Saturday, October 25, 2014
15

The Realism of Global Optimism

PRAGUE – Read a newspaper or watch the evening news, and the world always seems to be getting worse. One problem after another is put under a spotlight. The more death, destruction, and despair, the better. As one Danish journalism textbook puts it: “A good story is usually bad news.”

Only occasionally do we get uplifting, things-are-getting-better stories. When we do, they feel like a guilty pleasure. As a result, we often think that the world is in worse shape than it is – even if we think our own lives are improving.

Consider this: Since 1978, American consumers have been asked whether their current financial situation is better or worse than it was a year earlier. Over the past 25 years, an average of 38% have said they are doing better, while 32% have said they are doing worse. But, when asked the same question about the overall US economy, an average of 47% have said it is doing worse, compared to 38% who think it is doing better. More people think their lives are improving, while others are doing worse, probably because of journalists’ persistent bias in favor of bad news.

The phenomenon is not limited to the United States. Since 1977, Gallup International has asked people around the world whether they believe their lives will be better next year than they were the year before. For 2014, almost 50% of those surveyed said that their lives will be better, with just 20% saying they will be worse off. Yet, asked for their opinion of how the world economy will fare, the score is almost even, with 32% believing that it will be better, and 30% that it will be worse.

So it is worth stepping back and recognizing that many indicators point to a world that is improving. New data from the World Bank show that the proportion of extremely poor people has more than halved over the last 30 years, from 42% of the global population in 1981 to 17% in 2010. While 1.2 billion people in the developing world still live on less than $1.25 per day – a problem that we certainly must address – the rate of extreme poverty has never been lower. Economists estimate that in 1820, more than 80% of all people were extremely poor.

Similarly, consider the amazing improvements in education. Illiteracy today still afflicts 20% of the world’s population, but that is down sharply from an estimated 70% in 1900. In the prosperous West, rapid increases in literacy were achieved early in the twentieth century. In developing countries, similarly large (and continuing) gains were made from 1970 to 2000, with China recording the biggest improvement.

The costs of poor education are substantial. For example, Pakistan and South Korea started with about the same level of education and income in 1950. Today, the average South Korean has 12 years of education, whereas the average Pakistani has fewer than six. South Korea’s per capita income grew 23-fold over this period, compared to Pakistan’s three-fold growth.

Together with the Copenhagen Consensus, economists have attempted to assess the cost of illiteracy. We estimate that if there had been no illiteracy in 1900, the world would have been $240 billion richer (in inflation-adjusted terms), equivalent to about 12% of global GDP at the time. So, the global illiteracy problem in 1900 can be said to have cost the world 12% of GDP. Today, the cost of global illiteracy is down to 7% of GDP. By 2050, when illiteracy will reach about 12%, the cost will have dwindled to just 3.8% of GDP.

Likewise, war carries a high economic and human cost. But, while the images of it that we see are more immediate and vivid than ever, our perception of ubiquitous conflict is wrong. In the twentieth century, conflict killed 140 million people, including 78-90 million in the two world wars.

The good news, which is not often publicized (precisely because it is good), is that scenarios in which military spending is higher, the same, or lower in the future suggest that the high military costs of the twentieth century have been turned into what looks like a permanent peace dividend. World War I cost about 20% of global GDP, and WWII cost almost twice as much.

When examining the cost of conflict, the Copenhagen Consensus economists estimate the actual costs of global military expenditure. If one also takes into account the lives lost in battle, the estimates increase by about 50%.

According to these estimates, annual military costs in the twentieth century averaged about 5% of GDP. Yet, since the Korean War peak of 7%, global costs have declined steadily, reaching 3.5% in 1980 and about 1.7% today. Even a pessimistic outlook suggests an increase only to about 1.8% by 2050; under a more optimistic scenario, military costs could decline further, to 1.6% of GDP.

