Too much optimism prevents us from accurately predicting and understanding the pain and struggle that is inevitable in the future.
What it does is it reduces our stress and anxiety and provides a ‘playground’ where we can imagine alternative realities which we need to believe in.
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Our predictions usually seem to fall towards extremes, either too optimistic or too pessimistic. We underestimate how bad things can be in the short term, and how much better they can eventually turn out to be in the longer run. This leads to bad decisions, laughably wrong forecasts and predictions and a lot of confusion.
A reasonably optimistic person is a little cautious, a little cynical, and expects surprises, setbacks, bewilderment and disappointment.
The war-torn countries of the 1940s, Germany and Japan, quickly recovered and exceeded the expectations of the world, ranking much higher in development than many countries who had not experienced war.
Progress happens at an exponential rate when people learn new things, and when there is collective pain, suffering and misery, people learn a lot.
A realistically optimistic person knows that though things will happen, things that will be surprising, disappointing or completely out of control.
An important lesson from history is that big events are more complicated. It makes forecasting difficult, politics nasty, and lessons to learn from it harder.
We may demand simple answers to explain outlier events. However, it's almost impossible for something big to happen because of one event, person, or group. Unrelated things often culminate into something significant. For example, the Great Depression was the result of a stock market crash, a banking crash, a real estate bubble, an agricultural disaster, and an inadequate policy response. When all these things happened at the same time, it was a catastrophe.
In this world of uncertainties, nothing but death and taxes are sureshot in our lives.
There are however some assumptions that withstand the test of time. These assumptions take into account basic human psychology and historical data.
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