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by
Peter Zeihan
Read between
November 3 - November 15, 2022
The 2020s will see a collapse of consumption and production and investment and trade almost everywhere.
The coming global Disorder and demographic collapse will do more than condemn a multitude of countries to the past; it will herald the rise of others.
The biggest restriction of this new industrial era was no longer muscle, water, or wind—or even energy in general—but instead capital. Everything about this new era—whether it be railroads or highways or assembly lines or skyscrapers or battleships—was, well, new. It replaced the infrastructure of the previous millennia with something lighter, stronger, faster, better . . . and that had to be built up from scratch. That required money, and lots of it. The demands of industrialized infrastructure necessitated new methods of mobilizing capital: capitalism, communism, and fascism all emerged.
The American story is the story of the perfect Geography of Success. That geography determines not only American power, but also America’s role in the world.
The post–Cold War era is possible only because of a lingering American commitment to a security paradigm that suspends geopolitical competition and subsidizes the global Order. With the Cold War security environment changed, it is a policy that no longer matches needs. What we all think of as normal is actually the most distorted moment in human history. That makes it incredibly fragile. And it is over.
A precious few countries have managed a high degree of development while simultaneously avoiding a collapse in birth rates. It is . . . a painfully short list: the United States, France, Argentina, Sweden, and New Zealand.
In 2019 the Earth for the first time in history had more people aged sixty-five and over than five and under. By 2030 there will be twice as many retirees, in relative terms.
COVID is the most infectious disease to break into the general population since measles, and COVID’s fatality rate is five times higher.
The Baby Boomers are the largest-ever generation, so their absence is hugely impactful in numerical terms. They are also the oldest economically active generation, meaning that their numbers comprise the bulk of all available skilled labor. Remove so many high-skilled workers in a short period of time and labor shortages and labor inflation are a foregone conclusion for years to come.
In the best-case scenario, the Chinese population in the year 2070 will be less than half of what it was in 2020. More recent data that’s leaked out of the Chinese census authority suggests that date may need to be pulled forward to 2050. China’s collapse has already begun.
Between 2000 and 2020, moving a container across the Atlantic or Pacific averaged out to about $700 per container. Or put another way, 11 cents per pair of shoes.
What lies under the historical veneer of calm is the most war-torn and strategically unstable patch of land on the planet. Modern Europe is the purest distillation of the heights and complete artifice of the Bretton Woods system.
The biggest winners? Those locations that entered the Industrial Age in force because they had internal geographies brimming with navigable waterways as well as a degree of stand-off distance from threats: the United States, the United Kingdom, Japan, France, Turkey, and Argentina, in that order.
The Americans are not dependent upon international maritime trade for their food supply, their energy supply, or their internal or even the bulk of their internationally dependent supply chains.
The Imperial Spanish weren’t very good accountants, but the best guess is that somewhere between four million and twelve million people died during the course of the Potosi silver operations. (For a point of reference, the entire population of Old Spain in 1600 was only 8.2 million.)
Even the “simple” part of China, the North China Plain, has witnessed more wars and ethnic cleansings than any other spot on the planet.
Europe long past the point of demographic no return, but also, most of the core European countries have already aged into obsolescence, absolutely precluding any of them returning to the economic status of 2006.
The biggest risks to capital will be in the places with the fastest-aging populations as well as those with the most rapidly retiring workforces: Russia, China, Korea, Japan, and Germany, in that order.
The Western countries most likely to play are those that have the most proximity to the West Africans as well as the technical and military capacity to reach them: the United Kingdom and France.
Libya becomes Italy’s only source of oil. Unless the Italians choose to give up on their country’s existence, they will have no choice but to venture forth to secure Libya’s major ports, Libya’s production sites deep in the desert, and all the connecting infrastructure in between. Considering Italy’s trademark disorganization, general out-of-practiceness when it comes to colonial occupations, and flat-out racism when it comes to Arabs, this little chapterette of history is certain to be entertaining. And horrifying.
The most vulnerable locations are those most dependent upon massive natural gas flows from or through the territories and waters of countries that are less than reliable: Korea, Taiwan, Turkey, China, Ukraine, Germany, Austria, Spain, Japan, France, Poland, and India, roughly in that order.
