The End of the World is Just the Beginning: Mapping the Collapse of Globalization

by Peter Zeihan

It isn’t simply about stuff and speed and money. The human condition has similarly improved. During the past seven decades, as a percent of the population, fewer people have died in fewer wars and fewer occupations and fewer famines and fewer disease outbreaks than since the dawn of recorded history. Historically speaking, we live in an embarrassment of riches and peace. All of these evolutions and more are tightly interwoven. Inseparable. But there is a simple fact that is often overlooked. They are artificial. We have been living in a perfect moment. And it is passing.

No country that has ever industrialized has ever managed the process without crippling social and political mayhem. Industrialization is necessary and unavoidable, but it is hard. Unless you’re American. Understanding the why of that begins with the understanding that the United States truly is a land of plenty:

The Americans were only starting to hit their stride when the industrial wave crashed upon American shores at the end of the 1800s. America’s vast size kept land costs low. Its river network kept capital costs low. An open immigration system kept labor costs low. The low cost of preindustrial inputs changed the economics of industrialization in America, even as the lack of local geopolitical competition meant there was never a national security impulse to accelerate industrialization.*

Industrialization could and did happen in the United States, but the transformation was slower and less jarring, giving Americans generations to adapt to change.

On the roads to Rome, Berlin, and Tokyo, the Americans found themselves in control of key economic, population, and logistic nodes on three continents and two ocean basins. Between lend-lease deals and direct amphibious assaults, they now held all meaningful launching pads for attacks between the Western and Eastern Hemispheres. Combined with their massive wartime navy, the Americans had quite inadvertently become the determining factor in issues European and Asian, financial and agricultural, industrial and trade based, cultural and military.

For the first three generations of U.S. history, all the federal government was perennially responsible for was building a few roads, regulating immigration, and collecting tariffs. The Americans have never had a tradition of governing excellence* because for much of their history they didn’t really need a government. Managing foreign territories twice the size of the United States would have been, like, really hard. And the Americans are, like, really bad at government.

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.

As such, in preindustrial societies it was very common for a woman to bear more than six children during the course of her life. But break the link to the household and agriculture. Enable mass female education. Allow women to earn their own income. Even women desiring large families quickly discovered that careers tend to crowd out other items on their to-do lists, in part because—regardless of intent—spending a few dozen hours a week at factory job reduces the opportunities for pregnancy.

By enforcing global security, shattering the empires, opening the world to trade, and enabling the spread of the agricultural technologies of the Industrial Revolution, the Americans inadvertently introduced the world to “global” agriculture. No longer did a country need to conquer some distant bit of farmland in order to guarantee food security. Parts of the old imperial networks could now maximize output with an eye toward servicing global demand rather than the narrow needs of their imperial masters.

Now comes the other side of the hill. A central factor in every growth story that accompanies industrialization is that much of the economic growth comes from a swelling population. What most people miss is that there’s another step in the industrializationcum-urbanization process: lower mortality increases the population to such a degree that it overwhelms any impact from a decline in birth rates . . . but only for a few decades. Eventually gains in longevity max out, leaving a country a greater population, but with few children. Yesterday’s few children leads to today’s few young workers leads to tomorrow’s few mature workers. And now, at long last, tomorrow has arrived. In the 2020s, birth rates are no longer simply dropping; they have been so low for so long that even the countries with the younger age structures are now running low of young adults—the demographic that produces the children. As the already smaller twenty-something and thirty-something cadres age into their thirties and forties, birth rates will not simply continue their long decline, they will collapse. And once a country has more older folks than children, the next, horrible step is utterly unavoidable: a population crash. And because any country that begins this process is one that has already run out of young adults, these countries will never recover.*

But the bottom line is always the same: If for whatever reason global flows of products and services and energy and foodstuffs are interrupted, the population and political and economic maps will change.

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. And . . . that’s it.

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. Nearly all countries that boast sufficiently friendly geographies to enable development without American security sponsorship have already developed. Nearly all have been in terminal demographic decline for decades. Nearly all are now aging into mass obsolescence.

