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Global pessimism amid plenty

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By Michael Spence/Milan

A few years ago, I wrote a book called The Next Convergence, about how developing economies were “catching up” to their advanced counterparts in terms of income, wealth, health, and other measures of well-being. I looked not just at how these countries had achieved rapid growth – including the central role played by an open global economy – but also at the opportunities and challenges this process of convergence would bring.
In writing the book, I had planned to include a lot of data in visual form. But a respected literary agent told me that using graphs was a bad idea, because only a small share of people absorb quantitative information better when it is presented visually. I came to realise that graphs are, in a sense, answers to questions. If you don’t pose a question, a graph is somewhere between uninteresting and meaningless.
Recently, the Harvard University psychologist Steven Pinker published a book documenting long-term positive trends in multiple dimensions of well-being, which he calls “the fruits of the Enlightenment.” Progress is not, Pinker acknowledges, consistent; there have been significant setbacks as new challenges, such as climate change, have emerged. But, generally, well-being has been improving since at least the mid-18th century, with the Industrial Revolution bringing a sharp acceleration in welfare gains. Since World War II, 85% of the world’s population living in developing countries have benefited as well.
Yet, while Pinker uses many graphs to demonstrate this progress, most people seem not to perceive it, or at least to discount it relative to immediate problems and worries. Why?
A host of factors contributes to the divergence between data and perception, beginning with people’s innate biases. One such bias is the “optimism gap”: people tend to be more optimistic about their own circumstances than they are about those of others, or of society in general. Another is what the Nobel laureate Daniel Kahneman and his long-time collaborator, the psychologist Amos Tversky, refer to as the “availability heuristic”: people estimate the frequency of events by the ease with which examples come to mind.
When it comes to assessing economic and social trends, both biases are shaped by the news cycle. Pinker cites data indicating that the share of negative news stories has trended upward in the post-war period. Since the advent of digital and social media, the news cycle has been shortened to minutes, encouraging a continuous flow of imprecise, sensational, false, or deeply biased content. Negative news tends to sell better, perhaps because of a built-in negativity bias. It doesn’t help that on social media, users can “self-select” the type of content to which they are exposed, potentially reinforcing their existing biases.
Uncertainty, too, can fuel a more pessimistic assessment of trends. And there is no shortage of uncertainty in the world today.
In developed countries, globalisation and automation have already produced significant shifts in labour markets and income distribution. The continuing takeover of economic activity by artificial intelligence and robotics is likely to sustain and even accelerate these trends. Such global economic and technological forces are widely viewed as beyond the control of countries’ governance structures, raising doubts about the efficacy of policy responses.
Similarly, climate change is beyond the capacity of any country to address alone, and there are serious questions about whether the global community’s response is even close to aggressive enough to stave off disaster. The apparent crumbling of the post-war global order – and the lack of a clear idea as to what will replace it – compounds concerns about the efficacy of international co-operation.
It is also true that aggregate economic data can and do obscure more localised problems. While the benefits of globalisation have been enormous, they have been unevenly spread. Many regional and local economies have been rocked by job losses and the decline of entire industrial sectors – developments that have contributed to rising inequality.
The danger of ignoring the distributional aspects of growth patterns has lately come to the fore, as widening inequality has emerged as a key contributor to negative attitudes about economic and social progress. Pinker and others rightly point out that rising inequality does not imply absolute losses for subgroups, unless overall income growth is flat.
But while extreme inequality and poverty are unacceptable in most societies, some disparities of income and wealth are widely viewed as a tolerable, even inevitable, corollary of a market economy, though the specific level of inequality that is considered appropriate varies across countries. The real issue, then, becomes perceived fairness in a particular society – a hard indicator to quantify. Meritocracy, transparency, and constraints on the extremes seem to be the most salient dimensions of that question.
To some extent, societies’ perceptions of economic trends – whether positive or negative – comes down to policy responses. When policymakers ignore losses in particular regions or sectors, the result is anger and social division – and negative views about the economy’s trajectory. When policymakers provide adequate protection to their citizens, those views may be more likely to skew positively.
This point was driven home in a recent New York Times article, which cited a European Commission survey indicating that 80% of Swedes “express positive views about robots and artificial intelligence.” On the other hand, “a survey by the Pew Research Center found that 72% of Americans were ‘worried’ about a future in which robots and computers substitute for humans.”
Swedes broadly view technology as essential to foster competitiveness, fuel productivity growth, and thus expand surpluses that will be distributed among workers, management, and owners according to shared values, or used to help adapt worker skills. And there is a comprehensive – and admittedly expensive – social-security system to support people in transition. In the US, pessimistic views of major economic trends may be fuelled partly by a lack of adequate policy responses and less robust social-safety nets. Attitudes toward globalisation and digital technology also tend to be more positive in high-growth developing countries like India and China, where progress is highly visible and digital technologies look more like growth engines than threats.
While there is no shortage of challenges facing economies and societies today, they should not be allowed to obscure positive long-term trends. The best remedies for “undue” and potentially debilitating pessimism are practical: effective fact-based policymaking, shaped by scientific inquiry and social solidarity. – Project Syndicate

