False Optimism as The Economist’s Schumpeter Columnist Comments on Two Optimistic Books

Western Air Flight 101 From Reality Has Left the Gate

[Editor's note:  The following is a near perfect example of why The Dismal Political Economist is called 'dismal'.]

The future for America and Western Europe is not good.  The primary reason it is not good is the aging of the population.  A nation or region with a rapidly aging population, a population that will be dominated by those 65 and over will not experience long term economic prosperity.  This is the situation in the United States and Europe.

Add to this the growing dysfunctionality of government, particularly in the United States and the threat that all out war in the Middle East over Iran's nuclear program will even further damage the U. S. and Europe and the picture is very bleak.  A nuclear Iran is very troubling.  An attack by Israel or the U. S. on Iran is even bleaker. 

For those who do not want to face this reality the columnist who writes under the moniker of Schumpeter for The Economist highlights two new books that have an optimistic take on the future.

Peter Diamandis and Steven Kotler make a breezy case for optimism in “Abundance: The Future is Better Than You Think”. Eric Topol provides a more considered look at why medicine is about to be “Schumpeterised” (his word) by digital technology. These books are a godsend for those who suffer from Armageddon fatigue. They also remind us that technology keeps improving despite economic gloom.

So what is it that we have to look forward to that will relieve the slow but relentless decline that is going to happen?  There are microprocessors that will help diagnose problems.  Here is a sample.

Firms of every type are building an “internet of things” that will tell us when our machines are in danger of breaking down or our pipes are leaking water.

which sounds good, except for a little publicized concept called “false positives”.  The problem with electronic diagnosis devices is that they not only alert everyone to a defective item, they also alert everyone to situations in which there is no defect.  Attempting to distinguish between a real and microprocessor imagined problem may cost more than the benefit of the microprocessor.

Anyone who owns a washing machine with microprocessor controls knows about this.  Washing machines have been perfected in a mechanical sense, so the manufacturers have moved towards putting electronics in them.  This results in a machine that costs more, breaks down more, is more costly to fix and does not perform any better than the old basic machines. And automobiles, with all their fancy electronics do no better a job of getting a person from point A to point B than a 1955 Chevrolet.  But this is what people unacquainted with the real world call progress.

The first book goes on to list four positive factors that will improve the world

They argue that four big forces are speeding these innovations from the drawing board to the supermarket. The first is the rise of a generation of philanthropists who believe that technology can rid the world of ancient evils. . .

The second is the discovery of the “Fortune at the Bottom of the Pyramid” (as C.K. Prahalad, a management guru, called it). Firms have realised that poor people collectively constitute a huge market. The key is to make things cheaper. DataWind, a British company, has produced a $35 tablet computer in partnership with the Indian government. . . .

The third is the proliferation of do-it-yourself innovators. DIY-ers helped to power the automobile and aviation revolutions. . . .

The fourth is the clever use of prizes. A combination of cash and glory goads the brainy to compete, and can focus a vast amount of brain power on a specific problem. . .

 Note that almost all of these things benefit the non American, non European world, which will experience a much better future.  As for the U. S. and Europe, is a $35.00 tablet computer really going to help?

The second book by Eric Topol does focus in on a big issue in the United States, health care.

Eric Topol, one of America’s leading heart surgeons, argues that digital technology is giving people much more power over their health care. People can keep a constant watch on their vital organs thanks to sensors that can be worn on the wrist or injected into the blood stream. A flashing light on your smartphone will tell you when you need to see your doctor, just as a light on your dashboard tells you when your car needs a service. People can also get highly personalised treatment, thanks to rapidly advancing knowledge of their genomes. And they can find ready-made support systems thanks to the proliferation of health-related websites (more than 20% of American adults have posted on an online forum related to health care).

Uh, Dr. Topol, the problem with health care in America is not that people need a flashing light on the smartphone to tell them they need to see a doctor.  The problem is that they cannot get an appointment for months, that when they do they cannot afford the appointment, and that many times they a prescribed a treatment that is both incredibly expensive and totally useless.  (And the 'check engine' light in the car that comes on often means that the only problem is that there is something wrong with the 'check engine' light.)

So for those who want to believe in a bright and glorious future, despite all evidence to the contrary can revel in the fact that 20% of American adults have posted on an online forum related to health care.  Yep, that should make all the difference.