DEE SMITH: I do think that we've entered a new age, and I'm calling it the age of splintering.
It's infected politics. It has driven politics to the edges. So, you have this centrifugal force that's driving everything to the edges. And there's very little center. And the center can't be heard, because it's not outrageous.
If you go to any military, good military college, they will tell you that nationalism is always a prelude to war. But I do think it's distressing that so many people, including young people, in the US and Europe are looking backwards at these old solutions, which I just think they're in a posit, I think they're not going to work.
RAOUL PAL: There's very few people in the world that walk into Real Vision and completely changed my understanding of how the world works. Dee Smith was one of those. I met him in Hong Kong a few years ago. And we were talking about security because he has a corporate security firm in terms of intelligence, corporate intelligence. And I was talking to him about things. And he started talking about his world framework and worldview. And I understood that Dee was, in fact, an expert on geopolitics, geopolitical structures, and how the world is changing where we're going. And I was mesmerized.
I then asked Dee to come and make a documentary series for us called, The World On The Brink. If you haven't seen it, I really urge you to watch it. For me, it's one of the greatest pieces of geopolitical filmmaking I've ever seen. Yeah, it was pretty raw for us, because it's our first ever Real Vision documentary. It's five parts of an hour long each. But my God, how much is in that. And it doesn't come with any particular angle, it's observational, it's not pushing any particular agenda. And that made it very interesting to me.
And I want to get Dee back into the studio. I get him in periodically just to check in with where we are. His core thesis has been about the world fracturing, tribalism, and the breaking apart of the structures that we know and understand of the world, the geopolitical world in particular. And I think he's been on the money, all the way through pre the changes for Brexit and Trump, Dee was onto this, and he saw it coming. And so, I check in with him to find out where this is going and how it's developing.
So, sit back and enjoy a great conversation with Dee Smith, I'm sure we're going to go around the world, we're going to learn some new things. And we'll get a deeper understanding of where the world might be going, and what it means and particularly, where the opportunities lie. A lot of these things seem scary at first. But the reality is, change is good.
Dee, good to get you back. I think it is a truly extraordinary time. And we've been talking about this for a while now for several years, actually. And the story of the rising importance of geopolitics is becoming more and more obvious by the day. And it seems to be- I always discounted the geopolitical world as something that was in the dark and in the backgrounds and didn't always worry of me and wasn't something I need to be involved in. And now, it's clearly everybody's involved in everything. Geopolitics seems to be run on Twitter right now as well.
What is going on? And I know that's a difficult question. But at a top down level, it feels that everything has changed, which is something that you identified back in The World On The Brink, and had been ongoing, but talk us through it a little bit.
DEE SMITH: Well, it's great to be back and great to see you. It is a big question what's going on. And I think there are a number of elements that are interacting. But I do think that we've entered a new age, and I'm calling it the age of splintering. It's an age of fragmentation. And the age we were in before was an age of things coming together, an age of larger structures being built. And I think that we've exited that. I thought two or three years ago that it was fragile, but I think now, we're in a new age.
RAOUL PAL: Yeah. Because when you did the documentary for us, The World On The Brink, it was talking about the fragility of the old-world order, the rules basically of the old-world system for want of a better expression. And you identified how fragile it was then, and it looks like that was right. And that fragility has led to a breaking point.
DEE SMITH: I think it has. And I think you do get these ages of the world and things change and the ethos, that idea of the conceptual framework changes. And I think you see it across the board. You see it in rising nationalism and populism, mercantilism protectionism. You see it in the fear of supply chains, you see it in the fear of technologies from one place to the other, like 5G from Chinese sources. You see it in the breakdown of the large-scale multilateral institutions, they're still there. But their influence seems to be less and less than the world in which sovereign nations are asserting their independence and even groups within sovereign nations are now wanting to be independent. The catalogs, the wealth- they're just everywhere.
And so, it's a global tendency. It's not just- we don't just have Brexit or just have Orban in Hungary or just have Trump in the US or Modi in India. It's ubiquitous, it's everywhere. So, then the question becomes, what is causing that? Why is that? It's not in one country, it's in almost every country. Why?
RAOUL PAL: Yeah, and I guess everyone has a different answer to that. And it depends on the lens that you want to look at it through. And I don't think for us really, it's necessary to talk about our lenses, I think there is a broad perspective that people want change. I think that's always the interesting point is, regardless of what it is, people rejecting this order. So, the question is, how does this play out? Let's assume that that is now de facto, that is how happening. How does it play out? We're starting to see a splintering. How do you see this evolving? What are the next steps that we're going to be looking at in the next year or two as this whole situation evolves?
