Forecasting: Lucky Guesses or Keen Insights?

Observations are a science. Predictions are an art.

There is a distinct difference between providing observations and commentary versus predicting future events. Within the field of foreign affairs, most are glorified commentators. Few can provide accurate explanations on what is happening and why it is happening. Even when commentators can provide insights on how to fix things, they often lack ability to foresee how the future will likely unfold. It is extraordinarily rare to find someone who is capable of generating accurate and actionable forecasts.

Most of the time, individuals who dabble in forecasting either make vague prognoses that are impossible to disprove, or they make stupendous prophecies, usually regarding some doomsday event, to attract attention. In both instances, the individual refuses to acknowledge when they've made mistakes and is incapable of providing practical insights for daily living. Indeed, the best geopolitical forecaster is capable of succinctly explaining why their forecast is relevant to the life of an average American. If that average American doesn't burst out laughing, then perhaps the prediction holds some water.

Building a rigorous geopolitical forecast is awfully like building a choose-your-own-adventure RPG that factors in the choices of different characters, except the different characters are countries. Oh, and the decisions made by these characters can be influenced and triggered by things like demographic collapse, economic free fall, financial crisis, or the threat of nuclear war. Just to make things even more complicated, all of these characters are interacting with one another which is going to directly impact the ending of the game. If you're a video game designer trying to program such a game, this is your idea of hell.

So how does one even go about constructing a halfway decent geopolitical forecast? There are three basic elements that go into a forecast: an understanding of constraints, systems thinking, and risk probabilities.

The best explanation for understanding geopolitical constraints can be found in George Friedman's book The Next Hundred Years. Geopolitics is like chess. Upon first inspection, it would appear that there are infinite possibilities. Yet, it quickly becomes evident that each piece has limited moves and the consequences of certain choices create harsh constraints. A similar phenomenon is at play regarding the actions of nations.

Just as the greatest chess masters use constraints to mentally play out entire games based on their next move or even their opponents next move, so too do experienced practitioners of geopolitics game out different possible futures for the international system. This begs the question though, what are the constraints of geopolitics? The answer can be found in systems thinking.

The world is comprised of multiple overlapping, interdependent, complex, dynamic systems. This is important to recognize because the overwhelming majority of subject matter experts are knowledgeable in only a single system. What's more, these experts tend to view each system as independent and static. Consequently, subject matter experts are often incapable of providing accurate forecasts because they fail to recognize how events in adjacent systems can directly impact their immediate system.

As a geopolitical forecaster, I've identified six distinct systems, each of which is centered around geography. These systems are as follows:

• Demographics: A nation requires a people. It is people that make up the hopes, dreams, and aspirations of the nation. It is people that will determine the fate of the nation. Consequently, the age, birth rate, sex ratio, and life expectancy within a state has dramatic ramifications for the future of the nation. Demographics are destiny.

• Economics: If money is the sinews of war, then commerce is the lifeblood of the nation. It's not just aggregate GDP that matters for nation-states, GDP per capita is also of the utmost importance. A country's standard of living will directly shape the priorities of the national government and the desires of the people. Furthermore, the national distribution of wealth is an indicator of elite, oligarchic rule versus more democratic, egalitarian rule.

• Politics: There is always a tension between the elite class and the rest of the populace. Furthermore, there is always a core group of elites that presides over the majority of the nation's wealth, power, and prestige and an out group of elites that desires to become part of the national ruling class. Typically, these aspirant national elites seek popular support of the many so that they can become part of the few. It's in this power dynamic that we see national politics play out.

• Security: National security encapsulates several dimensions. Firstly, the nation must be secure from threats posed by external rivals. Next, the central government must possess the preponderance of power within the state. All other governments within the territory must be subordinate otherwise there is anarchy and perhaps even civil strife. There must also be a semblance of order and justice. Order requires regularity and consistency in the application of the law. Justice, on the other hand, requires enforcement of recognized social norms of right and wrong. Lastly, the people's basic needs of food and water must be met. Without sufficient food and water, civilization breaks down. Food and water security are matters of national security.

