Optimism Is Rational
The longtermist, futuristic, and optimistic view is rational.
This is not simply aspirational, but, as far as we can tell, rational in both moral and financial terms.
The burning questions companies and citizens must address often reduce to:
Short-termism vs. Longtermism
Optimism vs. Pessimism
General sentiments about each of the three dichotomies above often define how we work, how we plan, how we vote, and so on.
In the first case (short-term vs. long-term), we all generally agree that taking the long view is preferable, but any number of biases, incentives, and inconveniences get in the way.1 In the case of the latter two, it is worthwhile to realize that optimism is rational, if one adopts a long-term view.2
Looking Back
As a simple thought experiment, imagine being presented the opportunity to live one century ago. You might look forward to a world without social media and flame wars. But your first serious infection will make you long for antibiotics, summer and winter will make you long for central air conditioning and heat, and a long ride in a 1920s automobile on poorly-paved roads will make you long for your modern sedan (to say nothing of airplanes).
Now imagine this thought experiment at essentially any point in human history. Short of some specific exceptions (like, say, Europe during the bubonic plague), one would always opt for the present over the previous century. Turn the dial to a millennium over a century and the number of exceptions diminishes further.
Politicians who wax poetic about the “good old days” ignore this idea at their peril.3 Companies wagering upon a pessimistic, dystopian future are likely to be disappointed monetarily and otherwise.
The pessimists are generally perceived as irrational alarmists in retrospect. Predictions that overpopulation will cause mass famines4 have not yet come to pass.5 Barry McGuire claimed we were on the Eve of Destruction in 1964. We weren’t. Mayan prophecies of cataclysms and other doomsday cults have fallen into the basket of Chicken Little tales lost to history.
War, famine, and pestilence all can cause widespread death and suffering—for a spell. However, taking a longer lens, none of these events stopped the inexorable progression of the species.
Looking Forward
Does your retirement planning include equities? What gives you cause to believe that market returns will continue to be positive? Why are you even bothering to plan for retirement if you do not believe that a generally stable world will exist in a few decades and that you are likely to endure long enough for such a future to matter?
Most of us choose to conduct our financial lives through the prism of a generally optimistic worldview. Doing so is considered to be implicitly rational. For instance, consider an individual who spends all they earn, racks up credit card debt, and YOLOs their way through life. Though they might be free-spirited and excellent social companions, we generally see this behavior as somewhat short-sighted and irrational. Why? Because optimism about the future is rational, and myopic lifestyle choices ignore the potential to enjoy future years.
How do you suspect predictions of human flight were received circa 1900? My mother often describes the derisive comments received by her father (my grandfather) when he discussed the potential for a heart transplant while his heart began to fail in the 1950s.6
Predictions of technological progress perceived as fanciful, wishful, unrealistic futurism turn out to be more accurate than any other predictions. Therefore, when Ray Kurzweil predicts that the singularity will occur in the next 30 years and folks laugh, it is worth noting that most of his predictions in preceding decades turned out to be correct.7
The current soothsayers with the highest probabilities of accuracy are those with the most ambitious, futuristic imaginations.
Aspiration
Companies, at least those that experience long-term success, are aspirationally optimistic. They believe in a better world as time elapses and their potential to contribute to it. Presumably, they believe the geopolitical circumstances will remain conducive to success. More specifically, that more human beings will possess the wealth required to buy their products and services and that they won’t be too busy fighting wars and disease to desire those offerings.
Rational optimism suggests that humans are unlikely to simply cease with their curiosity and innovation. Rational optimism (and empirical observation) suggests that life will improve in successive centuries.
It is for this reason that effective altruists often focus upon risks that render the world non-ergodic8, e.g. “existential risks.” Positive progression with respect to quality-adjusted life years, population growth, economic achievement, social equality, technological development and so on is unlikely to end gradually. If it ends, it will be the bang of a nuclear holocaust or the whimper of a pervasive BCI controlled by some authoritarian regime.
Rationalism
Studies reveal a psychological benefit from not only the taking of a vacation, but the planning that leads to anticipation of that happy future state. Analogously, we might imagine a similar psychological benefit, over a much longer period, of anticipating a better future world. Not only is this likely to be beneficial, but in most cases in human history, this would have been correct.
Moreover, wouldn’t you rather invest in a company with such a worldview? Wouldn’t you rather be employed by a company with such a worldview? Wouldn’t you prefer the company of people who share such a worldview? Wouldn’t you prefer that policy makers offer a generally optimistic disposition rather than a retrograde view that glamorizes an inferior past?
None of this argues that recognition of risk is irrational. My wife and I carry insurance on our home, our vehicles, and the health of our bodies. It is entirely rational to plan for unforeseen risks and outcomes.
Of course, my wife and I also invest our money in anticipation of sharing a more comfortable retirement. This too is rational.9
Over a sufficient period, by any metric one desires, humanity advances economically, socially, and technologically. The only rational position is therefore, optimism.
1 E.g. “yes, I know I need to save for retirement, but there’s a foot of water in my basement that is beginning to smell of bilge and sewage…so maybe I should call my plumber now, pay to have my house smell a bit less like fecal matter, and then we’ll see about the whole 401k contribution thing tomorrow.”
2 Moreover, optimism, due to the Pygmalion Effect, is often self-reinforcing. Rosier expectations for our outcomes (and outcomes of those around us) actually increases the likelihood of those outcomes coming to fruition. In so doing, optimism is both rational and crucial.
3 They also tend to hearken back to the relative comfort of the 50s, when single-income, middle-class living evokes images of Norman Rockwell paintings. Of course, if you happened to be anything other than a white, cisgendered, heterosexual male, your experience may have differed. The superior version of the human experience for every other denomination reaffirms the general argument in favor of long-term optimism. Just sayin’.
4 The Population Bomb, and others.
5 Despite Paul Ehrlich’s assertions.
6 He died in 1961. The first human-to-human heart transplant occurred in 1967.
7 Famously, in 1990, he predicted that a computer would defeat a world chess champion by 1998. Deep Blue defeated Garry Kasparov in 1997. In 1999, he predicted that a computer would receive verbal commands by 2009. Siri beat the deadline. Read more here. Generally, Moore’s law applies to more than chip processing speed.
8 Ergodicity, mathematically, is the idea that a system, given an infinite amount of time, will visit all possible feasible states. Less mathematically, “given enough time, everything that can happen, will happen.” Non-ergodicity then basically refers to the idea that once a given state is reached, the game ends and any unvisited states never occur. We’re non-ergodic. Once we’re dead, there’s a whole list of things that are no longer possible.
9 And frankly, if a nuclear holocaust leads to our premature demise, I suspect we won’t have a ton of time to lament our not having enjoyed a week of Bacchanalian revelry in Monte Carlo beforehand.