When people think about geopolitics, they tend to think about war, as if the two issues were the same. But that is only partly true. 

Geopolitics is the study of the power of nation states, and war is certainly a determinant of power. But it is only one of many. Things like economics, politics, ideology, and technology work together to form national power, and however useful it may be to learn about any single element, they are inseparable. It’s for this reason that the situation in North Korea is (rightly) seen as a geopolitical problem but the Italian banking crisis (wrongly) is not.

Before we begin…

At the risk of stating the obvious, Warren Buffett is an extraordinary forecaster. At the risk of displaying hubris, I am struck by how similar his approach to forecasting the future of companies is to our method of forecasting geopolitics.

At Geopolitical Futures, we have pinpointed a way that our similarities can benefit you. You’ll find out more at the bottom of this issue.

But for now, let’s dig into This Week in Geopolitics.

Rooted in Geography

Multifaceted though it may be, geopolitics is nonetheless rooted in geography. Geography dictates what is possible and what is impossible. Iceland, for example, can never conquer Europe, nor will it become a major industrial power. 

Place is important. Human activity occurs in a place. Business is conducted in a place. Its fate is as tied to that place now as it ever was. Multinational companies are not new. Bankers during the Italian Renaissance did business all over Europe. But the bankers themselves lived in a certain place, and as vast as their interests were, they needed to live in a location where they and theirs were safe. Those with money must always seek safety, for there are always people who want their wealth. Bankers could hire mercenaries, but it was never really clear how loyal they were.

Times have changed but the fundamentals have not. Now, the security of wealth depends on the ability of the state to protect it. Wealth is sometimes created and sometimes granted but always envied and desired.