"If the epistemic argument is well-founded, even a population of socialist saints would be impoverished." John Gray Beyond the New Right

On this date in history in 1886 one Karl Benz became a hero of entrepreneurship and then, I suppose, a massive ecological villain when he patented a gasoline-powered car. People like me have long praised the automobile as a classic private solution to a pressing public problem, the increasingly intolerable fouling of cities and destruction of forests by… the horse.

I know, it sounds a bit silly. But major cities were being buried in horse poop, drowned in horse pee, and afflicted with tens of thousands of dead horses a year. And more and more forest land was being cleared for pastures to grow the hay all these creatures consumed.

If government had taken charge of the problem, there is no telling what disaster would have ensued. Instead entrepreneurs created a new form of transportation, less picturesque in ways that make me genuinely sad but enormously more efficient and effective. You could not have cottages for the middle class if we all had to take horse carts to them, nor supermarkets or indeed almost any facet of modern life. You could also not have carts that play what was once quaintly called "high fidelity" music, heat your seat and protect you from the elements while a gentle push of your foot accelerates you to 100 km/h. And now that we have seen modernity in all its horror, maybe future waves of technology can allow us to decentralize, slow down, and get back in touch with nature external and internal while retaining some of the gains like, say, laptops that can edit video. Just to pick an example at random.

Of course today the reaction is likely to be that by inventing the gas-powered car Benz (yes, of Mercedes-Benz) played a major role in dooming the planet and its inhabitants to climate change that will drown, fry or otherwise exterminate us all. But even if one grants that he’s about as much of a benefactor to humanity as, say, Sauron, surely we can at least draw the lesson that if we want alternatives to current technology including fossil-fuel-dependent vehicles and power plants, we are far likely to get dynamic, unpredictable, astoundingly effective solutions from the private sector than from central planning.

In turn they may raise new dilemmas over time to replace the ones they solve. But it sure beats government intervention, which reliably creates new messes without fixing the old ones.

"Not everything that can be counted counts, and not everything that counts can be counted." Albert Einstein

In my latest National Post column I argue that the unsettling nature of free enterprise is also the key to its success.

There’s this joke in a book we bought at the Roman Baths in Bath this summer that goes "How do you divide the Roman Empire? With a pair of Caesars." And it’s a good January 17 joke (no, really) because it was on that date in 395 that the heirs of Theodosius I permanently split it into the Eastern Empire under Arcadius and the short-straw crumbling Western bit given to the hapless Honorius.

I can sort of imagine the meeting where they said look, everything’s falling apart, barbarians are everywhere hacking and slaying, we were world beaters a century ago and now we can’t cope, what should we do? And some smart-aleck says maybe admit defeat, sort of, and hack off that bit of the Roman Empire with whatchamacallit in the middle, you know the place I mean, a pretty famous city, I think it’s, um, Rome, that’s it, Rome. Let’s… ditch Rome. It’s probably on fire anyway. And everybody looks at him funny and then there’s an awkward pause and the chair says "Has anybody got a better idea?" and nobody has so they do it.

It sounds like a counsel of despair. Surely they needed a bold stroke, something to fix the problem, not give in to it. But in fact it was a counsel of wisdom, following a rule that’s easy to state but hard to implement in the press of events: Reinforce success not weakness.

In statecraft, in military matters, and in business it’s far too easy to deal with a problem in the short term by drawing away resources from something that’s working to prop up something that’s not. But the more you do it, the fewer resources you devote to things that are working and the more you devote to those that are not and you spiral downward into defeat, bankruptcy or whatever particular form of ruin you were trying to stave off in the first place.

In fact the result of amputating the rotting western bit was that the Eastern Empire, later Byzantium, lasted more than 1,000 more years though the last four centuries were ignominious and those that preceded it were often squalidly magnificent, with intrigue and decadence behind a shimmering façade. The East badly missed the political and civil culture of the West once it was gone. On the other hand, refusing to face facts would probably have dragged the East down far faster without doing as much for the west as the separation did.

In the short run, the Eastern Empire was able to regroup, husband its resources, and make several determined efforts to recover the West after the Fall of Rome. In the second, the West liquidated its failing arrangements and rebounded dramatically.

I’ve often thought the Fall of Rome was much more of a political and headline event than a truly major historical development. The rule of law remained stronger there than even in Byzantium, let alone elsewhere, Charlemagne did resurrect the Holy Roman Empire by 800 AD and while there is much to criticize about the nature of government even in Western Europe after the 5^th century, and many waves of barbarians difficult to stop, it’s hard to think of anywhere you’d rather have lived even then. Especially if you pick the right part, Britain, an important part of the Western Empire for almost four centuries, where humanity later got both Parliamentary self-government and the slow but increasingly effective separation of Church and State in practice that have both eluded almost everyone else to this day.

So take another page from the Romans’ playbook and reinforce success not failure. Mind you, even in the failing enterprises you’d ideally put someone less useless than Honorius in charge.

You know all those internet-era stories about if only I’d put a few hundred bucks into that garage venture by those two awkward jokers I used to know, I’d be a billionaire today? The problem being to figure out which jokers are actually Steve Jobs, Bill Gates or Mark Zuckerberg. Well, would you have gambled on the Pemberton Medical Company back in 1889?

If not, maybe stick to broad-based mutual funds. If so, you’re arguably just plain lucky. Because, you see, the PMC incorporated in Atlanta on January 15 of 1889 went on to become the Coca-Cola company. And obviously if a morphine-addicted Civil War veteran reacts to local Prohibition by removing the alcohol from his mixture of cola nut and cocaine extract into a gooey sweet brown health tonic and accidentally mixing it with soda water, you’ll make a fortune, right? Like a music player with no off switch or a Quick and Dirty Operating System. Can’t miss. (I should mention that Coca-Cola may not have contained much cocaine to begin with and certainly had only minute traces after 1891, and none after 1929.)

Like many giant purveyors of non-health food, the company has been battling economic headwinds recently. But it remains true that if you’d bought a single share in 1919 for $40 and reinvested the dividends, you’d have had $9.8 million by 2012, more than 10% a year real returns (that is, adjusted for inflation). Plus the company more or less gave us the modern image of Santa Claus, and his less famous helper Sprite Boy. No, really.

The point is, capitalism is wonderful at creation and its disquieting cousin creative destruction. The marketplace allows things to succeed that sound absurd or revolting at first blush, things that would never get a grant or the central planners’ stamp of approval. But that’s precisely why entrepreneurial success is inherently unpredictable, at times even inexplicable in retrospect (think pet rocks). So don’t kick yourself if you didn’t foresee that a web site where you could post every inane thing that drifted into your head for the benefit of hundreds of friends you don’t know and nothing was sold could make some guy so rich you couldn’t count all his money in a lifetime.

Or that business with the fizzy syrup.

In my latest National Post column I say that neither Jane Fonda nor the rest of us can reach low-carbon nirvana just by really nicely really wanting it.

"If something cannot go on forever, it will stop." "Herbert Stein's Law" coined by economist and chair of the U.S. Council of Economic Advisors Herbert Stein; often rephrased as "Trends that can't continue, won't."