“Tell me something that’s true that nobody agrees with.” That’s Peter Thiel’s favorite question to ask entrepreneurs. With it, he’s trying to find people with contrarian mindsets who have no problem believing in things that are not popular. When I first read that quote, I sat for a few minutes thinking of beliefs I have that might fit the bill. Sadly, one of the things I came up with is my optimistic view of the world (including American politics!). Even before Trump, it seems like I rarely run across someone who is optimistic about the overall direction of the world, but especially politics. Everyone thinks people are more racist, politicians are more corrupt, and the world was a better place a few decades ago. My response to that has generally been:
- Nostalgia bias.
- We’re only human. Don’t expect perfection.
- Not that I was alive pre-1987 to know for sure, but when I think about life expectancy, women’s rights, slavery, and the rise of democracy, it certainly seems like the world today is the best it ever has been. And 20 years from now, it will probably be better. And so on and so on.
With that being said, the negativity surrounding so many conversations today (from Trump supporters and Trump haters alike) had started to make me think maybe we are doomed. Luckily I ran across the book Progress recently, which reminded me that we’re going to be just fine. The subtitle of the book is Ten Reasons to Look Forward to the Future. Each chapter covers a major factor in quality of life (food, life expectancy, poverty, literacy, etc) and how that factor has evolved over time. I think it’s a good idea every once in a while to remind ourselves how good we have it in a first world country in 2017.
In the 18th century, all but the rich ate fewer calories per day than the average person in sub-Saharan Africa does today. Because food is our body’s energy source, this had a serious effect on intellectual and physical development. People were shorter, weaker, and less intelligent because their bodies and their brains didn’t receive adequate nutrition during childhood. Over the last 140 years there’s been 106 mass starvation events (defined as killing at least 100,000 people). Because of a lack of nutrition and sanitation causing disease, life expectancy was under 30 for all of human history until the mid-1800s. Before 1800, not a single county had a life expectancy over 40. Even in 1950, life expectancy was only around 47 (now it’s over 70). Today, a newborn has a better chance of living to 65 than a newborn had of seeing their fifth birthday just 200 years ago.
Increased wealth has been a major factor in lengthening lifespans. The richest countries in 1820 had a GDP per capita of $1,750 (adjusted for inflation). That’s in line with the poorest countries today. “The average world citizen lived in abject misery, as poor as the average person in Haiti, Liberia and Zimbabwe today.” Luckily, globalization has been a massive tailwind for wealth. Worldwide extreme poverty went from 44% in 1981 to 37% in 1990 and 10% in 2015.
As wealth and life expectancy increased, people started to value life more and violence has decreased as a result. Countries began to realize they could produce things of value and trade it with other countries in the new global market, instead of stealing from or destroying those other countries.
It’s also interesting to put things in perspective. World War 2 is known as the deadliest war of all time with ~60 million casualties. While that is obviously a massive number, on a proportional basis there have been many worse events. Less than 3% of the world’s population died in World War 2, compared to several other wars and genocides throughout history that each killed 5-10% of the world’s population. When factoring in world population, the 20th century actually wasn’t that violent. That shows you how normal violence and war were throughout most of human history. During the 16th and 17th centuries, the great powers of the world were at war over 75% of the time. Since the Korean War between the US and China in the 1950s, the great powers haven’t been at war once.
The one area of violence that has increased in recent times is terrorism, but luckily terrorists aren’t very good at their job. 10x more people die every year falling down stairs and drowning in their bathtubs than are killed by terrorists. Of the 457 known terrorist organizations from modern history, not one has conquered a state and 94% failed to achieve even one of their stated goals.
The terrorism section of the book reminded me of cancer (there’s a phrase I never thought I’d write down) in that they’re both “good” problems to have. The violence of yesterday was never-ending war with dictators leading genocides of millions of people. Terrorists today don’t have the resources or manpower to have the effect many of those in the past did. Likewise, cancer is a relatively new problem as life expectancy has increased. When infant mortality was 30-40% and life expectancy was under 40, we rarely had to worry about people dying of cancer. Now we do and that’s a good problem to have. This reminds me of something from the book The Subtle Art of Not Giving a Fuck (yes, the book is as good as its title). One thing that book talks about is having better problems is a sign you have a better life. “When you get better problems, you get a better life.” Cancer is a better problem than infant mortality.
Here are a few more facts from Progress that I found reassuring:
- There is no record of any civilization that hasn’t at some point practiced slavery. Slavery was in almost every country in 1800 and just 200 years later it is banned in every single country.
- In 1900, women had the right to vote in only one country (kudos to New Zealand). Just 115 years later, in 2015, women were only completely excluded from the voting process in two areas (Saudi Arabia and the Vatican).
- Attitudes towards gay people changed even faster. Homosexual acts were illegal in every American state in 1960. Homosexuality wasn’t removed from the list of mental disorders until 1973 and sodomy was still illegal in 14 states as of 2003. And now gay marriage is legal and 60% of Americans support that fact.
- In 1900, 0% of the world’s population lived in a true democracy (where every citizen gets one vote). By 1950 that number was 31% and now it’s around 60%.
And the most amazing part of all that progress is how much we overcame. All of the above was achieved despite:
- Adolf Hitler’s genocide of over ten million innocent civilians.
- Joseph Stalin killing 5-10 million innocent civilians.
- Mao Zedong is held responsible for well over 40 million deaths throughout his Chinese rule.
- ISIS, al-Qaeda, and at least 455 other terrorist organizations that all wanted to take over their country and/or the world.
- Small groups like the Ku Klux Klan and the Westboro Baptist Church spreading hate.
- And those are only relatively recent examples that don’t include Genghis Khan, Attila the Hun, and a host of other murderous megalomaniacs from the past.
There are thousands of people and groups who would have loved to reverse humanity’s progress, but no one’s succeeded. A paragraph towards the end of the book gave me an idea of why:
“Literacy has increased wealth, and that new wealth has also made it possible to extend literacy further. Better access to food and health care has made it possible to work more, so that we can ensure even better nutrition and even better health.”
I’m betting some investors recognize this as the flywheel effect (or network effects). For thousands of years humans made virtually no progress, but once we got the ball rolling our progress has only sped up. At this point, that flywheel of progress seems almost impossible to stop:
“More countries, in more places, now have access to the sum of humanity’s knowledge, and are open to the best innovations from other places. In such a world, progress no longer depends on the whim of one emperor. If progress is blocked in one place, many others will continue humanity’s journey.”
What does this have to do with investing?
I think having an accurate mental model of the world, how we got to where we are, and what that tells us about where we’re heading is extremely important. Anything that helps me understand the world a little better can’t hurt. In the last chapter of the book, the author talks about a survey he gave to a couple thousand people. He asked “Is the world getting better or worse?” and these were the results:
- 71% said it’s getting worse
- 18% said it’s not changing
- 6% said they don’t know
- 5% said it’s getting better