Living deep among the outer suburbs of West London, my grandmother spoke fondly of last century’s second great war. On hearing the air raid sirens she would run to the garden, waiting for the sky to turn “dark with bombers”, in the words of Billy Bragg.
Banks of Spitfires and Hurricanes would rise to meet them, buzzing her house, filling her with pride. Despite living through the post war glory days when work was plentiful and housing cheap, later in life whilst reflecting on one of humanity’s greatest destructive acts she found a wistful happiness.
She was not alone in twisting memory to revere the past. We all do it. How else to explain my parental belief that every child can be improved by a paper round, vinyl records and a gobstopper? As David Hume wrote in 1777, “the humour of blaming the present, and admiring the past, is strongly rooted in human nature.”
He has a point. Implicit in a glorified past is a pessimistic future, a state of mind perhaps exacerbated by the events of the previous 12 months. This being my last column of the year, I’m going to depart from the traditional lamentations of the value investor and make the case for optimism, not just in an economic and investing sense but in the general trajectory of human history. We may have our challenges, but we should not underestimate our capacity to meet them.
The image above may not look like much to the owners of current technological masterpieces like a USB-powered humping dog – yours for just US$6.71 – but 1.8 million years ago the Acheulean hand axe was peak technology, the Swiss army knife of its millennia, which is a very long time. Developed 3.5 million years ago, the hand axe was around about 1.5 million years before the use of fire by homo erectus, and long before homo sapiens (us) superseded Neanderthals about 200,000 years ago.
Only with the arrival of the Greeks, Romans and various Chinese and Middle Eastern dynasties did the pace of change begin to accelerate, at which point the axe fell on the hand axe. Then, around the middle of the 17th Century, something remarkable happened.
Around 1550 average life expectancy in the UK was about 39 years. It stayed that way for 300 years. But, by 1850, life expectancy began to rise. Within 200 years it had more than doubled. The reason was the Industrial Revolution, which began around 1760, the effects of which took some time to spread.
The chart above belies some significant history. The Renaissance began in about 1400, when science as a means of understanding the world began to usurp religion. It took a mere 300 years before scientific inquiry led to the kind of inventions that made the Industrial Revolution possible – water, steam and coal power, the telegraph and diesel engine. All put a Stevenson’s Rocket under economic growth.
The link between growth and life expectancy is hinted at in the experience of South Korea – the purple line on the chart. A century ago the average Korean lived a mere 27 years. After rapid industrialisation, life expectancy tripled. A similar process is now underway in India, China and other developing nations.
It’s a remarkable transformation. For hundreds of thousands of years human life barely changed. In the last 200 years it has changed beyond all recognition. Triggered by the revolution, economic growth is the reason for it. How’s this for correlation:
All kinds of inventions have made this possible. Economist Tim Harford’s book 50 inventions that shaped the modern economy nominates, among other things, shipping containers, concrete, the barcode, antibiotics, insurance and IKEA’s Billy bookcase (you’ll have to read it to understand why). Each has allowed us to sustain an ever-larger population living ever-longer lives.
For me at least, nothing better illustrates the magnitude of human progress than the declining cost of artificial light. In the language of MasterChef, this was the game changing immunity pin (or maybe that was vaccination). Anyway, instead of sleeping or shagging in the dark, people could learn, build, think, invent, draw and write in the light.
Bill Nordhaus, a Yale economist, became a little obsessed with the subject, trawling through the scant economic data to establish the historical cost of manmade light. He discovered that during the Babylonian period one day’s average wages could purchase a mere 10 minutes of light, generated from a primitive oil lamp.
It stayed that way for 4,000 years, until 1850 in fact, when a Canadian discovered how to get kerosene from coal and oil. A day’s wages now purchased about five hours of light. The next breakthrough was the big one, Edison’s original lightbulb moment about 30 years later. At the time of the Nordhaus study in the 1990s, a day’s labour bought 20,000 hours of cleaner, instant, reliable electric light.
We may moan about our electricity bill but at least we don’t have to catch a whale to get enough oil to read the microwave instructions on a TV dinner (which, incidentally, made it into Harford’s top 50). Manmade light was once too precious to use. Now it’s so cheap we barely think of the price, and when we do we install solar panels. Instant, cheap light has led to a huge increase in productivity and human invention.
The upshot of all this is that it’s far better to have an ordinary income now than to be extremely rich 100 years ago, watching your kids die of polio while the maid empties the chamber pot, dreaming of boiled tripe. That, quite literally, is progress. So why the pessimism?
I’d propose three reasons, although there are probably more. The first concerns our many psychological biases, starting with the availability heuristic. Take the media’s infatuation with shark attacks, house fires, bombings and car crashes – known as the “if it bleeds, it leads” approach.
Anything memorable we deem more likely to occur, which is why many of us believe crime is at record highs (it’s near record lows) and Muslims are more prone to engage in terrorism (they’re not).
The second explanation concerns our evolutionary wiring and attitude to risk. The cost of under-reacting to the threat of being eaten by a lion was potentially a lost life. The cost of over-reacting is only a missed meal. This made sense 100,000 years ago, now not so much. We still overreact to threats because the wiring in our brains has not caught up with our changed circumstance.
The third is our limited capacity to imagine life beyond our own experience of it. Our brains see time through the prism of our own lives. That makes grasping the full, historical extent of human existence difficult, causing us to miss the lessons it offers.
This is not to argue humanity has a clear run to the future. There are obvious and serious challenges. But the likes of Donald Trump, Kim Jong-un, religious fundamentalists, anti-Semites, even Harvey Weinstein, are not new. Greed, stupidity, narcissism, selfishness, arrogance and conceit have always been with us.
Only this week Sir Chris Hohn, a UK hedge fund manager, paid himself £270 million despite his fund making only £200m, and a bloke performing a stunt for YouTube accidentally cemented his head in a microwave. Greed and idiocy are timeless.
But look at how far we’ve come in just 200 years. The silicon chip has changed our lives already but was only invented in 1961, genes can now be edited, and artificial intelligence and machine learning offer enormous promise, to say nothing of the inventions to come. Even your Christmas turkey this year will be twice the size of what it was 50 years ago.
Along with many others, I’ve experienced the pace of progress in an intimate and beneficial way. About 14 years ago I was diagnosed with leukaemia. According to the stats, my life expectancy was eight years. Immunotherapy now means I’ll probably live to an average age, without factoring in future advances.
This Christmas I’ll be looking to the future, the one just over the horizon. We may not be around to see it, but in another 200 years my guess is humanity will look back on today’s lives as my grandmother did – venerating the past whilst failing to see how far we’ve come and what we’ve achieved.
Happy Christmas and see you in the New Year.
PS. There’s a bottle of wine up for grabs for anyone that can carve their festive turkey with their very own Acheulean hand axe.