Outside the Box


Outside the Box was retired on April 25, 2018, to make way for the new and improved premium research service, Over My Shoulder.

If you’re interested in joining John Mauldin, Patrick Watson, and the thousands of Over My Shoulder subscribers as they analyse important research several times a week, please click here to find out how you can subscribe for less than $10 per month.

The Middle of an Era

February 28, 2018

“We see through a glass darkly,” said the Apostle Paul. That goes double when we are talking about what the future holds. There are times when I think my future-viewing lens is utterly opaque. When I investigate why my forecasts are sometimes off the mark, I generally find that I am trying to predict the short term, which is impossible, or am succumbing to the all-too-human psychological tendency to project a recent trend into the far future. Seeing as how I doubt that I would want us to move to a post-human world, let alone become post-human myself, I will always be subject to many of the cognitive biases that afflict us. There is a marvelous page in Wikipedia that lists literally scores of such cognitive biases. We all recognize them – generally in those around us and not in ourselves. Just saying…

The best prognosticators that I know of view through a lens that is formed of some combination of historical knowledge and an understanding of cycles. George Santayana told us, “Those who cannot remember the past are condemned to repeat it.” In today’s Outside the Box, one of my favorite forecasters, George Friedman of Geopolitical Futures, uses the lens of history to talk about the next 10 years. He takes us on an utterly fascinating walk through history to move us forward to what the world will look like by the middle of the next decade. If you don’t subscribe to George’s seriously underpriced geopolitical information service, Geopolitical Futures, you really should. 

And here’s where it gets really interesting to me. George uses a different historical lens than my friend Neil Howe (famous for The Fourth Turning and his understanding of generational cycles), but they both come to essentially the same conclusion about the next 10 years. And while I am not in their league, I have yet again my own historical paradigms and analysis, which leads me to basically the same conclusion: The next 10 years are going to be some of the most difficult years of the last 70-80 for the developed world.

Next week at the Strategic Investment Conference, George and Neil will both be speaking. I am doing something different this year, in that I’m not giving a speech per se but am going to do two 30-minute sessions in which I have different people interview and talk with me about the world as we both see it. Neil will be one of them, and just a few minutes ago I got George to agree to come on stage (assuming Neil concurs) during part of that 30 minutes to compare and contrast his views with Neil’s and to talk about how they come to their conclusions. I personally will find that more interesting than taking the stage alone, because I already know what my conclusions are. I bet our audience will agree.

George Gilder is going to be there for a panel on cryptocurrencies and Bitcoin. (We will also have the world’s biggest bitcoin/cryptocurrency miner, from Iceland – your basic humble 28-year-old multibillionaire – plus two other panel members, moderated by our own Bitcoin skeptic, Jared Dillian.) George is in the process of writing yet another new book, currently titled Life after Google. He has of course has his own historical lens for seeing the near future. Remember, he was talking about today’s telephone technology in 1991, clearly predicting what our phones would do 25 years in advance. Yes, he missed a few things and self-effacingly admits to his prognosticative errors, but when it comes to technology he has been about as far ahead of the game as anybody I know. Life after Google? Hard to imagine now, but then again, how many of us foresaw the iPhone or Samsung Galaxy in 1991?

All three men are ardent students of history. And from that base they talk about the future.

And so, without doing too much of a “reveal,” I commend to you George Friedman’s short essay “The Middle of an Era” as today’s Outside the Box.

As you can tell, I am completely wrapped up in and extraordinarily excited about next week’s SIC. Every session is designed to be just as exciting and informative as the one I described above. I am working through the list of speakers, getting a sense of where they are going so that I can make sure the continuity of the information flow works. You can still sign up and join me in San Diego; or if you just can’t make it, the next best thing is a SIC Live Stream Virtual Pass, which gives you access to all of the presentations in real time as well as transcripts to browse at your leisure.

If you want to learn how to guide your portfolio through 2018 and beyond...

