Brexit Part 2

The pundits are absorbed with the populist note, because it’s just won. Every angle related to the possible success of other populist movements is explored. For example, Russia’s KGB might have had a hand. Excepting representations of Russian propaganda outlets, evidence of hidden subversion, though plausible, is not open source. But in the open, communicative society of the UK, not many percentage point were buyable. The passion was Brit-to-Brit. And so it will be in most of the other EU countries where “leave” is being mooted as a populist sentiment.

In New Cold War, Not!, I wrote about the current nonexistence of blocs. Perhaps I should have allowed myself a loophole. But while the term “bloc” is overloaded with connotations of fear and compulsion, “community” is not. Because the idea of a European community is not coterminous with “European Union”, rumors of the demise of Britain’s integration with the European Community are greatly exaggerated. The formalities will change, but Britain’s younger generations will be heard.

We may take heart in the example of NATO and France. In 1966, Charles de Gaulle took France out of NATO. In 2009, preceded by many years of de facto reintegration, France rejoined the NATO command structure. Economic integration is much more complex than military integration. But the pundits who venture the complexity as a barrier to reversible change are premature.

Politicians are not great mathematicians. They prefer to count on their fingers. The reality of a European community is the sum of these four kinds of issue: populist, macroeconomic, geopolitical, and national. These rubrics suit the organization of the article. You might try choosing your own, but simplification or over elaboration would just muddy things. Of these, national interest is virtually ignored by pundits. But by depriving the EU of rationale, it has the potential of a slow acting poison.

The particular poison is the lure of trade with Russia and natural gas pipelines. Italy and Hungary, as major consumers of Russian gas, are major fracture points. Unless the Ukraine crisis is resolved, the end of sanctions would vitiate the reality of a credible, unified, EU foreign policy. But what of the grand center of the EU, Germany?

In White House Years, Henry Kissinger recounts that in 1969, a fault line emerged in NATO, over the Ostpolitik (new eastern policy) of Willy Brandt, consisting of “small treaties”, some bilateral with the Soviet Union and some multilateral, involving the Four Powers. In a time of overwhelming Soviet superiority of conventional forces, Brandt’s overtures were viewed apprehensively in the West, as opening the door to the neutralization of West Germany. Kissinger revisits the issue of German-Russian relations in Does America Need a Foreign Policy?  (2001). Quoting from page 40,

As Germany’s relative role and power grow, and as Russia recovers, there will emerge temptations for a special Russo-German rapprochement based on the Bismarckian tradition that the two countries prospered when they were close and suffered when they were in conflict


These trends will tempt other European nations to court Russia, in part as a reaction to American dominance, in part as a counterweight to Germany…

The urging of German Foreign Minister Frank-Walter Steinmeier to relax sanctions demands comparison with Kissinger’s recounting of Ostpolitik in White House Years. In Does America…, Kissinger draws on his vast experience to attempt a futurist view. Perhaps fifty percent has carried into the present, a remarkable achievement. Most futurists end up entirely wrong.

The four categories can be factored into attractive and repulsive forces:

  • Populist and national are repulsive.
  • Macroeconomic and geopolitical are attractive.

The fate of the European community, distinguished from the formal machinery of the EU, lies in the balance of these forces. The relative strengths are determined by the recognition and exploitation of them by world leaders. Some what ifs are interesting subjects for academic papers. What would be the effect on EU stability if:

  • Russia had not intervened in Ukraine?
  • Ukraine succeeds/fails in political reform?
  • Greece receives/denied loan relief?
  • The U.S. were to replace Russian gas?

Vox populi is frequently, but not invariably wrong. National interest can feed into populism, which gives it a vibrant and usually irrational expression. But in a hypothetical future disintegration of the EU, rational national interest may precede it as the “first cause.”


Brexit Part 1

This blog was on hiatus till the Brexit event. It was impossible to compete with what everybody wants to know, but nobody can figure out.

The most unanswerable questions of intelligence revolve around public opinion. The tools of the pollster register binary choices, but not ardency of belief. “Stay” campers were not inspired to violence. One “Leaver” was inspired to murder politician Jo Cox. The electorate reacted to the event, the polls ringing like a planet struck by a meteor, when all the apparent solidity of the crust is belied by the liquidity of the molten core. There was cognitive dissonance to the last moment, vitiating the 60% “stay” vote predicted by the majority of polls.

The Brexit vote is a secession from the quasi-government of the EU, with more than passing analogy to revolution. In this manner, it joins a long list of predictive failures by intelligence organizations, pollsters, and everybody else with a finger in the pie. The inspiration for the genesis of the IARPA program FWE (Forecasting World Events) was the intelligence failure of the 2011 Egyptian revolution. To call this a failure is not really fair to the intelligence community, because no one has ever established a track record of similar predictions to rise above random chance. Those who tried occupy a reputational graveyard shared with financial mavens.

The mathematical reason is that these are systems of chaos. With few exceptions, conventional tools of prediction  are entirely based on trend extrapolation. Chaotic systems contain points called “attractors.” A system orbits around a particular attractor for a while, lulling its observers into somnolence, until it makes a switch to another attractor. This event motivates the popular press to exhibit banner headlines with generic rubrics like “game over.” But it is never a game for those who understand the problem. It remains a perplexity.