There are still plenty of problems in the world, as the news media point out every day. And we do need to focus on eliminating poverty, stamping out illiteracy, and promoting peace. But we also need to remember that the world is a better place overall than we think.

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  1. CommentedJuan Gabriel Gómez Albarello

    aha, the number of CO2 particles in the air has increased dramatically. So does the number of species extinct. People have abused antibiotics either at home or in the meat production industry to the extent that WHO says that we should prepare to live in world without antibiotics. The consumption of anti-depressants, anxiolitics and tranquilisers has also grown almost exponientially, but you asked your readers to look at the bright side? Please, the half-empty glass thing, again? Get the full picture if you want to say anything meaningful.

      Portrait of Bjørn Lomborg

      CommentedBjørn Lomborg

      Dear Juan Gabriel. Thanks for your comment. We have actually tried exactly to do what you're asking for -- looking at the trends from a large number of different areas, including climate and biodiversity, along with health and other indicators, as I describe here (such as war and education). Pls take a look at all of them, which are almost all moving in the right direction.
      The academic version is here: http://copenhagenconsensus.com/projects/how-much-have-global-problems-cost-world, and a quick one here: http://www.theatlantic.com/international/archive/2014/01/a-report-card-for-humanity-1900-2050/282928/

  2. CommentedJeffrey Scofield

    I think Bjørn regularly takes a position where he compares the world today with the past in order to justify many of the wastes of market fundamentalism.  In other words, many people today have more amenities, education and a higher life expectancy than their grandparents. My first car was much more reliable than my father's. My chineese made toothbrush is much cheaper than what my father once paid for his. 

    But polls, opinions and statistics hide details.  First of all, many people in the US have experienced stagnating wages over the past thirty years and many of those life improvements have come a the cost of increased private debt. I work much harder than my father, yet I can not afford the health insurance he has been able to maintain, uninterrupted, most of his life. So the quality of my life has decreased relative to him.  I also pay a much higher % of my income to afford property relative to his him.  I am also left with less savings for retirement relative to him.  Furthermore the vacuum cleaners and freezers my father purchased in his youth were better engineered and lasted decades longer than similar products I purchase today. Even my grandmother (b1899) had an easier time paying for her masters degree than I would today.

    What Bjørn needs to consider is how much productivity has been lost due to unnecessary waste, senseless consumption, planned obsolescence, overfishing,  rent-seeking behavior etc.  Or even how much of our innovation has been fueled by directed government investment, like in technology and pharmaceuticals, as Mariana Mazzucato has been doing.

    He should write an op-ed to the 1.2 billion people still living in poverty in the developing world, explaining how much easier their subsistence living would be if first world nations hadn't overfished 90% of large game fish.  How much more cheap energy we would have (and less pollution) if we weren't wasting them producing toys like McDonald's Happy Meals. How much energy and resources are wasted with planned obsolescence.  Because in a world of less waste and better planning, those 1.2 billion could have already been lifted out of poverty.

  3. CommentedArmin Schmidt

    Here comes a related post with an Idea, that I initially addressed to you via e-mail, which seemingly did not work.

    I view it as good, that you answer to comments, thanks for that., it encouraged me to post here.
    Now my shortened comment on the issue of optimism vs.pessimism.

    I thought about the question, where to focus upon, when the focus can only be on one: optimism or pessimism/opportunities or problems,or as I described it: enabling enabling states or disabling disabling events.

    And the answer I wanted to discuss is:

    In times of elevated mood, I should focus on disabling disabling events to lower it, and, in times of lowered mood, I should focus on enabling enabling states to elevate it.

    This answer implies, that the actor perceives the average mood as best as it maybe is the most productive.

