Blame discredited elites for the decline and fall of the West in 2016
“The more I practice the luckier I get.” – Golfing great Gary Player
In essence, political risk analysis is like nothing so much as American baseball: there is an undoubted element of chance to the game and even the best player strikes out with soul-destroying regularity.
Saying this, it is not dumb luck that the legendary Ted Williams was the last man to hit .400, and that Yankee great Joe DiMaggio accomplished the unmatched feat of hitting safely in 56 straight games. The immortals in both political risk and baseball invariably do the best over time; there is a lot more skill than randomness driving both fields.
If the soothsaying perfection of the mythical Merlin is out of the question, mastering political risk – and putting it to use for the businesses and governments in today’s world – assuredly is not.
And yet I can say with no little amount of schadenfreude that the epoch-changing year of 2016 has confounded most of my competitors. Whether it is Niall Ferguson’s extraordinary mea culpa over Brexit (“I left my analytical brain at the door to help my friends David Cameron and George Osborne”) or the perpetual shock of the Financial Times (“We are surprised about the Dutch referendum on Ukraine, Brexit, Trump, the Italian referendum and everything else…”), one thing is for certain. Foreign policy and risk analysts have not covered themselves in glory this past year.
Read more: Why everyone called Brexit wrong: Analysts are too close to the elites
The reason for this is simple enough: 2016 was a year when the world actually and fundamentally changed. In other words, it was a year that will enter historical shorthand, like 1848, 1918, 1945, and 1989.
In this case, the obvious new global structure – a multipolarity, a world of many powers – became clear. It is a world where the EU unspooled (Brexit, the Italian referendum), America stopped being the ordering power (the Trump phenomenon), Russia emerged as wounded (its GDP is now only the size of the state of Texas) but dangerous, and regional powers were more and more left to their own devices (Erdogan’s authoritarianism following the botched coup against him in Turkey, China’s naval build up) as there was no one about to restrain them.
All these dots on the map are part and parcel of the same phenomenon; the fully justified discrediting of the old, deeply flawed, and blithely unaware Western elite. The decline of the West as the world’s ordering power came to fruition in 2016, but is the direct result of the elite’s catastrophic failures to see how badly they had been discredited strategically (by the disastrous Iraq war) and economically (by the Lehman and euro crises), when they ran the world geopolitically and financially into a ditch and then walked away, seemingly scot free, leaving the rest of us to suffer.
Read more: The decadence of Europe’s dismal elites is fuelling populism across the EU
Their fitting epitaph is what F Scott Fitzgerald said of his villains, Tom and Daisy Buchanan, in The Great Gatsby:
“They were careless people, Tom and Daisy – they smashed up things and creatures and then retreated back into their money or their vast carelessness or whatever it was that kept them together, and let other people clean up the mess they made.”
Their demise, and that of the world they made, should not be lamented.
And what of my record? All in all, this column and my firm have had a pretty good year. We called Brexit correctly (unlike every single other major political risk firm), along with the Dutch referendum, the Italian referendum, the Farc vote, the radicalisation of Turkey and the victory of shale over the Saudis.
Read more: Saudi Arabia has surrendered control of the global oil market to US shale
On the one big one we got wrong – the Trump victory – we still gave him a 30 per cent chance (reportedly about what his campaign staff allowed for) and were told we were mad to do so. Even so, 30 per cent is not 50 per cent so it is a miss; we underestimated (if not nearly so much as our competitors) what a powerful force populism has been in the world this year. But, in American baseball terms, it has been a very good season.
In thinking about the reason for this – as my firm is having its end of the year analytical review – one thing stood out. The very first of our columns for City PM for the year was entitled, “The end of the West: 2016 is the year a new order begins to emerge.” And that is what has happened. In political risk, as in American baseball, if you get the big picture right, you will win a lot of games.
Happy holidays, everyone.