Filed Under: Columns • Our Economic Past
Tags: horse power • incentives • innovation • oil prices • peak oil • precautionary principle • predicting the future • prophets of doom • the great horse-manure crisis • urban planning
The Great Horse-Manure Crisis of 1894
We commonly read or hear reports to the effect that “If trend X continues, the result will be disaster.” The subject can be almost anything, but the pattern of these stories is identical. These reports take a current trend and extrapolate it into the future as the basis for their gloomy prognostications. The conclusion is, to quote a character from a famous British sitcom, “We’re doomed, I tell you. We’re doomed!” Unless, that is, we mend our ways according to the author’s prescription. This almost invariably involves restrictions on personal liberty.
These prophets of doom rely on one thing—that their audience will not check the record of such predictions. In fact, the history of prophecy is one of failure and oversight. Many predictions (usually of doom) have not come to pass, while other things have happened that nobody foresaw. Even brief research will turn up numerous examples of both, such as the many predictions in the 1930s—about a decade before the baby boom began—that the populations of most Western countries were about to enter a terminal decline. In other cases, people have made predictions that have turned out to be laughably overmodest, such as the nineteenth-century editor’s much-ridiculed forecast that by 1950 every town in America would have a telephone, or Bill Gates’s remark a few years ago that 64 kilobytes of memory is enough for anyone.
The fundamental problem with most predictions of this kind, and particularly the gloomy ones, is that they make a critical, false assumption: that things will go on as they are. This assumption in turn comes from overlooking one of the basic insights of economics: that people respond to incentives. In a system of free exchange, people receive all kinds of signals that lead them to solve problems. The prophets of doom come to their despondent conclusions because in their world, nobody has any kind of creativity or independence of thought—except for themselves of course.
A classic example of this is a problem that was getting steadily worse about a hundred years ago, so much so that it drove most observers to despair. This was the great horse-manure crisis.
Nineteenth-century cities depended on thousands of horses for their daily functioning. All transport, whether of goods or people, was drawn by horses. London in 1900 had 11,000 cabs, all horse-powered. There were also several thousand buses, each of which required 12 horses per day, a total of more than 50,000 horses. In addition, there were countless carts, drays, and wains, all working constantly to deliver the goods needed by the rapidly growing population of what was then the largest city in the world. Similar figures could be produced for any great city of the time.*
The problem of course was that all these horses produced huge amounts of manure. A horse will on average produce between 15 and 35 pounds of manure per day. Consequently, the streets of nineteenth-century cities were covered by horse manure. This in turn attracted huge numbers of flies, and the dried and ground-up manure was blown everywhere. In New York in 1900, the population of 100,000 horses produced 2.5 million pounds of horse manure per day, which all had to be swept up and disposed of. (See Edwin G. Burrows and Mike Wallace, Gotham: A History of New York City to 1898 [New York: Oxford University Press, 1999]).
In 1898 the first international urban-planning conference convened in New York. It was abandoned after three days, instead of the scheduled ten, because none of the delegates could see any solution to the growing crisis posed by urban horses and their output.
The problem did indeed seem intractable. The larger and richer that cities became, the more horses they needed to function. The more horses, the more manure. Writing in the Times of London in 1894, one writer estimated that in 50 years every street in London would be buried under nine feet of manure. Moreover, all these horses had to be stabled, which used up ever-larger areas of increasingly valuable land. And as the number of horses grew, ever-more land had to be devoted to producing hay to feed them (rather than producing food for people), and this had to be brought into cities and distributed—by horse-drawn vehicles. It seemed that urban civilization was doomed.
Crisis Vanished
Of course, urban civilization was not buried in manure. The great crisis vanished when millions of horses were replaced by motor vehicles. This was possible because of the ingenuity of inventors and entrepreneurs such as Gottlieb Daimler and Henry Ford, and a system that gave them the freedom to put their ideas into practice. Even more important, however, was the existence of the price mechanism. The problems described earlier meant that the price of horse-drawn transport rose steadily as the cost of feeding and housing horses increased. This created strong incentives for people to find alternatives.
