Jan 2nd 2017

2017: The Beginning of the Era of Disruption

by Daniel Wagner

 

Daniel Wagner is the founder and CEO of Country Risk Solutions and a widely published author on current affairs and risk management.

Daniel Wagner began his career at AIG in New York and subsequently spent five years as Guarantee Officer for the Asia Region at the World Bank Group's Multilateral Investment Guarantee Agency in Washington, D.C. After then serving as Regional Manager for Political Risks for Southeast Asia and Greater China for AIG in Singapore, Daniel moved to Manila, Philippines where he held several positions - including as Senior Guarantees and Syndications Specialist - for the Asian Development Bank's Office of Co-financing Operations. Prior to forming CRS he was Senior Vice President of Country Risk at GE Energy Financial Services. He also served as senior consultant for the African Development Bank on institutional investment.

Daniel Wagner is the author of seven books: The America-China Divide, China Vision, AI Supremacy, Virtual Terror, Global Risk Agility and Decision Making, Managing Country Risk, and Political Risk Insurance Guide. He has also published more than 700 articles on risk management and current affairs and is a regular contributor to the South China Morning Post, Sunday Guardian, and The National Interest, among many others. (For a full listing of his publications  and media interviews please see www.countryrisksolutions.com).

Daniel Wagner holds master's degrees in International Relations from the University of Chicago and in International Management from the Thunderbird School of Global Management in Phoenix. He received his bachelor's degree in Political Science from Richmond College in London.

Daniel Wagner can be reached at: daniel.wagner@countryrisksolutions.com.

In this era of dramatic, rampant, and incessant political change, predictions about the future can no longer be based either on conventional wisdom or historical precedent. We are, after all, in the middle of a paradigm shift that is shredding prognosticators and their prognostications with voraciousness. Just as virtually all of those highly paid political pundits missed by a mile the Brexit and Trump’s electoral victory, economic pundits accustomed to predicting the future based on past performance are getting it equally wrong, falling victim to the seemingly endless stream of unanticipated news, based on fallacious assumptions.

Plainly and simply, historical performance can no longer serve as a guidepost to the future. Indeed, today there is great danger in presuming that anything that may have happened in the past is necessarily any indication of what will happen in the future. Wasn’t the stock market supposed to go down in response to Trump’s election? Wasn’t the Colombian peace deal supposed to be approved the first time? Wasn’t the price of oil supposed to see a dramatic rise in response to the OPEC agreement? Wasn’t Putin supposed to respond in kind to the diplomat expulsions in the U.S.?

This has a lot to do (among other things) with a tendency to perhaps over-rely on the lessons of history, the growing impact of instant communication, and the inclusion of voters who were previously either shut out or not heard (for whatever reason) having become integrated into political processes around the world. It is also the result of a change in global economic dynamics, with a gradual transition away from developed country domination of the global economy in favor of emerging economies. And it is evidence that technology, innovation and creativity, which are so vibrant in the many parts of the global economy, are translating into extended economic gains that literally swim against the tide of history.

It turns out that all those ‘know-it-alls’ who think they’ve got it all figured out, just don’t. Those political pundits who proclaimed that they knew the outcome of the U.S. presidential election, now proclaim to know what Trump’s next move will be. Those stock market prognosticators who swear to their brethren that they know the future movement of stocks or the market, will be wrong again. And those global leaders who honestly believe that they are in tune with the pulse of their people are often mistaken.

In the process, whether we realize it or not, the ‘pyramid’ we have all become so accustomed to is being turned upside down before our eyes. Decades of foreign policy ‘norms’ are about to be rewritten, some hard-fought multilateral treaties are about to be upended, and some of the things we have taken for granted as ‘the gospel’ are about to become a thing of the past. The net result is that scenarios that were previously considered little more than a pipe dream may now be within reach. Consider, for example, the following scenarios for 2017 and beyond:

1.    A real U.S./Russia reset: The ‘bromance’ between Putin and Trump blossoms into a full-fledged reset, the U.S. sanctions are lifted, the two powers become partners fighting the Islamic State in Syria, and 75 years of enmity between them becomes largely a thing of the past. What might have seemed far-fetched (or even delusional) a year ago becomes a reality as Trump ramps up his self-designated ‘Disrupter-in-Chief’ role and pushes legislative changes through Congress making Russia a partner of the U.S. politically, militarily, and economically. Russia becomes a preferred investment destination and regains its previous position as a global player.

