Can We Predict The Future Using The Past?

Thought Leader History Forum

This is a transcript recorded and edited with great flair by Ed Harris, of a talk that I had the privilege to give in September 2019 at the August gathering of the Thought Leader Forum. The event was Chaired by my very capable and good friend Christian James. It was one of the most enjoyable and board reaching speeches that I have ever given, thanks to the engagement and brilliant questions from the gathered members. Hence my desire to share its content with you all.

 

Introduction

The well-known expression “Build it and they will come” takes on an entirely new meaning. This phrase originally refers to the creation of a compelling gathering place. In the context of the cycle of empires, this could be taken to mean rather that once you build a position of stultified encumbrance, energetic, creative disruptors will come after you and, according to David’s analysis, almost invariably unseat you. You could imagine a brick wall holding out against attackers. The wall may be strong but it is static and cannot hit back and will eventually crumble when persistently and imaginatively attacked. The everyday examples of this are legion - look at what low cost airlines have done to national flag carriers, or what so many service-related technology platforms like Uber or Just Eat have done to traditional players. 

However, we are really looking at something far more serious than the fact that British Airways now looks more like Ryanair (if you are sitting in the back). It is quite something to sit down to a sumptuous meal in the comfort and elegance of the Cavalry and Guards’ Club only to be told that, within five or six years, we could be facing a third World War unleashed by China on the West. It is hard to imagine a much more chilling thought and this may be an extreme scenario, but not an impossible one - and, to make matters worse, we have unwittingly, or at least carelessly, done it to ourselves.

The vast majority of ThoughtLeader events have embraced the topic of disruption in its many forms and tonight was no different. Indeed, many such events have also had something of a dystopian feel, albeit usually mitigated with a hint of hope to prevent us all weeping into our cups at the bar afterwards. David paints a picture of the cycle being a predictable feature of all human systems - the rise and inevitable fall. This is the case in our own individual lives, as well as those of companies, political movements and, of course, empires. Forewarned is forearmed... 

 

Exposition

Failures are part of life and we should all learn from them. Human systems learn in the same way. Those in the ascension with natural energy will harness that energy to expand. Those that are old and infirm lack that energy and therefore cannot grow. 

David is briefly sharing with us his ideas developed over the last 17 years. Some of them touch on political views, but they are primarily about human systems and how they operate. The events of 9/11 prompted David to reflect deeply on what that fateful day would mean for society. He had had from a very young age a fascination with why we fought, how we fought and who won. Humans use conflict as a final arbiter whether the system is strong or weak.

David also trained as a scientist. There is a great quest in physics to discover a single theory explaining the four great forces of the universe [gravitation, electromagnetism, the weak interaction, and the strong interaction]. This involves the practice of taking complex ideas and reducing them to relatively simple components. 

Another key part of David’s formation was managing to survive the cannibals of Papua New Guinea and noticing the group nature of their behaviour - if one of them wanted to kill him, they suddenly all did. This experience taught him how human emotions can spread like fire, one person igniting another before it gradually dissipates over time. The key in his predicament in PNG was to survive long enough for that charge to dissipate. It happened time and time again and it struck David how, looking into the past, the tribal instinct is a lack of individuality and emotions going up and down like waves. Then he joined JP Morgan…

 

Papua New Guinean tribesman tooled up ready for a battle.

Observing his colleagues, he realised with horror that sophisticated, post-industrial man is in fact no different from the cannibals in PNG. People became charged with emotion through others and it then gradually dissipated. Probably only a small fraction of what we each think is our own individual perspective comes from within ourselves. All of a sudden, history becomes a vibrant human system.

Why does a human system act the way it does? We seek coherence. We know our DNA will die, so we have children to perpetuate it. Civilisations also want to perpetuate their DNA so the stronger they are the more they seek to control their surrounding environment. Ironically, through striving for greater control we are actually destroying our environment, but that is for another discussion. 

The five stages of Empire are fractal, meaning that our individual lives and the companies we build will follow the same pattern. Nations and Empires follow. We will focus on two parts. Firstly, the Brexit paradigm. Who would be the equivalent of Charles I today? It is not Boris. Regionalisation is the first stage of a human system. The population grows such that the dynamic between the limited power base at the top (which tends to be left-brained, linear and iterative) is displaced by the need for more people to be enfranchised. In the English Civil War, we had a Catholic monarchy. Very few people had any power and the result was a very narrow power pyramid with a wide base. But, as the base widens, more people subconsciously want a piece of the power. The Protestant movement was about disintermediating Catholicism and Parliament was about greater representation. So, on one side you have greater representation and a change in thought process - the right-brained creative element. This is up against the few on the left who want to keep the status quo. Who wins in such a struggle? The creative energy invariably finds a way to overcome the static incumbent. This is because society needs to find a way to expand, to find a new route when more people are enabled and it sticks itself onto the world with greater control.

 

The 5 Stages of Empire curve.

