Wealth Report From the 2017's world

From this day forward, a new vision will govern this land. From this day forward, it’s going to be only America rst.”
With these two short, yet immensely symbolic, sentences, spoken as part of his inauguration address in Washington DC on 20 January 2017, America’s 45th President Donald Trump formally called time on seven decades of interventionist US foreign policy. Seven decades that since the Second World War have seen the world’s most powerful nation attempt to wield its in uence to imprint its own values on the rest of the globe.
While Mr Trump’s supporters welcomed his pledge to make America great again, to rebuild its strength from within and to focus on addressing their own domestic woes, many other Americans were more nervous about the future. Across the Atlantic, speaking at The World Economic Forum in Davos, Switzerland, Ian Bremmer, founder and President of Eurasia Group reiterated his brief obituary: “Pax Americana is dead.”

It comes as little surprise to hear him say this. A couple of weeks earlier in his office on the 15th oor of a building on Fifth Avenue in Manhattan’s fashionable Flatiron district, Dr Bremmer had told me why he thinks the death of what he calls “Indispensable America” and the nation’s rebirth in the shape of “Independent America” is bad news for the world.

So bad, potentially, that it tops Eurasia’s eagerly awaited annual list of the 10 biggest geopolitical risks currently facing the world. Top Risks 2017 was released a few days before our meeting, and Dr Bremmer had spent most of the week touring New York’s TV studios explaining that choice and why, when combined with Eurasia’s other risks, in particular a China liable to overreact (Risk 2) and a weakened Angela Merkel less able to hold Europe together (Risk 3), he thinks we are entering what he describes as a “geopolitical recession”. “I like to think I’m a pretty optimistic guy, but 2017 is the most signi cant year for political risk since World War Two,” he warns.

Potential flashpoints :
The list of places where such ashpoints could occur around the world is worryingly long. Turkey (Risk 8) makes it into Eurasia’s top 10 for the second year running, but the fact that later this year China’s Communist party is holding its 19th National Congress, which will thrash out the details of the country’s leadership succession, makes parts of Asia, including debut entrant North Korea (Risk 9), particularly volatile, Dr Bremmer says.
“Trump’s new appointees on trade make it very clear that his hawkish line on China is something that is going to continue, but let’s keep in mind that this is possibly the single worst time for the US to try this approach. If ever there was a year when Xi Jinping was going to be maximally unwilling to show weakness, or softness or restraint in response to a perceived slight, it would be this year. He has got to be seen as tough, unyielding and uncompromising.”
However, he concedes, it is possible that Trump’s unorthodox approach could succeed where Barack Obama’s foreign policy failed, and help to establish a more stable world order. “We could end up with a tit-for-tat trade row that could seriously hurt both economies in 2017, lead to military confrontations, see the Japanese take a big hit in trade and tourism and the South Koreans, with a new government from the liberal opposition, ip towards Beijing.
“But then if Xi Jinping has his successful leadership transition and Trump has his Jesus moment – ‘Wow, the Chinese really hit me and I need to do a new deal’ – things could look very di erent. Trump, like Nixon, could end up creating the basis of a G2 [Dr Bremmer coined the phrase G-Zero to describe the world today, where he believes no single country has the power or inclination to shape a truly global agenda] between the US and China. It’s possible, but it won’t be in 2017 and we’re going to have to get through a lot of volatility before Trump can make it happen.”
The other big alpha male of global politics, Vladamir Putin, doesn’t explicitly make it into the Eurasia top 10, but he’s certainly going to be part of the mix, ready to take advantage of the power vacuum created by America’s unwillingness to lead, and of ongoing political and economic discord within Europe. Having this time last year unequivocally stated that Donald Trump would not become the US president, Dr Bremmer is understandably not ruling out a victory by the right-wing Marine Le Pen in this year’s French presidential elections. “Independent America leaves Putin with a lot of running room,” he says.

The declining power of governments to address society’s big problems brings the conversation on to wealth inequality, the issue that in one shape or another really drives most of the risks facing the world today. Last year, on these pages of The Wealth Report, our keynote interviewee, Lynn Forester de Rothschild, expressed a hope that the Movement for Inclusive Capitalism, which she champions, would help create a fairer system of capitalism and globalisation.
But as Brexit, the US elections and numerous other populist- driven political outcomes show, voters aren’t prepared to wait for those running the system to mend it gradually. Instead, they are pinning their hopes on a new breed of politician wielding a scalpel. Is wealth inequality a problem that can be xed, I ask Dr Bremmer.
“No,” comes the short answer. “I think that we will address it in many di erent ways around the world. Some will be successful, some will merely kick the can a bit further down the road, and some will be incredibly explosive. In the US, for example, you’ll see some very e ective policy responses to inequality, but they’ll happen in certain municipalities and certain states, they won’t happen nationally. Inequality across America as a whole will grow.”
Part of the problem, Dr Bremmer argues, is that the data used to measure wealth inequality is “way out of date”. “Full employment, for example, is no longer a very useful metric because you’ll have so many people employed in the gig economy where labour will be on demand. You’ll need to look at whether these people have satisfying lives, are they able to think of themselves as productive and think of future pathways for their children. Those are the questions that I think governments have been very inadequate at answering.”
The ability of politicians to answer the questions now being asked of them by electorates eager for change will define how much riskier the world really becomes in 2017. “What we do has never felt so important,” says Dr Bremmer, as we wrap up our chat.
Hopefully those who can make a difference are listening