Navigating the new geopolitical and technology landscape

Episode Summary

Executive Summary: The conversation argues that geopolitical uncertainty is at a two-decade high and that globalization is shifting from broad integration to competitive coexistence among great powers. Jared Cohen and George Lee highlight the rise of “geopolitical swing states,” the growing centrality of technology in geopolitics, and the need for companies and investors to adopt more tactical, country-specific, and geo-commercial strategies.

Main Topics: Geopolitical uncertainty and the end of hyper-globalization (Priority: 5/5): The speakers frame the current era as one where the old globalization model has weakened, replaced by persistent great-power rivalry and more fragmented economic relations. Geopolitical swing states and multi-alignment (Priority: 5/5): Countries with capital, critical supply-chain inputs, or favorable conditions for nearshoring/friend-shoring gain outsized leverage and will increasingly avoid choosing sides. Technology as a driver of geopolitics (Priority: 5/5): Semiconductors, 5G, AI, communication platforms, and digital payments are portrayed as strategic arenas shaping national power, sovereignty, and market structure. Multilateralism lagging behind technology (Priority: 4/5): Governments are seen as too slow to build cross-border governance for emerging technologies, creating risks like splintered internet standards and incompatible payment ecosystems. Company strategy in a more tactical world (Priority: 5/5): Boards and executives must move beyond regional strategies and think country-by-country, anticipating second- and third-order geopolitical effects on supply chains and investment decisions. Applied innovation as a client offering (Priority: 3/5): Goldman Sachs positions its new Office of Applied Innovation as a bridge between geopolitical analysis, technology trends, and practical commercial decision-making for clients.

Key Arguments: Geopolitical uncertainty is not temporary; it is likely medium- to long-term and may worsen over time. The era of hyper-globalization ended before COVID, but war in Europe and US-China tensions made the shift undeniable. Great powers now leverage differentiated assets—dollar dominance, gas/food, or supply-chain concentration—to exert geopolitical pressure. A new class of countries—geopolitical swing states—will gain agency by supplying capital, strategic inputs, or attractive operating environments. Companies are affected by geopolitics even when they are not directly exposed, because supply chains and market structures are being reoriented. Technology matters geopolitically not just for what it is, but because it can be a national-security asset, an accelerator for other innovations, a choke point, or a competitive moat. AI is especially disruptive because it is now directly experienced by consumers and businesses through tools like ChatGPT, not just embedded invisibly in products. The US-China tech competition is asymmetric and should be understood by the strategic attributes of technologies rather than catch-all labels. Governments lack a mature multilateral framework for technology governance, unlike defense and other physical-world issues. The likely near-term future is competitive coexistence rather than total decoupling or one side fully winning. Countries are increasingly seeking to build efficient, sovereign tech ecosystems using the best tools available from multiple sources. For investors and companies, the opportunity lies in identifying geo-commercial openings created by supply-chain shifts and new centers of economic gravity. Middle Eastern states are a key example of swing states that want their economic interests to drive geopolitics and are increasingly deploying capital globally.

Data Points: Geopolitical uncertainty level: Two-decade high - Jared Cohen characterizes the current moment as the highest geopolitical uncertainty in roughly 20 years. Time horizon for uncertainty: Medium- to long-term; likely worse for longer - Cohen says the uncertainty is likely enduring rather than short-lived. Geopolitical swing-state categories: 3 broad categories - Cohen groups swing states into capital-rich states, supply-chain/input states, and nearshoring-friendly states. US-China competition: Asymmetric - Cohen says the two countries play by different rules in the international system. Technology competition outcome: Competitive coexistence - Cohen argues the likely outcome is not one side winning and the other losing. Innovation inflection: Around 2017 - George Lee cites 2017 as the period when generative AI and large language models emerged as a major innovation approach. Podcast recording date: Thursday, March 2, 2023 - The episode outro notes the recording date.

Pivotal Quotes: "We're probably in a moment right now where the geopolitical uncertainty is at a two-decade high. I think it will get worse for longer." — Jared Cohen: Describing the current geopolitical backdrop and why Goldman created a global affairs role. "The reason we say applied innovation is we believe that there's a lot of expertise that Goldman Sachs has on the geopolitics... and... on the current ways that money and value moves around the world." — Jared Cohen: Explaining the name and purpose of the new Office of Applied Innovation. "New countries will emerge as king makers, and as geopolitical swing states will be geo-commercial and commercial swing states." — George Lee: On how companies must adapt to a more tactical, country-by-country operating environment.

Implications: Companies and investors should expect more fragmentation, tighter tech scrutiny, and greater value in country-specific strategy. Winners will be those that identify swing states, exploit geo-commercial openings, and build flexible supply-chain and technology partnerships.