the private parties that will be most devastated by anthropogenic climate change are located in the developing countries. By contrast, the main CO2-emitters are in the developed countries. But, in legal theory, it is still possible to address this through a federal law called the Alien Tort Claims Act. It allows for non-U.S.-citizens to file suit against U.S. companies in a U.S. court.
This statute was invoked in a civil suit concerning the corporation Unocal. The allegation is that Burmese villagers were abducted to toil as slaves on one of the company’s pipelines. Western lawyers invoked the Alien Tort Claims Act to say they could win a lawsuit against Unocal, on the Burmese people's behalf, in a U.S. court. This was ultimately privately settled. However, I think that Unocal would not have been pressured enough to settle the suit if not for the Alien Tort Claims Act being a viable option for the plaintiffs.
Capitalism is being practiced consistently insofar as every firm’s gains and losses are both private and internalized. By emitting more CO2 than is technologically necessary, firms take in privatized gains while socializing or collectivizing their costs. That is not pure capitalism.
Far from capitalism being the cause of damage to human life via climate change, a more consistent implementation of the principles of capitalism is the solution.
Capitalism Vs. Hunter-Gatherer Life Vs. Socialism | ^
No, insist detractors. In lieu of just developing new technologies to continue with man’s consumption of resources, they declare, everyone should just learn to live on less —especially the vendors of the world. Anti-capitalists see vendors such as Wilson Greatbatch not as wizards who enrich others through their inventiveness as much as they see them as predators who extract money from customers.
These anti-capitalists remember a time in their childhoods when their parents or guardians provided the amenities. As adults, these anti-capitalists yearn for the presence of some still-higher-ranking parental figure who can bail out adults in their desperate hours. They remember stories of how human beings once had the abundance of the Garden of Eden, only to lose it. Upon being banished from paradise, human beings were thereafter doomed to mortality and the need to struggle for sustenance. No matter the net increases in global economic value provided by the George Westinghouses and Wilson Greatbatches of the world, they will never measure up to the standard set by Eden.
But the reality is reverse. As we have learned, wealth is not in monetary units themselves as much as it is in the usefulness of the goods and services for which the money is exchanged. Thomas Jefferson’s colleague, A.L.C. Destutt de Tracy of France, was among the first the Enlightenment philosophers to explain the principle that commercial trades are a victory for both the vendor and the customer. The vendor realizes a financial profit in terms of the monetary value of her revenue exceeding the monetary value of what she paid for the raw materials. But both sides profit in terms of gaining more economic value by the end of the trade than what they started with.
I want to have an entire day to myself, but what I want even more is a particular monetary sum. You have that monetary sum in your possession, but what you want even more is for me to spend the day performing a service for you. We can roughly measure how much each of us wants something in “want-it points.” Having the day all to myself is worth 5 want-it points for me, but that monetary sum is worth 7 want-it points. You wish to hold onto your monetary sum by 6 want-point points but you desire the service by an extent of 8 want-it points. We make the trade. I perform the service for you in exchange for the monetary sum. We each come away with a net profit of 2 want-it points.
Sometimes we regret our purchases. They do not always award us as much happiness as we hoped or expected. And often, though what we receive in return is of value to us, we hate having to give up so much to get it. We value our ability to live and get by more than we value the number of hours at an unpleasant job that we otherwise could have spent on something else, but that does not erase the job’s unpleasantness. Still, for the most part, the general outcome is that we come away from a trade with more utility than what we had from the beginning. Were that not the situation, no trade would have commenced.
More to the point, the abundance of the Garden of Eden was never the default. Rather, the default has always been life-threatening poverty. Industrialization and capitalism “did not create poverty,” Ayn Rand elucidates. They “inherited it.” More than that, as we have seen, it is industrialization and capitalism that have done the most to alleviate this penury.
Socialism has over a century of promising that Edenic plenty, of all customers getting everything they need. And socialism has failed for that more-than-a-century, performing worse than whatever amount of capitalism has existed. Yet in its constant false promises, socialism continues to be hailed as more desirable than capitalism.
Such considerations are denied by various opponents of capitalism. Propagandist Michael Perelman huffs about private ownership of agricultural land replacing the practice of shepherds grazing their flocks on the medieval commons. Others go back even farther in time. They cite the living conditions of hunter-gatherers as far better. Many of the lifesaving innovations profiled in Part One were a remedy to dangers imposed by previously established technologies. George Westinghouse’s air brake cut the number of railroad fatalities, but there would never have been a need for this air brake if locomotives were never invented. Electric heating that Westinghouse helped make possible has saved people from having to damage their lungs in the employment of fireplaces. But people would not have suffered from this indoor air pollution if no houses were built. After all, for most of the species’s history, hunter-gatherers have managed to live without skyscrapers, houses, or cabins.
