Geopolitical Alpha

Chapter 8The Time Constraint: When Preferences Run Down the Clock

“Falsehood flies, but truth comes limping after.”

Jonathan Swift

I wrote this book between January and April 2020, at the height of the COVID-19 pandemic. I am glad that I chose to write a framework book and not a forecast one.

My view of the upcoming decade is clear from the first chapter, and COVID-19 has not altered it: I expect the world to continue deglobalizing. I expect laissez-faire to give way to dirigisme. I expect Europe to remain integrated and in fact accelerate the process. And I expect the US and China to remain at each other's throats – albeit constrained from full economic bifurcation by multipolarity.

The COVID-19 pandemic will likely only reinforce and accelerate these themes – particularly the move away from the Washington Consensus and toward the Buenos Aires Consensus, especially in the US and UK. By the time this manuscript hits the shelves, I suspect the move will be obvious. The time to forecast the apex of globalization, the end of laissez-faire, the Buenos Aires Consensus, and the US–China conflict was back in the early 2010s, not 2020.

Yet the COVID-19 crisis teaches a methodological lesson, particularly when it comes to the limitations of the constraint framework. Like many other investors, I initially underestimated the global impact of the virus: I advised clients to hold cash but not to outright short the market in February.

The constraint framework has a blind spot: the power ...