We are certainly living in interesting times. Our global village is facing very serious challenges ahead and very unfortunately, many of these challenges are confronting humanity at around the same time. As we wrote in the previous two articles (Another Achilles Heel of modern society- narrow margin and An Achilles Heel of modern society- specialisation and division of labour), the two Achilles Heels of modern complex societies will mean that it will be very difficult for nations and the world to adapt and adjust to these challenges.
In his book, The Collapse of Complex Societies, Joseph Tainter seems to say that as societies get more and more complex, more and more investments will produce less and less benefit until the point is reached when investments in more complexity no longer brings and increase in benefits. This is the point when complex societies are at its most vulnerable. Such societies can easily weather crisis in the past (e.g. military loss, drought, resource depletion, etc). But at that point, another crisis will become the tipping point that triggers the final collapse.
Regarding the idea that more and more investments will start to produce less and less returns as societies become more and more complex, it reminds us of many state governments in Australia. The Australian public are generally fed up with more and more state government incompetence as more and more public money are sunk into wasteful non-results. Although we are not sure whether Australia is at the point whereby investments are no longer producing any benefits, it seems that it is getting closer day by day.
Across the Pacific Oceans, we see many American states (most notably, California) more or less bankrupt. It seems that more and more money have to be thrown just to maintain the status quo. To his credit, Barrack Obama is attempting to reform the American system to reverse this trend.
When you look at the economic ‘results’ that the Chinese get by throwing money at their system, it looks like they are at the earlier part of the investment cycle. Ditto for the rest of Asia, excluding Japan. But mind you, the Chinese had already experienced collapse of their complex societies dozens of times in their thousands of years worth of history.
As Sean Brodrick wrote in The Ultimate Suburban Survivalist Guide,
Our [American] society is probably the most complex that has ever existed. Bigger and bigger investments in agriculture, medicine, energy and government are bringing smaller marginal returns.
But all this is still not enough to ring about a civilisations collapse. In Tainter’s view, a real collapse only happens in a power vacuum. That is the reason Europe did not collapse long ago- if one country fell, it was taken over by its neighbour- and according to this line of reasoning, is why the next collapse will be global in scale. Because this time, if one of the leading powers of the world goes down, we are so interconnected that we all go down.
Now, the question is: what about China? If the US collapse, will China be the ascending power that fills the ensuing vacuum? Or will it collapse along with the US? Or will it just continue on its own business and leave the US in the dark?
That’s the reason why Marc Faber is recommending that investors have half of their investments exposed to Asia. That is a very useful advice for very high net worth people who have the money and connections to resettle. But for the rest, it is very important to have your own plan B if something happens in your local area. Sean Brodrick made a very good point in his book,
Despite the scary scenario I’ve outlined so far, I don’t think societal collapse is a done deal. I believe we’re going to see waves of chaos going forward… … after a breakdown, the chaos will likely recede, and there will be some sort of recovery, perhaps even a return to normal.
As I said earlier, Rome didn’t fall in a day. It took hundreds of years from when the first wave of barbarians crossed the frontier to when Rome itself was finally conquered…
But if you were a Roman citizen unlucky enough to be in one of the areas that quickly descended into chaos, it was a world-changing and potentially fatal event.
The last paragraph is the point to remember. Your entire country will not be likely to collapse overnight. But if you are unlucky, your local region can be the one that descend into chaos first. The hard question to ask is: do you trust that your government (e.g. NSW State government) will have the resources, and competence to cope with large-scale crisis? We are not talking about small-scale crisis that affects small communities- we are talking about a scale large enough to affect at least hundreds of thousands of people.
If you are going to plan for Plan B, then you will have to increase the margins in your life and acquire skills outside the area of your specialisation.
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