Yes, it is quite fashionable for people, even many self-proclaimed admirers of Ayn Rand’s, to idealize the hunter-gatherer mode of existence. They say that such an arrangement was more pleasant in that the average number of hours of work a hunter-gatherer has to perform to obtain daily meals is a mere four hours. The major source of that figure is anthropologist Richard B. Lee. Arguing along these lines, anthropologist Marshall Sahlins judged that having so much leisure time made hunter-gatherers “the original affluent society.” And, continue the anti-capitalists, the figure about the average lifespan being low among hunter-gatherers is misleading. What mainly drives down the average life expectancy, goes the argument, is the high infant mortality rate. But, continues the argument, if someone lived to be two years old, there was as a great chance of her living to be eighty years old.
There is much to unpack from that.
First, the figure about hunter-gatherers only needing to work an average four hours per day for food is the actual instance of a statistical mean being misleadingly presented as a statistical mode. The anti-capitalists’ citation of this figure brings to mind the false image that, every day, the hunter-gatherer works no more than four hours, and then spends the rest of the day on quality time with family and recreation.
In reality, there is much irregularity in the number of hours per week on obtaining food. Typically, the men in such a band will spend several days attempting to hunt for game or to forage. Often, they can come back with nothing. They next spend the next several days on resting. This is the cycle on repeat.
Further, when anthropologist Richard B. Lee calculated that it took an average four hours per day to obtain their nourishment, Lee mentioned a fact that is seldom acknowledged by people who cite his four-hour figure. It was that, in calculating the average number of hours of “work,” Lee did not count the number of hours that these hunter-gatherers then have to spend on what Lee calls “housework.” Such housework includes the processing of the food that has already been retrieved. The same !Kung San bands that Richard B. Lee studied happened to spend eight hours a week on cracking the mogongo nuts they gathered, four to seven hours per week on assembling or repairing their tools, and fifteen to twenty-two hours per week on butchering and cooking meat and on collecting firewood. As food historian Rachel Laudan summarizes, “each adult spent between 27 and 37 hours a week on food processing and ancillary activities: fuel, water and tools. . . . Thus the total work week for the bushmen on the lowest of estimates turns out to be between 6 and 7 eight-hour days (not counting child care).”
Now we can turn our attention to life expectancy among hunter-gatherers. There is something perverse about people citing, as a counterpoint to the idea that hunter-gatherer subsistence is harsher than modernity, the argument that it is only because of a very large infant mortality rate among them that the average life expectancy of hunter-gatherers is driven down so low. After all, as stated previously, the infant mortality rate among hunter-gatherers is usually one in four. People who make this argument should bother to listen to themselves. That the infant mortality rate would be large enough to do that should be acknowledged, from the outset, as a major indication of how much more perilous the conditions of hunter-gatherer life are. More relevantly, that it has been able to reduce the infant mortality rate from 25 percent to less than one percent is a credit to industrialization and modernization. This is the same industrialization and modernization being belittled.
Moreover, it is not accurate that as long as someone survived being age two, it made it likely for that person to reach age eighty. In mass graves of hunter-gatherers, it is unusual for archaeologists to find anyone who lived to eighty. Even into the days of ancient Rome, some people were lucky enough to reach their seventies, but the percentage of the population that reached such an age was smaller back then than it is today.
Max Roser of Our World in Data demonstrates that, since the year 1700, the rise in life expectancy goes far beyond the salutary reduction in the infant mortality rate.
Overall, the mortality rate is lower for people in modern, liberal, republican, commercial societies than in hunter-gatherer bands, and for every age bracket.
Examining females in the Hiwi band who reach the age of fifteen, only a quarter will live to 70. By contrast, with fifteen-year-olds in a modern industrial society, three quarters can expect to be around for their seventieth birthday.
In members of the Arikara clan found in mass burial sites, the mortality rate for those aged 20 to 40 was 15.3 percent. In American citizens today in that same age range, we find a mortality rate of 3.7 percent.
Ah, counter the opponents of commercialism, escaping the evils of capitalism does not require that we go so far as abandon modern technology in favor of a return to being hunter-gatherers. Nay, they say. We can adopt the political-economic collectivism that is common to hunter-gatherer bands while maintaining the conveniences brought about through industrialization. This shall be accomplished, they offer, through old-fashioned socialism of one sort or another.