Let us take two examples:

The English Civil War. This started with an enfranchised group of people, a few protesters saying there was something wrong polarised because the elite treated them harshly. As it went on, more people heard about it. As more and more people joined the protest they effectively became a guerilla organisation, which is asymmetric because they think laterally, break the rules and find their way around the other group which is lumbered with limited thought processes. The New Model Army (formed in 1645) didn’t come from the Royalists, it came from a need to create something more effective. The New Model Navy founded an empire. We should think of it as a Darwinistic process whereby creativity overcomes limited thought and fear. Once parity of resources is reached, the incumbent has already lost as they simply cannot match the ingenuity of the pretender. Almost every civil war has played out in this way. 

The idea of Populism is interesting. Why demean the population? This is the collective mass which has a different perspective, but is demeaned by the elite because it is populist. Surely democracy dictates that the governing body should be that which best represents the will of the people. 

Is Brexit a civil war? Britain is making human records. Our endeavour is making the change between limited enfranchised thought and creativity without bloodshed. There is no precedent in history where such incredible energy in society has sat there and not started killing each other (and we strongly hope it will not). We should be so proud that, whichever view one takes, we are doing it in a unique way in human affairs. This is a beacon of light in our surrounding darkness. 

What is really going on though and why are Westminster missing the point? Perhaps back in the days of the Civil War they would also have thought they were winning until they lost. There is huge adaptive energy in Britain at the moment and we have to adapt to a world that is not post-war, but in which the axis of economic power has swung over to Asia. Europe is a backwater and the US is in decline. Europe is doomed as an old construct and with negative demographics at its centre. There is no precedent for a system with such demographics expanding or even maintaining its power. So, we are living next door to the Titanic and the axis of power has shifted to Britain. The reason we are having this argument is because of our national energy. Fascinatingly, all you have to do is look at Olympic gold medals. There is no counter-indicator to a nation moving up to the top of the medal table and not exhibiting political and economic power.

A table of top medal winners since 1996 showing the migration of China and Britain up the Medal table and Germany and Russia's decline

Once Britain is unleashed it will be the powerhouse of Europe. We are facing a tidal wave of financial reconstruction, so in the short term this won’t be a bed of roses. What defines a system is how adaptive it is, enabling it to grow. We are likely to come out of this massively in advance of our European neighbours with our own Central Bank and a free currency. According to the algorithms, with Brexit, we are effectively enacting the second Civil War in our system. The end of the 70s marked the start of a new cycle. We were lucky to have Thatcher who kick-started Britain and moved us to wealth-creation politics. Even those on the left have been neutral-distribution politicians. Jeremy Corbyn will not gain any traction in such a system. While we may fear him, we are watching the death of socialism and a move towards the right and the new. 

This is even bigger. Let’s consider the rise of Germany and the huge surprise of the Franco-Prussian war. How did the Germans manage to run over the greatest continental army under Napoleon III in just 6 months? The German chemical revolution created a huge demographic surge with the advent of fertiliser. With this demographic energy they applied science to warfare. Prince Albert died too early to bring over the chemical revolution so instead they used it to build an economic powerhouse from which they militarised their society. The whole nation was built on the basis of force, power and expansion. It was never a peaceful system but was forged in iron and blood. 

Now we come to the real challenge in the 1900s. Britain was in decline, relatively speaking. Our constitutional revolution of 1870 was the peak when it was unchallenged by anyone around us. But by the 1900s, the US was an industrial powerhouse seeking to take our naval power away from us and the Germans had read the same books and knew they had to challenge Britain’s naval supremacy in order to take control of the global trading system. Their first opportunity arose in 1896 when the Kaiser witnessed the Spithead Review and decided he wanted a navy like ours. Germany then spent 10 years building ships, although not on a comparable basis. Then, in 1906 Britain produced the Dreadnought. Built in Portsmouth in one year it immediately invalidated years of naval investment at a stroke. The arms races started right there. 

 

The Naval Arms Race preceding World War One between Germany and Britain. This was triggered by mounting tensions and the launch of HMS Dreadnought

Britain focused on the naval challenge whilst the French focused on the land challenge, as did Russia. Britain should have built up its land army at that point to provide a deterrent but failed to do so. When you see aggression built on this base of power and demographics with a revolutionary force overturning the balance of power, think of Germany in the run up to 1914 and Britain’s failure to create a deterrent in the form of a reserve army.

Fast forward to today. One day, we will look back and see anyone who does business with China from now on as a traitor who has sold their soul to trade with a country that has only one ambition - global domination - a country whose values are diametrically opposed to our own - freedom and democracy. The recent BBC documentaries about China have been fascinating, demonstrating, albeit late in the day, the magnitude of the challenge we in the West face. David has been warning of this for the last 10 years, and we are now seeing it played out in front of our very eyes. There are fascinating parallels to Germany. The demographic equivalent is there. Under Deng, up until 1974, China’s policy was to hide its light under a bushel. Then it would pretend to be assimilated by America, accept investment from the West, sucking all the IP [Intellectual Property] out of it, build its own economy and, at the critical moment, mount its challenge. Plundering Western IP and getting the West to pay for that was a stroke of genius. 

We have been investing in our own demise and we now face an industrialised leviathan led by a dictator whose sole aim is to change the world order. Look at the struggles in Hong Kong. The people who love there are imbued with Western thought processes and ideals, but they will not prevail and the world should look on in horror and realise we cannot deal with China anymore.

