Geopolitical Alpha

Chapter 6Geopolitics

“Who rules East Europe commands the Heartland;

Who rules the Heartland commands the World-Island;

Who rules the World-Island commands the world.”

— Sir Halford John Mackinder

Yes, I buried the “geopolitics” lead – in a book about forecasting geopolitics – all the way in Chapter 6. Halfway through the book, you might be dismayed to still be wondering: what is “geopolitics” anyway? Even more bewildering: my choice puts it below politics, the economy, and finance in the constraints hierarchy.

Geopolitics is a nebulous discipline. Most use it as a catchall phrase for interstate relations in the international sphere. For investment professionals, geopolitics connotes the unknown, unstructured, uncomfortably qualitative variable that intrudes upon their numbers-obsessed profession.

Geopolitical analysts claim it is the ultimate arbiter of the future because it deals with immutable, universal variables (i.e., natural endowments, demographics, and geography). Analysts confidently forecast the future using the geopolitical crystal ball: a tactile relief map where the topography stands out in three dimensions. Their predictions rival the certainty and, in some cases, grimness, of the best psychics.

The future of Poland is dire, as it is destined to be filleted anew by its ravenous neighbors. Canada's grim weather report is to be torn asunder by its regionalism and high infrastructure costs. And the US will live happily ever after. It will remain an Empire forever, ...