Ever since the rise in popularity of Bernie Sanders and Alexandria Ocasio-Cortez, it has, once again, become trendy for Americans to insist that socialism could provide this wealth to a much greater degree than capitalism. The history of the twentieth century does not bear out such an assertion. To the extent that capitalism’s detractors think of socialism as the rich being taxed to pay for social service programs for the poor and middle class, that is actually a welfare state or regulatory-entitlement state. There are great weaknesses to this alternative, but that is another essay for another time.
Let us compare “socialism” as it has been more traditionally defined from the late nineteenth century to the mid-twentieth century. “Socialism” here refers to the public —usually with the government acting as its representative — having collective ownership over heavy industry, such as steel production and automobile manufacture. When a national government has its own agency attempt steel production or auto-making, that agency is known as a State-owned enterprise (SOE). Rather than the selfishness imputed to competing firms that seek profit, the State-owned enterprise is nonprofit and supposedly acts for the good of all.
If we want to look at such socialism being practiced in countries that remained democracies, we can look to Sweden, the United Kingdom, and France from the end of World War II to the late 1970s, the latter period being when the government began converting the SOEs into privately owned, for-profit firms.
Ove Granstrand and Sverker Alänge partook in a study of their native Sweden, examining the origins of the country’s hundred “most economically important innovations” to emerge in the duration of 1945 to 1980. Eighty percent of the innovations originated from major private, for-profit corporations. Twenty percent arrived from then-small startup firms. By contrast, innovation from State-owned enterprises was “marginal,” . . . meaning zero.
Someone who had to confront this reality was Nelson Mandela. For decades during his campaign against apartheid, Mandela proudly called himself a radical socialist itching to nationalize the means of production and turn private companies into State-owned enterprises. Then as South Africa’s leader, throughout the 1990s — the same decade of Bono’s transformation — Mandela met with dignitaries from the former Soviet Union and post-Maoist China. They extolled the significance of privatization. Speaking of those meetings, he told his biographer Anthony Sampson, “I came home to say: ‘Chaps, we have to choose. We either keep nationalization and get no investment, or we modify our own attitude and get investment.’ ”
Capitalism Vs. Taxpayer Funding for Basic Research and R-and-D | ^
Yet it is often stated that even if outright socialization of heavy industry is a failure, governmental intrusions on market activity are still warranted in terms of allocating taxpayer outlays for specific R-and-D efforts. The assumption here is that politicians and government officials are a better judge than are private investors in determining which R-and-D projects will produce results beneficial to everyone. After all, Patrick Soon-Shiong’s nab-paclitaxel merely improved upon a different drug whose development was funded federally by the National Cancer Institute. Likewise, this NCI provided grants to the same Dennis Slamon who had to pester Genentech Corporation to get behind trastuzumab. An article from Kaiser Permanente states that both the BioNTech and Moderna COVID vaccines rely on the federally funded research of Dr. Barney Graham.
I once came across someone on Facebook who insisted to me that all great new inventions came from “government research labs.”
It is a cliché for taxpayer funding’s apologists to comb through the history of the sequence of events that led to the development and refinement of a particular technology, such as smartphones and hydraulic fracturing. Upon finding any instance in this sequence of events where someone in R-and-D received any taxpayer funding, these apologists declare triumphantly that this useful technology would exist in no form if not for the taxpayer funding.
That is a red herring. The issue is not whether anyone received taxpayer funding at any step of the process through which a technology has evolved. The issue is whether value-adding technologies can emerge in the absence of taxpayer funding. Indeed, they can. The primary distinction between the governmental sector and the nongovernmental sector has to do with violence and peace, respectively. Everything outside of direct government involvement — such as for-profit businesses, not-for-profit organizations, and domestic life — is supposed to be nonviolent. Insofar as private parties rely on the threat of violence to assert their will, they are in violation of the law. Then the State is correct to intervene against these parties initiating the use of force.
By contrast, the government is doing the very job for which it was created when it threatens to send armed men against parties that obstinately break its rules. That principle applies even when the initial penalty for disobeying a law is a tiny civil fine. Someone who ceaselessly refuses to pay such fines will eventually be found to be “In Criminal Contempt of Court,” and armed men will be dispatched on this lawbreaker. The government sector and the nongovernment sector are, respectively, the violent sector and the peaceful sector.
