Why there are reasons to be cheerful in turbulent times

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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Professor Sergei Guriev is dean of London Business School. He served as provost at Sciences Po, in Paris, and was chief economist at the European Bank for Reconstruction and Development

It is hard to be optimistic about the world these days.

There are bloody wars in Ukraine and the Middle East without a clear end in sight. The planet is getting hotter every month, and our capacity to address the environmental crisis is in doubt. There are growing divisions between China and the west ­— and, within western societies, social media provide a platform for spreading disinformation and promoting polarisation. Populist politicians blame “corrupt elites” for their inability to manage cross-border migration, for higher prices, and for lower living standards, but do not offer credible solutions.

All these problems are real, and daunting for those now beginning business and leadership careers. Global warming is likely to create hundreds of millions of climate refugees. Wars cost lives and destroy cities; they also affect the global economy. Russia’s invasion of Ukraine alone is likely to have shaved $1tn off global GDP (compare the IMF’s economic forecasts in January and April 2022). When populists come to power, a country’s economy slows and its democratic institutions deteriorate. Finally, inequality and polarisation undermine our ability to address these problems.

Yet we should not forget that humankind has been through worse — and survived. As they say in financial markets, past performance is not a guarantee of future results. But research in the social sciences suggests reasons for optimism.

First, we should not forget that we may suffer from negativity bias in reporting the news. The arrival of social media has probably aggravated this. The platforms’ business model is based on keeping users’ attention. This is easier with reports of disasters than news of incremental progress in fighting global poverty. Social media make the world more transparent. This helps to expose corruption, but also highlights every mistake of incumbent elites and reduces confidence in government and political institutions.

There are many problems today, but we should be aware that our perceptions are worse than the reality. Despite multiple crises, the world has never been as prosperous, educated and progressive. Fifty years ago, more than 40 per cent of humankind lived in extreme poverty. Today, this share is 10 per cent — still too high but much improved.

The climate crisis is real but the ingenuity of innovators and entrepreneurs has already lowered clean energy generation costs to the level where about 96 per cent of newly installed, utility-scale solar and onshore wind power plants have lower generation costs than new coal and natural gas plants. According to the International Energy Agency, renewables represent 33 per cent of the global power mix — up from 22 per cent 10 years ago. Next year, renewables will overtake coal as the largest source of electric power generation in the world.

Second, while populist politicians correctly point out that globalisation, automation and the global financial crisis left behind many lower-middle-class voters in developed countries, economic problems have economic solutions. Post-crisis austerity policies aggravated the economic situation of the most vulnerable parts of society. Among other things, there is evidence suggesting that austerity policies contributed to Brexit. But this lesson has been learnt and, during Covid, most governments around the world were more generous, thus avoiding fanning the flames of populism.

The other important way to bridge intra-societal divisions is deliberative democracy. Recently, democratic countries including Ireland, Canada, the UK and France have used various forms of citizens’ assemblies to address difficult and potentially polarising issues — from environmental transition to pension reforms to abortions and gay marriage.

Deliberative democracy randomly picks one or several hundred ordinary citizens and asks them to reflect on a given issue. These “mini-publics” talk to experts and politicians and propose solutions. These policies are formulated not by “detached elites” but by “normal people”, thereby giving them immunity to populists’ polarising narratives.

Finally, we should recognise that not all democratic electoral systems are born equal. In the recent UK general election, the Labour party won 34 per cent of the vote and got 63 per cent of the seats. In the French parliamentary election, Marine Le Pen’s National Rally came first, with 37 per cent of the vote, but got only 25 per cent of the seats.

Two-party systems, like that of the US, may further promote polarisation as it is hard to create a centrist third party. An alternative is ranked-choice voting, by which voters rank candidates. Those who are hated less than others (ie those who are ranked second by the majority rather than first by a minority or last by a majority) win. This voting system is thus more likely to benefit centrist candidates who propose compromise policies. This sounds like a theoretical abstraction (and can be further improved) but has been increasingly used in parts of the US.

The world is indeed in trouble, but there is hope. Humankind is still in favour of democracy. In 2024, half of the world’s population went to the polls; most of these elections turned out better for pro-democratic candidates than many feared. And even non-democratic leaders largely choose to pretend to be democrats, which shows they are aware that voters prefer choice and accountability.