Optimism about the margin is sometimes pessimism about the infra-margin

Let’s say you believe that a flood of forthcoming warrior-entrepreneurs will create exciting new products and earn high rates of return on their capital; associated venture capitalists will benefit too.

That might sound quite optimistic, and in one regard it is.  But the high returns also indicate that the status quo ex ante is in some way deficient.  Had the earlier entrepreneurs done better, the opportunities for these new creators might have been less.  In a sense, the prediction is also an (implied) pessimistic take on the current world as it stands.  The overall state of affairs may be less positive than many others believe.

The mood states of “optimism” and “pessimism” are often misleading ways of classifying or thinking about people’s views on the economy, or indeed about other matters too.  Those descriptors do not distinguish between attitudes toward likely final outcomes, as opposed to attitudes about benchmarks and constraints.


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