Anything that people can do in the absence of threatening violence, people can do in the absence of direct government involvement. To the extent that interested parties can obtaining resources for their research without threatening violence on those who refrain from providing them resources, they can do it without taxpayer funding.
The above is not mere theory. The data themselves undermine the narrative that taxpayer funding is needed, as is sometimes acknowledged by government agencies themselves. First in 1991 and then in 1997, University of Pennsylvania economist Edwin Mansfield inquired over the matter. Between 1986 and 1994, taxpayer-funded research accounted for a mere 13 percent of the new drugs released by U.S. companies. Conversely, 87 percent of the new pharmaceuticals were developed in-house by the companies’ own private capital appropriations. Likewise, in that same duration, taxpayer-funded research accounted for 14 percent of the information-technology products developed. Meanwhile, again, 86 percent of the new IT products were developed in-house, through private financing.
More recently, one can find even government studies that corroborate this.
On the U.S. Bureau of Labor Statistics’ behalf in 2007, Leo Sveikauskas reviewed the literature. He discovered, “The overall rate of return to R-and-D is very large, perhaps 25 percent as a private return and a total of 65 percent for social returns. However, these returns apply only to privately financed R-and-D in industry. Returns to many forms of publicly financed R-and-D are near zero.”
As Sveikauskas evaluates, “Generally, the case studies have found that federal R-and-D spending contributes to the economy substantially in excess of its costs, but the aggregate statistical studies report that federal R-and-D does not enhance productivity substantially, if at all.” University of Cambridge biochemist Terence Kealey provides a translation into English. It is that taxpayer funding for the R-and-D of firms may contribute to the short-term profitability of those firms by cutting their costs, but that funding yields no net gains in innovation for the national economy overall.
In 2003, Stefan Scarlett and associates reported for the Organization for Economic Cooperation and Development, “The results also point to a market positive effect for business-sector R-and-D, while the analysis could find no clear-cut relationship between public R-and-D activities and growth, at least in the short term.” And the OECD report went even farther, admitting that taxpayer-funded R-and-D has a “negative” correlation with economic growth and innovation. Hence, the report admits, such results “suggest publicly-performed R-and-D” wastes “resources that could be alternatively used by the private sector” more productively, “including private R-and-D.”
Someone who has something to say on this is lifesaving laser inventor Gordon Gould. He has worked on both top secret Pentagon operations and for private companies. In his mind, “Big projects can get done in government research labs, but you don’t see much inventiveness.”
As stressed by he and Wilson Greatbatch, the major source of lifesavings innovation is freethinking individuals who are able to pursue their interests through free enterprise.
Recall that from the Paleolithic Period to the present, a fifteen-year-old’s chances of living to age seventy increased from one in four to three in four. That is due to technological innovation. And the technological innovation is attributable less to government-mandated “investment” than market economics itself.
In the United States, a household falling under a certain income threshold puts it under the official federal poverty line. Whether the household is in poverty is calculated by the U.S. Department of Health and Human Services according to the household’s income and the number of people living in it. As of this writing, a family of four is under the poverty line if it brings in less than $26,500 annually. Even many households under this poverty line provide evidence of how living standards improve to the extent that people are free. In 1950, fewer than 80 percent of all U.S. households possessed a refrigerator. By 1997, a refrigerator was in 90 percent of U.S. households falling under the federal poverty line.
The general trend for units of consumer goods is not only for smaller quantities of natural resources to be inputted into their creation but also for them to decrease both in real cost for the manufacturers and real price for consumers. All these reductions are the consequence of improved industrial efficiency. Yet one may notice that the general price decreases do not apply to most of the pharmaceuticals and medical devices I mentioned in Part One of this essay. Genentech’s human insulin reduced costs for producers but it did not substantially shrink in real price for diabetic patients. Nor were there big price reductions in cancer drugs after the release of those from Patrick Soon-Shiong and Axel Ullrich. That is because, sadly, there is one large, general category of product to which the reductions in real price have not applied. This is actually not a failing of laissez-faire free market principles, however.
Yet most of the world’s human population persists in being poorer than it should be. As discussed earlier, there are still many casualties from people breathing — as they try to keep warm — the fumes rising from their fireplaces. The main reason for the holdup in development is that most countries have kleptocratic governments. People practice commerce but their governments usually refrain from protecting them from theft. Often on a whim, the State itself will seize the people’s meager belongings. But as to the extent that they have experienced any liberalization, such as the country becoming more open to international trade and direct investment, the perks of liberalization have conferred improvements in living standards upon the developing world’s residents.
