The case for optimism in the face of pessimistic economics

News outlets often make the world seem like a very gloomy and hopeless place; a trend only exacerbated by the last two years of pandemic-induced uncertainty. In particular, news surrounding the economy – presently in relation to Covid and Brexit – seems to be the grimmest of the bunch. But, in the spirit of festive cheer, we’re going to make the case the case for positivity in the face of pessimistic economic news.

“Britain’s export performance is slipping behind other developed countries as the world recovers from the coronavirus pandemic, exposing what some economists are calling the “most worrying trend” in the UK economy.”

“The impact of Brexit on the UK economy will be worse in the long run compared to the coronavirus pandemic, the chairman of the Office for Budget Responsibility has said.”

“The headline rate of inflation in the UK has risen to 5.1% – its highest rate in a decade.”

These headlines are just a few to grace the front covers and pages of news outlets from the last few months. A steady trend can be observed across all three: “we’re doomed”.

None of these articles are circulating spurious rumours either, all cite good data and reports. So, if the information put forward is accurate, why be positive about it?

Media Bias

It will come as a surprise to no one that the media we consume has inherent biases baked into it. Politics aside, the fundamentals of human nature bleed into this too. When presented with an ‘everything as normal’ news story or an ‘everything is doomed’ news story, most of the time we’ll choose to read the disastrous over the banal.

This preference for bad news over good is thought by psychologists to come from a primal danger preparation instinct locked deep inside our subconscious. Put simply, those among our ancestors who were more aware of upcoming bad situations could better prepare for them than those who were ignorant, therefore increasing their chances of surviving and thriving despite said bad situation.

Despite what many of us may like to think, these ancient behavioural biases still drive a lot of our behaviour today – in the scheme of evolutionary psychology it’s only been the blink of an eye since they were truly needed anyway.

So, when we see a headline predicting a 4% dip in the UK’s GDP, we pay attention – awareness of this fact could help us better prepare for a future where this becomes a reality.

This is an important fact to consider when viewing the world through the lens of a media outlet – bad stories get more clicks, and more clicks means more money, therefore perpetuating the cycle.

The job of economists

The subject of bad news brings us nicely onto the primary role of economists – to deliver the necessary bad news that no one wants to hear.

Economists are employed to help companies and governments better understand the risks, opportunities, and options present in their financial systems. So, when the chairman of the Office for Budget Responsibility says the UK’s GDP is at risk of shrinking 4% because of Brexit, he means it – but he certainly does not suggest that this is the end of the conversation.

Trends like this are the data that governments can then use to mitigate these exact predictions. If the government is aware of precisely how much Brexit might impact GDP, it can take measures to try and prevent that from happening.

To add to this, economists who successfully streamline the efficiency of parking regulations don’t make it to the front page of the BBC, but those predicting the downfall of the US economy certainly do.

Final thoughts

This thought piece is certainly not to say that the world is all sunshine and roses. The last two years have undoubtedly been the hardest in a long time for many around the world for a plethora of nuanced reasons.

But we’d like to leave the year on a positive note. We’ve just lived through the most prosperous decade in human history – ever. At no other time have so many had access to shelter, reliable sources of food and water, and various other luxuries only accessible to the royalty of the pre-industrial age.

While the outlooks of many economists may appear grim – remember, this is their job. It is now our job – and the job of our governments and corporations – to figure out how best to mitigate their dire predictions. The world need not be a grim place if we take steps to prevent it.

By Rebecca Garland on 22/12/2021