End of the World by Peter Zeihan
Zeihan's book is an interesting exercise in scenario planning: what if America decides to step back from its role as policeman of the world? But this is not the framing that the author uses. Instead, the book is a high-confidence prediction about the future based on geopolitical and demographic trends. In short, America will step down as global hegemon, global trade will end, supply chains will be irreparably damaged, the world will turn multipolar, and everyone will starve to death, except the Americans who will be a-OK!
Zeihan is a consultant to large companies making important strategic decisions, so I guess high confidence comes with the territory. I would be surprised if Zeihan's world transpires fully, but he makes good "big history" points and the book was worthwhile if you can get past the bombastic vibes.
In general, Zeihan does a good job of going pretty deep into how the world works, and explaining things like I'm five. This is inevitably simplifying, as in his explanation of mediums of exchange, which ignore ledgers as an important part of the history (see Debt by David Graeber). Nits aside, I really liked his concise chronicle of global mediums of exchange, all historically gold-backed currencies, all the way to the end of Bretton Woods, where the USD now floats freely, untethered to gold. There is a certain unevenness in the presentation however, for example I really disliked his convoluted explanation of inflation, disinflation, and deflation.
The book delves surprisingly deeply into many nitty-gritty side-spurs most of which I think serve to explain the complexity of the modern manufacturing.
Geographies of Success. At different stages of human civilization, different geographic features were desirable. For example:
- Hunter-gatherers geography of success: access to a variety of climactic zones, often best situated at the bases of mountains.
- Farmer geography of success: access to water, but also insulated from other people by large deserts.
Selon Zeihan, during the globalized American Order, these geographies ceased to matter, since you could get anything shipped to you. But once The Order collapses, they will begin to matter again.
The Order and globalization: After World War II, America was in a position to try to establish a Rome-like global empire. America weighed her options and decided that direct rule would be unsustainable. Instead, America wisely bought a period of peace by offering a militarily brokered economic order with prosperity for all. This meant an essentially global free trade network without any of the historical challenges and high costs. Previous trade networks had way more middle-men charging exuberant prices at every step of the way and way smaller shipping volumes. This ushered in an unprecedented peace dividend (see The peace dividend is over).
Collapse of The Order: When the Soviets emerged as a countervailing pole shortly after WW2, America's need to create a strong western alliance became even stronger. When the Soviet empire collapsed, and America "won" the Cold War, it lost its sense of urgency and direction. Zeihan claims that the order is over without much justification. It seems to be more of a mood affiliation (see The fallacy of mood affiliation)
The uneven spread of tech revolutions: the industrial revolution began in Britain, where it took decades to refine the key inventions: steam engines, looms, factories. Subsequent adoption in other countries like Germany proceeded much faster. Later entrants like China industrialized even faster.
Demographic determinism: It's hard to refute demographics, which are definitely an underrated (by me) source of long-term future projection. Given a demographic pyramid of the current world, it's relatively easy to predict a future pyramid because of population dynamics. In general, the more affluent a country, the lower the birth rate. If you have few children today, you will likely have few children in twenty years, because fewer children today means fewer child-bearing adults.
One major flaw with demographic determinism is that there is more to the story than just age. For example, a large young population may be skilled or unskilled, and these scenarios will play out very differently.
Straightforward projection of demographics does not account for immigration. Countries like the US and Canada are based on an influx of people from the outside, and this remains a major advantage compared to many other countries, which have similarly low birth rates but no immigration.
De-sourcing trend: Multinational companies set up factories in other countries, hiring the local population and selling them the goods. Japan does this globally with Toyota and other car companies. China does this with their auto industry in Russia, especially after the pandemic (see Russian car industry after War on Ukraine). The US does this all over the world.
The Order is fragile. Zeihan points to a historical episode in the 1980s, where the Iraq-Iran war disrupted global trade because the insurance industry collapsed. This rhymes a lot with what's happening in the Red Sea and Yemen's Houthi trade route disruptions. Large container ships enable essentially free global shipping and a very complex supply chain for all things. Unfortunately they cannot be easily defended, and having military escorts for all of them would be very expensive. Zeihan calls them "floating buffets" for other countries to raid.
Without The Order: Zeihan's predictions without American-backed global free trade are dire.
- Unlike the Eurozone, Southeast Asia does not have an independently curated peace treaty, and many countries still harbor great hatreds towards one another from past aggression and atrocities (eg. most hate Japan, many fear China).
- Purely oil exporting countries which dominate the Middle East rely on everyone else for everything else.
- These Persian Gulf countries also rely on external experts for building and maintaining their own oil infrastructure, including both extraction and transportation.
- (Israel is half a world away, so if the American brokered global peace ends, it will be Israel against its genocidal Arab neighbors which outnumber it by orders of magnitude.)
Split by hemisphere? Zeihan predicts a multipolar world that is for some reason split by hemispheres. The American hemisphere will do super well for many reasons. First, there is so much untapped resource potential in America. Mexico has the right demographics and US has the right expertise to replace a lot of global supply chains. Meanwhile, the rest of the world will suffer because of longstanding hatreds, relative lack of resources.
- Dominant professions over time: this would be an interesting statistic to track. One angle could be to investigate the capital investment going into each profession. Another could be just raw numbers. Most common professions over history
- Japanese finance culture and debt forgiveness: Zeihan mentions some Japan-specific historical precedent having to do with debt forgiveness.
- Demographic pyramids in general seem really powerful and interesting tools. https://www.visualcapitalist.com/population-pyramids-compared
- 3D printing could be a significant enabling technology if Zeihan's dire predictions come to pass and globalized world trade propped up by the American Order vanishes.
- In a zero-sum world, people will be more likely to look for scapegoats even in America and we all know what that means...