Oct 14, 2019

Steamed guano – the real driver of our industrial prosperity

From Andrew McAfee's great EconTalk interview:

Roberts: But, the steam engine changed everything. And it's not obvious – it wasn't obvious when it was created that it would... I think most people would struggle to think how it did change everything. For me, I think about things like, "Oh, there were trains that could take things around."

McAfee: Exactly. We could make fabric more quickly because you had factories with steam power in them.

Roberts: Which helped. But that's not the main part of the story.

McAfee: That's not the main part of the story.

And, I didn't understand this at all until I started writing the book... based on previous books that I'd co-written with Erik Brynjolfsson and previous work that I'd done, I came to the conclusion that the Industrial Revolution did in fact change the course of human history like nothing before or since. You just have got all kinds of evidence that makes that point.

And then, the broad reason why it was pretty clear, was that up until then, the only energy sources we could draw on were our muscles, muscles of domesticated animals, wind power, and falling water to drive a water wheel.

All of a sudden the Industrial Revolution comes along and we can take advantage of these crazy amounts of energy stored in the earth's fossil fuels.

Okay, great. Like you just pointed out, that misses kind of an important step: What exactly allowed us to massively increase both our population and our prosperity, because we could draw on fossil fuels?

Is it just that we had trains? Is it just that we had factories?

For me, the fundamental answer [to that] was "no." What allowed us to escape that Malthusian trap was the fact that our agricultural productivity skyrocketed after the steam engine, after the Industrial Revolution.

And, at first I'm like, "Hold on. I don't get the link there." And I thought, "Oh, we had steam powered tractors." And it turns out people built a couple of them – they were terrible, because they were extraordinarily heavy, and English farms, like all farms, are really muddy places. So, that wasn't it.

Now, one of the most fascinating things that I learned when writing this book is that the Industrial Revolution is an agricultural story in large part because of fertilizer. Because of things like sodium nitrate in the deserts of Chile. Guano (bird droppings) off the coast of South America. Bone deposits all over the world.

And what the Industrial Revolution actually did was allow us to build steamships that would go down, grab that fertilizer, bring it back, put it in an English factory that turned it into really powerful fertilizer; move that factory via a steam-powered train out to the farms; and then, when you fertilize a farm properly, it turns out the productivity of that farm skyrockets.

And you essentially get out of the trap that Malthus identifies. You can actually feed exponentially increasing numbers of people. And you can feed them a better diet over time.

Random aside: William Vogt (the Prophet of The Wizard and the Prophet) actually spent a few years studying the birds that produced the giant guano deposits off the coast of South America. Peru had established a Compañía Administradora del Guano to administer the island guano production; Vogt was employed by the Compañía.