You could learn a lot from an investor who manages $116 billion and has outperformed 92% of his peers over the past six years
Or a hedge fund manager who made hundreds of millions for his clients in the 2008 financial meltdown
And a bond manager who has correctly called the direction of the Treasury market for the past 37 years

If you want first-hand insights and actionable ideas from these leading experts and 20 others, this is your opportunity!

For the past few months, I have run into one person after another who needs only four to five hours of sleep a night, can fall asleep on a plane at a moment’s notice, and whose metabolism is superior to mine. One of my personal issues – and it’s one that I think nearly every one of my readers can relate to – is that there’s just not enough time today for all the information, entertainment and enjoyment, family and friends and business relationships, that we would like. Plus, everywhere I turn I see another incredible opportunity. Staying focused and on-program becomes ever more difficult.

It helps that I now have an increasingly large team to help me take advantage of the best opportunities that come my way. And we are working very diligently to make sure that those same opportunities and access to information end up in your arena as well. Ten years ago – and probably even five years ago – what we are attempting to do was simply not technologically possible. Now it is, and it is exciting to try to figure out how to take advantage of it on your behalf. I can barely contain myself knowing what we are going to be able to do within the next 3-6 months.

While the next decade promises to be tumultuous, at least as viewed through my lens and those of my friends, it is also going to be an extraordinarily exciting adventure. Rather than trying to avoid our problems, I think we will be much better off figuring out how to make them our allies and to grow and profit from them as we work toward solutions. A simple challenge to state but a tad more difficult in the execution. But that’s what we do. Have a great week!

Your cleaning his future-viewing lens analyst,

John Mauldin, Editor
Outside the Box

Get John Mauldin's Over My Shoulder

"Must See" Research Directly from John Mauldin to You

Be the best-informed person in the room
with your very own risk-free trial of Over My Shoulder.
Join John Mauldin's private readers’ circle, today.

The Middle of an Era

By George Friedman

I have written in several places about a paradox. On the one hand, if you take a snapshot of the world every 20 years or so, the reality of how the world works and what matters will have shifted dramatically compared with the previous snapshot. On the other hand, at any point in time there is a general belief that the world as it is at this moment will remain in place for a long time. It is not just the public but also experts and those who govern who tend to fail to see how transitory the present reality is. As a result – and this is what makes it important – as the geopolitical system shifts, there is a tendency to see the shifts as transitory, a temporary disruption caused by unfortunate events, until they are well entrenched, and so we tend to align ourselves with the shift far too late.

In 1900, Europe was peaceful and prosperous, and it dominated the world. It was assumed that this was a permanent reality. By 1920, Europe had torn itself apart, impoverished itself, in a bloody war. It was assumed that Germany, having been defeated, was finished. By 1940, Germany had re-emerged and was astride Europe. It was assumed that the German tide could not be resisted. By 1960, Germany was an occupied and divided country. It was assumed that war between the strongest of the occupiers, the United States and the Soviet Union, was inevitable. By 1980, there had been a war, but in Vietnam rather than Europe, and the United States had been defeated. The U.S. was now aligned with China against the Soviet Union. It was assumed that the Soviets were a permanent and dangerous enemy to both countries. By 2000, the Soviet Union no longer existed. It was assumed that the key interest of all countries was economic growth, and that traditional conflict among nations had become a marginal matter.

Twenty years is an arbitrary time period, but historically it’s about the length of a human generation. The world changes radically in each generation, but the dates can vary. The last era began in 1991 and ended in 2008. Yet even now there are many who are waiting for the world of 1991 to return. More important, only now is the full power of what started in 2008 being felt.