DEE SMITH: Well, I think it's a very dangerous time. And I think it's for several reasons. But what I think we need to do is to pan out, go back a little bit and try to understand what are the fundamental driving forces of this fragmentation, the splintering? And I think they're three. And I'm sure there're more but I think there's a coherent explanation.
First is technology, which has evolved at a speed and in directions no one ever anticipated. And that has ramped up dramatically in the last 20 years. The second one is just the size of the population. It is literally at a level that humanity has never seen before. And I think that as one dictator once said, quantity has a quality on all its own, you do have a different qualitative thing with a quantity of people. And I think the third element is our legacy human attributes- our fear of change, our nostalgia, our need for simple answers, our desire for a level of understanding that really escapes us and the complexity of things, and how those elements interact with the previous two.
So, you have this spiral of things going on. You have technology that's changing faster than ever in making the world both incredibly more complex, but also bewildering to a lot of people. You have a level of population where you can't avoid bumping into other people. And you have our Stone Age minds where we evolved in small groups, we all knew the same people all the time, most of the environments that we lived in were stable over long periods of time. There was abrupt change, but you would go centuries with essentially very little change.
And so, that's how we've evolved in our legacy attributes are not really in tune with the world we created. And so, I think that has created an enormous level of stress among people in the world. And I think that is partly or substantially underneath what we see going on.
RAOUL PAL: But there's also where this fits in is that the abuse of power by the ruling elite is a prevalent theme that comes and obviously, the bifurcation of wealth, where very few get all of it. Is that a manifestation or is that a thing in itself? And again, on Real Vision, you'll see there's a lot of anger about central banks and how people are dealing with our money. There's a sense that all of this is not within our control. And we're just mere pawns in that whole game. And we're the losers in that game. Where does that fit into that framework?
DEE SMITH: Well, everyone's angry. You're absolutely right. And it's at a level that has not been seen within our lifetimes. And I think they feel betrayed because I think they feel that the promises that the social contract as anthropologists, sociologists call it. If you do certain things, you'll be rewarded by society in a certain way- that's broken in country after country, it doesn't work anymore. And I think that people feel that they can't rely on the systems to take them into the future. But I have to back up and say, there is nothing new about income disparity and wealth disparity inequality. And there is nothing new about the elite.
RAOUL PAL: Abuse of power?
DEE SMITH: -abuse of power, it has always been that way. But what's new- and this goes back to my emphasis on technology. What's new, is in this case, the technology of communication, of connectivity, hyper connectivity, I sometimes call it- and because what that has done is it has made things more transparent. It's made it more visible that we now know how the wealthy live much more than we did 200 years ago. And even then, there were certainly revolutions, revolution being a good example. But it's now much more obvious. And so, there's that awareness that I think was not as prevalent in the past.
But also, there is the ability to connect to other people who share your beliefs, and to do so across time and space. And so, used to be if you had some outlandish belief, you probably would have a hard time finding anybody who shared it. Now, you can find many people who do, and that reinforces this belief. So, this echo chamber effect just keeps amping up. And we've been looking at this for two or three, five years, and nothing has been done really to ameliorate it. It's just gotten worse and worse.
And so, you have a country like India, where is the latest manifestation, which is WhatsApp, allows people to create mostly impenetrable networks. And as one Indian commentator recently said, it's no longer enough to be nationalist, you've got to be ultranationalists. It's no longer enough to be upset at what the Pakistanis do, you got to be outraged. Everything is just amped up to this, because people keep it going.
RAOUL PAL: That's right. And we've seen that within social media as a whole. The shift in social media went from getting attention by, hey, I'm here, to, hey, I've got something interesting to say to, hey, I need to say something more outrageous. So, you read me first. And then I have to be more outrageous than the other person being outrageous. And you just had this nuclear arms race of outrage that leads itself into the Daily Mail or whoever creating more and send those headlines all the time to get the click, to get the advertising dollar. And that seems to be writ large globally, and it's the same in politics we've seen.
DEE SMITH: And it's infected politics. It has driven politics to the edges. So, you have this centrifugal force that's driving everything to the edges. And there's very little center. And the center can't be heard, because it's not outrageous. And the algorithms are designed to do this. So, you've got this model that the social media companies have developed where they have essentially an almost addictive- has been called addictive by psychologists- that addictive structure, inbuilt structure of reward.
And you then have the mining of information on individuals based on this constant flow of data that the social media companies use to fund to- essentially, that's their business model. They use that to sell advertising and to sell information on people to sell advertising and so forth. And then you have the result of that, which is these algorithms that get more and more refined to focus on the more and more outrageous things. So, it's a spiral.
