First published in The Sunday Times on 17th September 2017.
Whether you regard the future optimistically or pessimistically determines the course of your life. By the nature of their job, entrepreneurs must adopt a positive outlook: they defer rewards now for the prospect of something greater tomorrow, be it a farmer planting crops for next season’s harvest, or an inventor thinking up a gadget that will change the world. They have to believe in the sunlit uplands to come, but that is not true of everyone.
Without the confidence of those who found and grow businesses, all societies would stagnate. I named this column Animal Spirits because that brilliant phrase coined by John Maynard Keynes sums up the mood of investors, consumers and, crucially, business owners. If they are bullish, then they risk their capital, they spend and they start enterprises. These are the engines that power progress. Without animal spirits, society languishes.
It is never hard to find reasons to be gloomy. The news always highlights disasters, problems and threats. Economists, commentators and many academics are, by nature, cautious and worry about all manner of menaces. Moreover, we are psychologically programmed to be anxious: such responses help protect us from genuine hazards, be they predators, enemies, starvation or injury. And we all know that no one escapes death, the ultimate and inevitable conclusion for everyone.
Take your pick: public debt, pensions, stagnant productivity, inequality, housing, the NHS, education — there are plenty of issues to be concerned about if you’re in the mood to lie awake at night fretting. Yet in the longer run these troubles are hugely outweighed by all the good things happening.
Human beings have made relentless advances through the ages. History shows improvements in almost every aspect of life for most of the world’s inhabitants. We now have better health and homes, live longer lives, have more honest government and transformed communications, fewer suicides and less war. But too many of us are blind to the bigger picture, and take for granted the incremental gains happening across society, thanks to trade, technology and liberty.
Of course, the world is imperfect, but the qualitative, aesthetic and environmental advances we receive are mostly not even recorded in statistics. Yet they matter as much as all the data that is measured.
Unfortunately, many intellectuals and journalists love a depressing story. The Resolution Foundation, a left-leaning think tank, has just published a survey showing 48% of respondents thought today’s youngsters would have a worse standard of living than their parents. Many Millennials, born between 1982 and 1998, said they would have preferred to have grown up when their parents were children, according to the report.
The idea that we will be generally worse off in 30 years is ludicrous. But people have short memories, and view the past with rose-tinted spectacles. Life in the 1970s, when I was growing up, was awful compared with today: be it travel, food and drink, entertainment, shopping, telecommunications, the workplace, clothing, household appliances, leisure facilities, cars — everything is dramatically better in almost all such categories.
Social attitudes to things such as race, homosexuality and sexual equality have changed for the good. There is always more to do — housing and provision for retirement are two particular issues — but we will solve these challenges provided Jeremy Corbyn and the unions do not drag us back to a 1970s socialist nightmare.
Among some there appears to be a desire to see Britain fail to prove a point about the Brexit referendum and the present government. This is baffling and self-destructive.
The Archbishop of Canterbury and the Institute for Public Policy Research, a left-wing think tank, recently published a report from their “commission” which said that our “economic model is broken”. The constant drone of such defeatist and inaccurate junk can itself undermine confidence.
So be it Brexit, a looming recession or computers and robots taking all the jobs, we will cope. Even if there are downturns, there will be recoveries and humankind will be even more prosperous in 10, 20 and 50 years.
Of course, being materially better off may not make us all happier, but it helps. Many of the so-called problems that confront society are those of plenty — obesity, for example.
Wellbeing does not always correlate with living standards, but free markets, the profit motive, limited government intervention, entrepreneurship, rule of law and property rights still deliver vastly better results than any alternatives.