Pessimistic Bias: Economists Suffer Too

This raises fascinating questions. Why has technical progress beaten diminishing returns? Traditionally, economists' pessimism - especially that of the classics - has been founded on the view that it wouldn't always do so.
Are diminishing returns really unimportant? If so, why do so many small businesses still survive and thrive?
Must technical progress really continue? Do network effects - the more we know the more we learn - really give us cause for optimism? Or is it just induction (and we know what Hume said about that) that gives us confidence that it will do so?

The Hanson paper looks a lot like SciFi writer Vernor Vinge's idea of the Singularity (1993: http://mindstalk.net/vinge/vinge-sing.html)(more recently taken up by Ray Kurzweil).

Yes, Kurzwiel makes a similar case in his book The Singularity is Near. Highly recommended.

Actually to some degree, we've already started down the path of diminishing returns in computer chips - the new chips aren't much faster than the old ones, they're just able to pack more of them on a single wafer. So instead of a superfast maserati that can go 500 mph, you get two ferraris that can go 400 mph. If you're doing two things at once, you're good, but if you try to race against the maserati, you're going to lose.

Now, why we haven't hit many of the other limits is primarily because our software is really good at reducing waste and optimizing solutions to make them cheaper and better. Including (of course) building the hardware that the software runs on. It's an example of a "singularity-like" system, and one of the reasons I'm optimistic about the future.

Fascinating stuff - but I can't get hold of the full paper. Does anyone know the suggested reason(s) _why_ the predictions are so pessimistic compared with reality.

At root, maybe it is because instincts are such a poor guide to reality in the modern world - and in general modernity is potentially (for some people, but especially intellectuals - it seems) so _alienating_ that we assume that something terrible is wrong to make us feel so strange.

"why_ the predictions are so pessimistic compared with reality."

A pessimist prepares for the downfalls in the future and survives them better. The predictions may be realistic at the time, but preparation makes the outcome better.

I'm never sure if I quite understand Hanson's paper, so forgive me if I seem overly dense. Hanson is essentially modeling "just" world product, and it doesn't absolutely and definitely follow that world product makes people happier, right? I mean, his second transition, to farming, definitely increased world product, but essentially by making massive numbers of really miserable people, relative to their hunter-gatherer forbears; this happiness dropped was not really made up until rather recently.

This raises two questions for me: (1) if we do make the next transition soon, does it follow that we'll be happier? and (2) is there some conceivable way of constructing a even sort-of sensible many-generational discount rate whereby you could even begin to discuss whether a shift in modes of growth that produced much higher growth but a long period of depressed human happiness could be called either good or bad?