The only countries in a post-2022 world that might be able to maintain an overseas empire are those that can have three things going for them: a serious cultural superiority complex, a military capable of reliably projecting power onto locations that cannot effectively resist, and lots and lots and lots and LOTS of disposable young people.

Outside of the military realm, Russia simply could not keep up with the technological dynamism of the American-led world. As the years stacked up into decades, the Soviet economy plateaued in terms of sophistication, and nearly all economic growth in the 1960s and 1970s wasn’t from technology or productivity, but instead from an expansion of the working-age population. More inputs, more outputs. To believe the Soviet Union would continue to function over the long haul, you had to believe that the Soviet population would continue growing, and that just wasn’t in the cards. Between devastation in the world wars, Stalin’s tender urbanization and collectivization efforts, broad-scale mismanagement under Khrushchev, and organizational stagnation under Brezhnev, the Soviet Union stopped generating sufficient numbers of new workers. By 1980 the demographic pipeline was already running dry . . . and then the bottom fell out. The trauma of the Soviet collapse was economic, cultural, political, strategic—and demographic. Between 1986 and 1994, the birth rate halved while the death rate nearly doubled. Russia today is deindustrializing at the same time its population is collapsing.

Russia is probably one of the best-case scenarios for much of the industrialized world. Russia, after all, at least has ample capacity at home to feed and fuel itself in addition to sufficient nuclear weapons to make any would-be aggressor stop and think (a few dozen times) before launching an assault. In a world of constrained trade and capital, one could be in significantly more dire straits than still having strategic depth plus reasonably reliable food, fuel, and electricity.

In the minds of many Boomers, Mexicans have long been not simply the “other,” but the “other” that has arrived in ever-larger numbers. A big reason why so many Boomers have been so supportive of nativist politicians such as Donald Trump is that their feelings of shock at the pace of change in American society is not a collective hallucination. It is firmly backed up by reality. This is one piece of the kaleidoscope of why American politics has turned so sharply insular in the 2010s and early 2020s.

China’s population path turned terminal two decades ago. Based on whose statistics you’re using, the average Chinese citizen aged past the average American citizen sometime between 2017 and 2020. China’s labor force and overall population peaked in the 2010s. 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.

Put simply, regions can deindustrialize far more quickly than they industrialized, and the critical factor is what happens to transport. Deindustrialization could happen far more quickly than you think.

But that handful of events nearly destroyed the global . . . insurance sector. The American security guarantee for shipping was considered ironclad. After all, there had been less than a handful of incidents globally for decades. There was even a period from roughly 1950 to 1975 with zero attacks on shipping. Loss provisions on maritime insurance, therefore, were, at most, minimal. Preparing for such incidents with large sums of cash would have been like setting aside billions to address earthquake claims in Illinois. But when the claims from the Iran-Iraq War rolled in, insurance firms quickly ran out of operating capital. So they filed claims with their reinsurance firms, who quickly ran dry as well. Suddenly all insurance companies discovered that their entire industry teetered on the precipice. Fire insurance, car insurance, mortgage insurance, health insurance—it didn’t matter. And with most insurance firms being linked to most bond markets via large financial houses, catastrophe loomed. The only thing that prevented a broad-scale, global financial breakdown was the Reagan administration’s three-part decision to (a) physically escort non-Iranian shipping in the Persian Gulf, (b) reflag all such shipping as American vessels, and (c) provide a blanket sovereign indemnity to all such shipping. A local military spat between a pair of nonmerchant powers that didn’t even have financial sectors quickly spiraled up to the point that only a superpower had the military, financi...

Bottom line: the world we know is eminently fragile. And that’s when it is working to design. Today’s economic landscape isn’t so much dependent upon as it is eminently addicted to American strategic and tactical overwatch. Remove the Americans, and long-haul shipping degrades from being the norm to being the exception. Remove mass consumption due to demographic collapses and the entire economic argument for mass integration collapses. One way or another, our “normal” is going to end, and end soon.

