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

by Peter Zeihan

Megawatt of electricity-generating capacity for megawatt of electricity-generating capacity, greentech requires two to five times the copper and chromium of more traditional methods of generating power, as well as a host of other materials that do not feature at all in our current power plant inputs: most notably manganese, zinc, graphite, and silicon. And EVs? You think going to war for oil was bad? Materials inputs for just the drivetrain of an EV are six times what’s required for an internal combustion engine. If we’re truly serious about a green transition that will electrify everything, our consumption of all these materials and more must increase by more than an order of magnitude.

The in-progress demographic bust threatens to reduce the human population writ large over the next few decades by as much in relative terms as the Black Death effect. The impact upon working-age populations will be even bigger. No matter what specifics the future holds, we will all need to get by with fewer workers.

Chile and Peru run the world’s highest-quality mines along the Atacama Desert’s many fault lines, mines that also have the lowest operating costs per unit of output. Collectively the two countries supply two-fifths of global needs. Chile also smelts most of its own ore into copper metal, making it the world’s one-stop shop in a post-China world. It’s a good thing Chile is both in a good neighborhood from a security point of view and the most politically stable country in Latin America. But mind those earthquakes.

You think that electrifying everything and going green is the only way forward? As of 2022, cobalt is the only sufficiently energy-dense material that even hints that we might be able to use rechargeable batteries to tech our way out of our climate challenges. It simply cannot be done—even attempted—without cobalt, and a lot more cobalt than we currently have access to, at that. Assuming all else holds equal (which is, of course, a hilarious statement considering the topic of this book), annual cobalt metal demand between 2022 and 2025 alone needs to double to 220,000 tons simply to keep pace with Green aspirations. That won’t happen. That can’t happen.

In the meantime, it is worth absorbing the disturbing fact that the production of lithium, its refining into metal, and the incorporation of that metal into rechargeable battery chassis is among the most energy-intensive industrial processes humanity has ever devised.

Lead only had one downside: it makes you CRAZY! Lead’s toxicity generates no end of health complications in the brain, up to and including encouraging dissociative and violent behavior. In the United States we began purging lead from our systems in the 1970s, systematically banning its use in product after product. Over the next half century, the ambient level of lead in our air dropped by more than 90 percent. At the same time, instances of violent crimes subsided from record highs to record lows. Correlation? Definitely. Causation? Let’s go with a strong maybe.*

The Chinese have taken all the risks and subsidized all the output, while non-Chinese firms do most of the value-add work and reap most of the rewards. Second, because the ore isn’t rare and because the processing isn’t a secret and because the first Chinese threats were more than a decade ago, there are already backup mining and processing facilities in existence in South Africa, the United States, Australia, Malaysia, and France. They just don’t see a lot of activity, because the Chinese stuff is still available and still cheaper. If Chinese rare earths were to vanish from global supplies tomorrow, processing facilities on standby would start up right away and likely be able to replace all Chinese exports within a few months.

Nickel is one of those materials that have few uses by themselves but are integral to a single process with a single companion material that makes it absolutely essential to every single economic sector. Standard steel bends and rusts and corrodes and warps and loses some of its coherence with high or low temperatures. But add about 3.5 percent nickel and a splash of chromium to the steel mix, and you get an alloy that is both stronger and largely eliminates those concerns. We colloquially know this product as “stainless”—the backbone of nearly all steel used in every single application. The forging of such stainless accounts for more than two-thirds of total global nickel demand.

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. Want to remain modern? You pretty much must get along well with the Americans. They will soon have something they have never had: resource control over the base material of the Digital Age.

In a post-Order world, uranium is likely to become more popular as a power fuel. While running a 1-gigawatt coal power plant for a year requires 3.2 million metric tons of coal, a 1-gigawatt nuclear power plant requires only 25 metric tons of power-fuel-enriched-uranium metal, making uranium the only electricity input that could theoretically be flown to its end user.

In the past seventy-five years of the Order, the list of materials critical to what we define as modern life has expanded by far more than an order of magnitude. With the exception of the United States, which will retain full access to the Western Hemisphere and Australia, as well as the military capacity to reach anywhere in the world, no one will be able to access all the necessary materials.

By many measures, China is going backward. The country’s manufacturing output as a percent of GDP has been falling since 2006, which, judging by corporate profitability figures, was probably China’s peak year in terms of production efficiency.

