How to overcome the second law of thermodynamics in investing and living.
In this episode you’ll learn:
- Why disorder and chaos is more common than order.
- How investing with index funds and ETFs helps combat disorder.
- Why poverty is more common than wealth.
- Why we must act to combine the utilitarian with the beautiful.
Show Notes
The Second Law of Thermodynamics – Steven Pinker – Edge
Neanderthals Were People Too – Jon Mooallem – New York Times
Just 8 Men Own Same Wealth As Half The World – Oxfam
Spirit and Place – Christopher Day
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Summary Article
Combatting Disorder With Beauty
I found Maria sitting on the outside step of a small convenience store on the busiest street in Valladolid, a town of about 50,000 people on the Yucatan peninsula in Mexico. She wore the traditional huipil dress of the Yucatecan Maya, a white tunic embroidered with flowers. Her hand was outstretched to anyone that passed and she softly repeated “caridad,” the Spanish word for charity.
I sat down next to her on the step as I fumbled with the money I was going to give her.
She told me her name and at age 78 she had been a widow for over twenty years. Her children lived far away. She takes one of the community taxis into Valladolid from her village. These taxis are often pickup trucks with wooden benches in back for the passengers to sit.
There are dozens of villages in the countryside around Valladolid, many with Catholic churches that have stood for three or four hundred years, evidence of the Spanish conquest of the peninsula.
I have visited Valladolid seven or eight times since I lived there for a few months about thirty years ago. I like to go back to see what has changed and what hasn’t.
Nothing Changes
It is surprising how little has changed in thirty years. The same hotels and restaurants overlook the central plaza with its fountain, S-shaped chairs, and metal benches. The taxis are the same shade of brown. A vendor still sells coconut ice cream on the corner and there are always grey-haired women like Maria dressed in Mayan huipiles with their hands outstretched asking for charity.
In 1928, the British archaeologist, Sir J. Eric Thompson stayed in Valladolid on his way to the Mayan ruins of Cobá. His description of the city center would be just as accurate today.
“A great rugged church, built to serve also as a place of refuge for the early Spanish colonists in the event of a Mayan rising, dominates the low municipal buildings and shops on the other three sides of the plaza…The center of the plaza, laid out in typical Latin America fashion as a small park was adorned with monstrous cement fountains in the forms of realistic frogs and pairs of seats of the same material in the shape of an S, so that a person seated in one loop of the S faced his companion in the other.”
There is a high probability in another ninety years the center of Valladolid will look a lot like it did in 1928 and as it does today. You should still be able to get a traditional meal of Poc-Chuc accompanied with hand made tortillas at one of the restaurants overlooking the plaza.
But then again, maybe not.
Everything Changes
In 1545, the Maya probably thought their ancient center of Saci would stand for hundreds of more years, but then the Spanish came and founded Valladolid on that very site, dismantling many of Saci’s structures to use the stone to build the colonial style buildings and cathedral that surrounds the main plaza.
The Maya rebelled in 1546 against the destruction of their city and way of life, sacrificing sixteen captured Spaniards as offerings to the Mayan gods. And for almost 400 years, the Maya continued to periodically rebel against the Spanish in revolts, wars and insurrections, well into the early 20th century.
Order Is The Exception
We like to think the orderly state of things that has endured for decades like an attractive central plaza, a constitutional democracy, or our good health will continue to endure. But an orderly state is the exception. Disorder and chaos are more common.
Steven Pinker emphasized this point in an essay he wrote for Edge on the underappreciated Second Law of Thermodynamics.
He writes that order can be “characterized in terms of the set of all microscopically distinct states of a system: Of all these states, the ones that we find useful make up a tiny sliver of the possibilities, while the disorderly or useless states make up the vast majority.”
“It follows that any perturbation of the system, whether it is a random jiggling of its parts or a whack from the outside, will, by the laws of probability, nudge the system toward disorder or uselessness. If you walk away from a sand castle, it won’t be there tomorrow, because as the wind, waves, seagulls, and small children push the grains of sand around, they’re more likely to arrange them into one of the vast number of configurations that don’t look like a castle than into the tiny few that do.”
Maintaining order requires effort. It takes responsibility. The Eiffel Tower in Paris, a steel structure that was suppose to be temporary when it was built in 1889 for the Universal Exhibition, costs over $14 million annually to maintain including painting it every seven years, a process that takes 20 months to complete.
When things are left alone or neglected, they fall apart. Including our health.
Overcoming Poverty
Pinker continues, “Poverty, too, needs no explanation. In a world governed by entropy and evolution, it is the default state of humankind. Matter does not just arrange itself into shelter or clothing, and living things do everything they can not to become our food. What needs to be explained is wealth. Yet most discussions of poverty consist of arguments about whom to blame for it.”
“More generally, an underappreciation of the Second Law lures people into seeing every unsolved social problem as a sign that their country is being driven off a cliff. It’s in the very nature of the universe that life has problems. But it’s better to figure out how to solve them—to apply information and energy to expand our refuge of beneficial order—than to start a conflagration and hope for the best.”
The way to overcome the second law of thermodynamics is to act. To apply information and energy to carve out a refuge from chaos and disorder. To help others.
Creating Beauty
Christopher Day writes in his book, “Spirit and Place,” “We can consciously direct our actions. This is our route to ecological harmony, to making the world better, society fairer, places beautiful. Striving to make things beautiful is primarily about values and commitment; only secondarily about skill, talent, understanding and experience.”
I met another Mayan woman outside a restaurant in Valladolid. She was selling handkerchiefs beautifully embroidered with flowers. I bought several, helping her carve out a refuge from poverty, chaos and disorder as she makes the world more beautiful.
