The Irony of Matt Ridley

So it turns out that the Matt Ridley who writes popular

bestsellers on genomics is the same Matt Ridley who was chairman of Northern

Rock until last Friday. He also was a columnist for the Londont Telegraph,

where he used his pulpit to sketch out his fundamentally libertarian view of

life. George Monbiot now puts

all these things together, and the irony of this libertarian being bailed

out by the UK government is not lost on him:

Ridley’s core argument, which he explains at greater length in his books,

is that humans, being the products of natural selection, act only in their

own interests. But our selfish instincts encourage us to behave in ways that

appear altruistic. By cooperating and by being perceived as generous, we earn

other people’s trust. This allows us to advance our own interests more effectively

than we could by cheating, stealing and fighting…

Like Ridley, I am a biological determinist: I believe that much of our behaviour

is governed by our evolutionary history. I accept the evidence he puts forward,

but draw completely different conclusions. He believes that modern humans

are destined to behave well if left to their own devices; I believe that they

are likely to behave badly. If you belong to a small group of intelligent

hominids, all of whom are well known to each other, you will be rewarded for

cooperation and generosity within the group. (Though this does not stop your

group from attacking or exploiting another.) If, on the other hand, you can

switch communities at will, travel freely, buy in one country and sell in

another, hire strangers then fire them, you will gain more from acting only

in your own interest. You’ll have an even stronger incentive to act against

the common good if you run a bank whose lending and borrowing are so complex

that hardly anyone can understand what is happening…

Under his chairmanship, the Economist notes, Northern Rock "pushed an

aggressive business model to the limit, crossing its fingers and hoping that

liquidity would always be there". It was allowed to do so because it

was insufficiently regulated by the Bank of England and the Financial Services

Authority. When his libertarian business model failed, Ridley had to go begging

to the detested state. If the government and its parasitic bureaucrats had

not been able to use taxpayers’ money to clear up his mess, thousands of people

would have lost their savings. Northern Rock would have collapsed, and the

resulting panic might have brought down the rest of the banking system.

I’m not convinced that there’s a significant inverse correlation between cooperation

and generosity, on the one hand, and globalization, on the other. Indeed, globalization

acts as an incentive to improve governance standards in countries where they

are significantly below the world average, for otherwise those countries tend

to get frozen out of the global economy altogether. Meanwhile, globalization

is great news for high-trust countries like Switzerland or Holland. But Monbiot

is entirely right that the Northern Rock collapse is all the proof you need

that Ridley’s libertarianism could never work in practice.

(Thanks to Matt Clark for the link)

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