*lMichael Spence, a Nobel laureate in economics, is professor of Economics at New York University’s Stern School of Business and Senior Fellow at the Hoover Institution.

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14 Comments on "Global pessimism amid plenty"

  1. Ghung on Fri, 2nd Mar 2018 12:27 pm 

    “While there is no shortage of challenges facing economies and societies today, they should not be allowed to obscure positive long-term trends.”

    Such as? Let’s make a list of, all things considered, net positive long-term trends.

  2. rockman on Fri, 2nd Mar 2018 1:52 pm 

    Ghung – Easily done…if you cherry pick properly. Just one of many possible examples: Indonesia. I doubt they are very happy with their long term oil production trend: going from a oil exporter and card carrying member of OPEC to a net oil importer.

    Life today is great…just ask any rich guy. LOL. Or anyone in Sweden: Sweden has the EU’s lowest proportion of citizens or residents living below the material poverty line – 1%. But don’t ask a Bulgarian where 44% of its population are considered materially poor.

  3. Davy on Fri, 2nd Mar 2018 2:51 pm 

    I see affluence but not much wisdom. We are making choices consciously and unconsciously that involve more, better, and easier instead of value. Value may include the above but more often than not value includes abstracts of for instance strength, beauty and harmony.

    When wisdom is subverted by a quest for affluence many important values are discarded because affluence is incomplete. A wise man will call into question more and easier if this means less sustainability and resilience to a dangerous world our communities dwell in. In fact
    today’s affluence is dismantling communities. The local connections of communities of earlier times is now dissolving into aimlessness of thrill seeking.

    Wisdom seeks proper choices that are scaled and reflect a reality testing. Today our choices have a flawed vision. Today we are rudderless and aimless because affluence has allowed people too many choices. There are very few wise choices longer term. These choices involve species survivability. In our world today survivability is an individual affair now. Collective values with so many people in a vast affluence has allowed a directionless mythology of MOAR. We have many people who have little and they too are part of this curse of affluence. How many of these peoples would even be around without affluence. Affluence has created poverty.

    Wisdom says we are wrong and there will be consequences for this existential mistake. Real value will be returned to because wisdom will be needed to navigate the end of affluence. Affluence will bring about its own demise. If you are smart you will choose less and learn to say no in preparation for this paradigm shift of the end of affluence.

  4. Jef on Fri, 2nd Mar 2018 6:11 pm 

    Again the only measure we have of increased prosperity or well being is by how much stuff they can make, sell, buy, and no mention of the waste stream this all creates

  5. DMyers on Fri, 2nd Mar 2018 7:37 pm 

    I agree that wisdom is the missing ingredient in the recipe for our salvation.

    Regarding the article, it contains some interesting points. Seems to be a psychologically sound analysis of certain tendencies.

    If the goal is to get people to “think positively” then this may provide some important clues to making that happen. Surely universal attendance to a Dale Carnegie course would help as well and would act as a resume fortifier.

  6. MASTERMIND on Fri, 2nd Mar 2018 7:43 pm 

    Economics is pseudoscience used to justify preexisting social hierarchies. If the earliest economists had told the truth (mutual aid is key to the flourishing of any civilization and allowing individuals to amass endless wealth is detrimental), the rulers who paid them would have just killed them and paid someone else to say differently.