• Environment: Every nation-state is endowed with certain natural resources. The natural resources may vary. Some nations are gifted with the abundance of farmland while others an abundance of oil and extractable minerals. Regardless, each state is granted a unique ecosystem that is to be respected. Humans are simultaneously dependent on their environment for their basic needs, yet their very actions and decisions also directly impact the environment. Therefore, a delicate balance must be struck between the demands of human prosperity and environmental sustainability.

• Culture: Ideas have consequences. What a people believes about itself regarding its origins, nature, and destiny has grave ramifications for how a nation governs itself and how the nation interacts with outsiders. Culture is a complicated and also delicate thing. Culture is shaped by both the internal dynamics of a nation and by interactions with other nations. Culture is constantly evolving because while culture imposes certain expectations upon its people, it is the aggregate of the actions of the same people that produce culture. Thus, as the people change so too does culture change.

All six of these unique, dynamic, complex systems are rooted in a particular geography. The existence of planes, rivers, mountains, jungles, etc., directly influences how nation-states evolve. That's why we must root these six systems within the context of immutable geography.

Some acute observers may have noticed that technology is strangely omitted from these systems. That is because technology is not a system in of itself. Technology is an amplifier of systems. The invention of the airplane did not remove the existence of mountains, it merely mitigated some of the effects. The invention of automation did not remove the need for human labor, it merely transitioned some humans from laborers into machinists and engineers. The Internet may allow near instantaneous communication with all of humanity, but it did not remove the distinctions of human culture and community. Technology can either accelerate or mitigate the impact of particular systems. It is an independent variable.

These are the constraints of geopolitics imposed by the existing dynamic systems. Such an overview of said systems may be interesting and illuminating, but it's insufficient for providing a framework for forecasting future geopolitical events. What is needed is an understanding of risk.

There is a strong misconception of risk that dominates the public mind. Many perceive risk as being normally distributed, that is risk is shaped like a typical bell curve. The majority of the curve is contained within one standard deviation of the mean at the center. There are tails at either end which represents the improbable. This is how risk is taught and conceptualized within the modern university system. This conceptualization of geopolitical risk is, at its core, fundamentally wrong.

When you flip a coin, what are the odds of landing heads? It's 50-50. What's the odds of landing heads 100 times in a row? Cause I'm too lazy to calculate the numbers, let's just agree that it’s stupidly improbable, almost impossible.

But what are the odds when you land heads 10 times in a row? What about 50 times in a row? What are the odds of flipping heads 100 times when you’ve already flipped heads 99 times? With every subsequent landing of heads, the probability of flipping heads 100 times in a row becomes more and more likely. This is the nature of geopolitical risk.

Geopolitical risk is not normally distributed, it's logarithmic and path dependent. When one black swan event occurs the odds of a second black swan event increases exponentially. And heaven forbid if you incur two or three black swans in rapid succession because that means you’re living history.

Let's bring these elements together. Constraints, systems, and risk. Three unique and key elements for creating a verifiable geopolitical forecast.

Every system provides a constraint. The nature of the dynamic, interdependent systems necessitates that a change in one system generate change in other systems. Understanding risk enables the forecaster to assign probabilities to different outcomes and trace how a seemingly insignificant event within one system can set off an uncontrollable chain of events across multiple systems. In layman's terms, it’s the butterfly effect.

Of course, geopolitics is a lot more complicated than that. Geopolitics is an interdisciplinary field of study. It requires expertise across systems. It requires hundreds of hours to become knowledgeable in a single system, thousands if you want to become an expert. Few manage to become experts in several systems, even fewer become experts across all the systems. This is the challenge for geopolitical forecasters.

It is impossible to escape the reality that geopolitical forecasting is still as much an art as it is a science. There is without question a scientific process to making observations about the past as well as the present. It's even possible to formulate theories that can explain what has happened. It's another matter altogether to predict what will happen. That's why forecasting is also an art. It's not a skill that everyone can master.

However, we must remember that every forecaster has a bias. Despite their best efforts to remain unbiased, forecasters are still shaped by sincerely held beliefs. After all, they’re still agents of history. No matter how good the forecaster, deficiencies can still be found.

The human mind is far from omnipotent. We are but finite creatures. Some forecasters are more honest about their inadequacies than others. Those that acknowledge their insufficiencies openly are the ones that ought to be trusted most. Their honesty and humility is to be valued for even the greatest artist is capable of making glaring mistakes.