Do We Really Want To Live In Interesting Times?

Friday, 8.42pm

Sheffield, U.K.

We live in the mind, in ideas, in fragments. We no longer drink in the wild outer music of the streets – we remember only. – Henry Miller

Sometimes, technology doesn’t make things better.

The Jevons paradox is an example. Take a resource, coal for example. We develop technologies that use the resource more efficiently and, in doing so, reduce the cost of using that resource. The lower cost increases demand so that we end up using more overall. So, better technology leads to greater energy use.

Not using technology isn’t the answer either. We don’t really want stone tools or bullock carts.

When it comes to getting the balance right, between supply and demand, the market system seems to work pretty well.

When the market works.

But markets are influenced by policy makers who, in many countries, want to try and control how wealth is created rather than letting the market get on with the job.

And that creates a large set of risk factors.

For example, when I was younger, I read that there were only two reasons to buy property.

One, because it was cheaper to buy than rent, or two, because you really really wanted that house.

A home was a place to live, not an investment.

At some point, property has become an investment. It’s supported by the idea that they don’t make land any more, and people will always need a place to live.

And that’s been true for a while. Property prices have surged and many people have a lot of equity tied up in their homes.

But not because of supply and demand.

The increases since 2008 have been driven by very low interest rates. Interest rates that were put in place to avoid a market meltdown.

Being able to borrow more money more cheaply led to an increase in prices, as that extra money people could borrow went towards bigger bids on houses.

And now we have a ticking sound as those cheap mortgages expire and some people find that a repayment at 1% is very different from one at 6%.

China, in particular, acts as a uncertainty generator.

For the last 70 or so years the Chinese system has funneled money into industry after industry, creating capacity and driving down global prices.

That has been a good thing, as part of globalisation, but it’s also led to the shutdown of manufacturing in many countries.

In the last decade or so that’s lead to dissillusionment with globalisation and a retreat, more protectionism and more nationalist leaders on the world stage.

You can see this in the news now, as America responds to an increasingly powerful China, and both countries consider trade barriers, limiting access to technology and the materials that are needed for technology.

The result of all this is what the Economist terms “radical uncertainty”.

Or what the Chinese might refer to as “interesting times”.

I doubt many of us know what to think or what to do in these situations.

How would we even start analysing what’s going on?

I think we might need to go back to the history books, to see what happens when things get complicated.

But we also need ways to get a sense of what’s going on and make decisions in these complex and uncertain times.

That’s one place to focus on in 2025.

Cheers,

Karthik Suresh