Protests in Hong Kong as the Chinese cracked down on the free press in 2019

 Our only defence against China is to build our own economies strongly to deter the Chinese from believing we are weak. Britain has an important role in facing up to one of the greatest challenges the Western world has ever seen. History is repeating itself. In his latest book “The Road to World Wars” David outlines the 11 stages that countries like Germany and Japan went through on the way to war. On this scale, China is already at number 10. They cannot act yet because they will still lag in military technology for a few years yet. Also, wars tend to be triggered by commodity cycles and we are currently in a deflationary period for a year or so. Following that will be a super-inflationary cycle until 2025-7, so we do have time to respond but we need to be faster on our feet. The lessons of history are before us.

 

Contingent Speakers

Head of history at various top schools:

To what extent is history shaped by those who record it? Take King John (early 13C) - “Bad” King John. He lost an empire within five years of taking the throne, fell out with the church and had a “colourful” private life. He therefore got a very bad and vocal press, which is not all that surprising when you think it was largely written by the literate people of the time - the clergy. It’s a fun read and has become the commonplace narrative for King John. However, if one looks at records, rather than chronicled evidence, you find a very different King John. It is not easy to find and is often not in translation, but does describe a hard-working, conscientious and dedicated king. His inheritance from Richard the Lionheart was in fact a “damnosa hereditas” - the poisoned chalice of an empire already in terminal decline. The question therefore, should not be why he lost his empire in 1204, but how on earth he managed to hold onto it for so long. Perhaps, had his story been written by less biased commentators, he might instead have gone down in history as “Good” King John…

 

Land held by the English crown (red) in France shortly before and after the reign of King John 

 

Economist: 

Economists may not be brilliant at predicting the future, but they are not hopeless either. It has been a well-accepted narrative that since the birth of Capitalism 200-300 years ago economies have been characterised by a series of booms and slumps. If you find yourself 8 years or so from the previous slump, you can be fairly sure that you are not more than 2 or 3 years away from the next one. Then, of course, the question is “Will it be the same this time around?” On the basis of past evidence a slump is currently overdue, but, given the geopolitical mess the world is currently in the global economy is holding up remarkably well. So yes, economists do sometimes give astrologers a good name. However, when China entered the world economy in 1980 it had a very strong currency which was weakened hugely over the ensuing decades. This enabled China to build its powerhouse economy. This contrasts strongly with Russia. Stalin had an advisor who reckoned that the correct exchange rate should be 14 Roubles to the Dollar. Stalin wasn’t happy with this so simply crossed out the “1” and set the exchange rate at 4. This directly resulted in Russian manufacturing becoming globally uncompetitive and uneconomical, such that Russia never properly industrialised and never produced the sort of export surpluses that characterised China’s success. The very different economic fates of these two huge nations shows us why using the past to predict the future can be very dangerous, given that Russia’s failure was effectively precipitated by a completely unpredictable and, one could almost say random, decision by one man.

 

City economist:

The above perspective is fascinating, but was played out over a long period of time. City economists do not have that luxury as they are expected to make much shorter-term predictions. How good are they at doing so? In terms of official forecasts, not very. The IMF, CBI, Bank of England and the Treasury have actually been fantastic counter-indicators over the last few years. Why? Possibly because many of their decisions and forecasts have been driven by political expediency, leading to a public distrust of “experts”. However, there is a difference between being able to see huge imbalances in a system, which many did before the last crash, and actually predicting the moment of that crash. So can economists really predict the future? It is becoming much harder due to profound changes over the last 10 years. Since the crisis, policy makers have adopted an entirely new tool kit involving such novelties as micro-regulation. Then there is monetary policy. Had you told an investor a few years ago that German 10 Year bonds would trade at a negative yield you would have been shown the door. Political risk is also a much bigger issue in economics than it was 15-20 years ago back in the days when Budgets were about as exciting as things got. Now, about 60% of client conversations are about second-guessing political risk. Western economies are highly leveraged and we have made some big promises on things like welfare to the detriment of the military, as dictated by democracy. Recession is now a particularly dangerous prospect as fiscal deficits would rise very rapidly. So economists have a tough job predicting politics and betting against markets that Central Banks seem happy to prop up when it suits them. In conclusion, the system is indeed currently building huge imbalances, and while the city economist would agree with David about the unsustainability of the EU economy, might not some of those problems also apply to the UK?

 

Technology perspective:

The colossal volume of data now being collected and the new ways in which it is being used will increasingly be brought to bear on the thought-processes of our decision makers. It is not just about the amount of data out there, but the degree to which it can be brought together and contextualised. Indeed, data collected from past events, such as the previous crash and its fallout, are very useful in trying to predict what will now happen in our low-inflation economies - what will become of military expenditure etc. Information can certainly be used tactically from a security perspective, collecting, for example, facial recognition data that can be used to link packets of data and therefore patterns of behaviour that can be used to keep us safe or simply monitor us.