Chinese fascism has worked to this point, but between a collapse of domestic consumption due to demographic aging, a loss of export markets due to deglobalization, and an inability to protect the imports of energy and raw materials required to make it all work, China’s embracing of narcissistic nationalism risks spawning internal unrest that will consume the Communist Party. Or at least that’s what happened before (repeatedly) in Chinese history, when the government could no longer provide its people with the goods.

History, unfortunately, offers us some fairly clear paths forward. As the reliability of long-haul maritime transport evaporates and the United States—by far Europe’s largest market—goes its own way, the Europeans will put a premium on protecting what they have and know: their own supply chains and their own markets. That Europe is starting as the most protectionist set of economies of the Order era doesn’t help. The end result will be the creation of several mini-Europes as various major powers attempt to throw economic, cultural, and (in some cases) military nets over wider regions. The United Kingdom, France, Germany, Sweden, and Turkey will all go their own way and attempt to attract and/or coerce select neighbors to come along for the ride. Integration will suffer appropriately. For those of you who know your Persian, Greek, Roman, Byzantine, Ottoman, German, British, French, medieval, or early industrial histories, this will feel disturbingly familiar. After all, history has no endgame.

The sheer fluidity of the future security environment won’t help. The industrial plant required to support multi-step supply chains exists in multiple locations by definition, and takes years to build. Every time there’s a tweak to a demand profile—either for intermediate or finished goods—it typically takes a year of retooling efforts to work its way forward and back through the system. We have learned that little lesson the hard way with COVID. Every ship diverted, every shot fired disrupts some part of the supply and forces that same year-long reset. In such an environment, multi-step supply chains in any region without rock-solid local security and rock-solid local consumption just don’t make much sense. Those supply chains must be concentrated into tighter and tighter geographies, with most needing to become fully internal to specific countries. Anything else spells persistent mismatches, and no end products.

Modern cities—and especially East Asia’s modern megacities—are particularly screwed. All only exist because the Order has made it easy for them both to source the building blocks of industrialized systems as well as to access end markets for their exports. Remove the global system, remove global transport, and cities will be responsible for their own food and energy and industrial inputs. That is, in a word, impossible. Only cities that are part of a bloc with sufficient reach can hope to keep populations employed, fed, and warm. For most of the global urban population, this leads to the same place: massive deindustrialization and depopulation as people are forced to return to the countryside. The bigger the urban conglomerate, the greater the risk of catastrophic failure. At least half the global population faces the unwinding of decades of urbanization.

Over time the shekel became synonymous with our modern concept of money. One shekel could pay a laborer for a month. Twenty shekels bought you a slave. By 1700 BCE and courtesy of Hammurabi, if someone injured you, you had the option of choosing restitution in the form of shekels rather than eyeballs. Bam! Finance was born!

As the Spanish were falling, the British were rising. The early British “pound” was quite literally a pound-weight of silver, but the Brits didn’t have a Potosi of their own, and no matter how hard they tried they couldn’t capture anywhere near enough Spanish treasure galleons to back a sizable currency supply. None other than Sir Isaac Newton found a workaround to this problem during his thirty years in charge of the Royal Mint. He initiated a century-plus effort to tap the totality of the British Empire for gold—most notably the territories that today comprise Australia, Canada, South Africa, and Africa’s Gold Coast—to unofficially create a counterweight to Spain. By the mid-1800s the gold-backed pound we know had come into being.

By 1900 the United States had already displaced the entirety of the British Empire as the world’s single-largest economy. Furthermore, the Americans didn’t even join World War I until three years in, and so were able to serve as creditor to the Europeans rather than needing to debase their currency to keep fighting. The British pound wasn’t as debased as the franc or deutschmark or ruble, but the dollar wasn’t debased at all.* Even better, the Americans were perfectly willing to provide the World War II Allies with anything they needed—oil or fuel, steel or guns, wheat or flour—so long as they were paid in gold. By war’s end the U.S. economy wasn’t only far larger and that of Europe far smaller. The U.S. dollar wasn’t just the only reasonable medium of exchange in the entire Western Hemisphere: it had sucked the very metal out of Europe that would have enabled a long-term currency competitor anywhere in the Eastern Hemisphere. If anything, this is truer than it sounds. After all, the metals-backed currencies of Europe were the culmination of all human civilizations of all eras stripping the entire planet of precious metals since before the dawn of recorded history.

