As ever, Oscar Wilde put it best: “We are all in the gutter, but some of us are looking at the stars.” Optimism, the most underrated quality in our cynical age, is necessary to get through the day.
Analytically, it is also often of more use than the doom and gloom that passes for the base case in the political risk profession. Even the name of the industry—with the pejorative “risk” being the crucial word—misses the larger ideational point. In understanding the world, there are both risks to be avoided and opportunities to be embraced. You would not know this by looking at what passes for political risk literature, a post-apocalyptic trawl through chaos and misery. It is just as utopian to view the world as irredeemably beyond repair as it is to see it as only full of butterflies and light.
So, as a necessary analytical corrective, here are three political risk calls for 2022 that amount to being very good news indeed.
The first one is that the Covid-19 pandemic will come to an end. Certainly, Covid-19 is not going anywhere. We will all have to learn to live with it, as humans have with every other virus that has blighted their existence since we first emerged from caves. However, as a world-historical crisis, its deadly reign is coming to an end.
If we look at the two key initial factors that should matter above all else, put forward by governments in March 2020 – the death rate and the hospitalization rate – Covid-19 is already winding down. The Omicron variant, in line with Charles Darwin’s Theory of Evolution, is trying to survive and is thus far less lethal. Two studies show how hospitalization rates are a dramatic 40 percent lower than the earlier Delta variant. This is true even if Omicron is far more transmissible and vaccine-resistant. Overall, this is very good news.
Weaker strains of a more transmissible version of the virus means Covid-19 is well on its way to becoming just another variant of the flu, rather than a world-altering emergency. Better still, the many recovering from Omicron will possess antibodies that will further sideline the virus.
We are not out of the political woods yet. We now must worry about the locust effect of Omicron, where the high frequency of cases still has the ability through sheer numbers to overwhelm our put-upon health care systems. But Covid-19 is historically behaving as viruses tend to do. This is the year it ceases being the defining political risk of our planet.
The second prediction is that for all the increase in geopolitical tensions, Asia remains the locus of the world’s future growth. The Sino-American Cold War has come into its own, becoming the defining geo-strategic contest of our era, but Asia remains the world’s greatest source of economic reward.
Beijing is topping out as a peaking power. China is a great power whose relative rise is stalling as a result of demography – it will get old before it gets rich – shadow banking and real estate debt, and a foolhardy, vainglorious foreign policy. Meanwhile, the rest of the continent looks set to steam ahead. With China’s labor costs on the rise, “Factory Asia” – the next-door ASEAN countries such as booming Vietnam – have taken up the economic slack.
Next-door India is an even better bet for the future. Delhi is blessed by its youthful population as the only major great power in the world set to take off due to catch-up growth. It is democratic, politically stable, and primed to retake its place as one of the world’s great political and economic powers. In short, it amounts to the best long-term macroeconomic investment out there.
And finally, we can forecast that the very structure of our world favors the continuation of a Western-dominated order. Think of it this way. There are two superpowers in our new era, the US and China. Beneath them, are five other great powers that can largely set their own foreign policy course. Of them, three (Japan, India and the Anglosphere countries) are fully in the American camp, with the EU veering between neutralism and a pro-American tilt. Only Russia is partially allied with China. This gives America and the West an overwhelming power advantage setting the terms for our new era.
So here’s to a wonderful, optimistic 2022.
This blog post was originally published in City A.M.