 

Legal perspective:

Precedent is relied on hugely in British law. A recent example in Scottish law was the challenge to the proroguing of Parliament. The first precedent to be raised, and apparently the most recent, was from the 1600s. A supreme Court case in 2015 raised the precedent from 1891 of Wilkinson vs Downton. Downton, being something of a wag, told Mrs Wilkinson that her husband had suffered a serious industrial accident (which he had not). This was enough to send poor Mrs Wilkinson into an acute state of nervous shock. The Law, therefore, always looks to the past and sometimes a very long way back into it. That is unlikely to change. Reliance on precedent is not just applicable in English law and, as a salutary tale to anyone looking to do business in France, look at the case that recently hit the headlines. An elderly man and a young secretary went to a hotel. Later that evening he died, presumably in “amorous” circumstances. In the ensuing case brought by the man’s widow, the French courts held that this was in fact an industrial accident for which his employer was liable as he was on a business trip at the time. That is what precedent looks like in France…

 

Climate science:

 

Climate scientists have an advantage in that their laws don’t change. We won’t wake up the morning after Brexit to discover that someone else’s law of gravity now applies. In 1992, a ship left China bound for Seattle. In the middle of the ocean it encountered a storm and some 30,000 rubber ducks were washed overboard. No ethics committee anywhere in the world, even in China, would allow a climate scientist to throw 30,000 bits of plastic into the sea. However, given that this accident had already happened, climate scientists raced to track these ducks to see what they could learn. These ducks helped in the creation of the OSCAR [Observing Systems Capability Analysis and Review] tool. These ducks are still being found all over the planet and the data their journeys have produced has been extremely valuable to scientists. As it happens, for any Scots feeling the pinch after Brexit, the manufacturer of these ducks will reportedly offer £50 for each duck retrieved when they arrive on the shores of Scotland as anticipated in 2020. 

 

The journey of the 30,000 rubber ducks over the course of 15 years

 

To sound a note of caution, though, we must ask when a piece of historical data ceases to be relevant. Both in the world of science and geopolitics, there are so many interconnected systems and processes at work at any one time, that simply relying on past data is not enough. We should always ask, regarding any such data, what relevance it had at the time it was collected and whether it is still relevant today.

 

Q&A

 

Q         Where does Islam fit into David’s view of the world in the context of tonight’s discussions?

A          Britain created the first truly global empire - there was no precedent for this. When it did this, for the first time in history, all the main economic pistons of our colonies were set to zero. Then, the Western Christian world tore itself apart with two World Wars and alternative powers springing up in their stead - not just China, but India and the Middle East as well. The bitter conflict between Shiite and Sunni in the Middle East is a contest to see which country will spearhead the Islamic charge. When the West went into Iraq and Afghanistan, they entered a hornet’s nest of religious war and acted as a catalyst. This religious war would have happened anyway, but because the events of 9/11 pushed us into war with our centuries-old enemy, Islam, we took our eye off the real danger - China. That civil war will get worse with Iran desperately struggling for survival, trying to make that nuclear break-out and be like Israel, a minority population defended by a nuclear capability against what is coming.

 

Q         Does David believe that both the USA and China will fall into the Thucydides Trap (which dictates that when a rising power threatens to displace a ruling one, war is inevitable)?

A          Imagine that a teenager joins a family business and challenges the 50-year old father/proprietor at the height of their power and wisdom. It will not end well for the teenager. Knowledge and power will trump the energy and idealism of youth. If the proprietor is 75 and has suffered a stroke, it is a very different story. Transpose this onto the world stage and the question is where is the hegemon in its cycle. Is it the 50 or 75-year old? The Western Christian system has been in retreat for a long time, creating an energy vacuum into which challengers can move. Systems pull themselves apart from the inside. From the 9/11 plotters’ perspective, their great success lay not so much in the physical damage they did to buildings and people that day but in the fact that they turned the US into what Islamic fundamentalists believed it already was. It became draconian with rendition, torture, detention without trial - this was a mindset adopted as an act of self-defence. This marked the start of the erosion of America’s moral authority to rule, as an empire has to have an internal belief in its own superiority. 

Then along came Obama who oversaw the biggest giveaway of power in America’s history. The issue is that when underclasses come to power, whether they are brilliant people or not, they are obsessed with social equality. They neglect the boundaries of their empire which they disrespect and become the architect of its rapid decline. 

 

 

Then we come to Trump. He has recognised the slide in US power and has given away all precedent in a bid to make America great again. Assuming the Chinese started their 50 year plan to take over the world in 1996, they should be looking to move that up by 20 years or so. They will be feeling in a very strong position. Pretty much everything they have done has been successful - until Trump arrived. If Deng were to be talking to Xi from the other side, he would say Xi has been foolish to project his power, to show his hand until he had the military might and technology to act. Xi, however, is now fully committed. He cannot back down and indeed must and will accelerate. The locking of horns is inevitable. The Sino-US trade war is not just a little spat. It is not a negotiation but is full-on strategic competition which is parallel to the biggest arms race we have seen since the Cold War. China is projecting its naval power - just look at its land grab in the South China Sea islands and the fact that the US is sufficiently weakened as to be highly vulnerable if it enters those waters. All the US can now do is to get its act together sufficiently to be able to deter China when it becomes ready to act in 2025-7. Mobilisation is the only solution. 

 

Q         Is there an average lifespan of empires? Could one not argue that the EU is in fact in its infancy, recognising the threats it faces?

