Past Performance Does Not Guarantee Future Results

On my wrist is a device for measuring the passage of time. It is made by Seiko, purely mechanical, and hopelessly outdated. Why do I say it’s outdated? Because it measures the passage of time by the oscillation of a balance wheel. It’s also powered by a mainspring that can keep the watch running for approximately 40 hours. The general workings of the movement are very similar to the general workings of a 100 year-old pocket watch. In the 1970s a new type of movement became popular. It used the oscillation of a quartz crystal to measure the passage of time. Not only is this more accurate than relying on the oscillation of a balance wheel but it’s also cheaper to manufacturer, immune to magnetism, can remain powered for five years on a single battery, and doesn’t need any lubrication. Wristwatches with quartz movements are superior in every way to their mechanical brethren. Why do I wear a mechanical wristwatch? Because I enjoy all of the gears, springs, and levers working together to measure the passage of time. What does this have to do with anything? Quite a lot, actually.

Yesterday I was involved in a discussion about the Tesla Model 3. I see the Tesla vehicle as a major leap in automobile technology. Not only does it decouple the power source from the vehicle it’s also mechanically simpler than a gasoline powered vehicle. Having a 200 mile range also makes it very useful to anybody living in an urban area that makes a fairly short commute every day. Since the Tesla car offers so much it was guaranteed that somebody would bitch about it.

Another person in the discussion wrote the Tesla off as worthless because it didn’t fit her use case. She needs to make periodic 350 mile trips, which is outside of the Tesla Model 3’s 200 mile range. I pointed out that the Tesla is still in its infancy and battery improvements would likely advance rapidly and give the car greater range. Her response was to claim battery technology advances only over decades.

This is a common fallacy people fall into. They use current trends to make predictions about the future. But technology doesn’t advance linearly. It advances exponentially. That’s because breakthroughs in one field can lead to improvements in other fields. My wristwatch is an example of that. For hundreds of years tools to measure the passage of time relied on mechanical parts. Their complexity made them expensive to manufacture. After hundreds of years of little improvement the quartz movement was released to the world and it was greeted with open arms. People snapped up quartz wristwatches at such a pace that designers of mechanical wristwatches began calling that period the Quartz Crisis. Advancements in electronics had propelled instruments of measuring the passage of time forward.

But that’s not the only example. Humans have been using the bow and arrow for thousands of years. By the 1900s it would be safe to say there wasn’t much left to learn about bows and arrows, right? Wrong. In the 1960s a revolutionary design called the compound bow was released. By utilizing cams a compound bow was able to not only store more energy but also allow the archer to hold the bowstring at full draw longer by reducing the weight to almost nothing. When you draw a compound bow there is a lot of weigh initially and then it tappers off. Even after thousands of years humanity found a way to revolutionize the bow and arrow.

I work in the computer field, which sees constant advancements. Few people stop to consider how far computers have advanced in a few years. In my pocket is a computer that is more powerful than my eight year-old desktop. Not only is it more powerful but it’s also more power efficient. And it’s has 24/7 Internet connectivity thanks to a high-speed wireless technology that was little more than an idea a decade ago.

Dismissing a technology because of past performance is idiotic. The phrase “past performance does not guarantee future results” is traditionally used to note that a previously successful person many not necessary be successful in the future. But it also applies to technological advancements. Just because it took decades to advance battery technology before doesn’t mean it’s going to take decades to advance it again. New materials could be developed tomorrow that allow for lighter batteries that can store more energy and survive more recharge cycles. Suddenly the Tesla Model 4 could have a range of 1,000 miles on a single charge and outlast any gasoline-powered vehicle.

As a general rule I don’t bet against technological advancements. That’s synonymous with saying I don’t bet against markets. The reason I’m so optimistic about market solutions is because markets are constantly advancing. Problems we don’t even know we have are being solved right now. Did you know that pulling your cellular phone out of your pocket is inconvenient? I bet you didn’t. But smart watches exist that allow you to keep your phone in your pocket for longer and enough people enjoy this solution that an entire market is being built around the technology. Markets are the opposite of government. Governments stagnate. Markets advance. When people claim markets can’t solve a solution they are making a sucker’s bet. Just because a market solution to a problem doesn’t currently exist doesn’t mean one won’t exist in the future. Even if a market solution hasn’t be developed over a thousand years doesn’t imply one won’t exist tomorrow.

When a statist predicts anarchism will fail they are making future predictions based on current trends (i.e. the world is currently a statist shithole so it will always be a statist shithole). This is why I don’t take them seriously and never accept their predictions of doom and gloom if the world ever frees itself from the statism.