Fed chairman Ben Bernanke is living proof that delusional optimism is always possible if the person in question restricts their view to exclude any and all inconvenient considerations which contradict it.
Bernanke made the case for a Happy Future in a commencement speech to the graduates of Bard College. The chairman scolded "pessimists" for taking too narrow a view of that future. Bernanke's conventional thinking about the future rests upon human ingenuity and the technological innovation which springs from it. There are three fundamental assumptions which typically guide human beliefs about the future.
- Technological innovation solves all problems.
- More innovation is always better—it facilitates population or economic (consumption) growth, which is axiomatically a Good Thing.
- Human ingenuity (technological cleverness) is essentially unbounded (practical limits do not exist or do not matter).
Assumptions #1 and #2 form the Human Nature clause—when all you've got is a hammer, everything looks like a nail. Behavioral changes which might violate either assumption are ruled out. Assumption #3 springs from innate human bias (untempered optimism). Thus humans take an unrealistic view of themselves and their capabilities.
Once you've absorbed these assumptions, you will better understand the chairman's speech. Bernanke compares life in 1913 (shorter, harder) to life in 2013 (longer, easier). He then launches into his main theme.
The purpose of these comparisons is to make concrete the argument made by some economists, that the economic and technological transformation of the past 50 years, while significant, does not match the changes of the 50 years—or, for that matter, the 100 years—before that.
[See my post Two Ted Talks, and pay particular attention to the talk by Robert Gordon.]
Extrapolating to the future, the conclusion some have drawn is that the sustainable pace of economic growth and change and the associated improvement in living standards will likely slow further, as our most recent technological revolution, in computers and IT, will not transform our lives as dramatically as previous revolutions have.
Well, that's sort of depressing. Is it true, then, as baseball player Yogi Berra said, that the future ain't what it used to be? Nobody really knows; as Berra also astutely observed, it's tough to make predictions, especially about the future. But there are some good arguments on the other side of this debate.
Having completed his straw man, Bernanke now makes the optimistic case, which is founded on the considerations stated at the beginning of this post.
Technological innovation, which is part of our very nature, will continue. Pessimism is shortsighted and thus unwarranted (e.g. growth in income per person in the United States, great income inequality notwithstanding).
Second, not only are scientific and technical innovation themselves inherently hard to predict, so are the long-run practical consequences of innovation for our economy and our daily lives.
Indeed, some would say that we are still in the early days of the IT revolution; after all, computing speeds and memory have increased many times over in the 30-plus years since the first personal computers came on the market, and fields like biotechnology are also advancing rapidly.
Moreover, even as the basic technologies improve, the commercial applications of these technologies have arguably thus far only scratched the surface. Consider, for example, the potential for IT and biotechnology to improve health care, one of the largest and most important sectors of our economy.
A strong case can be made that the modernization of health-care IT systems would lead to better-coordinated, more effective, and less costly patient care than we have today, including greater responsiveness of medical practice to the latest research findings. Robots, lasers, and other advanced technologies are improving surgical outcomes, and artificial intelligence systems are being used to improve diagnoses and chart courses of treatment. Perhaps even more revolutionary is the trend toward so-called personalized medicine, which would tailor medical treatments for each patient based on information drawn from that individual's genetic code. Taken together, such advances could lead to another jump in life expectancy and improved health at older ages.
Other promising areas for the application of new technologies include the development of cleaner energy—for example, the harnessing of wind, wave, and solar power and the development of electric and hybrid vehicles—as well as potential further advances in communications and robotics. I'm sure that I can't imagine all of the possibilities, but historians of science have commented on our collective tendency to overestimate the short-term effects of new technologies while underestimating their longer-term potential.
Technological innovation solves all problems. The human-created, god-awful mess which is health care in the United States will be fixed by means of better health-care IT systems. We will innovate our way out of the climate problem by means of wind, waves, solar, etc. More is always better.
Finally, pessimists may be paying too little attention to the strength of the underlying economic and social forces that generate innovation in the modern world.
Invention was once the province of the isolated scientist or tinkerer. The transmission of new ideas and the adaptation of the best new insights to commercial uses were slow and erratic. But all of that is changing radically. We live on a planet that is becoming richer and more populous, and in which not only the most advanced economies but also large emerging market nations like China and India increasingly see their economic futures as tied to technological innovation.
In that context, the number of trained scientists and engineers is increasing rapidly, as are the resources for research being provided by universities, governments, and the private sector.
Moreover, because of the Internet and other advances in communications, collaboration and the exchange of ideas take place at high speed and with little regard for geographic distance. For example, research papers are now disseminated and critiqued almost instantaneously rather than after publication in a journal several years after they are written. And, importantly, as trade and globalization increase the size of the potential market for new products, the possible economic rewards for being first with an innovative product or process are growing rapidly. In short, both humanity's capacity to innovate and the incentives to innovate are greater today than at any other time in history.
Well, what does all this have to do with creativity and critical thinking, which is where I started? The history of technological innovation and economic development teaches us that change is the only constant...
If human ingenuity is essentially unbounded, it makes sense to say that the more people there are, the more innovation you're going to get. And now, thanks to technological advances like the internet, it is easier for good ideas to spread. It is easier to find a market for practical implementations of those ideas. And so on.
Thus the chairman chastises "pessimists" for taking too narrow a view of the human future, which is ironic because I began this post by saying that optimists like Bernanke are only able to maintain their rosy views because their belief systems exclude huge swathes of what we might (affectionately?) call Reality.
Change, says Ben Bernanke, is the only constant. But what sort of change will that be? And what, despite the chairman's assertion, will remain constant?
If humans were technological innovators who could also be counted on to benignly manage their home planet, the ecosystems and biosphere upon which they depend, and most importantly, themselves, there would be no problem here. Humans would then be highly discriminating in what they choose to do and choose not to do. Tragically, such is not the case. Humans are like bulls in a china shop, causing indiscriminate drepredation everywhere they go. Often humans will tell you that they didn't mean to cause all that destruction, or that they did not cause it, but almost invariably they do cause it. Most of the time they don't care one way or another, or even notice the damage which follows in their wake.
Viewed this way, Bernanke's speech is simply a recipe for more capitalistic rape & pillage, and more environmental carnage. The world Bernanke would construct is not a world where we leave the moose alone.
Or, as I said in my Schopenhauer post, let the suffering continue!