The locations facing the greatest shortages are those major consumers at the very end of those vulnerable supply lines: Northeast Asia and Central Europe, with Germany, Korea, and China by far facing the greatest threats, as none have proximate oil or natural gas sourcing, nor the military capacity to venture out to secure someone else’s.
For the countries with more means, the picture is brighter, but there are still loads of problems. Countries like the United Kingdom, France, Japan, and India do have the military wherewithal and geographic position that will enable them to go out and secure resources themselves, but all will face a price environment of terrifying proportions.
Not only does greentech fail to generate sufficient electricity in most locations to contribute meaningfully to addressing our climate concerns but also it’s laughable to think that most locations could manufacture the necessary components in the first place, simply due to the lack of inputs.
But the real problem will be the semiconductors. Some 80 percent of the world’s high-quality quartz that ultimately makes up electronic-grade silicon comes from a single mine in North Freakin’ Carolina.
A few countries with local deposits or militaries with reach can try, but it is a short list: the United Kingdom, France, Turkey, Japan, and Russia. For the rest, there is a very real risk of reverting not simply to the economic and technological levels that pervaded before 1939, but to before the Industrial Revolution itself.
In calendar year 1969, the first full year of container service from Japan to California, Japanese exports to the United States increased by nearly a quarter.
Of the European Union’s major countries, France is by far the least integrated.
End result: the Texas–Mexico axis boasts the technological sophistication of Japan, the wage variation of China, and the integration of Germany with its neighbors, all within the footprint of the world’s largest consumption market.
There are still (many) problems. The African continent is composed of a series of stacked plateaus, which all but prevents the various states from linking themselves together with infrastructure and achieving regional economies of scale.
It is all going to become stranded. Deglobalization—whether triggered by the American withdrawal or demographic collapse—will break the supply links that make most China-centric manufacturing possible, even before consuming nations more jealously protect their home markets. Pretty much the entire export-driven industrial plant (and a not small portion of the domestically driven industrial plant) will be written off. Completely.
Moving forward, the German system will be absolutely hosed. Germany’s demographics are too terminal to maintain production, it is too integrated with other terminally demographic countries to maintain its supply chains, it is too hooked upon industrial commodities imports to even attempt large-scale manufacturing, and it is too dependent upon extra-continental exports to maintain revenue flows.
Even in the best-case scenario, once the world cracks we will go years between iPhone models.
Whether the country in question is Bolivia or Laos or Congo, the risk is not of devolving to a world that predates 1939, but to one that predates 1800.
Deindustrialization doesn’t simply mean an end to industry; it means an end to large-scale food production and the return of large-scale famine.
In a deglobalized world, European supply chains face severe constraints. German-made farm equipment requires the same supply chain linkages throughout Central Europe as German automotive, as well as global markets for sales. Neither is possible moving forward.
Hyper food-secure France is going to get all neocolonial. Paris will establish a suzerain relationship with Belgium, will attempt one with Switzerland, and will firm up links with a willing Morocco and Tunisia and an unwilling Algeria. The French will also establish as many dependencies as possible in the oil-rich states that are part of what was once known in imperial days as French West Africa, most notably Gabon, Congo (Brazzaville), and Chad.
absolute terms the biggest loser by far will be China. China sits at the end of the world’s longest supply routes for nearly everything it imports, including roughly 80 percent of its oil needs. China’s navy lacks the range necessary to secure, via trade or conquest, agricultural products—or even the inputs to grow and raise its own.
There will be no shortage of famines in the post-Order world. Likely in excess of 1 billion people will starve to death, and another 2 billion will suffer chronic malnutrition. Some two-thirds of China’s population faces one of those two fates. And remember, China is also history’s most quickly aging society. The people who will be called upon to manage—or suffer through—mass malnutrition and famine are going to be old.
Consider this: countries like the United Kingdom, Russia, the UAE, Poland, and Mongolia are currently at the apex of their historical culinary diversity. In coming years, unless they can join someone else’s trading network, they risk at best going back to the diets of the mid-nineteenth century,
Countries that couldn’t even consider beginning the industrialization process before World War II are now responsible for more than half of current emissions, with total emissions seven times what they were in 1945.
Organics also tend to be grown at higher, drier elevations to somewhat limit pests, which means the bananas need massive irrigation to grow. The result is the food product with the highest chemical and carbon footprint, as well as the highest staff turnovers from death in any product set in any industry.