The numbers not only didn’t add up, they couldn’t add up. Throughout human history, humanity has probably produced no more than 6 billion troy ounces of gold (about 420 million pounds). Assuming every scrap of gold ever mined was available to the U.S. government, that would only be enough to “back” a total global currency supply of $210 billion.* From 1950 to 1971, global trade expanded by quintuple that figure, on top of the fact that the U.S. dollar was the currency of the United States itself, which already had a GDP larger than total global trade. The peace and economic growth that the Order encouraged also increased the global population from 2.5 billion to 3.8 billion, suggesting much stronger demand for U.S.-dollar-enabled trade to come.* Even if the politics had been perfect, the gold standard was doomed to fail. The Americans awkwardly and painfully discovered for themselves not only the age-old issue that asset-backed currencies were incompatible with rapid growth, but the very age-new issue that asset-backed currencies were incompatible with global peace—the sort of peace that formed the backbone of America’s anti-Soviet alliance.

Faced with the possibility of a global economic depression that would leave America facing down a nuclear-armed Soviet Union alone, the Americans did the only thing they could. In a series of steps in the early 1970s, the Nixon administration cut the cord and put the U.S. dollar on a full, free float. For the first time, a major government didn’t even pretend to have anything in the vault. The only “asset” backing the dollar was the “full faith and credit” of the U.S. government. The very nature of America’s post-1971 globalization-fueled alliance gambit was quite literally based upon none other than Tricky Dick Nixon saying, “Trust me.”

Enter 1971. Suddenly foreign (gold-backed) capital became less critical to the equation. If profits could not cover debt payments, then export earnings would. If earnings could not, firms could simply take out more loans. If loans were not available, the government could always expand the money supply to push everything forward. (It didn’t hurt that expanding the money supply also drove down the value of the Asians’ currencies, making their exports more competitive and therefore driving up export income.)

Every country puts a premium on political unification. Every country has fought internal wars to achieve it. China’s own internal unification effort is one of the world’s most heinous, stretching back across four millennia and dozens of discrete conflicts. The most recent major dustup—Mao’s Cultural Revolution—killed at least 40 million people, twenty-five times the number of Americans killed in all wars. The Chinese belief in the necessity of internal political violence, repression, and propaganda didn’t manifest out of nowhere, but is instead viewed as a necessary reality to avoid nightmarish civil wars. The solution? Spend! The Chinese government assigns capital to everything. Infrastructure development. Industrial plant buildout. Transport systems. Educational systems. Health systems. Everything and anything that puts people in jobs. Excruciatingly little of it would qualify as “wise capital allocation.” The goal isn’t efficiency or profitability, but instead achieving the singular political goal of overcoming regional, geographic, climatic, demographic, ethnic, and millennia of historical barriers to unity. No price is too high.

Enron was great at bookkeeping. The sacrosanct part? Not so much. It turns out that when you don’t actually own anything or move anything or add value to anything, your sole income comes from what is in your ledger. Enron got really good at moving things on paper, “adding value” on paper to simulate income. They were so good that many believed Enron was the wave of the future, and so bought in. At its peak, Enron was the United States’ seventh most valuable publicly traded company.

