For the better part of a decade, the world has been wracked by utter unpredictability. A global financial crisis, assorted military invasions, the mass movement of peoples: the years since 2008 have been full of action. By January of this year, things seemed so unstable that we forecast that 2016 “could top all of that,” with cross-currents creating the chance for even greater chaos.
Forecasting is tricky business, and despite years of bad calls and cautionary tales from everyone from pollsters to oil analysts, many experts allowed themselves to be broadsided again, this time most notably by Britain’s decision to leave the European Union and by the US election of Donald Trump. There has been much less chastened hand-wringing than one might expect from the commentariat—whether from the ranks of politics, journalism, Wall Street, or think tanks around the world—given that most of them flatly misread humanity in 2016. Aside from shock and recriminations, we have had little in the way of mea culpas, soul searching, and strategies for doing better.
Here is ours.
After a reasonably good 2015 for geopolitical forecasting (when we were correct with five of six predictions), we were barely 50-50 this year. We hit 3.5 of six forecasts, in addition to a second straight year winning a side bet on where Brent crude oil prices would end the year.
What we got right: We correctly forecast another year of low oil prices. Brent crude closed the year at about $57 a barrel, roughly half its average from 2011 through 2014. Prices are so low that, on Nov. 30, major producers, including the OPEC countries and Russia, agreed to a joint cut in oil production for the first time in 15 years.
We also correctly forecast that once sanctions were lifted against Iran, as they were on Jan. 16, the Iranians would meet their goal of adding 1 million barrels to its daily oil production, and that is what happened. Iran was pumping an average of 3.7 million barrels a day in November. This was no little thing—the consensus was that Iran would manage to pump just 500,000 or 600,000 barrels a day more. We also forecast “a very difficult year of tension” between the US and Iran, which also is how the year played out.
Our view with both of the Iran forecasts was shaped by the Mountain and Injustice rules, two of our Quartz geopolitical guidelines that help explain the shape of future events. These two particular rules highlight the behavior of countries with an outsized view of their role in the world, and those that feel they are righting an inequity. Iran, with its uninterrupted national history going back 2,500 years, feels a cultural superiority in the Middle East, and that it has been unjustly treated by the US and others for decades. Muscling its way back into the top tier in international oil is one expression of national pride; continuing its long fight with the United States—the “Great Satan”—is equally a point of principle for Tehran.
We also correctly forecast that a technological inflection point would be reached in 2016, specifically in the commerciality of electric and autonomous vehicles. We reasoned that big carmakers would go big for both technologies, and they did. In the minds of the automakers, Silicon Valley entrepreneurs, and Wall Street analysts, self-driving vehicles moved from the hypothetical to a near-future reality. And on Dec. 13, GM delivered the Chevy Bolt, the first mass-market pure electric car that can travel more than 200 miles on a charge; many more models from other carmakers will follow.
The reason they did so is explained by the Staying in Power Rule. The big automakers feared that, if they did not leap into the new technologies aggressively, the likes of Tesla Motors could capture the new zeitgeist, and they could go the way of Eastman Kodak. Whether the extreme version of the future painted by a lot of analysts—of ubiquitous robot cars—materializes is another matter. But an advanced form of electric-propelled autonomous vehicle, somewhat short of robots, appears likely to be widely available within the next five years.
Now on to what we got wrong. Two of our misses were substantial. Unlike the crowd, we foresaw that Trump would win the Republican nomination, and we give ourselves a half-point for that. But we went on to predict that Democrat Hillary Clinton would beat Trump in a general-election landslide. As reasoning, we relied on the Precipice Rule, which says that populations and countries do not ordinarily consign themselves to disaster—they will shout, scream, and scrap all the way up to the lip of a precipice, but stop short of actually going over. We defined Trump as that precipice.
We were correct conceptually: Voters in the places that ultimately counted did choose to stay away from the precipice. But we misjudged what they regarded as that disaster. To American voters in sufficient places to win the electoral college, Clinton was the precipice.
Our second big miss was forecasting that Russian leader Vladimir Putin would do a big deal with the West—that, in exchange for obtaining free rein to do his mischief in Ukraine, he would abandon Syrian leader Bashar al-Assad. Why would Putin take such a step? Again invoking the Precipice Rule, we reasoned that he would do so in order to call a halt to Western sanctions over his 2014 invasion of Ukraine, and start the Russian economy back on the mend.
Instead, Putin doubled down, with confidence that punishingly low oil prices would eventually go back up and help replenish Russia’s fiscal health, regardless of whether sanctions were still in place. It was more important to him to keep his dignity.
Finally, we wrongly forecast that US president Barack Obama would meet a key 2008 campaign promise and close the US prison at Guantanamo Bay, Cuba. Republicans fiercely oppose the facility’s closure, asserting that the remaining prisoners are too dangerous to release and opposing both court trials for them and their imprisonment on the US mainland. When Obama’s term is over, some 40 prisoners will remain, compared with 238 when he took office and a height of 775 when George W. Bush was in the White House. Trump has vowed to expand the Guantanamo prison population with new prisoners.
A year ago, we declared 2015 the year of the big shot. Around the world, the most consequential events were driven by big personalities such as Obama, Putin, China’s Xi Jinping, and Iran’s Ali Khamenei.
This year, the little guy struck back.
In hindsight, it is much easier to see the warning signs of the Trump upset: his consistently large, rowdy public rallies; numerous, early journalistic accounts of the raw material for a public revolt; and his resonance with an astonishing range of Americans. (We at least warned it was a tight race, and directly pointed out Clinton’s fateful blind spot.)
Yet, even if we had fully absorbed the seething anger around us at the start of the year, it is doubtful that we would have forecast that Americans would embrace a candidate who so flagrantly rejected social and political norms. Indeed, it remains a bracing fact of 2016 that Americans did this.
What a year it has been: Ordinary people expressed suspicion with virtually every public institution, and exasperation with the status quo. It has been an uprising against “the elite” and the experts, including: those who caused the 2008 financial crisis and went unpunished while taxpayers financed their fat bonuses; the politicians who voted for the bailouts; the economists who promised that trade deals would bring prosperity but failed to foresee a need to accommodate the millions of ordinary people who would be left out; governments that opened the floodgates to migrants; and a biased, and sometimes clueless, media.
In June, Britons repudiated centuries of their history as a global leader and exemplar, and decided to disengage—specifically, to get out of the European Union and “take our country back,” as the slogan went.
Five months later, Americans latched onto a questionable narrative, too: That the US was a failed state, and the entire global system was weighted to exploit Americans. Conspiracy theories abounded, about how the voting system, the information flow, banking, and politics were all hopelessly corrupt. Though some of their criticism was proven valid, whether by Russia’s interference in the US electoral process, or Wells Fargo’s creation of millions of fake accounts in the name of real customers, conspiracy theories wildly exacerbated the problems. Helping to create this false picture, 2016 was also the year of fake news.
It was also the year when authoritarianism gained new credibility—in Russia, in Turkey, in the Philippines. But not everywhere: Latin America had its own anti-establishment uprising, but it was against populism. Argentina, for example, indicted former president Cristina Fernández de Kirchner, and Brazil impeached Dilma Rouseff.
It has been the year of cyber war, when Russia turned the tables and upped the stakes on the West, and meddled in their elections. It also was the year it ironically became okay in the West to ignore and even embrace Russia.
And, of course, it was the year when forecasters of all types got their comeuppance. In a short while, we will release our 2017 forecasts with the benefit of the harsh lessons of 2016.