Optimism About Our Rising Standard of Living

Matthew E. Kahn – Arthur Brooks’ OP-ED focuses on the politics of optimism but I would prefer to recast his focus on what should be the basis of our optimism about our collective future.  In 2015, we live in a world with roughly 7.3 billion people whose life expectancy is higher than it has every been.  Educational attainment is higher than it has ever been. Urbanization both insulates us from climate shocks and facilitates trade and learning. Anticipating a longer life time and lower infant mortality, families are having fewer children and investing more in the human capital of each child. These children (through the dynamic complementarity mechanism of learning begets learning) are more likely than previous cohorts to achieve their full potential.  While many progressives yearn for a return to 1950s America, I have argued (see this post and this post) that those days were not as great as they recall and the rest of the world was not in terrific shape then (think of China).

My optimism about our future is based on information technology keeping us aware and up to date in real time about emerging risks.  An educated world population demanding solutions to pressing challenges (ranging from climate change to cancer) and an ambitious set of entrepreneurs who seek both to become rich and to improve the world (think of Zuckerberg).  Ideas are public goods.  In a world of 7.3 billion people, what is the chance that the best idea from this large set is bad? The answer is zero.

Free markets, global connection, international markets in human capital and financial capital guarantee that the pace of progress will only accelerate.  Do the poor benefit from this emergent trend? Yes.  But, we all have to find and hone our comparative advantage within the world economy’s price signals.

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