Capitalism’s doubters continue to shake their heads. Even if they concede that capitalism drives innovation, they fret that something can reverse this progress. Anthropogenic climate change is frequently cited as the foremost exhibit of unregulated capitalism run amok. The famous progressive journalist Naomi Klein wrote an entire book to propound as much. The idea is right in her book’s subheadline: Capitalism Versus the Climate. To favor capitalism, she inveighs, is to be against the climate.
No, insist detractors. In lieu of just developing new technologies to continue with man’s consumption of resources, they declare, everyone should just learn to live on less —especially the vendors of the world. Anti-capitalists see vendors such as Wilson Greatbatch not as wizards who enrich others through their inventiveness as much as they see them as predators who extract money from customers.
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Westinghouse and other vendors, then, are not geniuses who have raised us beyond the living standards of cavemen. Instead, in expecting payment for units of their inventions, the Westinghouses and Greatbatches are holding these units for ransom. The customers’ need is the basis of what they deserve. Once the ransom is paid off, these vendors release to their customers the units of value that were rightfully owed to the customers from the outset.
Yet it is often stated that even if outright socialization of heavy industry is a failure, governmental intrusions on market activity are still warranted in terms of allocating taxpayer outlays for specific R-and-D efforts. The assumption here is that politicians and government officials are a better judge than are private investors in determining which R-and-D projects will produce results beneficial to everyone. After all, Patrick Soon-Shiong’s nab-paclitaxel merely improved upon a different drug whose development was funded federally by the National Cancer Institute. Likewise, this NCI provided grants to the same Dennis Slamon who had to pester Genentech Corporation to get behind trastuzumab. An article from Kaiser Permanente states that both the BioNTech and Moderna COVID vaccines rely on the federally funded research of Dr. Barney Graham.
CONCLUSION | ^
Accounting for everything, it is hardly doing justice to capitalism for Lindsay Ellis to say that corporations “make us stuff — not useful stuff, but stuff.” The “stuff” is more than useful. It includes pharmaceuticals, medical devices, and other goods that have lengthened lives and added to their quality and comfort.
Contrary to the assumptions of Alexandria Ocasio-Cortez and her counsel Dan Riffle, someone such as Patrick Soon-Shiong acquiring a billion dollars’ worth of monetary exchange value does not deprive the rest of the human population of a total billion dollars’ worth of resources. That entrepreneur’s billion is the consequence of that entrepreneur obtaining natural resources and, by exercising a technique to boost efficiency, changing those natural resources in such a manner that they now provide a greater benefit to human beings than they did in their previous state. The billionaire’s profit is equal to the new value that the billionaire’s efforts produced from the resources inputted, a net increase in the value of the resources employed.
Consider a gram of lithium. Starting in the middle of the nineteenth century, it was occasionally imbibed as a form of medication. For the most part, though, it was exotic. It would not have provided much value to the average person living in the year 1870 or even 1930. Once converted into a particular form, however, that same gram of lithium proved to be of much more practical and immediate value to someone in the year 2009. This is on account of electronics tycoons such as Craig McCaw, Philippe Kahn, and Steve Jobs having lithium power their mobile phones and of medical-device innovators such as Wilson Greatbatch exploiting it to enhance his pacemakers. That usefulness — that value — added to the lithium is economic value that such entrepreneurs created, and for which they are paid in kind. Absent of “the creative power of man’s intelligence,” Ayn Rand reminds us, “raw materials remain just so many useless raw materials.”
Hence, we understand the fallacy of Alexandria Ocasio-Cortez proclaiming, “I do think a system that allows billionaires to exist — when there are parts of Alabama where people are still getting ringworm because they don’t have access to public health — is wrong.” There is no merit to the insinuation that someone having a billion dollars contributes to those Alabamans having ringworm. The best hope for those Alabamans is that an ambitious scientist-entrepreneur will brainstorm a procedure whereby she can profit from providing those Alabamans better medical treatment than what they have received previously.
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When it comes to what he said about twenty-three types of deodorant proving how Americans’ priorities are misplaced, it is projection on Bernie Sanders’s part. There is no inherent inverse relationship between children being fed and their parents being able to choose different types of deodorant. Through the smart employment of resources, there can be more meals for kids even as a variety of deodorants and snazzy sneakers go to market.