But as “new game”, or similar, will become a staple in the popular press, does accumulation of analysis offer any benefit in understanding the bounds of the new attractor Brexit has created? This in itself is a question. Pundits are now offering diverse opinions, well aware that if they score, they become famous. If wrong, rapid public amnesia will offer the option of another shot a few years hence.

An example from the stock market illuminates. In this example, imagine that every big money investor is a pundit. On the day of an interest rate change, the market reacts. But typically, the direction of reaction reverses on the second or third day, and becomes the semi-durable trend. The analogy with Brexit consequences is immediate. The mental framework of pundits of today is neoteric. As the event recedes, the neoteric framework will be replaced by a contemporary framework. The framework will eventually become historical, until sudden rupture when the international system jumps to yet another strange attractor.

What will the “second day” of Brexit look like? The vote split is suggestive, because the young wanted to stay. Over the coming years, the trade relations of the EU economic umbrella may be substantially replaced by piecemeal agreements recapitulating the original evolution of the EU. The EU did not spring into existence. Its distant ancestor, the European Coal and Steel Community, dates to 1951. In 1957, it was joined, in tandem, by the European Common Market. These institutions, and several others, were gradually subsumed to form the EU. Supported by the firm pronouncements of nervous EU authorities, the pundits concentrate their thoughts around an immutable EU structure, with less or more members. This may not be predictive, because those authorities are themselves groping for certainty.

But stress points for subsequent fractures, as well as healing glues, can be enumerated. It’s a good time to do this, because it will help us identify emerging trends more quickly. Four kinds of interests contribute to the generic _exit debate, in play in multiple EU countries:

  • Populist. Including immigration, job export, and social inequality, populism is pro-exit.
  • Macroeconomic. Multinational economic interests, which have evolved for 41 years in a large market, have adapted to specific business conditions, so they are against exit. If the historical environment had been a small, protectionist market, this would not have to be the case.
  • Geopolitical, represented by thinkers whose mental spaces inhabit a hostile international system. Since World War I exploded the idea that economic interdependence made warfare impossible, geopolitics and macro economics have moved in a wary, partially decoupled embrace. NATO, the world’s most powerful military alliance, is the expression of the European geopolitical imperative.
  • National interest, pro exit, to be distinguished from populist by rationalism. Greece is the in-play example. In July 2015, in Oracles of Greece, I wrote that Greece will exit the euro, which has equivalence to the current question. Greece will leave because it is mathematically unaffordable to stay.

Next: The interaction of the four categories.

Hillary Clinton, Democratic Nominee

This is not a political blog.  But  the importance of the Clinton-Trump struggle  transcends politics. The Democratic Party has chosen someone who is actually electable, and well-schooled in the traditions of democracy and our government. Many  comparisons  have been made between the U.S. and Rome:

  • Some have focused on the power that accrued to the appointed Roman dictators when the borders of the Empire came under attack.
  • Others have pointed to the historical inability of all empires, most notably the British, to shed the military burden when the economic benefits of empire dwindled.
  • Others have emphasized the dispossession of the plebeian farmers when Egypt became the granary of the Empire.

The spoken and documented sentiments of the electorate point to the third reason. But there has always been a rich, a middle, and a poor. Walter Lippmann’s theory of how democracies  choose wisely is based upon a pyramid of  interpretation,  so that the issues of the electorate become matters of trust, not facts.

In the case of the Republican nominee, Lippmann’s interpretive process broke down. Republican voters went straight for promises, bypassing the intellectual shield that perceives and interprets what the electorate cannot see directly. Why did it break down now?

The lesser cause is social stress, much of it of a “moral” nature, that has distracted the diligence of Republican electorate from protection of the Republic. The more direct reason is that the middle class is vanishing. Trickle-down economics did not work. And even if it did work, something remains undefined. Which is more important to political stability, the total wealth of the nation, or the way it is distributed? Polemics favor the extremes. The middle way is hard to hold, and hard to argue.

The exposure of “Trump University” may have saved American democracy for now. But the next challenge  may feature a demagogue whose  deception is more perfect. Since this blog is about prediction, let’s frame a question. How long will American democracy continue?

The stressors of democracy are three:

The short of it is that the background of human existence, defined by technology, is about to tear away from human potential to follow, benefit, or adapt. This was explicitly recognized by the sponsors in Switzerland of a guaranteed income proposal, which was just rejected in referendum. We will hear more of this as the problem becomes more defined.

If the stressors acquire a unique identity in the public mind, so that they can be addressed as a public policy issue, there is a chance that remedies could prevail against special interests and conservative thinking, which, by definition, will be helpless against the Singularity. The Trump candidacy is an early warning of a kind of decay that proceeds over the time scale of a generation. One generation takes us to 2036, not far from the median prediction of the Singularity of 2040.

So, twenty years hence,  a coincidence of factors may topple American democracy. This is the kind of prediction I prefer to be wrong about.  Optimistically, the Clinton Administration may be the first to be aware of the challenge in its totality and with the intellect to politicize.

What of the face of the demagogue? Perhaps something Peronist. At least we can have a good musical.