The False Gods of Optimism and Pessimism

The False Gods of Optimism and Pessimism

I often write about being an optimist here. But this week, Peter Thiel was asked if he is an optimist. I didn't make it Video of the Week; Elon Musk gets that privilege. Both are from the All In Summit, which appears to have been a great success.

Here is what he had to say:

The key takeaway is that both pessimism and optimism are passive. They are about opinion, unlike doing things and impacting the outcome. Optimism is only an opinion unless it derives from the feeling you get when you try to do something and succeed. He is right, and my support for optimism is unmasked as a passive reaction, needing action to bring about the changes I want. Pessimism is the same. Fearing a future is only helpful if used as fuel to create your desired future. Both Optimism and Pessimism are false gods. And both require action to affect future outcomes. Both need their believers to become activists. And activists almost always become shapers of human experience.

This week, there are a lot of pessimistic pieces in this newsletter. This week's leading piece is the report from former president of the European Central Bank, Mario Draghi. It is a devastating critique of the EU's failure to generate innovation and GDP growth.

He focuses on many failings, but two of the themes highlighted in this newsletter are central - failure to invest sufficiently and an overly restrictive regulatory attitude to technology.

He calls for €800b annually to be spent on innovation, which is 5% of the EU's GDP.

The facts are strikingly in his favor. Here are the GDP, Population, and venture investment numbers to compare the EU to the USA, China, and the UK.

The GDP per capita in the EU and UK are similar. However, the UK spends $318 per capita on venture investments annually, compared to only $54 in the EU. The USA is well ahead, with a GDP per capita almost three times the other two and a spend on venture per capita of $500.

The EU would need to spend $225 billion a year more to equal the USA. He suggested almost four times that he catch up on lost ground.

It isn't only the EU that is falling into decline. Blanko Milanovic writes about the breakdown of the post-WW2 international monetary and trading system and the challenges an "international economic system" faces with rising "nationalisms."

If the international neoliberal rules are no longer considered the appropriate rules for the United States and Europe, should they be considered as the right rules for the rest of the world?

There is simply no current answer to this question. The new rules have to be invented and introduced or the entire system will become incoherent and internally contradictory so much that eventually no "system" at all will exist. The world will be back to individual country optimization under the rules of the jungle.

The article from the Wall Street Journal chronicling the rise of the crypto-stable coin Tether perhaps shines a light on how much technology is routing around these failed systems:

A giant unregulated currency is undermining America's fight against arms dealers, sanctions busters and scammers. Almost as much money flowed through its network last year as through Visa cards. And it has recently minted more profit than BlackRock, with a tiny fraction of the workforce.

Its name: tether. The cryptocurrency has grown into an important cog in the global financial system, with as much as $190 billion changing hands daily.

Earlier in the video embedded above, Peter Thiel speaks about this impact on World War Three pessimists.

Ray Dalio has been speaking about the same thing for a long time.

So, what is an optimist to do? Not sit at home, feeling smug and spouting optimism. A famous politician once said, 'What is to be Done?'

The answer is to make the future happen. And to help stop the future you least prefer. Draghi's calls to invest in innovation are right. This week, SpaceX succeeded in the first civilian spacewalk, more than 500 miles above the Earth, and tested equipment designed to go to Mars. Uber and Waymo announced that they would join the robo-taxi initiative in more cities. OpenAi released a "reasoning" version of ChatGPT. Cerebras Systems released a twenty times more efficient AI chip than Nvidia's GPU chips.

People are doing things and succeeding all around us. I'm neither optimistic nor pessimistic. I'm writing this newsletter and also building SignalRank. See you next week.

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