    There are many more thoughts surrounding this, if you or another reader is interested, please reply.
    Best wishes to everyone

  4. CommentedHenrik Nordborg

    There are (at least) two big problems with the remarks of Mr. Lomborg. First, the development of the world so far looks pretty OK if one measures everything in terms of GDP. Yes, defense costs as a share of GDP have decreased and the energy efficiency has increased. Most of this is due to the fact that the GDP, just like the housing prices in the US in 2008, has decoupled itself from reality. The GDP is a largely fictitious number which might be correlated to the profits of large banks and financial institutes but has very little to do with true wealth and quality of life of people. Some details can be found here: http://giseco.org/2014/01/17/the-missing-curve/
    Secondly, we are not talking about the past but about the future. We cannot just take past experiences and extrapolate them into the future. This is why we need models that take the finite nature of the Earth and its atmosphere into account. It the surface of the Earth and the volume of the atmosphere were growing as fast as the economy, I would not be at all worried. Unfortunately, they are not and Mr. Lomborg knows it.

  5. CommentedKen Presting

    Funny how Mr. Lomborg is also a featured speaker on a right-wing entertainment cruise of the Caribbean, entitled "Fixing the World" - http://reason.com/blog/2013/05/15/register-today-for-reasons-2014-cruise-f

    One might ask, if "Global Optimism" is so true, then what needs to fixed?

    Lomborg is neither a thinker nor an opinion writer. His employer is a paid outlet for propaganda, funded by corporate foundations. He is an entertainer, like Rush Limbaugh.

    It is crucial to the business model of his industry that independent media should be routinely despised. "Read a newspaper or watch the evening news" he says - and you are only a dupe. Or, a "low information voter" - That's what Rush Limbaugh calls us. These so-called "free-market advocates" can't admit that the market for information is free, Even when they themselves are selling their own wares in it.

    This self-styled optimist is in fact a pure cynic.

    I object to the editorial decision to include paid publicists like Lomborg in the pages of Project-Syndicate. This material is not content, it is advertising, and should be clearly labeled as such.

      Portrait of Bjørn Lomborg

      CommentedBjørn Lomborg

      Dear Ken Presting. Thanks for your comment, but what a depressing ad hominem, and an inconsistent one at that.

      We've produced a project with more than 20 of the world's top economists looking at how the world is doing from 1900-2050, funded by the Danish government, published by Cambridge University Press. You can read about it here: http://copenhagenconsensus.com/projects/how-much-have-global-problems-cost-world. I will look forward to hearing your thoughts and factual criticism, instead of just name-calling.

      Secondly, your criticism is inconsistent. You claim I'm right-wing (I'm not, and publicly on the record for that) and just paid to belittle the world's issues. Yet, you also note that I'm giving a lecture on "fixing the world" (one that I've also given in countless other forums and universities). This is exactly consistent with what I actually do: getting us to focus on the smartest ways to help the world. I do not understand why you would ascribe cynicism to me for that.

      The world is generally better, but there are still lots of problems to be fixed. (As I write in my oped here, there is for instance still 1.2bn extremely poor people, and 20% illiterates.) But we often don't focus on the most important problems (like the 3.5m people that die each year from indoor air pollution) because they are not the most media sexy ones.

      That is why we need to understand the real state of the world.

      So, dear Ken -- let's talk about the real problems, and refrain from name-calling. It will make for a better conversation in here, and likely help the world much more. I look forward to seeing your factual comments.