Backed by broad-scale government, financial, and cultural forces, an entirely new sort of firm manifested. These new “mortgage origination companies” identified would-be homebuyers, provided the financing to get them into homes, and then sold the resulting mortgages on to investors. Those investors bundled the mortgages together into packages and then sliced them into pieces for circulation on bond markets. The idea was that mortgages were the safest of investments (people will do whatever they can to not lose their home and the money they’ve sunk into it). By turning mortgages into bonds (specifically “mortgage-backed securities”), more investors of more types could put more money into the market, driving financing costs down for everyone. With capital no longer being the restrictive factor it once was, credit terms gradually got easier. Long gone were the days when a would-be homebuyer would have to put half down. Half became a quarter. A quarter became a fifth. A fifth became a tenth. A tenth became a twentieth. A twentieth became nothing. Nothing became . . . 5 percent cash back. Credit checks became less strict. Eventually they disappeared altogether. Now issuing mortgages to clients they knew could not service payments on their new homes, the mortgage origination companies started selling their mortgages within days, even hours, of arranging home sales, for fear someone would discover the jig was up. The mortgage-backed securities quickly degraded from the safest of ...

Mature workers don’t only generate a lot of income and capital; they pay a lot of taxes. The world in general and the advanced world in particular has had loads of mature workers in recent decades, making government coffers the flushest they have ever been. That’s great! It pays for things like education and law enforcement and health care and infrastructure and disaster relief. Or at least it’s great until those mature workers retire.

Known energy producers such as Persia and the Dutch East Indies gained a new lease on life, becoming the independent countries we now know as Iran and Indonesia. Budding energy producers that were technically independent but in reality were half foreign-managed (think: Iraq and Saudi Arabia) were allowed to come into their own. Somewhat unsurprisingly, some European countries resisted decolonialization, but the Americans proved uncharacteristically patient and would often wait until revolutionary movements within the colonies reached critical mass before pressuring their allies, or until the ebb and flow of bilateral relations provided an opening. Thus countries as diverse as Nigeria (1960) and the United Arab Emirates (1971) received independence from the United Kingdom, Algeria (1962) from France, and Angola from Portugal (1975). The end result was as intended: an increasingly diverse list of independent, significant oil suppliers to a globalized—and above all, American-managed—system.

Without sufficient volumes of affordable oil, the entire Order would collapse. American (and British!) actions included sponsoring a coup in Iran in 1953 to overthrow a semidemocratic system in favor of a pro-American monarchy. American actions included supporting of a borderline-genocidal purge in Indonesia of communist elements in 1965–66. American actions included the quiet backing of an authoritarian Mexican government against prodemocracy forces in 1968. American actions included the largest American expeditionary military action since World War II as part of the forcible ejection of Iraqi troops from Kuwait in 1992.

In essence, shale operators drill down as per normal, but when they reach a petroleum-rich rock strata they take a sharp turn, drilling horizontally along the entire layer. Then they pump water and sand at high pressure into the formation. Since liquids do not compress, the rock cracks apart from within, freeing untold trillions of tiny pockets of oil and natural gas that would otherwise be far too small to harvest with conventional drilling. The sand suspended in the frack fluid props the cracks open, while the now-freed oil provides reverse pressure that pushes the water back up the pipe. Once the water has cleared, the oil continues flowing. Voilà! A shale well is born.

Brazil is a bit more complicated. Most of Brazil’s production is offshore and most of its truly promising fields are not simply under two miles of ocean, but under an additional two miles of seabed. Brazilian energy presents very difficult operating environments, very high production costs, and a very challenging political backdrop. The problem is nothing less than the future coherence of Brazil as a state. The Order has been perfect for Brazil: large global markets, bottomless Chinese demand, cheap global financing. As Brazil’s tropical and rugged geography saddles it with among the world’s highest development costs for . . . everything, that has been fantastic. It’s all going away, and it just isn’t clear if there will be sufficient technically capable, capital-flush foreign partners on the other side of the Order. Even if the answer proves to be an enthusiastic “yes,” large-scale Brazilian output sufficient to generate large exports is a minimum of two decades and hundreds of billions of dollars of investment away.

Every technological development that has brought us to our industrialized, urbanized present must be reevaluated to make today’s greentech work. But by far the biggest challenge is the very existence of cities themselves. All are by definition densely populated, while greentech by definition is not dense. Squaring that circle even in sunny and windy locations will require massive infrastructure to bridge the gap between dense population patterns and far more dispersed greentech electricity-generating systems. Such infrastructure would be on a scale and of a scope that humanity has not yet attempted. The alternative is to empty the cities and unwind six thousand years of history. Color me skeptical.