A          The average duration is about 400 years. Actually, in the Christian West, it appears to be much shorter, but when you look in terms of religion rather than nationhood it is still about 400 years. As to our hopes for the EU, the early phase of regionalisation is always characterised by expanding demographics. France and Germany have negative cores and peripheral countries are even worse. The EU is a structure that came about under the umbrella of US power and nuclear weapons. Without that, a very different structure would have resulted. 

 

Q         Why is it that everybody is so down on the EU? Yes, its power structure is unwieldy and needs reform, but surely it is a very positive force. It was a commercially created union after the War designed to prevent further conflict. So why are we scared of it? The UK already has many freedoms from the EU in terms of taxes, the military, the NHS. Why are we so desperate to get out?

A          The Cold War bifurcated the Western Christian world into the atheist Communist world polarised against the remainder. NATO brilliantly protected this divide. The French, meanwhile, were determined that Germany must never be in a position to run them over yet again. Therefore, Europe was constructed as a means to contain German power with the French being very much at the heart of it. Under the shield of NATO, it grew, but was never just a commercial arrangement. Even when Britain joined, we knew that, eventually, political unification was the vision. However, given that Britain was on its knees and regarded the political aspect as being a very long way off, we turned to our European allies to create a trading relationship. The trouble is that Britain is founded on democracy and as such no longer sees itself relating to the EU. It believes it can be something greater on its own. We are not scared of the EU, but don’t want to be tied to a system that is founded on bureaucracy rather than democracy. Europe will survive, but not in its current form and Britain, as a separate nation, can help in its ultimate reform. The Brexit debate is essentially a power shift.

 

Q         Why are we always so negative about the changing of power? America has led the world for the last 50 years (not perhaps so much in the last 3). Why are we so afraid of the Chinese? It is a new system and model, but why not embrace rather than fight it?

 

A          If I were French and saw the Germans building concentration camps in 1933 and calling them “Re-educational Processors”, I would have been worried. Look across to China where over a million Uyghur Muslims are being held in “Vocational Education and Training Centers”, generally regarded as concentration camps and a form of collective genocide. Wee should be pretty worried about coming under China’s influence. This was a country that, for decades, created the illusion of looking like us so we would invest our billions and help them build their economy while they harvested our IP. Xi has broken away from this, figuring China can go it alone and Trump only has a tiny bit of breathing space to hold them up with a trade war. 

 

Uyghur Muslims protesting against Chinese persecution

 

Q         If you are the US President, having to grapple with the democratic need to be elected every four years, how can you have a strategy against someone like Xi who has no such constraints?

A          Trump may be a divisive character, but the division over which he presides is innate to the position the US is in in its cycle. Decline promotes division as there is less to go round. He didn’t create that division, but he does represent it. The one way of unifying two halves of a system is to focus on a common enemy. Many analysts say that Trump will make a deal with the Chinese because he needs a buoyant stock market to help his re-election chances. This is not enough. There is so much division in the system that no stock market level will get him re-elected. He needs something much bigger - to unify America against a common threat - China. Much as Trump is ridiculed, the way in which he unfolded the trade war with China showed a very astute strategic thinker. There have been several strategies where Trump has been very sophisticated, along with various different advisors, leading one to think that what you see on the outside and what you get on the inside are two very different things. The revelation that Trump wanted to go after North Korea was nothing new in itself - every US administration has wanted to do that. Trump went to Xi and asked for a trade embargo against the DPRK. Xi followed the Deng principle of not aggravating your enemy before you are ready to attack them, so granted it. Shortly thereafter, cue photos of a Chinese tanker busting its own sanctions by transferring oil to a DPRK vessel and the trade war begins that day with the US claiming the moral high ground. China was defeated in its role as puppet-master of North Korea. 

The trade war will escalate and the world will divide into those dealing with China and those trading with the US. The global system we all take for granted is over. There will be a global slowdown which will put a whole new reflection on Western debt with all its associated problems. The Chinese may also have a lot of debt, but that is debt they created to invest in themselves, rather than, as the West, simply to survive. The former system always prevails. Britain can borrow the way Europe can’t. So we cannot hesitate. Trump should not have got rid of Bolton. That action probably triggered the attack in Saudi Arabia in the mistaken belief that Trump wasn’t a hawk. Trump only got rid of Bolton because he is a narcissist who can’t tolerate contradiction. He needs to focus on his deterrent and get his 355 ship navy onto the water as quickly as possible.

 

Q         Can the West resurrect its naval power quickly enough to deter China?