RAOUL PAL: And the offense of big data has a lot of behavioral economics, which we talked about before. The rise of behavioral economics has to manifest itself primarily on Facebook first, and it's happening all across social media, is when you got big data and human emotion all put in the same place, you can affect emotion. So, whether it's affected election outcomes, or whether it's just in selling products. At Real Vision, we'd lived this. So, we decided at one point, with the help of Google to start trying to advertise Real Vision within social media. And our competition there had been in the financial world, with people like Agora, who's a publishing business.
Now, Agora sold on very sensationalist headlines. So, many people will be familiar with the James Altucher, Bitcoin and it's all about, you can either make a fortune or it's the end of the world. And you need to read this to save yourself. And what it does is it's appealing to raw human emotion. If you amplify that in social media, what you get is very good results. So, these guys have had huge ROIs out of that, because it's emotion, top of emotion, you're using technology and big data to push those buttons endlessly.
So, Real Vision came into the equation, we don't have that content. Our modus operandi is to be the central ground to allow everybody from all sides of it to come. Whether we have Nigel Farage on one side and Steve Bannon, populists to people who are centrist and people on the left, we don't care. We'd like a nice even platform of people's opinions that we can learn from, to say, we are the middle ground. And we are the open platform, we don't have a voice, doesn't work in advertising. Because the center ground in this world doesn't work. And it literally doesn't work in quantifiable ROI on ad dollars doesn't work, because we can't compete with somebody saying, look at me, the world's all screwed, you need to read my newsletter, or I'm going to make your million dollars tomorrow by my newsletter. Will not work.
DEE SMITH: It's exactly right. And I think that there's an interesting thing going on with this, which is that as the world has been driven into this centrifugal thing where you want things on the edges, you want things that are outrageous, you want things that are demonstrably not sane really. It has fed into something that these two things have dovetailed, that's one. The other one is this feeling that the system is not working anymore. And demonstrably, it isn't working.
And this is another very interesting topic that I would like to talk about, but the feeling that it isn't is scary. And it's scary for everybody. It's scary if you're at the top, it's scary- maybe scarier if you're at the bottom, but it's scary all the way through. And so, that ability to channel that fear into anger and outrage feels good. Back to the behavioral economics, it feels like you're doing something. And so, that itself, this has arrived at a moment and that maybe it's a causal factor of the moment, but it's also at a time in which these emotions are running high anyway. And so, it's just amped them up considerably.
RAOUL PAL: So, where does that lead to? Does this keep going until what? What do you break at this point? The Catalan separates from Spain, and the Brits separate from Europe and the US separates from the rules based global order system? Where is this going? What is the outcome here? Is the outcome war?
DEE SMITH: Well if you go to any military, good military college, they will tell you that nationalism is always a prelude to war. And that is a standard analytical structure. And you do have these things like the potential Thucydides trap between China and the US. And that's a very serious issue. Thucydides was an ancient Greek historian. And he posited that anytime you have a plateaued power, an incumbent power, and you have a rising power that is challenging it, it very often leads to war. So, in his case, it was Sparta was the incumbent power and Athens was the rising power, and it did lead to war.
And so, this is called the Thucydides trap. And somebody recently studied this, there have been 16 cases.
RAOUL PAL: Christian Adamson, we had him on Real Vision.
DEE SMITH: Oh, did you? Okay, yeah. There have been 16 cases of Thucydides trap type situations in the last 500 years. 12 have led to war. So, it is a thing. So, it may lead to war. It doesn't necessarily need to lead to war. The rise of the Soviet Union in the 20th century did not in the end lead to war.
RAOUL PAL: But the problem is here, we've got not only the rise of different powers. So, arguably, it's the rise of China and then with others in the wings, probably Russia, Iran, Turkey- there's a whole shift going on, which we'll talk about in a bit. But there's also this domestic call rotting in each country, where it feels like it's collapsing on itself anyway. So, when you've got both things, it feels that- well, I don't know what the outcome is.
DEE SMITH: It's really problematic. And you're right and it does, and I think we're reaching the end of a certain- I've talked about this before, we're reaching the end of a certain set of trends in history. Some people call it neoliberal economics where you felt like the opportunities were endless, and that there was always a way to manipulate the economic situation to provide for more growth. And, of course, one of the things that really, I think, distresses me and a lot of people is that what we've done to do that is debt and debt is borrowing from the future to pay for the present.
So now, you have this enormous debt overhang- public and private. And we may be just, we may be seeing the beginnings of coming to the end