India underestimated (again)

For savvy investors, that can actually be a good opportunity

I recommend everybody to watch Peter Zeihan here as he delivers a barnstorming illustrated speech on the future of the world. He is a geopolitical analyst who for years worked at Stratfor, known as the ‘private sector CIA’ and has since struck out on his own. He is a great speaker, very funny, knowledgeable, engaging and stimulating.

I should warn that it is very much a Texan’s-eye view, and I am mentioning Zeihan mostly because he mentions India, at 47 minutes in, thusly:

‘The short version on India is that if you’re happy with it today, it’s not going to change a whole lot, the reason being that the Ganges basin is the most productive agricultural zone on the planet in terms of calories per acre per year. That gives you endless population growth. However, there is not a single navigable river in the country. So high populations, no capital. That’s abstract [sic: abject?], total, unending poverty. But India’s looked like this since the fifth century. So if this is an India you can operate in, an India you know and like – great! They are not a major player in Bretton Woods, never have been. They’re not going to change, but if you think India’s about to turn the corner, the whole ‘Shining India’ concept, I’m sorry. It’s looked like this for 1500 years; it’s not about to change.’

A brief anecdote: A literary agent I used to work for – a wise and eccentric Hungarian gentleman – was the first person to open my eyes to the fact that one should never believe what one reads or hears from figures of authority. Specifically, he was speaking to me about newspapers, which appear to be convincing and realistic about what they report and predict until you come across an article about which you have some first-hand experience. When that happens the scales fall from one’s eyes: you suddenly realise the tissue of errors and fantasy that comprises the journalist’s effort at representing reality. Every single line of the article from beginning to end will slightly misrepresent, misinterpret or misunderstand the thing about which you have concrete knowledge.

These factual errors will one after another accumulate and also be compounded by the writer’s own opinion, not to mention the editorial direction from whatever organ he works for. By the end, reality will have been utterly traduced and you realise that this is what newspapers always do.

The lesson is that journalistic math almost always arrives at the sum of two plus two equals five. Or to put it another way, ‘newspapers are excellent at predicting movie and theatre schedules.’ Journalistic codswallop, as Sybil Fawlty would say, contains a lot of volts but only one watt.

I think it goes for speeches from experts as well.

Much of what Zeihan talks about is appealing in the sense that you (as his American audience) would love it to happen – it concerns the unassailable supremacy of the West, or rather the USA, and the diminishment of its competitors. Zeihan hearkens back into history in analysis to prove his points and goes on fearlessly to predict the future several decades from now with uncanny, telepathic accuracy. I was unaware that Russia is almost ready to invade Western Europe and will be forced to do so within the next few years (I’m sure it’s possible but this is the first I’ve heard of it; I wonder if President Putin knows).

I was also unaware, as Zeihan claims, that the Cold War was planned and executed by the USA from start to finish and ran on rails according to America’s Deep State plans, such that the rosy outcome was always destined exactly as it happened. Actually, the Cold War I do know something about and that is not how it happened. It was messy, unpredictable and depressing, not to mention plain scary. We are dealing here in Zeihan’s speech with massive hindsight bias and narrativity – making rational post-hoc sense of past random outcomes – and doing something similar with future events, forgetting that everything beyond the next 24 hours is incredibly path-dependent and almost impossible to get even slightly right. In truth, Zeihan commits every sin Nassim Taleb lists on page 50 of The Black Swan.

Back in the 1970s and 80s victory for the West over the Communist Bloc looked anything but certain; in fact things were going the other way and democratic governments were becoming resigned to the inevitability of socialism winning. It was only National Intelligence Council Vice-Chairman Herb Meyer, with his famous memo, for which he was lampooned and condemned as a madman, who predicted the inevitable demise of the Soviet Union. Meyer’s memorandum is one of the great museum-quality documents of the last century. Luckily Ronald Reagan believed him.

Suffice it to say that while I loved Zeihan’s speech, and bearing in mind that its sheer élan and ferocity made much of it sound convincing, the bits that I personally knew about I found badly wanting in any sort of accuracy. The Hungarian gentleman was correct. Zeihan’s brilliant performance is highly entertaining good old-fashioned Texan snake oil.

And it doesn’t matter that Zeihan gets India so utterly and ignorantly wrong; in fact it is advantageous. I have already written about the Chinese senior PLA strategist Major-General Qiao Liang here. His view of the geo-political situation is interesting for a similar reason to Peter Zeihan’s. For Qiao Liang notably fails to mention India when he lists China’s global rivals. It is as if India doesn’t even exist in the minds of those who, like Qiao Liang and Zeihan, see themselves as members of the ‘top teams’.

My point is that it is always good to be underestimated if your rivals are expending their energies and treasure on grappling with each other. I am starting to think that is a real factor in the emerging and re-arranging world order. Nobody is looking at India’s horse as it gallops up through the field along the rails: the binoculars are all trained on the leaders being whipped as hard as they can go but tiring, slowing and tiring …

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