 

A          Naval power is the ultimate arbiter of our global maritime society. The British used their navy to control almost everyone in the world through the supply chain. America supplanted our dominance, but instead of battleships they had aircraft carriers. We are now on the cusp of a revolution in military affairs. When one hegemony challenges another, it is never on the same basis. Why use the same weapons as the other guy? Technological development is now happening at a staggering pace. The F-35 is a very interesting plane. It may have its downsides, but you can now fly a stealth plane off a short strip or small aircraft carrier which means the small carrier now has the capability of large carriers. The small carrier’s time has now come. The idea of having weapons systems on every ship you have is coming of age. Saturation is the issue. You can build more missiles than you can ships. Only when the US develops lasers and railguns (a railgun is a device that uses electromagnetic force to launch high velocity projectiles by means of a sliding armature that is accelerated along a pair of conductive rails) does the balance shift towards defence. A modern naval battle consists of lasers and railguns pitted against saturation with missiles. Standoff range is also a crucial factor. US carrier groups are currently as good as useless against the Chinese as their average strike range is 640 miles without refueling and they lack sufficient refueling capability on their flight decks. UK carriers have the same issue. We need drones to fly another 640 miles from where the missiles are launched against carrier groups. The Chinese are right on the cutting edge of this technology. The US could mobilise this capability but would need to go onto a war footing. The UK has done very well to build two carriers which, contrary to certain reports, are not useless. They are packed with new technology and ideas and are probably the best carriers afloat today. In the Astute, we have built the best submarine next to the Virginia and our Type 45 Air Defence Destroyer is world class, but we only have 6 of them. The Royal Navy is the only force that will ever be asked to escort a US carrier group, but this is a numbers game. The UK needs to increase its defence budget to 5% of GDP and the US to 7%. We have to move quickly and decisively.

 

 

Q         While China is no doubt a threat, should we not far more fear the forces that recently all but destroyed the Bahamas? Environmental degradation and climate change is a pressing global issue, so instead of squaring up for war with each other, should we not be reaching out for global collaboration to address the real existential threat to the human race?

A          There is a chapter in David’s book on this issue. He is an advocate. If you look at the 800,000 year ice cores and examine the correlation between CO2 and temperature, there is a lag, but we are now in the non-linear stage of climate change. Western scientific communities have collectively overlooked the risk of non-linear climate change. It is a mindset of thought rather than pure science. In David’s opinion, given the evidence he has seen, we have already cooked in 11 degrees of temperature increase. Average wave heights are increasing as is environmental energy. We are on the cusp of dramatic change in the decades ahead. We will know it has come when London is flooded - there are already days when the water level on the Thames is just one inch under the Flood Barrier. Land ice melts will result in a change in our civilisation. The broken levees around New Orleans were a foretaste. When our key littoral cities are inundated (think London, New York, Tokyo, Shanghai), we might start to unite. [According to the The Future We Don't Want analysis, the total urban population at risk from sea level rise, if emissions don’t go down, could number over 800 million people, living in 570 cities, by 2050.] Unfortunately, until we do get that massive wake up call, the unconsciousness of human collective organisations will hold sway. We need to break them out of that torpor to make them understand that the world they thought they were creating to their advantage is seriously at risk. 

 

Q         Empires tend to be created by extremely unpleasant and ruthless people - the Romans, the Normans and Napoleon are a few examples. This makes them a bad thing on the whole. Therefore, they fail when the people who live in them tend eventually to “grow up” and realise that abusing power and mistreating your neighbour is not an acceptable way to behave. Look at the Swiss. Whatever goes on around them, they keep themselves to themselves and are impregnable. Therefore, is not the whole concept of Empire abhorrent?

A          This will be answered from a systematic perspective. Living creatures have an innate desire to perpetuate their DNA, largely through having children. The main enemy of this perpetuation is time. Empires are born out of a desire for social coherence and the need to control one’s environment (this has backfired because of climate change). If you take the example of the Roman Empire, there was the move from polytheism to monotheism. If you didn’t control your environment you needed a god for everything, fearing you could get wiped out. But when you could suddenly get your grain from Spain or Egypt, meaning that the Empire transcended one country or region’s weather systems, you only needed one god. It is all about organisation, perpetuation and continuation. There is the creative cycle to consider. At their maturity, empires tend to be highly tolerant and integrative - the Islamic empires were excellent examples of this. Unfortunately, it is human selfishness and greed that sooner or later starts to tear the system apart from the inside. The ideal is that at some point we will all be one, but that will not happen until a little green man lands his spaceship in Central Park at which point all our differences will be forgiven. If we survive another 20 years, we will be an interstellar race.

 

Q         David has the very rare prophetic talent of being able to speak of history before it happens. The trouble with prophets is that they are too often ignored. Looking back in history, who would David most closely identify with in this regard?

A          He was fascinated by Nostradamus when he went into the City. The question was whether he was truly prophetic or was he merely outlining a pattern that people then connected to, leading to the question of whether anyone really can prophesy. There has been some work done in the US regarding people who can super-forecast. We don’t ask enough questions of those who do make correct predictions. Was it luck? Was it something else? Why are we sleepwalking towards disaster, despite the fact that we love our children? Take Miyamoto Musashi,  the great swordsman of Japan (1584-1645), who was also a philosopher, writer and ronin - a wanderer. He had great wisdom and knowledge, but was an outsider to the system,  a masterless warrior. Thus, his wisdom was only recognised late in his life. Some people make predictions intuitively and nobody quite understands how they do it, but David uses science and systems. His goal is to pass this wisdom on to as many of us as possible to give the human race its best chance of survival.

 

Miyamoto Musashi

Q         We have spoken of Christianity vs Islam, but China is currently the country in which Christianity is growing most quickly. How does that fit with the argument?

