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The Dark Side of Social Media: Lessons From History

In the 16th century, the arrival of the printing press inaugurated centuries of violent religious polarization and civil war across Europe. Those same dynamics are happening today.
Guild Investment Management (www.guildinvestment.com) is a registered investment advisor located in Los Angeles. The company was founded in 1971 by Montague Guild. We provide fully discretionary investment portfolio management services to U.S. and foreign individuals and companies with personal, pension and IRA accounts. We study the world, do the homework, make strategic asset allocations, and make buy and sell decisions so our clients don’t have to do this work.
Guild Investment Management (www.guildinvestment.com) is a registered investment advisor located in Los Angeles. The company was founded in 1971 by Montague Guild. We provide fully discretionary investment portfolio management services to U.S. and foreign individuals and companies with personal, pension and IRA accounts. We study the world, do the homework, make strategic asset allocations, and make buy and sell decisions so our clients don’t have to do this work.

Popular Stanford University historian Niall Ferguson, whose books we’ve occasionally reviewed in these pages, often reminds us why we’re in favor of undergraduates getting a good foundation in history as well as in the indispensable STEM subjects (science, technology, engineering, and math).

Ferguson’s most recent book was published late last year: The Square and the Tower. It’s an examination of the role and importance of social networks and social hierarchies — how they interact, and how they conflict. Its relevance has become more apparent during 2018 — as the weaponization of social media for political purposes has been revealed more clearly and the polarization of the American electorate seems to be approaching some kind of crescendo.

Ferguson points out that these dynamics are not at all new. In fact, they parallel events that occurred the last time there was a qualitative shift in the availability of information and the ease of communication — with the invention of the printing press some 500 years ago.

The technorati of Silicon Valley may have taken some history classes, but obviously, they did not immediately absorb the implications. The operating assumption of many of them was that more communication, and more access to information, would intrinsically lead to better outcomes.

In the 16th century, as Ferguson observes, that didn’t work out. The arrival of the printing press inaugurated centuries of violent religious polarization and civil war across Europe. People’s ability to communicate with one another more cheaply and easily, and to distribute their opinions more rapidly, did not lead in a straight line to a “better world.”

The dynamics that are happening today — with social media increasing polarization among social groups, intensifying rather than ameliorating tribalism, and serving as a tool for self-interested and ruthless people and groups — shouldn’t surprise any student of history.

This is not to say that social media per se are wholly negative, or that they have no good effects and present no promising possibilities. It’s just that the social embrace of social media is going to need a dose of realism to offset its myopic optimism: there are unanticipated negative consequences to some things, and humans are not innately angelic.

That realism is probably going to result in government regulation, as we have already seen thus far in 2018 — and will likely continue to see in coming years.

Investment implications: Social and political effects are going to continue to take the shine off of social media. Their negatives will mean that government has an increasing interest in regulating them, and the disruption of rising tribalism and polarization means that voters will likely press government to act. There will continue to be a big role for social media platforms, but clearly, 2018 has been a watershed in public perception that they are not an unalloyed good.