An Optimistic Balance
By Jeff Bernier
On what principle is it that, when we see nothing but betterment behind us, we are to expect nothing but deterioration before us? Thomas Babington Macauley (1860)
I’ve been spending some quality time with my two-year-old grandson recently. Maverick is well-named! In the early evening, as grandparents like to do, I spoil him with a few minutes of the Thomas the Tank Engine show before we settle down to read or go to bed. (Thank you, Netflix!) The other day, I thought we would mix it up a bit and thanks to the miracle of YouTube I put on a “classic” cartoon, The Jetsons. You know, George and Jane Jetson, the family of the future with their flying cars and robot housekeepers. Production quality has improved greatly since these shows were produced and predictably, Maverick was not nearly as interested as “JJ” – my grandad name. (Who knew that you MUST have a special grandad name!)
The show reminded me of a quote by Peter Thiel, a well-known entrepreneur and investor who wrote in 2011: We wanted flying cars, instead we got 140 characters. This is referring to what he described as a slowing down of technological innovation--instead of transformational breakthroughs, we are getting Twitter and its 140 characters. He argued that we need more ambitious entrepreneurs solving very important challenges instead of working on rinky-dink social media startups.
Is it possible that historical evidence, abundance, and vaccines in record time could refute this?
Sometime in the last twenty years or so, I have become particularly interested in reading history. As a financial advisor, I have always been drawn to economic and investment market history believing that it would make me a better advisor. Believing as I do that many people fail as investors because of behavioral errors and that providing context and perspective is important.
One of my favorite books of the last twenty years was Matt Ridley’s The Rational Optimist: How Prosperity Evolves, published 2010. It is a well-researched book that documents the incredible progress humans have made over time and argues that the best is yet to come.
When I saw that he published a new book How Innovation Works: And Why It Flourishes in Freedom, I was excited to go further. This book tells the story of innovation through time and the progress that ensued. Importantly, it also posits the conditions under which innovation grows. Some of the conclusions might surprise you as they did me.
A short excerpt:
The chief way in which innovation changes our lives is by enabling people to work for each other. As I have argued before, the main theme of human history is that we become steadily more specialized in what we produce, and more steadily diversified in what we consume: we move away from precarious self-sufficiency to safer mutual interdependence. By concentrating on serving other people’s needs for forty hours a week – which we call a job – we can spend the other seventy-two hours (not counting fifty-six hours in bed) drawing upon the services provided to you by other people. Innovation has made it possible to work for a fraction of a second so as to be able to afford to turn on an electric light that would have required a whole day’s work if you had to make it yourself by collecting and refining sesame oil or lamb fat to burn a simple lamp, as much of humanity did in the not-so-distant past.
Recently, I had the opportunity to watch a portion of Peter Diamandis’ Abundance 360 event where game changing technologies are discussed and presented. We may be getting the flying cars after all!
Predicting which technologies or businesses will go from cool innovations to business success is virtually impossible. After all, about 3,000 auto companies have started and failed in the U.S. The big takeaway is that innovation is not receding and that many of the world’s problems can be solved. Some of the themes in his opening remarks were covered in one of Dr. Diamandis’ recent blog post: Why Abundance Mindset.
Nonetheless, the world is heading rapidly towards abundance, and understanding this could transform your life and your business.
Exponential tech like computation, AI, 3-D printing, robotics, VR are rapidly dematerializing, demonetizing, and democratizing products and services. What used to only be available to the richest and most elite, is now available to almost anyone on the planet. A child in the middle of Zimbabwe can Google any information or video conference for free with someone on the other side of the world. Many things we paid millions of dollars for just two decades ago are now available for free on your smartphone.
The challenge is that our minds evolved during a world of absolute scarcity, and most people are trapped in an unhealthy “Scarcity Mindset”. In a world of scarcity, there is a limited pie. If your neighbor gets a slice, that means you get a smaller slice. It’s a world of limited resources and fierce competition.
With an Abundance Mindset, rather than slicing the pie into thinner and thinner pieces, we just bake more pies… millions of more pies. This is the future that exponential tech enables. And this is true across almost every sector whether or not people see it or recognize it yet.
The release of multiple vaccines in record time to address COVID-19 is an example of biotech innovation and free market competition. Scientists and biotech companies have been experimenting with messenger RNA (mRNA) for some time. Companies that work with mRNA do not need the actual virus to create a vaccine, just a computer to tell its scientists what chemicals to put together and in what order. Moderna, BioNTech (Pfizer’s partner), and other companies got to work. This technology may hold promise for future medical breakthroughs as well.
Here is a short video on mRNA vaccines:
I see all this progress, and it fills me with conviction and hope that further progress is possible. This is not optimistic. It is having a clear and reasonable idea about how things are. It is having a worldview that is constructive and useful.
Hans Rosling, Factfulness: Ten Reason’s We’re Wrong about the World – and Why Things Are Better Than You Think
In his book, Rosling provides insights into how knowing the facts (which are often far different from the headlines) can help us perceive the world more accurately and optimistically. We reviewed it on the Money and Meaning Podcast a while back:
Think the world is getting worse?
If so, you’re wrong according to Ronald Bailey and Marian L. Tupy in their book, Ten Global Trends Every Smart Person Should Know. Here are a few of the trends mentioned in the book:
The Great Enrichment: Since 1820, the size of the world’s economy has grown more than a hundredfold.
The End of Poverty: According to the World Bank, 42% of the globe’s population was still living in absolute poverty in 1981. Today that figure is 8.65% and continues to decline.
The End of Famine: Agricultural productivity has greatly improved because of more scientific methods of farming, access to plentiful and much improved fertilizers and pesticides and new high-yield and disease- resistant plants.
More Land for Nature: The global tree canopy increased by 865,000 square miles between 1982 and 2016.
The Long Peace: Over the past half century, wars between countries have become rarer, and those that do kill fewer people.
Of course, none of this is to suggest that there are not significant problems and challenges to face. It is only to provide an optimistic balance to the culture of negativity and scarcity mindset that seems more pervasive following a difficult 2020. And to suggest that innovation and technological advances have not stagnated.
Now, if someone can just help me to get the microphone to work on my next Zoom call!
Stay Rationally Optimistic!