2.    China steps up to the plate: China acts more like the superpower that it is, significantly increasing its foreign aid flows, implementing diplomatic initiatives that challenge both Russia and the U.S. in international forums, and building a blue water navy that can begin to back up its claims to sovereignty over the islands of the South China Sea and project its power beyond Asia. Chinese GDP growth – the engine of global growth -- falls below 6% and heads toward 4% (one third of its previously sustained peak) by the end of the next decade, placing huge economic pressure on natural resource producing nations.

3.    Global alliances shift: This is already under way vis-à-vis China, Russia and the U.S., with Turkey having pivoted toward Russia, and the Philippines and Malaysia having signaled their willingness to do the same with China. More of this will come, as the balance between these three powers continues to vacillate. U.S. dominance in the global economy gradually yields to China, Europe rescinds sanctions against Russia, and the balance of power that has evolved since World War II is gradually eroded, with unforeseen consequences.

4.    The Right takes charge in Europe: National Front movements throughout Europe are elected, dramatically altering the political landscape, significantly curbing immigration, and resulting in widespread repudiation of the Left. This may not prove to be a short-term orientation, but rather, a sea change in global politics. The world enters an extended period of unease and uncertainty, resulting in a swing further in the direction of economic nationalism, and in gyrating investment climates.

5.    Multilateralism slowly dies: In the Post-War era, Wilsonianism (liberal internationalism) and Rooseveltism (collective action based on alliances and mutual respect) have been the cornerstone of international relations. Trump succeeds in weakening many of the pillars of Post-War stability and prosperity, such as NATO, the WTO and the UN, and declares war on free trade agreements. Alliances become dependent not on a common set of values, but on perceived short-term interests. The price of natural resources and food can skyrocket at any given time because of spot shortages, resulting in riots and increased global political and economic instability.

In short, in four years’ time we may be witness to a world that is barely recognizable, based on what we know as standard operating procedure today. Should one or more of these scenarios come to pass, just imagine the implications for investors, lenders, traders, risk managers and policy makers. In a world in which foreign policy is reduced to a series of business transactions (based on relative costs and benefits), policy making ability becomes the domain of the highest bidder, investment climates may cease to be the domain of equal treatment under the law, and trade policy becomes even more dependent on bilateral treaties, rather than multilateral arrangements.


This article first appeared in the Huffington Post.

 

Daniel Wagner is Managing Director of Risk Cooperative and co-author of the book “Global Risk Agility and Decision Making”.

Daniel Wagner can be reached at: dwagner@riskcooperative.com or 1-203-570-1005.





 


This article is brought to you by the author who owns the copyright to the text.

Should you want to support the author’s creative work you can use the PayPal “Donate” button below.

Your donation is a transaction between you and the author. The proceeds go directly to the author’s PayPal account in full less PayPal’s commission.

Facts & Arts neither receives information about you, nor of your donation, nor does Facts & Arts receive a commission.

Facts & Arts does not pay the author, nor takes paid by the author, for the posting of the author's material on Facts & Arts. Facts & Arts finances its operations by selling advertising space.

