The Case for Openness – An Open and Shut Case?

Q1 | January 2022

Topic: Human Interest

Fergus W. Gould, CFA

January 28, 2022

Image used with permission: iStock/TK 1993


Print & Share

Print

The Case for Openness – An Open and Shut Case?

Q1 | January 2022

From time immemorial, mankind has been open. Open to new ideas, open to trade, and open to migration – the three critical ingredients for progress. Well, not always open and not everywhere, but more or less.

Three decades ago, after the collapse of the Soviet Union, western liberalism, with its key tenets of free ideas and free trade, was triumphant. Now, after a most unsettling period – September 11, the Global Financial Crisis, waves of refugees, global warming and COVID – we are seeing a rise of nationalism, populism, and calls for strong policy responses. Anti-free trade and anti-immigration are not fringe concepts – in some democracies they are policy. At universities, once lauded as the bastions of free speech and the free exchange of ideas, professors and students need to be circumspect. While The Donald may be gone for now and Boris may soon be, the underlying nationalistic sentiment and jingoism hasn’t changed. Brexit and Putin remain. Are we seeing a shift from open to more closed? Where may this lead, and why?

The Case for Openness

Mankind has made extraordinary progress. As Johan Norberg in “Open: The Story of Human Progress” points out, in the last two hundred years, life expectancy has increased from less than thirty years to more than seventy.(1) Extreme poverty has been reduced from around 90% of the world’s population to 9% today. Being poor used to mean undernourishment and stunted growth. Two centuries ago, the average male British worker was 13 cm shorter than a typical upper-class male. Today the difference is negligible. Both wear similar clothes, have access to healthcare, travel by powered transport and take vacations. And the progress is global. In the last 100 years, real GDP per capita in the West increased by a multiple of 7 times and ranges from 4 to 8 times across the various sub-regions in the rest of the world. Anthropologists put it down to humans’ ability to cooperate – the sharing of ideas and trade are at the core. Simply put, nobody could ever live in a city or enjoy specialized goods and services without trade. Without shared ideas, there wouldn’t be much to trade or other forms of progress. Similarly, we move for opportunity – perhaps for a job across town or on another continent. Along the winding path of history, more rapid progress has occurred in times of openness. Think Phoenician traders, Greek philosophers, Roman empire builders, the Dutch golden age, and our current world state. Starting in about 1800, we have enjoyed an almost unbroken increase in living standards. Outside of the Western world, openness drove the Persian Empire, China in the Song dynasty, Japan after the Meiji Restoration, and the Muslim world before the Mongol invasions.

Put another way, openness is a “win-win”. Over time, we can expand the pie for all, rather than just claim a bigger share (“win-lose” or “zero sum”). Intertwined with openness are individual rights, such as private property and freedom of choice, and capitalism, with it’s beautifully creative, sometimes destructive, and continuously scorned inequitable attributes.(2) The case for openness may seem to be open and shut, but not so. Now that openness has triumphed, we humans are doubtful and dissatisfied. Recently, Nexus hosted a webinar by Matt Ridley, author of “The Rational Optimist: How Prosperity Evolves”, but even his well-reasoned arguments generate “yes, buts” from many.(3)

Closed

Closed societies, closed minds, no progress or reversion. There are current examples (North Korea), and many in history, such as China after the cultural revolution and the Soviet Union. The Dark Ages were aptly named – following the rapid progress of the Western Roman Empire, and until the Renaissance, “centralised authority” – the Christian Church – increasingly dictated how to think. All ideas about life and death, good and evil, were commands from God. Other religions were supressed, astronomers flogged, libraries destroyed, and the 900-year old Plato’s Academy for philosophers in Athens was closed. According to Anthony Gottlieb, “By the year 1000, medicine, physics, astronomy, biology and indeed all branches of theoretical knowledge except theology had virtually collapsed. Even the few relatively educated men, holed up in monasteries, knew markedly less than many Greeks had done eight centuries earlier.”(4) The Persian Empire, China and Japan, have all had closed phases. These waves of openness and more closed seem to repeat.

Why?

What may have caused these waves and the recent tilt towards closed that we see today? Who knows, but there are some thoughts that are based on anthropology and human psychology.

“Humans” have been around for at least 300,000 years. For almost all of that time we were hunter-gatherers. There was no point in making anything that couldn’t be carried with you. Small tribes lived together to protect themselves from danger and to hunt. Between tribes, it was largely a zero sum, “what you get, I lose”, world. Hostility between tribes was normal. Small tribe sizes limited new ideas and made specialization difficult. With 290,000 years of hunter-gatherer and only 10,000 years of a more cooperative existence, it seems that our brain still has its innate tribal win-lose instinct. This part of the brain has a tendency to overwhelm our more cooperative win-win brain in times of adversity and uncertainty. Psychologists have conducted innumerable experiments to understand and validate this. Uncertainty makes us tribalistic – less tolerant of outsiders and less open to new ideas or free debate. Back in the day, this meant you listened to the person on the soapbox whose views you agreed with. Today, we simply dial up social media. Everyone self-selects the stories and platforms that reinforce their own views, amplifying the divide and the discontent. Today’s “tribes” tend to be ideological subgroups, frequently within countries, that are slowly wedging themselves apart. Psychological research confirms that the same individuals can be conformists or individualists, depending on their frame of mind. Similarly, our attitudes to authoritarianism are not fixed. In uncertain times, most, even the more libertarian, prefer an authoritarian leader. It is also human nature to see the past as more settled and better than today (every generation has a yearning for “the good old days” – they remember the good and forget the bad), so the strong leader will take us back to better times. We saw that with Nazi Germany and Fascist Italy. Trump has been peddling MAGA. Across the pond, it’s the good ship England that will once again set its own course. Putin wants to redraw geographic lines back to Soviet days and regain pride. In Canada, it seems we yearn for the warm hand of “good government” – perhaps one that is more focussed on an egalitarian sharing of the pie, rather than growing it.