If someone acquires a billion dollars through the sale of goods or services, it is because his planning and organizing skills had created, for the world, a net increase in economic value of such magnitude that his customers willingly paid him a total one billion dollars for it. And those customers made such deals because what that entrepreneur provided them was of greater value to them than the money they paid him. The principle remains the same if an entrepreneur becomes a billionaire on account of a rise in the price of corporate shares he owns. In that case, the entrepreneur earns those would-be investors’ confidence that his company will profit its owners by providing great value to customers in the future. Anticipating that the entrepreneur will continue to exercise such competence, demand for ownership in the entrepreneur’s company increases among investors. The more eager the investors are to gain a piece of the action, the greater the demand is for shares in the entrepreneur’s company. Capitalism saves lives and is win-win.
Yet a reader who has been a longtime fan of Ayn Rand’s might notice that she was not fond of an expression like “capitalism saves lives.” That might initially seem strange, considering her status as capitalism’s biggest champion. But there is a special reason for this. The phrase “save a life” is usually spoken in a context where the default is someone going about her life only for some extenral threat to come at her suddenly, which is thankfully removed just as soon.
Capitalism, as Ayn Rand understood the term, is a social system where a liberal republican government allows for people to do anything that is peaceful. Trade and commerce in human history go back at least as far as the Neolithic Period. But even as this commerce was carried out, authority figures could arbitrarily overrule people’s trades and confiscate the fruit of their efforts. It was not until the Enlightenment and the Industrial Revolution that philosophers and statesmen began to enshrine, formally and eloquently, the individual’s right to live and prosper. There would always be some criminals who would try to prey on others, but they would be an aberration. In Ayn Rand’s estimate, then, capitalism did not keep having to “rescue” its citizens. Rather, as far as the threat of violence is concerned, capitalism allows for people to go about their lives without their having to be rescued or saved in the first place.
Definitely, modern industrial capitalism avails to people more opportunities than in centuries past, often because of the new resources whose creation industrial capitalism has facilitated. To try to make a career as a musician in antiquity or during the high Middle Ages, someone would usually have to be born into a family of musicians just to be able to access a high-quality musical instrument. Someone able to master such an instrument would usually then be confined to performing directly before a baron or a politically-connected family.
By contrast, as a consequence of the bounty that market-based industrialization has afforded, someone trying to be a musician today can access many more resources. A middle-class person can record her music and put it on the internet. If she can play multiple instruments, such as a bass guitar and the drums, she can record herself playing each instrument in a separate session, and then put all the sessions together as if she were an entire band playing all the instruments simultaneously. Achieving superstardom is still not easy. The process is more competitive than ever, but it is not for a lack of resources for someone of relatively modest means. Inasmuch as someone wants to pursue her own creative passions and dreams, no social system enables that more than constitutional, liberal republican capitalism. Capitalism enables you to live — not just in terms of survival, but to live in fulfillment, as in make an attempt at the sort of life you want for yourself.
The welfare state and socialism have promised to endow their citizens with greater material security than capitalism ever could; they promise greater access to healthcare and housing. Pursuing one’s artistic passions often interfere with the ability to work a more conventional job to pay for the amenities. Hence, our would-be musician may fantasize about receiving taxpayer funding that can secure her financially so that she has more time for her craft. But every resource a welfare state or socialist government hands out must be taken forcibly from someone. The contradiction inherent to socialism and the welfare state is that their promises of security to someone are enforced by the threat of police violence against others. Rather than say that capitalism saves lives, Ayn Rand judged that capitalism — insofar as it is implemented — is the only social system that enables someone to live a completely human life at all.
Hence, the closest Ayn Rand has come to saying that capitalism saves lives was in her observation that if capitalism itself needed to be “saved” — saved from being replaced by something else — or else the result would be peril to all. In her words,
Billionaires and capitalism do provide us “stuff,” yes, but there is a much grander result than that. To the extent that the relative freedom of a liberal republic has been of benefit to you, billionaires and capitalism have saved both your life and mine.
We must define, understand and accept individualism as a moral law, and Capitalism as its practical and proper expression. If we don’t — capitalism cannot be saved. If it is not saved — we’re finished, all of us, America and the world, every man, woman and child in it. Then nothing will be left but the cave and the club [emphasis hers].
Still, perhaps the principle can be phrased in terms that most people might find familiar. Capitalism does rescue people from the high mortality rates found in hunter-gatherer bands and other pre-industrial societies. If Ayn Rand had to write the phrase at all, it would probably be to state that capitalism saves your life every day.