Little of the income from all those Chinese exports went to the workers (especially the workers from the interior), so little can be spent on consumption. China now has a rapidly aging coastal population that has limited consumption needs and—most important—hasn’t repopulated. That coastal population is stacked against a seething migrant class from the interior that lives in semi-illegal circumstances in hypercramped, near-slumlike conditions, working grueling hours, and that cannot repopulate. It is all located next to an emptied-out interior whose primary source of economic activity is state investments into an industrial plant that is of questionable economic usefulness, populated by a demographic that is too old to repopulate.

The successive waves of hypergrowth—concentrated on the coastal zones where the world can see them—make China’s rise seem inevitable. The reality is China has borrowed from its interior regions and its demography in order to achieve what, historically speaking, is a very short-term boost. Never let anyone tell you the Chinese are good at the long game. In 3,500 years of Chinese history, the longest stint one of their empires has gone without massive territorial losses is seventy years. That’s. Right. Now. In a geopolitical era created by an outside force that the Chinese cannot shape.

With a total population of “only” a half billion, Europe doesn’t even have the theoretical capacity to generate an economic system as wildly large and divergent as China, with its 1.4 billion souls. But Europe does have a Japan, Korea, and Taiwan (Germany, the Netherlands, Austria, and Belgium). It also has its own Thailands and Malaysias (Poland, Hungary, Slovakia, and the Czech Republic). It even has hangers-on that contribute in uniquely European ways. Romania, Bulgaria, and especially Turkey are a bit like Vietnam in that, yes, they are low-wage, but all (and triply so for Turkey) often surprise to the upside in terms of product quality.

Europe’s weakest point in the game of manufactures is that its labor cost disconnects between high and low are not as wide as they are in Asia, so the Europeans are not as economically competitive in products that benefit from more varied labor structures. The spread between advanced Germany and less industrialized Turkey is $46K versus $9K, while the Japanese-Vietnamese differential is $40K versus $2.7K. Europe really doesn’t have a “low end” in the Asian sense, so a great number of products that rely upon low wages for at least part of their cost structure—and that’s everything from basic textiles to advanced computers—are not made in Europe at all.

Most of America’s regions would do very well flying solo, but they do not need to. Add in the country’s broad-scale road and rail system for transporting intermediate products, and in many ways the American manufacturing system has more variety than even Asia, even without its northern and southern neighbors.

Perhaps best of all, while the United States features the developed world’s healthiest demographic structure, Mexico features the best of the advanced developing world’s. There’s plenty of consumption on both sides of the border. 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.

The four Northeast Asian economies do not get along. Only America’s two largest overseas military deployments—in South Korea and Japan—keep the locals from being at each other’s throats. Only the threat of American naval power prevents the Chinese from trying something cute.

But Maoist communism is long dead, replaced by a steely neofascist ultranationalism. As China faces the terror of disintegration in a deglobalized world, the Chinese Communist Party has begun systematic persecution of its minorities to the point of stationing CCP officials inside people’s homes to prevent them from, among other things, procreating. The Uighirs of Xinjiang saw their birth rate drop by half just between 2018 and 2020. Instead of exceptions to One Child, some of China’s minorities are now de facto under a Zero Child Policy. Add it up and China is now the world’s fastest-aging society.

Rapid aging strikes the Asians with a triple bind: First, aging workforces may typically be more productive, but they are also more expensive. China’s low-skilled labor supply peaked in the early 2000s. China’s skilled labor supply is peaking at the time of this writing. The end result is as clear as it is unavoidable: higher labor costs. China is no longer the low-cost producer, and it hasn’t moved up the value chain fast enough to be the high-quality producer.

Perhaps the biggest problem for the Chinese will be . . . the Japanese. China’s navy is coastal and near coastal, with only about 10 percent of its surface combatants capable of sailing more than 1,000 miles from shore. Very few can sail more than 2,000 miles. China has no real allies (except maybe North Korea), so projecting power . . . anywhere is a hilarious impossibility. Japan, in contrast, has a navy fully capable of sailing—and fighting—a continent or two away. Should push come to shove, the Japanese can simply dispatch a small task force past Singapore into the Indian Ocean and shut down Chinese resource inflows—and with them, shut down China—remotely.

Drones de alta tecnologia resolvem este problema chinês.

With the possible exception of Japan, there is no Asian power that has the naval capacity to reach either of the two large end markets in question, and in a post-globalized system it isn’t very likely that Asian product would be very welcome in the first place. Add in the general mutual loathing most Asians feel toward one another and the entire model that has pulled the region out of poverty and war is set to implode. The only question is whether someone will try to go out swinging. And to be crystal clear, “swinging” is exceedingly bad for supply chain security.