  7. Sissyfuss on Fri, 2nd Mar 2018 8:52 pm 

    To an economist the world is seen as all things financial. The forests are lumber, the oceans fish factories, the land either farmland or cities.And the future is an opportunity to increase profits. Nowhere is there seen habitat that sustains all life for that has no meaning to an economist. They know the cost of everything and the value of nothing.

  8. MASTERMIND on Fri, 2nd Mar 2018 9:34 pm 


    Well put, very well put…

  9. onlooker on Sat, 3rd Mar 2018 1:23 am 

    not be allowed to obscure positive long-term trends—
    Like the dismantling of the planet”s life support systems by a species that does not and cannot control it’s prolific population growth. Wake up humans the Big correction is coming.

  10. dave thompson on Sat, 3rd Mar 2018 2:12 am 

    Yes the corporate capitalist system “knows the cost of every thing and the value of nothing” Sissyfuss, I might only add that in the end the real “cost” to what was done with everything valuable will be devastating. I am watching what is happening in the arctic as we speak. It ain’t looking good.

  11. GregT on Sat, 3rd Mar 2018 2:39 am 

    ” I am watching what is happening in the arctic as we speak. It ain’t looking good.”

    It most certainly does not look good at all.

  12. deadly on Sat, 3rd Mar 2018 5:38 am 

    The Arctic has warmed for thousands of years over time any time of year and it will continue to do so.

    The indigenous North Americans witnessed a warm wind sailing down the front range of the Rockies all the way down to Colorado. It is called a Chinook. Been there and done that for a long time now. The Pacific Oscillation is the term.

    It ain’t climate change that does it, the Pacific warms, the warm waters and air move north as the world turns.

    For every action…

    A computer is an extension of the human brain.

    No brains, no headaches, nor computers.

    American Luddites are always complaining about something that appears to be wrong and will do them harm. If it ain’t for them, then it is opposed.

    It never changes. Plasterers opposed sheetrock. I’m using my slide rule, why should I use a scientific calculator? Needs electricity, slide rules don’t. Always an ODD group out there thinking they’re always right.

    How many farmers out there prefer a workhorse to a diesel-fueled 200 horsepower tractor?

    Plow all day long and hope to cover five acres with a workhorse, or use a tractor with an internal combustion engine busting out a couple of hundred acres in no time at all?

    Oh wait, I’ll take the workhorse that needs oats, water, and ten acres of pasture. I don’t want no stinking tractor that can improve production exponentially. Who wants that? An on board computer monitoring all systems and sensors giving warnings of potential mechanical problems? Nah, don’t want any of it. Technology just plain sucks, I’ll take a workhorse farting all day long while I walk behind it trying to get something done. There is no rest for the wicked.

    I’d rather work twelve hours and eek out a miserable existence than have a tractor that can make life better for everybody.

    Why should there be more people benefiting from my labor? The workhorse can work me to death and at a ripe old age of 59, it’ll be all over. Why have a tractor that can relieve the work load by a thousand times and more can benefit when I can work myself to death and everyone else can starve?

    I want answers, dammit.

    There are too many people who can’t fend for themselves. Why is it my responsibility to help them survive?

    It’s not.

    It is an outrage. Besides, they’re all lazy and good for nothing. They don’t deserve anything to eat and they can just die. The workhorse is going to eat long before they do, the filthy swine that they all are.

    Die-off coming soon to a neighborhood near you.

    That is what you call progress.

  13. twocats on Sat, 3rd Mar 2018 7:24 am 

    “In developed countries, globalisation and automation have already produced significant shifts in labour markets and income distribution.”

    So all this “aplenty” but yet for the vast vast vast majority of people – very little certainty. Developing countries will your “wage growth” work yourself out of a job. In developed countries will your job skill set survive longer than the next iphone model.

    This article is so filled with ideological bias and cognitive dissonance its almost hard to read. It’s like watching someone with dementia try to remember the name of some common everyday item. At some point you just hope they have a half-way decent death.

  14. Cloggie on Sun, 4th Mar 2018 9:30 am 

    World’s largest offshore lifting crane “Sleipnir” to be commissioned in 2019:

    Main task: decommissioning of abandoned oil platforms in the and installation of super-heavy transformer blocks for offshore wind farms. The monster ship had eight feet and is fueled by LNG.

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