A new era for Definite Optimism

Maeslant Barrier in Rotterdam, unsourced photo from Wikipedia

In Peter Theil’s book Zero to One, he describes a governmental and cultural framework in two dimensions without using the standard trappings of democracy or economics. This is useful for discussion of policy or direction based on whether government policy is optimistic or pessimistic (dimension 1) or definite or indefinite (dimension 2). The book is worth a read for further detail, but Mr. Theil lists early 20th century Europe and America as defined by Definite Optimism, which meaning that life for the average citizen was improving, and benefiting immensely by improvements in physical and tangible ways. From the mastery of the combustible engine, to the development of interstate highways, telephone lines strewn across continents provided networks of commerce and communication not imagined previously. The final project of definite optimism era could arguably be the moon landing. There was a tangible goal and massive investment in technology was developed to achieve that goal.

Following a decade of malaise, this sense of Definite Optimism gave way to Indefinite Optimism, as tax rates were reduced and financial instruments (Junk Bonds, Hedge Funds, Credit Default Swaps) were developed a sense of irrational exuberance, equity bubbles in housing and new technology (the internet in the 90s) resulted in some concrete improvements, in things like smartphones, but mostly for those companies that themselves had Definite Optimism. Steve Jobs had the long range vision for the IPhone product even as Apple began producing IPods. The failure rate of Silicon Valley startups is 90%, and while social media may be addictive and in some ways a convenience, it is not as helpful in modern life as, say, refrigeration.

But even worse is policy that is driven by Indefinite Pessimism. The one foremost comes to mind is Universal Basic Income. Touted heavily by Elon Musk the rationale is that robots will run the earth for free and humans won’t have to do any more work, ever. It sounds optimistic in one sense, yes of course automation can reduce labor, but let’s consider how much labor is currently employed, now, to feed the American marketplace with product. Most of East Asia is employed working on the technology and virtually all the consumable goods used in the US, that’s close to 2 billion people. Extreme poverty rates in China dropped from 88% in 1980 to 1.8% today, mostly due to access to the American market. Eventually, East Asia (The five Tiger Economies, China, and a bit of India) developed their own middle and upper class while American wages remained stagnant. The UBI is a project from the wealthy Silicon Valley crowd who may know enough about history, or have driven to Oakland, to see that maybe large classes of people resent their robber barron lifestyle, and are trying to cut off any resentment at the pass.

But ultimately this is a tacit admission that they are running out of ideas. When I take a look around any city or town in America, the last thing I think is ‘there is no more work to be done’. Automation and robots will free citizens up to tackle hard projects, of which there are many. Here is one example of a Definite Optimism project that will require lots of labor.

The Louisiana coastline has lost 1,900 square miles in the last 85 years. For nearly 200 years the army corps of engineers worked on the Mississippi River with the chief goal of preventing flooding, and some secondary goals of producing ship channels. Over the centuries the goals were mostly accomplished. In 1993 massive floods of the upper Mississippi, near St. Louis, did not cause river flooding in the basin. The drawback to this is that sediment can’t get deposited in the delta and gets funneled out to the Gulf. Rising sea levels likely contribute to this erosion as well. In the Netherlands, with a population of fewer than 5 million people worked for seventy-seven years on the Delta Works, named one of the Seven Wonders of the modern world. Unlike the slow moving erosion of the Mississipi, the Dutch has harrowing Ocean storms and flooding. With a total cost of about 7 billion US dollars the Dutch were able to claim 900 miles of land from the sea. This was before the rise of the EU, done by this small population of Dutch citizens. Now, it is projected that a restoration project in Louisiana will cost $50 billion, seven times the cost of the Netherlands Delta Works. I don’t know how much make-work and waste is involved in the difference, but having concrete goals and projects is better and ultimately less wasteful than “creating stimulus” through quantitative easing. The robots won’t care about the Mississippi delta, and citizens on UBI won’t be motivated to work on such projects. But engaged citizens with Definite Optimism can tackle it and many other projects like it.