Somewhat similarly, the European system will falter for any number of reasons. The first rationale is both the most obvious and the least manageable: Europe’s baby bust started before Asia’s, with the Europeans passing the point of demographic no return even before the new millennium. Belgium, Germany, Italy, and Austria will all age into mass retirement in the first half of the 2020s, while nearly every country in a Central European line from Estonia to Bulgaria is aging even faster and will age out in the second half.

Germany cannot maintain its position as a wealthy and free nation without the Americans, but Germany also cannot maintain its position as a modern industrialized nation without Russia. The story of all things German and Russian is about alternating chapters of begrudging cooperation and incisive conflict. As searing as that is for the Germans and Russians, it is far worse for the peoples between them—countries essential to Germany’s manufacturing supply chains. The Ukraine War is already forcing some tough questions upon all involved.

Simply put, the Germanocentric system cannot maintain its current position, much less grow, and no one in the world has a strategic interest in bailing it out. The challenge for Central Europe will be to keep the Germans from acting like a “normal” country. The last seven times Germany did, things got . . . historical.

The second option might feel more comfortable to the Scandinavians: work with the Anglos. Scandinavian-British cooperation against all things continental has a centuries-old history. With the Brits moving in with the Americans (organizationally speaking), some interesting possibilities are surfacing. The Americans obviously have a more powerful military and economy than anything the French boast. The Americans similarly also have far greater reach—reach to anywhere that might have necessary resources. The American-Mexican market is second to none, while the British market remains the healthiest one (demographically speaking) in Europe outside of France.

Let’s begin with base structure: part of why American manufacturers feel cheated by globalization is because that was the plan. The core precept of the Order is that the United States would sacrifice economic dynamism in order to achieve security control. The American market was supposed to be sacrificed. The American worker was supposed to be sacrificed. American companies were supposed to be sacrificed. Thus anything that the United States still manufactures is a product set for which the American market, worker, and corporate structure are hypercompetitive. Furthermore, the deliberate sacrifice means that most American manufactured products are not for export, but instead for consumption within North America.

Daí a atração de Trump.

three-quarters of the U.S. economy is domestically held, limiting its exposure to all things global. Canada and Mexico are far more integrated, getting roughly two-thirds and three-quarters of their economic heft from trade, but roughly three-quarters of that trade is with the United States.

the Americans have already ratified, operationalized, and implemented trade deals with Japan and South Korea, another two of the country’s six largest trading partners. Add in a pending deal with the United Kingdom (another of the six) and fully half of the United States’ trade portfolio has already been brought into a post-globalized system.

Most studies in the past half decade have indicated that by 2021, most manufacturing processes were already cheaper to operate in North America than in either Asia or Europe. That might shock, but it doesn’t take a deep dive to understand the conclusions. The North American system sports high labor variation, low energy costs, low transport costs to end consumers, nearly unlimited greenfield siting options, stable industrial input supplies, and high and stable capital supplies.

The whole basis of just-in-time inventorying is that the stability of the various manufacturing partners is so reliable that you can bet the future of your firm on the next shipment arriving, well, just in time. In most of Asia that entire concept is about to fail. Not so in the NAFTA region. For all their faults, Canada, America, and Mexico face no structural challenges and so can continue to use just-in-time should they choose to do so. So can Colombia.

Most people think of the Bretton Woods system as a sort of Pax Americana. The American Century, if you will. But that’s simply not the case. The entire concept of the Order is that the United States disadvantages itself economically in order to purchase the loyalty of a global alliance. That is what globalization is. The past several decades haven’t been an American Century. They’ve been an American sacrifice. Which is over. With the American withdrawal, the various structural, strategic, and economic factors that have artificially propped up the entire Asian and European systems are ending. What consumption remains is concentrated in North America. Only North America sports a demographic profile that doesn’t have to immediately adapt to a fundamentally new—and fundamentally unknown—financial reality. And so massive manufacturing reshoring to the American system is already in progress. The real, actual American Century is only now beginning. That hardly means there won’t be manufacturing anywhere else.

God bless America. Nós, europeus, cavamos a própria cova e cagamos nela antes de entrar.

Combine Japanese tech and military strength and wealth with India and Southeast Asia’s manufacturing potential and demographic and industrial inputs and you have one of the great alliances of the twenty-first century.

