The cloudy and clockwork flags changing the global game

In this update on the global flags I identified in 2015’s Flagwatching, you’ll see that clockwork flags are those ticking away with fairly precise consequences, whereas cloudy flags can have a wide array of possible outcomes.

 

The religious flag

The flag of major religious conflict, which really only went up the flagpole in this century after a thousand-year hiatus, is affecting all sorts of games in a significant way.

The first is the Middle East and North Africa, parts of which are in a permanent state of civil war as a result of this flag. Thousands have died, millions have been turned into refugees and major cities like Aleppo have been destroyed.

The second is the toughening of immigration policies, which has probably divided America more than any other issue since slavery triggered the American Civil War.

The third is intelligence-gathering and the game of war generally, where the West has to fight a highly dispersed enemy unified only by ideology, but with the ability to create havoc through lone-wolf attacks on civilian targets.

The fourth is the growing restrictions in the field of international travel on such activities as carrying laptops onto planes and obtaining entry visas.

This is a cloudy flag with extreme scenarios flowing out of it, such as nuclear or dirty-bomb terrorism and a possible showdown between Saudi Arabia and Iran. There are no signs that this flag will come down any time soon, although in its present form it doesn’t represent an existential threat to the West.

 

The red flag

This cloudy flag first went up with the annexation of Crimea by Russia in 2014, after which Russia was thrown out of the G8 and had heavy economic sanctions imposed on it. Yet Russia supplies one quarter of Europe’s energy. Presidents Vladimir Putin and Donald Trump are uneasy colleagues whose relationship could change overnight if there’s any military incident in Syria or elsewhere involving Russian and American military forces.

Meanwhile, China overtook America to become the world’s largest economy in terms of purchasing power parity. The Asian giant is building a sophisticated defence system and international trading network to protect its number one position, having regained it after 300 years in the shadows.

North Korea, the third component of this flag, is a wild card with the potential to start a second Korean War, given the unpredictability of its relationship with America and the impulsive nature of both countries’ leaders. No amount of sanctions will make it drop its missile and nuclear programme. However, in the event of war, South Korea will be the country to suffer most and China will be severely disrupted.

 

The grey flag

The ageing of the world’s population is accelerating and has already slowed Europe and Japan’s economic growth rate down to virtually zero. America is younger and more resilient and will expand its economy faster. China has revised its one-child policy to a two-child policy because of this clockwork flag ticking away in the background. Nevertheless, public healthcare is becoming an overwhelming issue everywhere as the number of old people spirals upward, with limited resources available to keep them alive.

In the developing world, the economies of those countries with competent governments will easily outpace those of the developed world. By the end of this century, Asia and Africa will account for 83% of the world’s population of just over 11 billion.

 

The anti-establishment flag

This flag has already produced Brexit in the UK, Trump in America and an outsider like Emmanuel Macron to lead France. This is a cloudy flag because Macron, with his belief in a united Europe, is the exact opposite of the UK’s Theresa May and Boris Johnson. One simply doesn’t know where or how the lack of trust between the public and the political establishment is going to create the next surprise. However, inequality between the super-rich and the rest is still widening so the anger that caused the flag to rise in the first place is bound to increase.

The pressure is intensifying on companies to be more concerned and transparent about the ratio of top executives’ pay to workers’ wages. International agreements are also forcing the banks and others to share financial information with governments to stop money laundering and tax avoidance by rich individuals. The game of being a financial adviser will therefore be very different in the future.

 

The green flag

The latest example of this clockwork flag’s impact is the projection that global warming will open up the Arctic as a major shipping route by 2050 because the ice will have sufficiently disappeared.

Extreme weather is causing extreme drought and extreme rainfall in many countries. California has experienced both in the past five years. America’s continued support of the Paris climate change accord is in doubt – just as scientists are warning that the tipping point for the planet’s sustainability could be earlier in this century than previously thought.

 

The national debt flag

This clockwork flag is quietly rising as governments everywhere are abandoning austerity and budget surpluses in favour of the Keynesian solution of running budget deficits to reinvigorate their national economies. As long as interest rates remain low, the effect of increasing national debt beyond acceptable levels is being deferred.

As soon as inflation rates start to go up, the era of cheap money will end as central banks raise interest rates. This could lead to defaults on national debt by countries such as Greece and Italy, setting in motion the kind of credit crisis that fuelled the stock market collapse in 2008.

 

The world of work flag

High youth unemployment rates will persist until the educational establishment understands the nature of this clockwork flag. Automation, robots and artificial intelligence have completely transformed the world of work from what it was like

in the last century. The majority of young people have to create jobs for themselves now rather than get jobs based on their academic qualifications. The age of the entrepreneur has begun and school and university curriculums must reflect this.

In America, many citizens have become personal conglomerates, pursuing several different careers at the same time. This kind of informal employment may, for example, include making money out of your car by participating in a smart network like Uber. This is the way things are, and as with the first industrial revolution in the 19th century, there’s no turning back the clock.

 

The porous border flag

Earlier this year, 6 000 refugees were rescued from drowning in the Mediterranean in two days. This cloudy flag, along with the religious flag, has led to the hardening of attitudes in the West towards accepting refugees from conflict zones, as well as normal economic migrants. This has meant that, unlike in 2016, migrants are now compelled to survive in makeshift camps without any hope of reaching their ultimate destination of choice. Borders are becoming less porous as a result of popular pushback in the US and Europe.

The new rules of the immigration game are diminishing one of the great forces driving the world since World War II: globalisation. It may well extend to educated and talented people having less opportunity to pursue education and work opportunities abroad in other countries.

The world is turning into a more closed society and unfriendly place than it was 20 years ago. The question is whether exceptional and more inclusive leadership replacing the power elite we have today will reverse this trend.

 

The internet and cellular flag

This pervasive clockwork flag is radically altering the way every arm of government and every industry in the private sector operates. As I mentioned in Flagwatching, our dependency on this technology has elevated cybercrime and cyberterrorism to one of the greatest threats on Earth. The attack in May on 200 000 institutions in 150 countries showed how vulnerable the world is to dedicated hackers. On the other hand, this flag offers entrepreneurs incredible opportunities to be innovative and to reach their target markets.

The latest view on the next major technological wave is that the internal combustion engine will be obsolete by the middle of this century as cars become electric and driverless. Every house will have its own solar energy system, making it independent of the grid.

 

The lifestyle and leisure flag

The millennial generation has a completely different view of time than previous generations. This is why this clockwork flag is negatively affecting the popularity of sports like golf and test cricket that require a large amount of time to play or watch.

Equally, the role of mother and father is moving away from the old model of the former looking after the children while the latter goes out and earns the money. Life and leisure are now a jointly shared affair in which the two partners’ roles evolve as circumstances and personal preferences demand.

 

Source: GlacierQuarterly – Clem Sunter