Life After the Cold War

Consider how the world changed in 1991. The Soviet Union collapsed, and it was assumed that the rump state, Russia, was no longer a significant factor in how the world worked. Europe signed the Maastricht Treaty, which was seriously and reasonably believed to be the preface for the creation of a United States of Europe. The United States led a vast coalition of nations against Iraq’s occupation of Kuwait, defeating Iraq with few dissenting voices. China had adopted capitalism and begun its historic economic surge; it seemed an unstoppable train headed toward liberal democracy. Japan, the previous economic miracle that would never end, was in the midst of its transformative economic crisis. With the Cold War over, the U.S. was the only global power, and the world was reshaping itself in the American image.

The world was filled with the promise that the horrors and dangers of the 20th century were behind us. And for a time, that appeared to be the case. The first sign that the world was not quite as it seemed came in 2001, when operatives of al-Qaida attacked the United States, and the United States struck out at the Islamic world.

That era hung on for a few more years, until two events a few weeks apart finally broke it. On Aug. 8, 2008, Russia and Georgia went to war, putting to rest the idea that Russia had fallen into permanent, shabby irrelevance, or that conventional warfare was obsolete. Then on Sept. 15, 2008, Lehman Brothers collapsed, wrecking the illusion that the global economy could only go up. In the span of just over five weeks, the core assumptions of the era began to change.

Russia was no longer a superpower, but it was certainly still a regional power. It still had a sphere of influence beyond its borders, and it would protect its interests by force. The empire the czars had created would not go quietly into that good night.

The core weakness of the European Union was revealed: It was not a nation-state but merely a treaty joined into by sovereign states whose leaders were elected by their citizens and whose loyalty was to their voters, not to Brussels. The EU was a perfectly designed instrument for economic success, but it could not cope with economic dysfunction because economic pain did not distribute itself neatly over the bloc’s vast geography. Each member state increasingly pursued its own interests and frequently found the EU a hindrance rather than a help. 2008 was the high point of Europe.

China found in 2008 that an economy built on exports was not in its hands but in the hands of its customers. The economic stagnation that followed transformed China from a powerful engine pouring goods out to eager customers to a nation scrambling to put out financial fires, fantasizing about endless roads and artificial intelligence, all while turning into a dictatorship that would likely define it for the next era. Japan, rather than descend into disaster, used its social solidarity to weather its crisis by accepting the idea that a declining population and stable growth lead to higher per capita income.

And the United States discovered that being astride the world was a prescription for stumbling and falling. The war against jihadism would not end; the Russians would not accept their place in the world order; the Chinese would be less an economic problem than a potential military one; and the Europeans would be self-absorbed and provincial, as would be expected from their position. The United States realized that it was not ready, institutionally or psychologically, to manage the power it had acquired, and it could not delegate.

A New Era

The world in 2008, some 17 years after the last era had begun, did not resemble what most people expected. For a long time – for some even today – there was the expectation that the post-Cold War world (as good a name as there is for what began in 1991) was the norm, and but for someone’s bungling we would still be there and certainly would return to it. But eras come and go, and the world of 2008 will be in place well into the 2020s.

After 10 years, its outline is already clear. It is a time of economic dysfunction, defined by slow growth and unequal distribution of wealth, leading to domestic political tension and deep international friction. Countries will be focused on their own problems, and those problems will create trouble abroad. It is a world that is best described as parochial, tense and angry. There are worse things that it can be. But much depends on how rapidly the United States matures into its role as the single-most powerful country in the world. Likely the emergence of the U.S. from its internal rages will be the major feature of the next era.

Twenty years means nothing in history, but it means everything in our lives, so our tendency to convince ourselves of the permanence of the present era is understandable. But history didn’t end in 1991, and it didn’t end in 2008. For better or worse, this too shall pass.

The post The Middle of an Era appeared first on Geopolitical Futures.

Discuss This


We welcome your comments. Please comply with our Community Rules.



March 8, 2018, 4:20 a.m.

Superb article but I think it misses one point: the assumption that the United States remains the global power.  Maybe it will never mature into that role, as it becomes energy self sufficient it doesn’t need to.  Surely the next era will likely be defined by the emergence of all countries from their internal rages not just the U.S.