The Six Killer Apps of Prosperity

TED (Technology Entertainment and Design) is a global set of conferences owned by the private non-profit Sapling Foundation, formed to disseminate "ideas worth spreading." (Wikipedia)

If you haven’t already discovered the TED lecture series, I strongly encourage you explore this remarkable collection of contemporary human thought. The speakers come from many disciplines and viewpoints. No matter whom you might be or what you might believe, you will find speakers who will annoy you and speakers who will inspire you. They are limited to 18 minutes, less time than it takes to watch a second rate sitcom. The lectures are free and you don’t even have to listen to any commercials.

Several weeks ago, I discovered Niall Ferguson’s TED presentation on the Six Killer Apps of Prosperity (linked from the Simple Dollar Blog also well worth your time). It has been bumping about my head ever since, so here is a little synopsis and review.

Ferguson asks the question, “What are the common characteristics of a prosperous or rapidly improving economy?” He proposes six that span time, nationality, religious belief, and culture.

1)Competition --Economies that encourage competition inevitably do better than those that centralize economy control. This is true of modern centrally planned economies such as the Soviet Union or the medieval economies in which the king granted monopolies to his favorite and most generous courtiers.

2)Scientific Revolution--Ferguson defines this term as applying the discoveries of “pure” science to practical problems. One of the examples he presents is an early study that applied the then recent discovery of Newtonian mechanics to artillery. Now your cannons can hit their target. Talk about a killer app.

3)Property Rights--I would have termed this rule of law and included property rights as a part of a larger whole. Economies in which the rules are fair, clearly spelled out, and systematically followed do better than economies in which the rules of the game are constantly changed to benefit the rich or politically well connected.

4)Modern Medicine--Ferguson believes this subset of the Scientific Revolution is so important it merits a separate line item in his list. He points out modern medicine has more than doubled life expectancies in every economy that has made it a cultural priority.

5)Consumer Society--Ferguson believes the consumer society triggered the industrial revolution. Does a woman really need 40 pairs of shoes? No, probably 4 or 5 would suffice even in the most extreme four season climates. Ferguson observes that today most Indians are delighted their country chooses not to follow the path of self sufficient poverty promoted by Mahatma Gandhi. Even somebody with my taste in clothing wants to own more than two loin cloths.

6)Work Ethic--For an economy to prosper, people have to believe there is a direct connection between effort and reward. This encourages behaviors like deferred gratification that encourages savings that allow for investments that produce more wealth. This is what economists term the virtuous circle.

There you have it. If it is really as Bill Clinton famously observed, “It’s about the economy stupid!” perhaps we should consider the six killer apps when we vote in the next election.