  6. CommentedZsolt Hermann

    I agree that the media likes to over-blow the negatives as negative news sell more papers than positive ones.
    I also agree that looking at the provided statistics there is vast improvements in many important areas, facets of human life.
    And I definitely do not want to destroy budding optimism as I agree with the some of the comments that for any healing, recovery the positive mindset is the most important.
    But I would still recommend caution with becoming overly optimistic, as keeping our heads above the clouds, losing critical self-assessment can be just as harmful as negative projections.
    If we look at humanity from systemic point of view, and instead of isolated statistics we look at the whole picture, we can see that our overall direction is simply wrong.
    We are still forcing an unnatural, unsustainable structure within the closed and finite natural system.
    We can twist things as much as we want but human beings are not outside or above the natural system, we evolved from it and we are existing still within it.
    Thus the present, modern human lifestyle, our whole socio-economic system that is built on excessive, artificial demand, overproduction and over-consumption goes directly against the general balance and homoeostasis of the vast natural system. And this cannot be maintained infinitely and most of the signs, the daily events of the ongoing global crisis suggest that we have already passed the point of no-return and what we do has become self-destructive.
    The other systemic issue connects to our world being global. We have become interconnected and interdependent. And although superficially there is hardly anybody who disputes this, when we look at our day to day life and general processes in human society, they are still based on subjective, self-centred calculations, ruthless competition, isolationist policies, succeeding at the expense of others. This attitude, direction is again self-destructive, it is like being cancer cells in a single, interconnected body.
    We need to get used to looking at the world in a systemic fashion, specific, isolated statistics will not give us the full picture, not to mention how statistics can be easily manipulated to suit certain bias, personal motifs.
    Only this way, using the constant honest, critical self-assessment and subsequent self-adjustment only human beings are capable of doing can we build a truly successful and sustainable human system, future.

  7. CommentedArne Van Renterghem

    There is a vicious circle dictating what the media covers. News coverage is not free. The business model is largely based on income from publicity. The more people watching/reading the more income.
    Most parts of the public have a biological tendency to be focused on problems/danger. Without even realizing this there is a darwinistic proces that thus automatically focusses the media to the largest group of people. By doing so they create/confirm an image of a dangerous world, a world of problems and corruption. This directs the focus of even more people to the dark side of the news. Creating higher income for media-owners and thus more pressure on the journalist.
    Essentially: there is a biological bias in our brains to focus attention to danger and there is a darwinistic economic process that thrives on this.
    There is no simple way out of this.

  8. CommentedClyde Israel

    http://www.project-syndicate.org/commentary/the-price-of-inequality
    This challenge is not just an American challenge.

  9. CommentedClyde Israel

    http://www.project-syndicate.org/commentary/joseph-e--stiglitz-pours-cold-water-on-rosy-projections-of-faster-recovery-in-europe-and-the-us#4pU1odM1WJKuUkBA.99

  10. CommentedClyde Israel

    The state of our media always surprises me, the more shocking the better; it seems there is a physiological, psychological and evolutionary cause behind the proclivity for bad news. I was reminded of this circumstance when reading Poached by Dr. William Fowlds, recommended university reading dealing with the plight of the endangered rhino – a “horror movie”. Is this type of publicity necessary? The world is full of tragedy and serving it up on a silver platter seems to be Neanderthal - according to some psychologists and neuroscientists it is; hard wired into our brains from the hunter gatherer times of so long ago. Nevertheless, it has served its purpose, the General Joe is definitely informed about the plight of the world’s rhino.

  11. CommentedAndrei Sandberg

    Hi
    In order to survive one must have hope. I mean...what's the point otherwise, right?

    One has to believe in a better world. Maybe we would have not got this far otherwise. There is absolutely nothing wrong with optimism per se, but if one has seen the dark side of what a human being can do, it can't raise many questions. Many philsophers and social sciencists have pondered these question for ages.

    I'm just saying that it takes courage to look at the dark side. How much we spew chemicals and pollution into this beautiful planet, how much propaganda is being spread every day through media, how much violence and manipulation is going on all walks of life, how easily one can get caught in something like a neoliberal ideology or any other for that matter.

    We can of course choose and walk around not knowing and caring about the crimes against humanity and nature, but once we opened the Pandoras box of knowledge we also have a duty to do what is right. Pursue justice, peace and happiness for all of us. Maybe that is the key to happiness?

    Best Wishes

      CommentedAndrei Sandberg

      A slight correction on my part. Meant to say: "There is absolutely nothing wrong with optimism per se, but if one has seen the dark side of what a human being can do, it can in some of us raise many questions. Many philosophers and social sciencists amongst others have pondered these questions for ages.".

      Keep up the good work and thank you all.

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