A          It probably won’t grow quickly for long if Xi has anything to do with it.  

 

Q         David predicted 3 years ago in this very room that there would be a trade war with China and that Boris would be the next PM. However, why is our conflict with China inevitable? Do they not need the West to do business with?

A          David decided to answer the question with another question to us all:How does democracy come about when most leaderships are hierarchical? What conditions led to democracy?

 

Q         Plague? Wealth? Growth of the middle class? Economic envy? Education? Common myths? Culture? No. We were then given a clue: Athens and Britain. Sport? Slavery? Freedom? Emancipation? No.

A          Both Athens and Britain have high coastline to internal area ratios which makes them very popular destinations for seafarers. When you captain a boat, you make all the decisions regarding the welfare of the crew in a multi-variable environment and nobody can tell you what to do. This makes you individualistic and highly independent. Having high numbers of such people in the population promotes these qualities. Britain came of age when striving for naval supremacy. If you send your ship on a 5-year mission, you need senior crew who are right-brained, individualistic and lateral thinkers. This culminated in Nelson’s navy. The navy was based on a meritocracy, whereas the army was based on hierarchy in order to protect the Monarchy against revolution. Russia would never have espoused democracy and India struggled to do so. Now we see in Hong Kong, once again, the crushing of democracy by a totalitarian China. Xi’s China uses AI to control every individual. When he had an anti-corruption drive, he was merely rooting out any individuality that could threaten his bid for lifetime power. Can such a centralised, repressive system really coexist with democracy?

 

An image from the Tiananmen Square massacre of 1989 in which, according to the British ambassador at the time, 10,000 people were slaughtered by the Chinese government 

 

Summing Up:

The case against:

David started by stating that his views are based on data and facts that are there for all to see. But this turned into talk of China being the bad guys, the imminent collapse of the EU and the fact that Trump is a good strategist - but none of these things are historical fact. These are interpretations. We write our own history and the same event can be framed in many different ways. Brexit might be a great opportunity for creative aspiration, but could turn out to be the opposite. 

Back in 2007 banks were all happy with their value at risk based on historical data, but once the events of 2008 unfolded portfolios behaved in unprecedented and unpredictable ways. History is a really bad estimator of extreme events. How many extreme weather or stock market events do we hear are once in a century events? Therefore, history cannot be said to be an accurate guide to the future. 

The case for:  

I believe that David’s analysis is entirely correct on the basis of one simple fact: Human nature does not change, at least not in the timescale we are discussing. Of course, our creations do advance and evolve - look at technology. We create more effective ways of both killing and curing each other. Social media now means we no longer even need to meet or speak to each other. So yes, of course, the way the world looks changes every day, but the qualities that make us human beings do not. We are driven by the same base motivations through the ages. Cycles are a natural human phenomenon.

Remember when Gordon Brown infamously declared an end to boom and bust? He completely misunderstood what it is that causes the stock market and economic cycles - greed and fear. These are hardwired into all of us and it will never change. 

Something that does evolve, however, are our aspirations. We have been talking tonight about the much longer cycle of Empires. We Western developed countries regard democracy as a manifestation of how far we have come and a template that the rest of the world should follow. Enfranchising the people may make us all feel that we have a voice, but it is a massive handbrake on development. It stands to reason that the more people who need to buy into a plan the longer it will take to agree and carry out. Imagine, for example, if HS2 were in China. It would have been completed years ago. China builds about 5,000km of high speed railways each year. If your house is in the way, tough.

China’s Three Gorges Dam was completed in 2003 and is now the world's largest power station. More than 1.2m people were displaced with 13 cities, 140 towns, and 326 villages simply submerged. Can you imagine getting that through the UK Parliament. We get tied up in knots over a runway or a few hundred miles of railway. 

 

 

The obvious point I am making is that democracy slows development whereas an ambitious dictatorship is unfettered. The part of the world now in decline is characterised by democracy, whereas the main countries in the ascendency, most notably China, are, broadly, dictatorships. President Xi has effectively made himself an Emperor. He plans to get things done and nothing will slow him down. The other thing to remember is that while democracies tend to think along a timescale of 5-10 years China is looking ahead decades and even centuries. This is why the situation in Hong Kong is so worrying to Beijing. To them, democracy is not merely a concept they don’t embrace. It is an existential threat to the future Chinese Empire. We saw this before with the Tiananmen Square massacre. The lives of a few hundred protesters and the condemnation of the world are a small price to pay to stamp out a democratic rebellion. Let’s pray the protests in HK don’t end the same way.

To conclude, David is quite right that history repeats itself because history is made by people whose key makeup does not change. As an aside, and before we all get too depressed about being in decline, it seems to me that given the average human lifespan we will each only see a small part of the Empire cycle and I would rather be living in a comfortable, flabby democracy than in a hungry dictatorship. It seems that in the latter things might be exciting and glorious for those at the top, but it is pretty wretched for everyone else…

 

Conclusion:

It is quite hard to know where to begin. As I write, I am sitting in a little country village with the birds tweeting and the occasional tourist strolling by. At the same time, having now spent many hours listening back to the discourse of the evening, I have thoughts of Armageddon swirling around in my head. Very rarely have I listened to the views of someone so well-informed, intelligent, articulate and compelling and yet so desperately hoped he was completely wrong about almost everything he said. 