In short, like wildebeest in the presence of a leopard, people who are feeling threatened want to be part of a larger group – their like-minded tribe. At these times, our instincts to grab more of the pie – more certain, closed or “win-lose” behaviour – overwhelms our desire to grow the pie, which requires longer-term, more uncertain open or “win-win” thinking. In the theme of “You don’t know what you got till it’s gone”, perhaps we can all benefit from a more thoughtful reassessment of the lessons from history?

(1) This statistic, along with a number of others and the theme for this article comes from “Open: The Story of Human Progress”, by Johan Norberg, 2020.

(2) For a brief recap of capitalism’s apparent woes 200 years after Marx’s birthday, try this blog: Whither Capitalism?

(3) Here’s John Stevenson’s recap of Ridley’s presentation

(4)The Dream of Reason: A History of Philosophy from the Greeks to the Renaissance”, by Anthony Gottlieb, 2016.

More Like This...

See another CRM2 blog post that may be of interest to you.

CRM2: The Nexus Approach to our CRM2 Reports

Topic:
CRM2
Excerpt:
With changing securities regulations coming into effect, investment firms are now required to provide individual investors with specific additional in

More Like This...

See another Foundations & Endowments blog post that may be of interest to you.

Charitable Giving Made Easier

Topic:
Foundations & Endowments
Excerpt:
Giving to charities and supporting our community are important to us at Nexus. We donate a portion of our management fees back to the charities and

More Like This...

See another Human Interest blog post that may be of interest to you.

COVID: An Uneven – and Unequal – Recovery

Topic:
Human Interest
Excerpt:
Canadians have had enough of the lockdown. Here we are 18 months after you first heard of the then mysterious Wuhan flu. Today, but for any curve ball

More Like This...

See another Inside Nexus blog post that may be of interest to you.

Here we Grow Again!

Topic:
Inside Nexus
Excerpt:
Recently, the Nexus team welcomed our seventh new face to join us since the start of the pandemic in 2020. As growth is an integral part of our

More Like This...

See another Investments blog post that may be of interest to you.

Lessons From the Art World and Beyond

Topic:
Investments
Excerpt:
“Exactitude is not truth.”

More Like This...

See another Pearls of Wisdom blog post that may be of interest to you.

“Work, Work, Work, Work, Work, Work”

Topic:
Pearls of Wisdom
Excerpt:
This has been a busy year. I’ve had lots happening on the home front (a wedding!) and lots going on at the office (too long to list!) Managing work

More Like This...

See another Tax Planning blog post that may be of interest to you.

Saving in my Professional Corporation – It’s a Great Idea!

Topic:
Tax Planning
Excerpt:
The ability for professionals in Canada to incorporate their practice has existed for some time. Doctors, dentists, lawyers, accountants, and other

More Like This...

See another Wealth Planning blog post that may be of interest to you.

Living to 100

Topic:
Wealth Planning, Living to 100
Excerpt:
“You’re going to live to 100!” For some, this may sound like a fantastic, welcome prognosis. They imagine gazing at sunsets every evening at the

On a Side Note…

See another CRM2 Nexus Notes Quarterly article that may be of interest to you.

No posts found.

On a Side Note…

See another Foundations & Endowments Nexus Notes Quarterly article that may be of interest to you.

Charitable Giving Made Easier

Topic:
Foundations & Endowments
Excerpt:
Giving to charities and supporting our community are important to us at Nexus. We donate a portion of our management fees back to the charities and

On a Side Note…

See another Human Interest Nexus Notes Quarterly article that may be of interest to you.

COVID: An Uneven – and Unequal – Recovery

Topic:
Human Interest
Excerpt:
Canadians have had enough of the lockdown. Here we are 18 months after you first heard of the then mysterious Wuhan flu. Today, but for any curve ball

On a Side Note…

See another Inside Nexus Nexus Notes Quarterly article that may be of interest to you.

Here we Grow Again!

Topic:
Inside Nexus
Excerpt:
Recently, the Nexus team welcomed our seventh new face to join us since the start of the pandemic in 2020. As growth is an integral part of our

On a Side Note…

See another Investments Nexus Notes Quarterly article that may be of interest to you.

The End of an Era – Inflation is Back!

Topic:
Investments
Excerpt:
Inflation talk is dominating the news. It is on the mind of the man in the street and investors alike – and not just in North America or the lands of

On a Side Note…

See another Pearls of Wisdom Nexus Notes Quarterly article that may be of interest to you.

A Table for None, Please; Working From Home on the Rise

Topic:
Pearls of Wisdom
Excerpt:
Reading is one of the principal occupations in our profession. As we digest a wide range of material, interesting ideas and surprising facts – some

On a Side Note…

See another Tax Planning Nexus Notes Quarterly article that may be of interest to you.

Saving in my Professional Corporation – It’s a Great Idea!

Topic:
Tax Planning
Excerpt:
The ability for professionals in Canada to incorporate their practice has existed for some time. Doctors, dentists, lawyers, accountants, and other

On a Side Note…

See another Wealth Planning Nexus Notes Quarterly article that may be of interest to you.

From The Editor: What’s My Age Again?

Topic:
Wealth Planning, Living to 100
Excerpt:
How old are you? It’s a simple question, one we readily know the answer to, although some of us might not want to talk about it. And why do we know