We present a recent theory for nerve pulse propagation and anesthesia and argue that both nerve activity and the action of anesthetics can be understood on the basis of simple physical laws. It was found experimentally that biological membranes melt from a solid state to a liquid state just below physiological temperature. Such melting processes have a profound influence on the physical properties of cell membranes. They make it possible for mechanical pulses (solitons) to travel along nerve axons. In these pulses, a region of solid phase travels in the liquid nerve membrane. These pulses display many properties associated with the action potential in nerves. Both general and local anesthetics lower melting temperatures of membranes. Thus, they make it more difficult to excite the nerve membrane. Since hydrostatic pressure increases melting temperatures, it counteracts anesthesia. This theory has the virtue of providing a simple explanation of the famous Meyer-Overton correlation, which states that the effectiveness of an anesthetic is proportional to its solubility in the lipid membranes of cells. We offer evidence that this concept if also applicable to local anesthesia. Finally, we show that the presence of transitions has an influence on channel activity that can arise even in the absence of proteins.