World's problem #3 - Positve Feedback Loop

“Positive feedback loops are not always positive; negative feedback loops can actually be positive.” — Kun He

Previously, I’ve shared how positive feedback loops affect our mental well-being at a personal level. Today, let’s explore this phenomenon on a larger scale.

A positive feedback loop is a process where energy is harnessed and amplified, often with escalating consequences. A nuclear chain reaction is one classic example—once triggered, it feeds on itself until either controlled or catastrophic. In daily life, fights between siblings or couples work in much the same way. One hurtful comment sparks another, escalating the conflict. If one side is wise enough to stop, the loop can be broken before real damage is done. But more often than not, we all want to have the last word, don't we? And because of that, the loop continues—sometimes leaving scars in both hearts.

Zoom out further, and the stakes become even higher. Wars are often nothing but positive feedback loops—once blood is shed, the desire for revenge makes it incredibly difficult to stop. The tragedies in Gaza and Ukraine vividly demonstrate how these loops can spiral out of control. If President Kennedy hadn't negotiated a timely deal with Comrade Khrushchev during the Cuban Missile Crisis, I might not even have the chance to type this today.

But today, I’m not repeating what I’ve written before. I want to talk about finances—another powerful manifestation of positive feedback loops.

You’ve probably heard of compound interest. If you're a young reader, stop reading now—go set aside some money in your 401k and index funds. Let time work its magic. In a few decades, you'll be surprised by how much those small contributions will grow. That’s the beauty of a positive feedback loop—when it works in your favor.

But what if you're on the other side of the equation? What if you're buried in debt beyond your ability to repay? The same loop will drag you further and further down—until the only way out is bankruptcy.

This financial model offers an interesting lens to explain a curious pattern in Chinese history: why no dynasty ever ruled for long. Most dynasties lasted only a couple of hundred years or even shorter. There are many ways to explain this, but one perspective is the same compounding effect at play.

China was an agricultural society where land ownership determined wealth. At the start of each dynasty, rulers often tried to distribute land evenly, because only when the majority of families could make a living would society remain stable. But over generations, the magic of compounding would take hold. Wealthy landlords would accumulate more land through profits and loans, while poor peasants would gradually lose their land and become servants. The richer the rich became, the poorer the poor became—until the gap was so extreme that the only options left for the peasants were to starve to death or fight to death. And when that point was reached, revolution would break out—ushering in the end of the dynasty. The same positive feedback loop that fueled the dynasty's rise was also the force that guaranteed its downfall.?

If I had to draw a parallel in the U.S. today, it would be the growing bipartisan divide. Politics has become a taboo topic at work and family gatherings—unless you're sure everyone agrees with you. The media, especially social media, has accelerated the polarization, pushing liberals and conservatives further apart at a faster and faster rate. People surround themselves with voices they already agree with, reinforcing their beliefs in echo chambers. Over time, any slightly different opinion starts to feel like an extreme one.

I’ve experienced this firsthand. During an overall productive conversation at work, a German colleague recently called some of my views extreme. Without any hard feelings because I understand why. In his environment, he's surrounded by people who share similar views that are different from those in the U.S. Whether something is extreme or not is always relative—it depends on what you're comparing it to. That's the tricky magic of culture—something we all talk about but few can truly define.

Culture will be a topic for another day.

For now, I’ll leave you with this: Positive feedback loops are World Problem #3. Do you agree?

--TBC--

03/01/2025, Kansas City, MO