The Rational Optimist: A Response to the Doomsayers

Posted by Brad McMillan, CFA, CAIA, MAI

Find me on:

This entry was posted on Jul 27, 2017 3:58:39 PM

and tagged On My Bookshelf

Leave a comment

the rational optimistOne of the ways I am trying to control my screen-induced ADD is by making myself sit down and read more. It has been surprisingly difficult, as I have apparently largely lost my ability to sit down and concentrate on a book for a period of time. Now that I think of it, this is something that may have been due more to my small son than to screens. In any event, now that he is old enough that we can sit and read together, I am making the effort to relearn concentration.

The effort is worth it in many cases, particularly for the book I just finished. The Rational Optimist, by Matt Ridley, is a detailed, hardheaded, and thorough look at what got the world where it is now. As the book proves, it’s the best place we have ever been, and it explains why things are more than likely to get even better over the next century. As a detailed response to the current doomsayers, and an even more detailed examination of why they have been wrong in the past, this book is without equal.

Some key takeaways

First, the magnitude of how far we have come, even in the past 20 years or so, in improving the human condition is reported almost nowhere. Good news doesn’t sell, so no one—certainly not me, who makes a point of keeping up on this sort of thing—has any idea just how much better things actually are. People are richer, healthier, living longer, more entertained, and so on. On almost every metric, the improvement has been phenomenal.

Second, in every decade, there has been some well-reported, well-reasoned case as to why we are all doomed. Paul Ehrlich, author of The Population Bomb, is repeatedly called out, but there are many other examples as well. It pays to look back at history and see how predictions actually played out. Over the long run, the doomsayers have been wrong in the past.

Third, and perhaps most important, Ridley lays out a convincing thesis on why this improvement has occurred over a period of millennia, and why the doomsayers are likely to keep being wrong.

The “outside view”

But the real benefit of the book, in my opinion, is that it offers the kind of “outside view” around big issues that provides both context and guidance. I have written before about Kahneman’s work on how to avoid bad decisions and how cultivating an outside view is one of the best ways to do that. Ridley’s comprehensive and detailed look back gives that context and, in conjunction with the framework around specialization and exchange that he uses, allows the reader to internalize that context as well.

That’s not to say I agree with everything in here. With my well-known (and well-earned) nickname of Eeyore here at Commonwealth, you might expect that. Even where I disagree, though, Ridley’s arguments make me think much more deeply about why I disagree—and why I might in fact be wrong. This is what I look for in a book like this: an argument powerful enough to make the reader deeply question his or her own conclusions.

Verdict: Highly recommend

Read this book if you want to feel significantly more optimistic about the future. Read this book if you want to have a much larger context as you read the news. Read this book as an antidote to shorter-term concerns. I very much enjoyed it and heartily recommend it.

One final note. When you buy books, or anything really, on Amazon, give some thought to going to smile.amazon.com. This site (part of Amazon) automatically donates part of your purchase price to a charity you select. As a painless way to helping a cause you already support, with money you are going to spend anyway, I recommend it highly.

Subscribe via E-mail

New call-to-action
Crash-Test Investing
Commonwealth Independent Advisor

Hot Topics

Have a Question?

New Call-to-action

Conversations

Archives

see all

Subscribe

Disclosure

The information on this website is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets.

The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. All indices are unmanaged and investors cannot invest directly into an index.

The MSCI EAFE Index (Europe, Australasia, Far East) is a free float‐adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of 21 developed market country indices.  

Third party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided at these websites. Information on such sites, including third party links contained within, should not be construed as an endorsement or adoption by Commonwealth of any kind. You should consult with a financial advisor regarding your specific situation.

Member FINRASIPC

Please review our Terms of Use

Commonwealth Financial Network®