 

 

Browse articles by author

More Essays

Jun 29th 2020
EXTRACT: "Numerous studies have shown that children who grow up in more deprived neighbourhoods tend to have worse physical health as adults compared to those raised in more affluent areas. This is the case even when researchers take into account family income and education, and whether or not parents have major illnesses. In order to address this health disparity, researchers need to understand how those living in disadvantaged neighbourhoods end up with worse health outcomes. Our team’s latest study has highlighted one potential way your childhood neighbourhood may influence your health for years to come. It might do so through changing how the activity of your genes is regulated."
Jun 29th 2020
EXTRACT: "Ruth Poniarski is a painter and the author of Journey of the Self: Memoir of an Artist (Warren Publishing, 2020), in which she tells the story of her decade long struggle with mental illness, a “spiraling malady” which led her into a “pattern of psychosis”. I recently had the opportunity to talk with Poniarski about her life and work, and how she eventually overcame her demons."
Jun 27th 2020
EXTRACT: "I know I’m good in a couple of things, really good in a few things, and that’s enough. My confidence is big enough that I can really let people grow next to me, it’s no problem. I need experts around me. It’s really very important that you are empathetic, that you try to understand the people around you, and that you give real support to the people around you."
Jun 27th 2020
An essay about the "the enormously influential 1940 'Head of Christ' painting by evangelical Warner E. Sallman" pictured below.
Jun 17th 2020
EXTRACT: "The diverse, non-human life forms that live in our guts – known as our microbiome – are crucial to our health. A disrupted balance of these contribute to a range of disorders and diseases, including obesity, diabetes, inflammatory bowel disease. It could even affect our mental health..... It’s well known that the microbes living in our guts are altered through diet. For example, including dietary fibre and dairy products in our diets encourages the growth of beneficial bacteria. But mounting evidence suggests that exercise can also modify the types of bacteria that reside within our guts."
Jun 13th 2020
EXTRACT: "Bonhoeffer’s life holds an important lesson for us today, regardless of our religious affiliation or lack thereof. And simply put it is this: you are called upon; you are called on behalf of your neighbor. When you are called to be responsible that is not an obligation which you can decline, discharge or acquit yourself of – it is an infinite responsibility, a “forever commitment” as Charles Blow recently put it. And we all must be prepared to make any sacrifice necessary when we are called."
Jun 11th 2020
EXTRACT: "People differ substantially in how much they’re affected by experiences in their lives. Some people seem to be more affected by daily stress, or the loss of someone close to them. On the other hand, some people seem to get through the same experiences relatively unscathed. Similarly, some people benefit strongly from counselling, or having a support system of close family and friends. Others seem better able to manage on their own. But understanding why some people are more sensitive than others isn’t just a question of how they were raised, and the experiences they’ve been through. In fact, previous research has found that some people in general seem more sensitive to what they experience – and some are generally less sensitive."
Jun 7th 2020
EXTRACT: " The root causes of anthropogenic climate change – which has led to the endangering of countless species across the globe – cannot be adequately grasped in isolation from the technological application of modern science. While Swedish activist Greta Thunberg was certainly justified in calling upon American legislators to “unite behind the science,” neither can we overlook the culpability of science in bringing about the environmental crisis. "
May 23rd 2020
EXTRACT: "The QAnon movement began in 2017 after someone known only as Q posted a series of conspiracy theories about Trump on the internet forum 4chan. QAnon followers believe global elites are seeking to bring down Trump, whom they see as the world’s only hope to defeat the “deep state.” OKM is part of a network of independent congregations (or ekklesia) called Home Congregations Worldwide (HCW). The organization’s spiritual adviser is Mark Taylor, a self-proclaimed “Trump Prophet” and QAnon influencer with a large social media following on Twitter and YouTube."
May 23rd 2020
EXTRACT: "The aim of my research for the Understanding Unbelief programme was to investigate the worldviews of non-believers, since little is known about the diversity of these non-religious beliefs, and what psychological functions they serve. I wanted to explore the idea that while non-believers may not hold religious beliefs, they still hold distinct ontological, epistemological and ethical beliefs about reality, and the idea that these secular beliefs and worldviews provide the non-religious with equivalent sources of meaning, or similar coping mechanisms, as the supernatural beliefs of religious individuals."