No doubt in the Paleolithic era there was panic about the growing exhaustion of flint supplies. Somehow the great flint crisis, like the great horse-manure crisis, never came to pass.
The closest modern counterpart to the late nineteenth-century panic about horse manure is agitation about the future course of oil prices. The price of crude oil is rising, partly due to political uncertainty, but primarily because of rapid growth in China and India. This has led to a spate of articles predicting that oil production will soon peak, that prices will rise, and that, given the central part played by oil products in the modern economy, we are facing intractable problems. We’re doomed!
What this misses is that in a competitive market economy, as any resource becomes more costly, human ingenuity will find alternatives.
We should draw two lessons from this. First, human beings, left to their own devices, will usually find solutions to problems, but only if they are allowed to; that is, if they have economic institutions, such as property rights and free exchange, that create the right incentives and give them the freedom to respond. If these are absent or are replaced by political mechanisms, problems will not be solved.
Second, the sheer difficulty of predicting the future, and in particular of foreseeing the outcome of human creativity, is yet another reason for rejecting the planning or controlling of people’s choices. Above all, we should reject the currently fashionable “precautionary principle,” which would forbid the use of any technology until proved absolutely harmless.
Left to themselves, our grandparents solved the great horse-manure problem. If things had been left to the urban planners, they would almost certainly have turned out worse.
*See Joel Tarr and Clay McShane, “The Centrality of the Horse to the Nineteenth Century American City,” in Raymond Mohl, ed., The Making of Urban America (New York: SR Publishers, 1997), pp. 105–30. See also Ralph Turvey, “Work Horses in Victorian London” at www.turvey.demon.co.uk.
Comment by Aharon A. Lavi on 19 May 2009:
Great article, helped me alot with something I\’m working on right now.
Pingback by Feeling peaky about the future? « Thomas the Think Engine on 11 November 2009:
[...] concerned enough to do extrapolation is generally the moment of the most rapid change… As the freeman online explains, in the 1800s, the number of horses was a major issue in London. “Writing in the [...]
Pingback by Project TOTO · Climate Change, Poverty and The Great Horse Poo Debate of 1898 on 8 December 2009:
[...] Similar figures could be produced for any great city of the time.* (The Freeman) [...]
Comment by Ruth Miale on 9 December 2009:
Costs of stabling horses and parking motor vehicals costs are born by the vehical operator.
Sounds like manure pickup wasn’t regulated by law to be managed by those whose operated those livery businesses–was the cost of cleanup allowed to be taxed from the clients (private) and businesses who profitted from the use of this transport?
In our modern era Mass transit moves the smog production back to a easily forgotten coal fired electrical plant looming as a rider on the prevailing winds from the Western (U.S.).
Smog adds costs to everyone in breathing distance to it–and we all pick up the tab in the form of high health care costs, inefficiencies of work, because of lost days for health, damage to equipment and buildings, extra transport for extra healthcare and its supplies, staff, and more; ill children (who need care), and probably contribute to high numbers in neonatal crises, and depression. Reduced oxygen in our breath clouds our thinking.
And yet–we’ve got people who seem to think universal health care is a mercy, a charitable favor.
When we make pollutants universal–and often relegate their worst effluent to poorer regions and sections of the country or cities–
who owes the funding of healing the health problems it creates?
If we cannot tax the producers of it (“it will chase industry out of our state”)–the governments which literally license these entities to operate ought to pick up the tab.
We need a nation-wide, international tax on polluting. So there is no place to run from taxes and no new location to move and take the jobs. Everywhere they go–they could be regulated for the crap they produce.
And, while we are at it–why do we run the hamster wheel of allowing these nasty pollutants, getting sick, using big pharma outrageously expense remedies–assigned us by doctors who seem to have an exclusive contract to stick to that narrow option? There is an economic engine here that leaves us each the hamster, the sick hamster, and the dead hamster.
I can think of better ways to use my life, my money and my death!
