An Antidote to Pessimism
Regular readers of this blog will recognize two of my oft-mentioned maxims that investing is all about the future and that what happens in the future is unknowable. Some people might equate an unknowable future with uncertainty and possible risk of financial loss, and to that I would not disagree. Predictably, this would be the part in my blog where I would tell you all the reasons we should, nevertheless, be committed to investing some part of our wealth in long-term assets like stocks (which I have done already: see here and here).
Psychiatrist M. Scott Peck began his best-selling book The Road Less Traveled with the words, “Life is difficult.” Most would agree. For many, life has taught us to expect less than ideal outcomes. Bad things happen to all of us at one time or another. Of course, some are more naturally optimistic about life than others. But there is more at play here, especially now in these times of COVID-19 and its Delta Variant. The world has experienced enormous economic and social upheaval from the pandemic.
We could each compile a unique list of things to worry about. No doubt the most pressing items on our lists would include serious personal concerns around health, finances, and relationships, for ourselves or those we care about.
Other worrisome things come from outside ourselves, from what we consume in the way of daily news, sourced regularly from social media, newspapers, and the nightly news. This information arrives instantly on our cellular devices from a news cycle that never sleeps. Bad news sells. Consume too much of it for too long and it’s no wonder so many of us have that constant, nagging feeling of angst and dread. Pessimism can permeate our thoughts about the future.
How would you answer this question: “All things considered, do you think the world is getting better, getting worse, or about the same?” If you answered “worse,” you have a lot of company. According to Hans Rosling, in his book Factfulness: Ten Reasons Why We’re Wrong About the World – and Why Things are Better than You Think, when people in thirty countries were asked this question, over half of the respondents answered “worse.”
But is this pervasive sense of negativity justified? What evidence do we have to be more optimistic about the world? Actually, there is considerable data supporting the fact that, in many ways, the world has gotten better.
One accessible resource is the book Ten Global Trends Every Smart Person Should Know, by Ronald Bailey and Marian L. Tupy. Let’s consider seven of these global trends out of 78 described in the book:
- “The latest World Bank assessment reckons that the share of the world’s inhabitants living in extreme poverty fell to 8.6% in 2018.” The authors expect this number to drop below 5% by 2030.
- Are we running out of natural resources? No. “On average, the real (inflation adjusted) price of 50 commodities fell by 36.3% (from 1980 to 2017).” A shortage of a commodity would command a much higher price, from a supply and demand perspective. “Humanity has not yet run out of a single supposedly nonrenewable resource. In fact, resources tend to become more abundant over time relative to demand for them.”
- The population of the world is expected to peak at 9.8 billion around 2080 and fall thereafter. “Instead of having many children in the hope that a few might survive, more parents around the world now aim to provide those few with the skills and social capital that will enable them to flourish in a modern economy.”
- Paul Ehrlich’s 1968 book The Population Bomb predicted that by “the 1970s hundreds of millions of people will starve to death” because the population growth would far outstrip the world’s food production. The authors state that “Since 1961, the global average population-weighted food supply per person per day rose from 2,196 calories to 2,962 calories in 2017…Today, famines have all but disappeared outside of war zones.”
- “Nearly 90 percent of the world’s population in 1820 was illiterate. Today, almost 90% can read…Being able to read and write is associated with reduced poverty rates, decreased mortality rates…and increased political awareness and participation.”
- “Growing urbanization is good for both humanity and the natural world. Cities are the centers of innovation, engines of growth…No country has grown to middle income without industrialization and urbanizing. None has grown to high income without vibrant cities.”
- With fewer people living in rural areas, more land can revert to nature. “The global tree canopy increased to 2.24 million square kilometers (865,000 square miles) between 1982 and 2016. Expanding woodlands suggests that humanity has begun the process of withdrawing from the natural world, which, in turn, will provide greater scope for other species to rebound and thrive.”
Books like Ten Global Trends and Rosling’s Factfulness are excellent antidotes for pessimism about the world. Another book in that category is Fewer, Richer, Greener by Laurence B. Siegel. In the preface to the book, Siegel writes: “More food, better food, less hunger. Longer lives, healthier lives, happier lives. Less work, easier work. Technology that satisfies and makes life more pleasant and interesting. A culture worth enjoying. The amount of betterment that has taken place over the last 250 years – the Great Enrichment – in what we call the developed world, and which is rapidly spreading to the rest of the world, is almost unbelievable. Humans have lived on Earth for many tens of thousands of years, but only in the last quarter-millennium has any large number of them enjoyed the fruits of economic growth and technology on a sustained basis.”
The world still faces many seemingly intractable problems which dominate the news outlets. Yet we’ve seen how the world has progressed on many fronts – this should give us hope for the future that these trends will continue. Thought experiment: If you were given the chance to live either 100 years ago or 100 years in the future, which would you choose?
John Finley 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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 The Road Less Traveled by M. Scott Peck, Touchtone, 1980
 Factfulness, by Hans Rowling, Flatiron Books, 2018
 Ten Global Trends Every Smart Person Should Know, by Ronald Bailey and Marian L. Tupy, CATO Institute, 2021
 Fewer, Richer, Greener, by Laurence B. Siegel, Wiley, 2020