Putting Things Into Proper Perspective
One of the most spectacular birds I’ve ever seen is the Snowy Owl, a large white bird with a wingspan of almost five feet. With a worldwide population estimated at only 200,000, some of these owls reside all year in their breeding grounds high in the Arctic tundra. Others, however, migrate south in the winter to Canada and the northern continental U.S., where they can be found in open fields and shorelines.
During certain years, relatively large numbers of Snowy Owls migrate south in what is called an irruption. Because their primary food source in the Arctic is lemmings, researchers had long assumed that the reason for these periodic irruptions was due to changes in the lemming population. It was thought that during those years when the lemming population declined, the owls had to go south to avoid starvation.
In 2013, a group of volunteer scientists began capturing and fitting the owls with GPS transmitters to better understand their movements and to record their medical conditions. What they discovered was a complete surprise and the exact opposite of the conventional narrative. Not only were the migrating birds not emaciated from starvation, but researchers now understood that large irruptions occur in years when lemmings are abundant because the “Snowies” will lay more eggs and raise more young, and it’s the younger birds that tend to migrate more. (You can learn more about this research at www.projectsnowstorm.org).
This is one example of the value of ongoing scientific research to challenge conventional or consensus thinking. Another example which is much better known: The case of the worldwide overpopulation doomsday narrative.
In one of my undergraduate classes, I was required to read a book by Stanford biologist Paul Ehrlich called The Population Bomb, first published over fifty years ago. The book famously begins: “The battle to feed all of humanity is over. In the 1970s and 1980s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now…Nothing could be more misleading to our children than our present affluent society. They will inherit a totally different world, a world in which the standards, politics, and economics of the past decade are dead…We must have population control at home, hopefully through changes in our values, but by compulsion if voluntary methods fail.”
Ehrlich’s conclusions were based on the assumption that worldwide agricultural production could not possibly keep up with the growth in population. In response to the hysteria, India implemented forced sterilizations and China adopted its notorious one-child policy. But even as these issues were being debated at the time, forces were at work in the world that would undermine the doomsday prophesy. First, as the fruits of capitalism and free enterprise began to raise living standards in many parts of the world, birth rates began to decline.
Also, technological advances in agriculture, such as the work of biologist Norman Borlaug, greatly increased food production. Borlaug created a new strain of higher yielding wheat that, when adopted by India, was so successful that India was not only able to feed its population, but eventually began to export wheat to other nations. As William McGurn of the Wall Street Journal wrote, “Paul Ehrlich got it wrong because he never understood human potential.”
As human beings, we seem unusually susceptible to the power and influence of narratives like this, especially those with a scientific veneer. Remember UFOs, “Nuclear winter”? Second-hand cigarette smoke? The Y2K scare? Bird flu? H1N1 virus (Swine Flu)? Asteroids hitting the Earth? Obviously, the two pandemics were real threats…the others, not so much.
Nobel Laureate economist Robert Shiller writes about the economic and political power of such narratives (and how they go viral) in his recent book, Narrative Economics, saying that people “use narrative to explain how things came to be and to tell stories…The human tendency to form simple narratives around even the most complex chains of events infects even the most analytical minds.”
The late novelist Michael Crichton, MD (author of Jurassic Park, Andromeda Strain) adds an additional warning about narratives, especially those backed by “hard science” in a speech he gave in 2003: “the work of science has nothing to do with consensus. Consensus is the work of politics.” In other words, we should be skeptical of narratives that invoke the word consensus, because “(t)he greatest scientists in history are great precisely because they broke with the consensus.”
My point in all this is just to say that it is important that we recognize any such narratives (including the latest fads in investment strategies, for example) for what they are and to be cautious, if not skeptical, about what we finally decide to believe. It is all too common for us to believe the worst and to forget how far the human race has come. The world, in spite of many problems and conflicts, continues to keep getting better and better.
To help us gain a proper perspective, here are some statistics that should encourage us to be optimistic about the future. These are global changes over the past 50 years (find more at www.humanprogress.org):
- In 1966, average life expectancy was only 56 years. In 2016, it was 72. That’s an increase of 29 percent.
- Out of every 1,000 infants born, 113 died before their first birthday. In 2016, only 32 died. That’s a reduction of 72 percent.
- Average income per person rose from $3,698 to over $17,469, or by 372 percent – and that’s adjusted for inflation.
- The food supply rose from about 2,300 calories per person per day to over 2,800 calories, an increase of 22 percent, thus reducing hunger.
- The length of schooling that a person could typically expect to receive was 4.15 years. In 2016, it was 8.71 years – a 110 percent increase.
- On a scale from 0, which denotes autocracy, to 10, which denotes democracy, political freedom rose from 4.55 in 1966 to 7.05 in 2016. That’s an improvement of 55 percent.
- David Brooks writes “In 1981, 42 percent of the world lived in extreme poverty. Now it’s around 10 percent. More than a billion people have been lifted out of poverty.”
Accordingly, from an investment perspective, we quite naturally remain very optimistic about the long-term prospects of equity investing, with the obvious caveat that short-term returns will always have an element of volatility.
Speaking for everyone here at Coyle Financial Counsel, we hope that you have a wonderful Holiday Season and a Happy, Healthy and Optimistic New Year!
John serves as Chief Investment Officer for Coyle Financial Counsel and is responsible for overseeing the investment process. John’s prior experience includes managing institutional fixed-income portfolios for corporations, pension funds, non-profit organizations and foundations at several large, global asset managers. With more than 20 years of institutional investment experience, he is energized by helping individuals understand the role investing plays in meeting their long-term financial goals.
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All information is from sources deemed reliable, but no warranty is made to its accuracy or completeness. This material is being provided for informational or educational purposes only, and does not take into account the investment objectives or financial situation of any client or prospective client. The information is not intended as investment advice, and is not a recommendation to buy, sell, or invest in any particular investment or market segment. Those seeking information regarding their particular investment needs should contact a financial professional. Coyle, our employees, or our clients, may or may not be invested in any individual securities or market segments discussed in this material. The opinions expressed were current as of the date of posting, but are subject to change without notice due to market, political, or economic conditions.
Copyright © 2019 Coyle Financial Counsel. All rights reserve
 Paul R. Ehrlich, The Population Bomb (MacMillan, 1971)
 Robert J. Shiller, Narrative Economics (Princeton University Press, 2019) Kindle Edition
 Michael Crichton, “Aliens Cause Global Warming” (Accessed at http://www.sepp.org/NewsSEPP/GW-Aliens-Crichton.htm)
 David Brooks, “I Was Once a Socialist. Then I Saw How It Worked”, New York Times, 12/5/19 (Accessed at https://www.nytimes.com/2019/12/05/opinion/socialism-capitalism.html)