Only entropy comes easy.Anton Chekhov
I have been reading excerpts from Edward Chancellor’s The Price of Time: The Real Story of Interest for the last few weeks. I suggest you get a copy – I think it will become one of those books that shape people’s thoughts and color public dialogue. It illuminates the path our country took to get into its current economic mess. It is an in-depth study of what I wrote about in “Masked Villains.”
Chancellor has an interesting metaphor that I want to borrow. Suppose there are two cities, separated by a raging river. One city is the Present and one is our desired Future. There is a bridge that crosses the river – the only way we can get to that Future.
But we live in the Present, and have to meet the Present’s daily needs: food, clothing, shelter, education for our kids, medical care … And so, it is all too easy to forget about the bridge to our Future. But there is a price to pay for our forgetfulness, for our neglect – entropy. Entropy is the price of that wasted time.
Entropy is perhaps the most difficult physical property to understand. Temperature, mass, distance, velocity, volume, and even time are all concepts that we almost intuitively understand. And yet entropy is in some ways the most important, because of its ties to our own mortality.
Entropy is Nature’s drive toward randomness, seen in the buildup of waste products and the dissipation of energy and order. It is the loss of information in messages, the fading of memories, and the decaying of our bodies and bridges. Entropy embodies uncertainty, risk, and friction.
It takes effort – energy – to combat entropy. Our bodies’ systems geared toward repairing the day to day wear and tear on our bodies first and foremost rely on our internal energy generation systems. As we age, those systems become less and less efficient until our bodies no longer are able to withstand entropy’s inexorable pull. Thus, in a very real sense, entropy kills.
At the community level, entropy means concrete will inevitably crack, stone will erode, and iron will rust. We often call these the ravages of Time, but just as it takes effort to maintain our bodies, maintaining our physical infrastructure also requires effort – energy. In fact, all of our infrastructures – whether physical, social or economic – require effort if they are to be remain viable parts of our communities.
If we neglect them, they will inevitably crumble: the concrete pillars holding up a condo will fail; our children will forget how to interact with others on a human level; our businesses will waste their capital on meaningless gestures instead of investing in themselves. One need only look at our frayed social networks and our confused and conflicted culture to recognize entropy’s fingerprints.
Because of entropy, our communities will always face chronic slow-onset crises that eventually will require immediate attention and action. It is all too easy to become so wrapped up in the Present’s crises that we forget to maintain the bridge to our Future. The Chekhov quote is a stark reminder of how easy it is to forget, and of how hard it is to remember to invest in our bridges toward our Futures. If we don’t invest and maintain those bridges, we risk their collapse. And if they collapse, we may fall into the river’s swift current, perhaps never to find our desired Future.
A side note. The sharp-eyed may note that Chancellor in effect is calling interest (e.g., on loans), not entropy, the Price of Time. In effect, interest is a measure of the entropy of financial systems. When the interest rate is decided by the financial market without government interference, it is a reasonably accurate measure of the financial system’s entropy. In times of low monetary volatility, market interest rates tend to be low, indicating the market’s conclusion that the loss in value of the loan’s principal over the term of the loan is relatively low. As market volatility and perceived risk (uncertainty) increase, the interest charged increases. So, too, with increasing length of the loan – longer time, larger uncertainty.
Unfortunately, when central bankers do silly things like giving us negative interest rates (where we still are now in almost all of the developed world), then the measure becomes highly inaccurate.