As children, sometimes the most asinine things earn our attention. At least in the old days they did, back when children played with toys that didn’t talk back or require a lithium battery to operate. One of those old affects was the proverbial spinning top. An awkward space-ship looking toy that, with the right torque could spin for over a minute or more dancing its way across the floor until it finally wobbled to a halt.
It is that wobble at the end of the spin that we see today in Western conceived markets. That neat little wobble at the end of a spinning top’s run is called entropy. Let’s grab a quick definition:
a thermodynamic quantity representing the unavailability of a system’s thermal energy for conversion into mechanical work, often interpreted as the degree of disorder or randomness in the system.
lack of order or predictability; gradual decline into disorder.
Take a closer look at the second definition if the first scientific explanation is a bit baffling. We are watching the current world system wobble, because it is losing momentum and gradually declining into disorder. This is happening principally because the world is not confined to a closed system and new ideas are emerging. The world that once relied on the expertise of a few now have new thought-leaders around the world who are confident in their assessments and ready to move into a brave new world. Additionally, people are losing faith in older systems.
Recently, several reports debuted regarding the disastrous student debt bubble, estimating over 1.5 trillion in student debt. A report from Bloomberg estimates that it would take 100 years for Americans today to pay off their student loans.
the College Board reports that the “3.1% average annual rate of increase in published in-state tuition and fees in the public four-year sector between 2008-09 and 2018-19 corresponds to an average annual increase of $270 in 2018 dollars, compared with $170 per year between 1988-89 and 1998-99 and $250 per year between 1998-99 and 2008-09.” Couple that with the fact that the median family income from 1998 and 2008 increased by 0.0 percent, according to 2017 Census Bureau data. That’s right 0 percent! Essentially For 10 years the Medium family income never rose once! It meant people were essentially getting degrees for nothing. Greedy colleges, complicit lending institutions and finicky employers helped devalue the worth of a college education.
Couple that with the fact that the median family income from 1998 and 2008 increased by 0.0 percent, according to 2017 Census Bureau data. That’s right 0 percent! Essentially For 10 years the Medium family income never rose once!
And while many rich countries were busy strangulating their own populations, some developing countries followed suit. They strangulated lending, commerce and money circulation in their own economies–but some were smart, and they did not. New models began to evolve. The Banking Crisis hit in 2008 and sent the world wobbling, as it decimated the housing market and in many cases the lives and fortunes of struggling citizens. The entropy was growing, finance, tech and industry were too hungry to realize they were gobbling up their future and their credibility. Quantitative easing (affectionately known as QE) was a clever trick central banks used to jump-start the economy and create financial gains out of thin air. It was a way to figuratively lower the body temperature of the patient, just low enough to kill the parasite but save the host. The QE stop-gap was good enough to propel us into the gig economy. And we road high, hoping nobody would notice the little man working furiously behind the curtain.
Even beyond the 90s dot-com bubble explosion, the Asian economic collapse detailed in “Confessions of an Economic Hitman,” and gluttonous outsourcing; rich countries were taking on more, with waning momentum at home in jobs, lending and local business prospects. It was thought that importing labor would help to manage the wobble and so rich countries opened their boarders. Cheap good deserved cheap labor. According to the US National Council of State Legislatures, the top five regions sending the most immigrants (legal or not) are South/East Asia, Mexico, Europe/Canada, the Caribbean and Central America. The top three nations are Mexico, China, and Cuba (narrowly beating India). An insatiable need for abundant workers, via the H1B Visa system has helped those immigration numbers and countless firms. And those figures prove what internal data from Pew Research unearthed in 2016, that finds Asian men are the highest paid demographic in the USA. Tons of U.S. and European tech companies are headed by immigrants from those top sending countries and regions (like India, China, Pakistan, Bangladesh, Canada, etc).
The fact is, too much was going on unregulated, and the “good greed” from the 80s began to expose the limitations of the Western world system. New competing beliefs and agendas have emerged; and the questions remain. What will happen when the wobble ends? Unfortunately, many developing nations have been too heavily invested in the current system that incentivized leaders toward benign neglect. Hence, many of their populations are not prepared (educationally or socially) for a post Western world system. It is obvious to see how many former colonial states still rely on the strongman systems of the past, where a large, weak and unproductive populace was acceptable. Many do not have the current capacity to take advantage of new opportunities opening up in agriculture, tech, manufacturing and industry around the world, because for over half a century, very little was invested in the development of its citizens, infrastructure, local business or education. There will be a scramble for both survival and primacy in the new world order. It remains to see whether developing states that have long neglected their large populations will be able to move quickly enough to empower its people to survive inevitable the shift.