Comment by Andy green on 23 December 2009:
I coined the term ‘horseshit statistic’ – as a cousin to ‘bullshit’ to describe how an expert extrapolates a figure, based on current assumptions, to create a stark, negative scenario. So, when confronted with such claims we should descibe them as ‘horseshit!’
Comment by Drik on 9 June 2010:
Just imagine if the government had stepped in and micromanaged everything with mandates. We would still be riding horses and they would be the major source of manure in our lives, instead of DC.
Pingback by The Great Cow-Manure Crisis of 2010: Amish Farming? « Journal of Natural Food and Healing on 9 June 2010:
[...] 9, 2010 · Leave a Comment The Great Horse-Manure Crisis of 1894 in major cities is nothing like the Great Cow-Manure Crisis of 2010 going on in rural [...]
Comment by Johnny on 11 June 2010:
There’s no question that America has a Manure Crisis that goes back to the middle 1800s. The manure that flows out of Washington DC poisons the streams of thought for all of us. This toxic effect robs us of our energy and has other deadly consequences. Natural manure, produced by horses and cows, doesn’t scare me.
Pingback by Dirty Jobs « wanderings on 13 June 2010:
[...] is built in coming months, for now it is all part of the daily routine. Ever heard of the Great Horse Manure Crisis of 1894? Probably not, I hadn’t either until I had this new interest in horse manure. Let’s [...]
Comment by Aleksander on 12 July 2010:
On the other hand, we have human-caused deforestation of Levant in neolitic (http://www.usj.edu.lb/mpl/pdf/hajar-2009.pdf). The bottom line is that the future is unknown, and we should avoid taking on risks where we can not afford some of the possible consequences.
Comment by James Madison Fan on 12 July 2010:
This should be titled “Mr. Davies Defines Optimism Bias by Example.”
What he ignores is the manure crisis was a reality that was accidentally relieved by the automobile rather than the automobile being intentionally invented for that purpose. The question he fails to address is what would have happened if the automobile had not occurred in such a timely manner or the technology had proven impractical? Necessity may well be the mother of invention but counting on providence to resolve pressing issues is not a prudent way to run a nation much less a business. He needs to take a course on Cost/Benefit analysis because his “que sera sera” attitude may work when applied to philosophy or watching brain tripe like “Pollyanna” but fails miserably when applied to economics and science.
In many cases the doomsayers that Mr. Davies decries allow the situation they warn against to be avoided. If marine conservationists hadn’t made the public aware of the pathetic state of whale populations many species would be extinct by now. Offering that their worries were unfounded because the whales did not become extinct grossly undervalues the effort and effect of their campaign. China’s population was growing at an unsustainable rate and it has taken draconian efforts by the government to get it under control. Were it not for “population bomb” doomsayers China’s population would probably be over 3 billion by now.
For every case of failed warnings there are as many if not more cases of unheeded warnings leading to disaster. Churchill warned Baldwin and Chamberlin that Hitler was a schmuck and they called him a war monger. The French were told New Orleans was a death trap when they built it below sea level 300 years ago and it took that long for a large enough hurricane to turn it into an aquarium. Until 2005 the doomsayers were wrong and suddenly they were right. Rather than learn not to build a city in a punch bowl they’re rebuilding it. Brilliant.
“Those who do not learn from history are doomed to repeat it.” – George Santayana
The fact is that a significant portion of planning a business has to do with forecasting the future. Do I cut back on toppings and the quality of cheese on the pizzas I make in an effort to cut production costs and will that offset lost revenues when customers stop coming? Do I keep offering 0% financing on cars purchased from my dealerships or do I raise it to 5%. Can I offset the potential loss of customers with an increase in the number of extras such as a DVD player, side airbags, roadside service, and repair packages and does this justify the cost?
Discarding the sciences of statistics, economic forecasting, and cost/benefit analysis in favor of the hope that Icarus will show up and invent wings as necessary is entirely imprudent and impractical even if it does rid of us a few annoying doomsayers and busy bodies.