Living in a golden age, under the sword of Damocles (Or: dentists, criminals, terrorism, furniture, and Kim Kardashian)

We live in a fantastic time.

Consider Johan Norberg's recent article in The Spectator - "Why can't see see that we're living a golden age?":

If you think that there has never been a better time to be alive — that humanity has never been safer, healthier, more prosperous or less unequal — then you’re in the minority. But that is what the evidence incontrovertibly shows. Poverty, malnutrition, illiteracy, child labour and infant mortality are falling faster than at any other time in human history. The risk of being caught up in a war, subjected to a dictatorship or of dying in a natural disaster is smaller than ever. The golden age is now.

    Steven Pinker puts forward a compelling argument in The Better Angels of Our Nature that, for many reasons, we are living in the least violent period in human history.

    There's plenty to be optimistic about.

    Sure, income inequality may be up, Donald Trump may have a higher chance of being US President than many of us would like, and there seems to be increasing unease about many political institutions. But would you really prefer to live in 1980 than now? Without the internet? Mobile phones? The leaps we've made in tolerating and embracing minority groups? The additional knowledge we've accumulated in the past three and a half decades? 

    Perhaps it's human nature that many of us don't appreciate it. We've evolved to pursue happiness, not to be happy. 

    Perhaps it's a function of our ever-increasing access to an ever-accelerating news cycle, and our tendency to focus on negative stories. (Again, focusing on the negative rather than the positive is adaptive from an evolutionary perspective. Better to run from an imagined lion than not run from a real one.)

    Or. Perhaps, at some level, we sense the risks that have accumulated in tandem with our good fortune.

    Consider a dentist with a net worth of $2 million. And consider someone who has accumulated $2 million from a career in crime. Devoid of context, $2 million is $2 million. But add context, and you realise there's a lot more risk with one scenario than the other.

    The risk to which we are exposed is important. 

    Consider terrorism. Chances are, you haven't directly been affected by an act of terrorism.

    You might have been inconvenienced by the secondary effects of terrorism in this post 9/11 world. You've had to endure queues and additional security screening before getting on a plane, for example.

    But you're familiar with the statistic that you're more likely to be fatally crushed by furniture than killed by a terrorist. Or: that you're more likely to have slept with Kim Kardashian than been killed in a terrorist act.

    It feels like we're pretty safe, really.

    The problem, however, is that terrorism isn't like deaths from furniture or sleeping with Kim Kardashian. As Scott Alexander of Slate Star Codex points out:

    there’s probably not going to be a furniturepocalypse where suddenly millions of people all perish at once after being struck by a really really big desk. Furniture is constant. Terrorism isn’t. The whole point of black swans is that we pay too much attention to constant risks and ignore the outliers, especially the outliers which outlie so far that they haven’t happened yet. That’s true whether it’s terrorism, earthquakes, pandemics, or AI.
     Furniture. The stuff of nightmares. 

    Furniture. The stuff of nightmares. 

    The risks that we're wired to "dread" in greater proportion than other risks, loom as large as ever. These include risks that relate to the potential for many people to die at once. These include risks that are unfamiliar with, or over which we have no sense of control. 

    As technology improves, and our quality of life improves, so does the ability of people to cause harm - whether intentionally or not.

    You could say that we live in the best of times. 

    But the sword of Damocles hangs over us.

    Are we like the criminal or the dentist? Who knows. And even the dentist might have some enemies or could suffer catastrophically bad luck. 

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    Sonnie Bailey

    Sonnie is the founder and principal of Fairhaven Wealth.

    Before founding Fairhaven Wealth, Sonnie worked in the legal and financial services industries for over a decade.

    Sonnie first became involved with financial advice as a specialist financial services lawyer. For many years, he was an “adviser of advisers”, reviewing thousands of advice files prepared by hundreds of financial advisers, and providing feedback in relation to the quality and appropriateness of advice; industry best practice; risk management; and regulatory compliance. He has published work in industry publications and spoken at various financial advice conferences.

    Sonnie has also worked with banks, investment management firms, insurers, and derivatives providers.

    Sonnie has worked as a private client lawyer, focusing on succession, estate planning and trusts. He ran his own legal firm in Australia before relocating to New Zealand. He has also acted in independent trustee and company director positions.

    Sonnie is passionate about helping people achieve their goals and manage the risks to which they are exposed.

    He has written extensively on his blog, New Zealand Wealth and Risk, which can be found at www.wealthandrisk.nz.

    Sonnie is married to his wonderful wife Chrissy, and has two young children, Ben and Anna.