Machiavelli for the 21st Century: “The Next Decade” Review

11:51 am - February 25, 2011

George Friedman’s “The Next Decade” could alternately be described as Machiavelli 101 or a crash course in realpolitik.

Friedman’s central thrust is this: America is an accidental empire – like it or hate it, the world must deal with it – and it is thus in the United States’ best interest to maintain the “balance of power” at all costs.

The balance of power is predicated on status quo. When you are at the top of the heap (as America is in Friedman’s view), any major shifts threaten to destabilize the top dog’s position. As the British and Roman empires did before it, the American empire must anticipate and prevent such shifts, blocking up-and-comers from excessive power accumulation.

As Friedman sees it, a century is about events but a decade is about people. The main actor over the next ten years will be the POTUS, or President of the United States. In his role as shaper of strategy and manager of expectations, the POTUS must act as a classic “prince” in the Machiavelli mold.

This role also involves double-dealing with the populace, in terms of appearing to meet unreasonable demands (such as overwhelming focus on the war on terrorism) while actually focusing on more critical things (behind-the-scenes issues too nuanced or complicated to explain).

To safeguard America’s interests, Friedman endorses what one might call an enlightened amorality – doing what is necessary for the sake of the greater good. Friedman argues for a middle ground between the idealists and the realists, pointing out unworkable flaws at both extremes. The idealists are ill-equipped to function in the real world, while the realists find themselves lost without a guiding moral compass. Ruthless execution in commitment to moral principle is the solution Friedman endorses.

It is easy to see how many people, Americans and non-Americans alike, will be offended by this book. Some will resent the broad brush strokes Friedman uses. Others will resent the hard-nosed subordination of idealistic principles, or strongly disagree with certain controversial forecasts.

But in many ways this book is more valuable as a high level thinking exercise than a blueprint for world events. It is useful to understand, if only in abstract, the various drivers that shape international relations – many of them deliberately unspoken.

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Within the text, Friedman makes many provocative assertions. For example:

Increased global interdependence via free trade can actually increase, rather than decrease, the danger of war.

Osama Bin Laden’s goal in attacking the U.S. was to encourage local overthrow of Middle Eastern governments (by demonstrating that seemingly invulnerable power structures are actually weak).

Iran calculatingly embraced a “North Korea” strategy of appearing crazy and unstable for greater advantage at the negotiation table.

It will be in America’s best interests (from a balance of power standpoint) to back away from Israel – and strike up an uneasy strategic partnership with Iran.

The European Union was formed out of necessity as a counterbalance to the consolidated power of America and the USSR.

Poland will be a regional linchpin, especially in terms of counterbalancing a Germany-Russia linkage.

The U.S. will need a nurturing relationship with China to contain a growing power imbalance with Japan (rather than the other way round).

Again, the most helpful thing about “The Next Decade” is not necessarily the accuracy of the fault lines portrayed, but the illumination of critical thinking as applied by geopolitical strategists in today’s world.

As a trader with a global macro focus, my biggest criticism – and the reason the book only gets four stars – is because of the short shrift given to the causes and consequences of the global financial crisis.

In his chapter on the financial crisis, Friedman tips his hand early by saying “there was nothing at all extraordinary about what happened in 2008.” (Really!) For the next few pages, the tendency to engage in sweeping generalities overlooks critical details that still shape the world situation today.

Friedman seems oblivious to the fact that the Federal Reserve, the banking system it serves, and Wall Street on the whole have their own internal geopolitics – a mix of influence, legacy and corruption that impacts the global economy greatly.

One is willing to give Friedman a partial pass in this area, as macroeconomics and monetary policy are not his chosen forte. Still, though, the weighting of various financial crisis variables seemed unacceptably light, given how money and finance could aggressively shape some potentially dramatic outcomes in the next few years. (Weimar Germany anyone? Panic of 1907?)

All in all, “The Next Decade” is a fast read (243 pages, written in plain English) that will certainly make you think, whether you whole-heartedly adopt Friedman’s view or disagree with every page. The book could prove an especially fruitful exercise for traders and investors seeking to hone their big picture skills, via the extra practice of connecting dots and putting puzzle pieces together.

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