One of the most difficult-to-move bulk products is water. Opposite sides of individual water molecules have strong negative and positive electrical charges, which make the molecules cling to everything, even each other.* Pumped water must overcome this friction, and that can only be done by constantly expending energy. It is the single largest reason why some half of the Earth’s nonfrozen land surface is unsuitable for agriculture, and why meaningful cultivation of nearly half of the lands we do farm first required the pumping technologies of the Industrial Age. 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.

Wheat’s biological characteristics shaped our species’ technological, geopolitical, and economic outcomes. Wheat’s generally unfussy attitude isn’t just about climate; it also doesn’t require babysitting. Once the wheat seeds are tossed on the ground, you are pretty much done until harvest time. And if the wheat tends to itself, then farmers can do other things for 90 percent of the year.

Instead, the pair produce products more customized to their environmental and labor conditions—products in ravenously high demand globally. New Zealand’s ultra-mild climate makes it the world’s most efficient dairy, timber, and fruit producer, with cow paddocks, industrial forests, and orchards crowding out less profitable wheat fields. Similarly, Egypt grows cotton and citrus for export rather that wheat for local consumption. Both countries export their ag products for top dollar, and then import cheaper foodstuffs—like wheat—that they could have grown themselves had global agronomics pushed them in a more autarkic direction.

Also, unfortunately, the energy question is about a lot more than “merely” fuel. To explain that, we need to jump to the next restriction on agriculture: industrial commodities. Remember how there’s more to oil and natural gas than simply moving things around? Oil is typically the primary ingredient for pesticides, herbicides, and fungicides, while most fertilizers’ base materials also include natural gas.

This will be a problem nearly everywhere in the Eastern Hemisphere, but as with the broader energy question, the complications will be particularly intense in Korea, Central Europe, and the bulk of sub-Saharan Africa. The country that will certainly face the biggest declines in agriculture output will be China. Not only do the Chinese grow pretty much everything at scale, but Chinese soil and water quality is so low that Chinese farmers generally use more fertilizer per calorie produced than any other country—five times the global average in the case of nitrogen fertilizers.

Phosphate is, in essence, fossilized bird poop, which serves as a suitable substitute to . . . human poop. I’m slightly oversimplifying here, but the mined bird poop is treated with acid, ground to a powder, and tossed on plants. Its commodification and production in industrial volumes has proven absolutely critical to the rise of industrialized agriculture, especially because a) there are a lot more people who need food now than there were in 1945, and b) most of humanity agrees that storing and spreading our own poop is something we would really rather not do. Testament to these facts? Phosphate-based fertilizers experienced an eightfold increase in production and application since 1960.

Before the country’s post-Mao modernization began in 1979, there were next to no tractors and such in the Chinese countryside. Nor was there much of anything in the realm of artificial fertilizers and the like.* Instead, the rural population had been politically, economically, spiritually, and nutritionally gutted by the Cultural Revolution, which was, in essence, a full national purge of anyone who did anything in any way aside from what matched up with whatever twisted thought was running through Mao’s brain at the time. The point is that the population was basically a crushed peasantry, working small-plot fields by hand, giving individual attention to every individual plant, bereft of any of the technologies that had been developed in the past two centuries. Technically it wasn’t farming at all. It was gardening.

China simply cannot maintain its current population without full access to the global system to provide foodstuffs and agricultural inputs—but mass deurbanization just might—might—generate enough food to preserve the concept of China as a political entity.

Taken together, genetically tweaked seeds plus digital gardening promise to—at a minimum—double crop yields per acre by 2030, while simultaneously reducing chemical inputs and fuel needs by up to three-quarters.

Historically chickens have been small and scrawny because their diet was table scraps, bugs, and grass seeds, but feed them grain in bulk and they get yuuuge. Some criticize the American chicken industry for the mass use of enclosures, but if the goal is to keep chicken as the cheapest of the animal proteins, that is the only way to raise them. (True free-range chickens cost more per pound than most steaks, with boneless/skinless chicken breasts costing more per pound than all steak cuts save filet mignon itself.*) Those American enclosures explain why the United States is the only significant exporter of chicken meat, and why chicken prices outside of America tend to be triple or more the price within.

The history of the next fifty years will be the story of how we deal with—or fail to deal with—the coming food shortages. How those shortages—some continental in scope—will create their own changes in circumstance. How political and economic systems the world over will grapple with the one shortfall that matters more than everything else combined. That is what keeps me up at night.

We called the twentieth century “the American Century” because the United States emerged globally predominant in 1945. In the coming age, the gap between North America and the bulk of the world will be, if anything, starker. Never before in human history has the premier power from the previous era emerged so unassailably dominant at the beginning of the next.