May 22nd 2020
EXTRACT: "Psalm 91, for example, reassures believers that God will protect them from “the pestilence that walketh in darkness… A thousand shall fall at thy side, and ten thousand at thy right hand; but it shall not come nigh thee”.............Luther was a devout believer but insisted that religious faith had to be joined with practical, physical defences against sickness. It was a good Christian’s duty to work to keep themselves and others safe, rather than relying solely on the protection of God. "
May 22nd 2020
EXTRACT: "Evidence from this study shows clearly that eating foods rich in flavonoids over your lifetime is significantly linked to reducing Alzheimer’s disease risk. However, their consumption will be even more beneficial alongside other lifestyle changes, such as quitting smoking, managing a healthy weight and exercising."
May 5th 2020
EXTRACT: "It’s possible that the answers to questions like, “how do I live a virtuous life?” or “how do we build a good society?” are not the same as they were a few weeks ago."
May 2nd 2020
EXTRACT: "Strangely, those with strong beliefs tend to be admired. The human mind hates uncertainty, so it is comforting to be told what to think, and to form settled opinions. But it is not rational. As the philosopher Bertrand Russell wrote: “The fundamental cause of the trouble is that in the modern world the stupid are cocksure while the intelligent are full of doubt.”
Apr 21st 2020
Extract: "Humans, Boccaccio seems to be saying, can think of themselves as upstanding and moral – but unawares, they may show indifference to others. We see this in the 10 storytellers themselves: They make a pact to live virtuously in their well-appointed retreats. Yet while they pamper themselves, they indulge in some stories that illustrate brutality, betrayal and exploitation. Boccaccio wanted to challenge his readers, and make them think about their responsibilities to others. “The Decameron” raises the questions: How do the rich relate to the poor during times of widespread suffering? What is the value of a life? In our own pandemic, with millions unemployed due to a virus that has killed thousands, these issues are strikingly relevant.
Apr 20th 2020
Extract: "If we do not seize this crisis as a moment for transformation, then we will have lost the war. If doing so requires reviving notions of collective guilt and responsibility – including the admittedly uncomfortable view that every one of us is infinitely responsible, then so be it; as long we do not morally cop out by blaming some group as the true bearers of sin, guilt, and God’s heavy judgment. A pandemic clarifies the nature of action: that with our every act we answer to each other. In that light, we have a duty to seize this public crisis as an opportunity to reframe our mutual responsibility to one another and the world."
Apr 16th 2020
EXTRACT: "Death is the common experience which can make all members of the human race feel their common bonds and their common humanity."
Apr 7th 2020
EXTRACT: "A crisis such as this one demands that we exercise what the philosopher Immanuel Kant called the ‘public use of reason’ – as opposed to merely the ‘private use of reason’ where, briefly put, the expert, the specialist is tasked with resolving a defined problem. The private use of reason is sufficient when we are dealing with a problem that can be solved by simply applying the appropriate expertise...............The public use of reason asks: how we are defining the problem? Is our definition – our conceptualization of the problem – perhaps part of the problem itself? Is this pandemic solely a problem of public health, or is it also a problem of extreme economic inequality? ..............Since this crisis began, the greatest failure of the administration is not the denial, the lies, the lack of preparedness, but the inability to rally and unify the nation against this common threat, the lack of genuine leadership – Trump’s utter inability to bring the nation together."
Apr 5th 2020
EXTRACT: "Rarely has an architectural experiment aroused such extremes of ire and admiration. One side is convinced the house is a masterpiece. The other expresses brutal condemnation of the entire project (leaky roof, danger of flooding, too-hot, too-cold interiors depending on the American Midwest weather).........Farnsworth encapsulated her personal ambiguity in her comment to a Newsweek interviewer: “This handsome pavilion I own is almost totally unworkable.” She told one journalist, “ … all I got was this glib, false sophistication. The conception of a house as a glass cage suspended in air is ridiculous.”
Apr 1st 2020
Ambrogio Lorenzetti, Effects of Good Government fresco, Palazzo Pubblico, Siena.