Investment decisions by individuals or organizations are becoming increasingly difficult. The reasons are many, including record-low interest rates and seemingly irrational stock-market movements. However, one additional element of insecurity is increasing exponentially throughout most of the world.
Entropy is the natural tendency of all material objects, including the entire universe, to dissolve into its constituent particles. This tendency is counteracted by the little-understood force of gravity. Social entropy is the tendency for social entities such as countries to disintegrate into their constituent clans, tribes, ethnic groups, religious groups, etc. This tendency is counteracted by force exercised by those in power and, more fundamentally, by the legitimacy granted by the constituent elements of the society to the ruling segment.
In much of the contemporary world, social entropy is gaining force, and often the central authorities have lost much or most of the legitimacy they used to have and have had to resort to an ever-increasing measure on brute force. That, in turn, leads to greater illegitimacy and to even greater counter-force with the ultimate outcome either a regime based largely on repression or anarchy.
The manifestations of this increasing social entropy are everywhere, in the decline of comity, rational discourse, classical education, the traditional family, beauty in art and music, and has invaded all institutions, including precisely those dedicated to the preparation of future generations, such as colleges and universities.
However, the most startling manifestation of the tendency is in the ever-increasing massive demonstrations, often degenerating into riots, throughout the world. Some months ago, if asked to list those territories least likely to be subjected to such mass popular outrage, almost all experts would have put Chile and Hong Kong very high on the list. Chile was universally considered the most stable and prosperous country in Latin America. Hong Kong is the second-richest territory in the Far East, after Singapore. Yet both Chile and Hong Kong have been racked by massive demonstrations, riots and destruction of property for weeks on end. To be added to Chile and Hong Kong, the list of countries affected by this phenomenon currently includes Bolivia, Ecuador, Nicaragua, Venezuela, Lebanon, Iraq and Iran.
Sometimes the trigger is significant, as in the case of Hong Kong, where the initial demonstrations were caused by a threat to the city’s autonomy. But often they are truly insignificant events, such as a rise in bus fares or gasoline prices. And earlier in the year, what of the “yellow vests” in France trashing Paris and other cities?
It is more and more obvious that the spreading of social entropy, however it is manifested, is an indication of the weakening, and in some cases the collapse, of that legitimacy which is all that stands between order and anarchy. There is a building rage within large segments of the population against what, in effect, is the modern world – a world they do not understand and therefore do not like. A world where gigantic fortunes are made and flaunted; a world where criminal syndicates control ever greater segments of the economy; a world where terrorist groups, often in the name of religion, spread death, property theft, slavery and destruction wherever they achieve control and from their enclaves threaten everyone else.
Advances in technology have become breathtakingly rapid, leading to social consequences no one foresaw. Social media, artificial intelligence, robotization, and social engineering threaten the very underpinnings of traditional social culture and in some cases, the whole concept of what it is to be a human being. Ignorance is not bliss when it affects your life in ways you do not understand, and when you don’t know what to do about it and your “leaders” are clearly as clueless as you are, as well as corrupt, lashing out at a world that has become incomprehensible is the only outlet.
With all these factors at play, is it any wonder that so much of the world’s liquid wealth is sitting idly by waiting for some sort of resolution? Economic statistics have become less and less reliable because so much of the economic activity taking place is not reported or recorded because of its criminal origins. Huge financial institutions have become money laundromats. Businesses, lawyers, accountants, banks and non-governmental organizations collaborate with the criminal syndicates and terrorist organizations. Governments are terrified into impotence or bought off.
What are investors to do? Being conservative brings scant to negative returns. Speculating is the playground of the forces of entropy. And the rage increases.