We’re immersed in a lot of bad news.
Many governments around the world, including the U.S. and the U.K., seem dysfunctional. Climate change leads to worry about what shape the planet will be for our grandchildren. More than seventy million people are currently displaced from their homes because of conflict, disaster, or persecution.1 According to the United Nations, 700 million people live in extreme poverty, on less than $1.90 a day, struggling to fulfill basic human needs.2 The mass media dispense daily an unceasing blast of disheartening headlines.
We're immersed in a lot of bad news.
Hold that thought. I’m going to shift gears abruptly, but it will come together in a few paragraphs.
Your mind does a lot of work to create meaning.
Let me illustrate. It was a few days before my 40th birthday. We were living in Rio de Janeiro at the time, in an apartment building near the beach. I came home from work, took the elevator up to our floor, and unlocked the door to our living room. It was initially unclear to me what was happening. I saw friends I recognized milling around. But there was one man I didn’t recognize at all with a tray of drinks. People saw me enter and began shouting “Happy Birthday!”
Shortly, I realized my wife had thrown a surprise birthday party for me. My brain pieced together all the stimuli rather quickly. I concluded that it was, in fact, a surprise birthday party for me.
That may be a silly example. You can come up with others. You sense a furry something rubbing against your leg and hear a faint purr—must be a cat. You walk late into Minute Maid Park and the crowd is enthusiastic and rowdy—the Astros have to be winning. Your wife calls you in the middle of the day and begins apologetically—she's had a minor fender-bender.
Our minds process stimuli all the time to create meaning. We have mental models that we fit stimuli into. We rely on past experiences. We make associations. We remember what our parents taught us. All these frameworks are in our head and enable us to make meaning out of what our senses perceive. Our minds create meaning that enables us to process information and move through our day.
The problem is that sometimes the meaning our minds create is factually wrong.
It's a consequence of living with a brain that is hard-wired with instincts that helped our ancestors survive and reactions that enable us not to be overwhelmed by stimuli. We can't be paralyzed by over analysis, but the cost of that is that sometimes the meaning our minds create is factually wrong.
If you ask a large number of people whether the world is getting better, recent surveys suggest an overwhelming percentage would say "no." In 2015, over 18,000 adults from high-income countries were polled. In none of the countries did more than 10% agree that "all things considered, the world is getting better."3 Phrased another way, more than 90% of those surveyed in developed countries like the U.S., Norway and Germany didn't think the world is getting better.
There's a lot of evidence to suggest that by many measures, the world is getting better. On virtually all the key dimensions of material well-being—poverty, literacy, health, freedom and education—we are extraordinarily better off than just two centuries ago. A graphic from Our World in Data4 makes the point. (If you want to see the graphic more clearly, click here and scroll to the bottom.)
If the facts are that things are getting better, why do most of us not believe it?
One answer is that with so many negative headlines each day, our mind creates a mental "reality" that the world is a mess and has to be getting worse. Blogger Ben Carlson writes: "There will always be something to worry about because good news is gradual while bad news is a headline.” We process the headlines supportive of a mental framework that says the world is falling apart. That framework is reinforced by another well-known phenomenon, searching for data that support our views, pointing us to headlines and stories that suggest things are getting worse.
Fortunately, there are those who point out that for much of the world, things are getting better. A book entitled Factfulness5 lays out ten reasons why we're usually wrong about our perception of the world and why things are better than you think. Access their recent research here. Pulitzer-winning columnist Nicholas Kristof publishes an annual column about how much progress is being made. Check out his assessment of 2018 here. A summary of human progress in a 2017 Forbes article addresses why we should be hopeful for the future.
So, we can follow the news and bemoan the state of human affairs. The world is getting worse. Or we can think a bit harder, search for facts, and discover that on many fronts, the world has never been better. Which story line will you follow?
Appreciating the advancement humankind has made over the years leads one to an optimistic view of the future. Those of us investing in great companies around the world expect material progress to continue over time, but not necessarily without fits and starts along the way. Perhaps most important, seeing these trends clearly reflects a willingness to think critically, question one's own mental realities, and search out the truth. That's not a bad recipe for engaging the world.
If your optimism leads you to want to invest in the future, we'd be happy to help you construct a portfolio and develop a personalized financial plan. Schedule a call by clicking the button below.
5Rosling, Hans, with Ola Rosling and Anna Rosling Rönnlund. New York: Flat Iron Books, 2018.
Disclaimer: The information provided here is general and intended as educational in nature. It is not intended nor should it be considered as tax, accounting, or legal advice. Investec Wealth Strategies and its advisors do not provide tax, accounting, or legal advice. We recommend you seek the counsel of your attorney, accountant or other qualified tax advisor concerning your situation.