Pattern Recognition

“We’re entering an age of acceleration. The models underlying society at every level, which are largely based on a linear model of change, are going to have to be redefined.” Ray Kurzweil, Director of Engineering, Google.

“But I fear that he is expending upon Morel rather more than wholesome morality would enjoin, and without knowing to what extent the young penitent shows himself docile or recalcitrant to the special exercises which his catechist imposes upon him by way of mortification…”. Proust, Remembrance of Things Past

If you invest in a company, one risk is the CEO makes a boneheaded capital allocation, like AOL buying Time Warner or Elon buying Twitter. With countries, it is similar. If the Supreme Leader misallocates resources, death, destruction of capital, or both follow. Wars of choice (Vietnam), labor camps (gulag), internecine feuds (civil war), or monetary profligacy (Argentina, Weimar) all fit that description. It’s the same human folly, be it a CEO or political leader.

Against that backdrop, this week two things caught my eye. First, the bond sell-off (more on this below). Second, India’s alleged murder of a Sikh activist in Canada. If India did it, it would fit into a pattern that is evident in Russia, China, Saudi and elsewhere. Seeing the pattern is critical to accurately understanding today’s reality and investing well. 

Killing people who criticize the Supreme Leader has a long lineage rooted solidly in the pre-modern. Authoritarian, agrarian, or personality cult structures are inherently fragile, so if you claim the magician really can’t pull a bunny out of a hat, you become a threat and risk death. This is a code of honor-type justice as opposed to rule-of-law-type justice.

One predictive way to cut through cultural and geographic differences and measure the prevalence of such “pre-modern” attitudes is to test something narrower. A symbol of modernity and, for traditional societies, disruptive change, is homosexuality. As you can see below, by this measure, acceptance of “modernity” exists on a spectrum, with the Netherlands at one extreme and Nigeria at another. India is well down the list.

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