Part of what makes the modern world work is on-demand electricity. This requires something called dispatchability: the idea that a power plant can ramp its power output up and down to match demand. Not only can wind and solar not do this; they are also intermittent. Power levels vary based on that most mercurial of forces: the weather.

Let me underline that: greentech today is so unreliable in most locations that those localities that do attempt greentech have no choice but to maintain a full conventional system for their total peak demand—at full cost.

Greentech in its current form simply isn’t able to shave more than a dozen or so percentage points off fossil fuel demand, and even this “achievement” is only possible within geographies fairly perfect for it. A few places with good greentech potential have attempted to replace half of their preexisting conventional power generation with greentech, but working around issues of grid capacity and intermittency and transmission results in a quadrupling of power prices.*

City-grid batteries require megawatt-days. Achieving meaningful greentech power storage would require grid-level battery systems that could store a minimum of four hours of power to cover the bulk of that daily high-demand period. Assuming that the technological improvements in the world of batteries that have unfolded since 1990 continue into 2026, the cost of a four-hour lithium grid storage system will be about $240 per megawatt-hour of capacity, or six times that of the standard combined-cycle natural gas plant, which is currently the most common electricity-generating asset in the United States. Important note: that 6x figure does not include the cost of the electricity-generating asset that actually charges the battery, nor the transmission asset to get the electricity to the battery.

Many particularly unlucky people will be stuck with something called lignite, a barely-qualifies-as-coal fuel that is typically one-fifth water by weight and is by far the least efficient and dirtiest fuel in use today. Germany already today uses lignite as its primary power input fuel because greentech is so woefully unapplicable to the German geography, and yet the Germans—for environmental reasons—have shut down most of their other power-generation options.* As a planet, we are perfectly capable of suffering broad-scale economic collapse and vastly increasing our carbon emissions at the same time.

The end of globalization may herald the end of the world we know, but the end of global energy heralds the end of the lives we know.

The ironic bottom line is that the United States is one of only a handful of countries that not only will not face a protracted energy crisis, but can also attempt oil and natural gas substitutes at scale. It is the developed country closest to the equator, granting it the world’s second-best opportunities for mass solar installations (Australia is far away in the top spot). It has huge swaths of windswept lands in the Great Plains, granting it the world’s best wind resources. The Americans even have an ace in the hole in terms of their oil demand: One of the by-products from most shale oil wells is a steady flow of natural gas. The Americans, and pretty much only the Americans, can use that natural gas in lieu of oil in their petrochemical systems. Add in a relatively stable and robust capital structure and secure access to lithium deposits in Australia and Chile, and the Americans can even attempt battery systems and EV rollouts with current technologies, should they so choose.

Should anything happen to the sustainability or reach of the industrial technology set, all of them will simply fade away—and take all their benefits with them. We have seen this before. Many times. Many of the world’s past empires launched specific military campaigns to secure this or that material, while others leveraged their control of this or that material to achieve breakthrough and become something more than their geographies would normally allow.

World War II was in many ways a fight over inputs. Most of us have at least an inkling of the strategic competitions that took place for agricultural land and oil, but battles over industrial materials were just as front and center. France had iron ore while Germany had coal. Both materials were necessary to forge steel. You can see the problem. Germany’s May 1940 invasion of France resolved the issue. For Berlin at least. Postwar, the French spearheaded the formation of the European Coal and Steel Community in an attempt to resolve the same iron-ore-here, coal-there problem with diplomacy instead of bullets. We know the ECSC today as the European Union.

The German invasion of Russia in June 1941 obviously marked the end of the German-Russian alliance, but the first big wedge in the relationship had occurred nineteen months earlier, when the Russians invaded Finland, threatening German access to what had been the Nazi war machine’s primary source of nickel, a critical input into high-grade steel.