We are left with a rather desperate sense that if the Chinese don’t get us, the environment will. Interestingly, the link between China and global warming was not explicitly discussed. We obviously cannot have failed to hear the message of Greta Thunberg and, if one lives in a major city, have experienced the inconvenience of environmental protesters disrupting the traffic on occasion. The problem is that if the US and China don’t buy into the need to change things, there is not a great deal the rest of us can do. For the time being at least, Trump is a denier. The Chinese are doing certain things like building vast solar panel farms that don’t generate much electricity because the sun cannot penetrate the thick pollution. Their view, as far as I am aware, has long been that while they are prepared to curb their excesses of polluting industry and power production they will not be told by the West, which has already had its industrial revolution, that they cannot have theirs. So on the climate change front we are not in a great place.

In terms of the China threat, David didn’t go into exactly what the “war” would look like. Will we see the Chinese People’s Liberation Army patrolling the streets of London, Paris and Berlin? Will we be paying our taxes to Beijing instead of Brussels? I suspect it will be far more subtle than that. I have heard various Chinese people say over the years that the Middle Kingdom does not have territorial ambitions outside its borders (although Tibetans would disagree). China, after all, is not a small country - they have plenty of room for their 1.3 billion population. However, China does indeed crave power and influence and that certainly will grow. As China’s economy has burgeoned over the last few decades, it has become increasingly clear that it is not self-sufficient, particularly in terms of oil and other resources. In its insatiable quest for oil and iron ore it has extended its tentacles all over the world, particularly into Africa, in order to secure a ready supply of everything it needs.

However, China under Xi is going beyond mere self-sufficiency. The Belt and Road Initiative (BRI) is a global development strategy adopted by the Chinese government involving infrastructure development and investments in 152 countries. The Chinese government calls the initiative "a bid to enhance regional connectivity and embrace a brighter future". Most others would see it as a push for Chinese dominance in global affairs with a China-centered trading network. 

 

 

As shown in the BBC documentaries David referred to, China is already engaging in debt colonialism in nearby poorer countries by persuading them to build unnecessary infrastructure such as ports and airports, lending them the money to do it. When those projects fail to deliver revenue, the Chinese take them back as collateral for their loans which the host country cannot afford to repay, thus enabling China to accumulate strategic infrastructure assets abroad for such time as they might need them. 

Closer to home, then Chancellor George Osborne was welcoming Chinese investment into the nuclear plant at Hinkley Point. He reportedly said (but hotly denied saying) that ‘They are going to do it [spy] anyway so we might as well get the investment’. This was not everyone’s view. Economist Dieter Helm said he found it astonishing that an independent nuclear military power should be “complacent about allowing potential enemies into the core of its nuclear technologies”. This is no doubt what David was saying too. Perhaps our problem is that we are too English about all this. Whatever our private views about the degree to which China should be regarded as our enemy, we have to make it appear as though we are friends. Look at the fuss over Huawei, which is generally regarded as another arm of Beijing’s spy network. We felt it would be frightfully rude not to let them build our 5G network, although this may be academic, as I am sure I read somewhere that Huawei already has access to the 4G network the UK government uses for all its “secure” communications with overseas embassies and consulates. Trump, of course, has no such qualms. Hopefully this is a demonstration of his insight into these complex issues rather than pure protectionism.

Of course, we don’t need to invest in China for them to steal our IP anymore. The cyberwar is already well underway. China routinely hacks Western companies and governments, sometimes putting them out of business in the process, although that is not to say we are not doing the same to them. Presumably the smart guys at GCHQ are giving as good as they get, but China is somewhat better resourced.

The bottom line is what should we all do about this? As individuals, we can salve our climate change consequences by trying to live greener lives, even though we know that the institutions which can genuinely effect change will probably continue merely to pay lip service. As regards the China threat, all we can really do is think more about the provenance of the goods we buy. In the same way that, if you still want there to be shops in your local high street in five years’ time, you should use them rather than getting everything from Amazon, we can make ourselves less dependent on China if we source things from elsewhere, and cause a groundswell of sentiment among the companies who make the things we like to buy that we would prefer them to use other countries for their manufacturing, even if we have to pay a bit more. Today, of course, that would not be quick or easy to do. Most of what we buy has passed through China at some point, but we have to start somewhere. If, as David said at the start, people and companies who deal with China start to be seen as traitors, they will change their arrangements pretty quickly. We must vote with our feet.

Finally, the 1986 movie Top Gun wasn’t really my thing, but it does contain one line which always stuck with me, perhaps as it shows what the US perception was 33 years ago of China’s mass export of cheap rubbish to the world. It was mocked at the time, but in light of tonight’s conversation should have been more closely studied. Maverick (Tom Cruise) is getting a roasting from his superior over yet another overly-risky manoeuvre in his jet fighter and is warned that if he messes up again, “you'll be flying a cargo plane full of rubber dog shit out of Hong Kong!” If we had all bought less of this garbage over the years, we might not be in this mess now and there would be far less plastic floating around in our oceans to boot. Still, we live and learn, don't we? Or do we?