3 Awesome Reasons for Economic Optimism

It’s hard to grasp the logic that underpins abiding pessimism. It just doesn’t add up.

Now, I’m no naïf silver spooner. I’ve been around. I’ve seen some of the bad side of humanity and the world. I’ve been close to the end of the rodeo a couple of times, and I’ve lost people dear to me. So I know there’s plenty to be skeptical about.

But there’s just no compelling long-run argument for overall pessimism. In the long-run, the world keeps on getting better and better.

Could the trend bend? Well, sure. We could heat the ice caps like they’re on a backyard Hibachi and we could all drown or whatever.

Or a Zika-Ebola hybrid virus could wipe us out. Or nukes. Or general revolt brought on by another Expendables sequel.

But as a species we’ve faced down worse with less. And my money’s on us doing it again. Which means I can be happy in the meantime while things more or less turn out all right. This isn’t to say we don’t all have a role in making the world better. We do. It’s just to say there’s no good reason to be grumpy about the chance things go sour.

Economic Optimism: Plenty to Go Around
Economic Optimism: Plenty to Go Around

Which brings me back to the logic of pessimism/optimism. It’s like an agnostic take on Pascal’s Wager: There’s virtually no cost to being optimistic whether you’re right or wrong about the way things eventually go. But there’s a huge cost (i.e., you kind of crap on the goodness of life) if you’re a pessimist, regardless of whether you’re right. So you might as well be happy, holmes.

For those among you who remain unconvinced by ironclad logic invoking the world “holmes,” I present three long-run trends guaranteed to make you more optimistic.

1. Oh, Genghis, You Shouldn’t Have!

But Genghis Khan did. Oh, he did mightily. To the tune of 11% of the world’s population.

That’s the death toll of Mr. Khan’s wars waged in the early 1200s A.D.

You read that right: Genghis Khan was responsible for killing more than one-tenth of the world’s population in a roughly 20-year period. What a douche.

World War II, by comparison, left around 3.7% of the global population dead. And also involved a few douches.

In all of the 21st century, roughly 0.01% of the world’s people have been killed in conflicts. Still some douches around.

Percentage of Global Population Killed
Percentage of Global Population Killed

Every death is a tragedy. And the statistics will provide no solace to those who have lost loved ones in recent strife.

But for more and more people, those sorts of tragedies are increasingly rare to suffer. The world is becoming much safer and much less violent. Which, despite all our joking about hardcore wrestling moves here, is incredibly good for everybody.

Statistically, you’d say the world is roughly 1,100 times less violent today than in the 1200s. That means people have to worry less and less about their personal safety, about political upheaval and about global crises that upend the cornerstones of economic freedom like property rights, human rights, security and trust.

That’s something to be very optimistic about because it’s a trend that makes us all much happier and richer.

2. Lights On! (Hair Down! Glasses Off!)

It’s not something we often think about in today’s society because it’s so abundant and so inexpensive.

But for a huge part of human history, the “labor cost” of a standard measure of man-made light was absolutely devastating. Up until about 1,000 years ago (around the time Genghis did his thing), it cost more than 50 labor hours to generate 1,000 “lumen hours” of light.

Which means the cost of lighting is now around 500,000 times less than it was when Genghis pillaged and plundered.

And over the last century, the decline in lighting cost is especially striking simply because it pretty much just happened. The cost today is around 10,000 times less than it was as around the year 1900. Like, as in that crazy cost of lighting was still hanging around when people who are still alive today were scooting around in diapers.

The following graphic from international man of ridiculous economic super-awesomeness J.L. Cordeiro illustrates. Note it’s in log scale.

Global Labor Price of Light
Global Labor Price of Light (Source: Cordeiro, J.L., “Telephones and Economic Growth: A Worldwide Long-Term Comparison with Emphasis on Latin America and Asia,” V.R.F. Series, No. 441 (2008).)

You’ve probably got a 1,000 lumen light bulb somewhere in your house. Imagine what life would be like if you had to work for 25% longer than a modern workweek just to be able to afford turning that thing on for an hour. Or even if you only had to work 10 hours to do so.

Now imagine all the work and other stuff you wouldn’t be able to get done without that light because roughly one-fourth of your waking hours would be spent in the dark.

Now consider the exponential growth that every bit of technological advancement enables. With inexpensive illumination, people could work and tinker and read longer and light up their houses for the holidays. They could be roughly 25% more productive than before. And they could thus create even more great technology to make things better yet in the future.

Similar lines of thought apply to technological leaps like cars and vaccines and computers. Which enable more productive leaps. And faster productive leaps.

All of which means things aren’t simply getting better every day. It means things are getting better every day at an accelerating pace – a pace whose very acceleration is accelerating.

Whoa, that’s like second and third derivative type stuff. If you happen to be seated near Keanu Reeves while he reads this, please step away before his head explodes. Because, yes, it’s mind blowing.

3. Libre!

Would this list even be close to complete without some self-referential grandstanding?

No!

FinanciaLibre is a manifestation of this world’s incredible wealth and freedom and opportunity. So we should celebrate it.

And celebrate we shall. With a little trivia: As late as the 1950s the average number of years an American spent in retirement was…

Any guesses?

Any takers?

How about multiple choice:

A) 12 years

B) 19 years

C) 8 years

D) 0 years

E) 5 years

Got your selection?

Good. But let’s start with today and we’ll shoot back to the fifties Back to the Future style in just a minute (sans DeLorean, sadly). Today, in the United States, the average number of years spent in retirement is 12.

And that number has grown incalculably since the 1950s. Really. In percentage terms it’s undefined. Because the answer to the trivia above is d. Cero.

Now, I’m not gonna wager how long I’ll live. But getting to retire before 35 is pretty all right. So, if I make it to the average U.S. life expectancy of 78 years old before eating it, I’ll have been retired for – abacus, please – around 44 years. As will Lady Libre. But she’ll way outlive me. So mark 65 years in retirement for her, at least. Which, as it happens, is pretty close to the life expectancy of an American (68) in the 1950s – just 60 years ago.

Which means yours truly and those smart enough to be getting their recommended daily value of Libre could be retired longer than people in this very country lived just a few decades ago! And further means, because I was able to retire early, FinanciaLibre can live long and prosper to help even more people (who aren’t yet getting their RDV of Libre) do the same.

So, see? I told you this would make you an optimist.

Now get out there and grin like a creepy dude in a panel van at the playground. That is, be un-grumpy. You’ve got it pretty damn good, and you’ve got plenty to be optimistic about.

Luchadores, what’s the numero uno reason you’re an optimist? Lay it on me!

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