The World According to Peter Zeihan
Analyzing geopolitics through geography, demographics, and natural resources
Just as I did with Peter Thiel, this week I'll share views of the world according to Peter Zeihan, one of the more thinkers in geopolitics today
Looking at the macro perspective, when we predict which countries will have more or less power in the future, we usually think about a country’s governance or culture. Zeihan instead evaluates them through the lenses of geography, demographics, and natural resources.
Accidental Superpower recounts why the U.S. created the global order the way they did and why they are now retreating. Absent Superpower explains the shale revolution and how it accelerates the U.S. retreat. And, finally, Disunited Nations examines who will flourish and who will struggle in the new resulting (dis)order.
His main points are as follows:
The United States, post-WWII, set up a global order that sacrificed economics for security in order to fight the Russians.
Post-Cold War, that global order no longer made sense, so the U.S.retreated — which means that global order may all fall apart.
Post-World War II, the U.S. effectively said, "You don't have to worry about wars or invasions or supply routes or food or energy or anything. The global system will take care of it, the U.S. will subsidize and protect the global system." We artificially created a dependency on the U.S. that greatly affected those involved, and maybe not for the better.
The U.S. helped everyone else conquer their geographical limitations. Countries that didn’t have navigable rivers or large chunks of arable land to feed themselves all of a sudden could participate in the global network that they didn’t have to fight for. This led to the greatest explosion of economic activity in world history and created the greatest military alliance humanity has ever known, and it has been a really good seven decades — on the US's dime.
Free trade isn’t as free as people think; it requires someone providing the security to indirectly subsidize the rest of the system. The U.S. has provided that for seven decades, and for the last three decades they have done so without asking for anything in return.
People often think free trade uniquely benefits Americans economically, but it doesn’t. The Americans did not create Bretton Woods to become rich; they were already rich, and had been the world’s richest country since the completion of Reconstruction in the 1870s.
But the Cold War ended back in 1992, and the U.S. never updated the system. For the Americans, free trade wasn’t about economics at all; it was a security gambit that was designed to solidify an alliance in order to fight a war. But that war ended three decades ago, and before 2016, the U.S. just didn't realize it yet.
So what happens next? The US retreats.
After all: why continue subsidizing the allies if the war is over?
As the U.S. backs away, few players have any inkling of how to operate in a world where markets are not open, transportation is unsafe, and energy cannot be secured easily. Zeihan thinks those that come to terms with their necessary independence from the global order will be successful in the long run. This means that countries that depended on the global order will be screwed (China, Germany, Russia, Iran, etc.) and the countries that flourished without the global order will continue to flourish (Japan, France, Argentina, Turkey, etc.).
Of course, the U.S. was the best positioned of them all because it was the least dependent (well, duh — all the other countries depended on it). For one, the shale revolution let the U.S. become energy independent. And the fact that only 8% of GDP came from international exchange further solidified that they were already independent in the first place. From a population perspective, we were the most balanced in terms of the distribution of age groups; and geographically, not only do we have the richest chunk of territory in the world, but it's also the most secure.
So why can't another country pick up where the U.S. left off? First off, to thrive without a global order, you need:
Perfect geography — some sort of crunchy exterior so people can't get to you; mountains are good, but oceans are better.
Your own supply of food and energy
A sustainable population structure with balanced ratios between children, young adults (consumers), mature adults (employees & tax-payers), and retirees (also consumers)
Sufficient military resources to protect yourself
Looking at these four things alone, countries dependent on the U.S. are in for a rude awakening:
Germany has a population problem with not enough children. They also lack a strong consumer class, have no military power, are in a precarious geographical position, have internationalized manufacturing, and are dependent on trade for 2/3 of their GDP and Russia for their energy. To make matters worse, Russia is also in a tough spot, as too many people are old/sick, and they need to annex countries like Ukraine and the Baltic States just to be physically secure. Once the U.S. and NATO retreat, they likely will try.
The French are regionally obsessed, and same with the Japanese who don't want to go beyond the Pacific.
The British are out of practice: They will lose access to European markets because of Brexit, beg the U.S. for trade, and then succumb to our demands, which puts them in competition with Mexico. London will lose its place as a financial center of the world, which may have happened already since it represented the EU...
China's in a tough spot too. Their one child policy led to too many retirees, and they can't maintain their food production without imports. They also import 85% of their energy (which goes away, as any consumable does), have a credit & debt bubble, and low naval capacity. In many ways, their country could implode in the next decade with the lack of consumers/aging workforce, the energy crisis in the Middle East, and a collapsing export industry. Every pillar that China has used to base their entire civilization on is beyond their control, and it's all cracking at the same time.
The Middle East is also fraught with chaos. Because of the shale revolution, everything that's kept the U.S. bound to this region (oil) is no longer as important, since we now have our own. That cuts Iran and Saudi Arabia's biggest economic lifeline. They were basically rentier states with one commodity; rebuilding that economy will take centuries.
It's ironic that the countries most critical of the global order and the U.S.'s management of it (e.g. Iran, Russia, somewhat China) are also its biggest beneficiaries — they'll also suffer the most when it's gone.
This means that countries that flourished without the global order will continue to flourish: namely Japan, Turkey, Argentina, and France.
Japan has a strong navy, geographical positioning, and is an expert in de-sourcing ("build where you sell"). It has the capacity to go out and take everything it needs, or interface with friendly countries to get what it wants.
Further, Turkey has the largest army in NATO outside of the United States, and recent skirmishes make it "battle tested." There's no one who can really hold a candle to it within its own neighborhood.
Argentina has absolutely everything it needs within its own borders: It faces no security threats, and has natural resources the rest of the world needs (energy, raw materials, and food), good demographics, and great geography.
And then there's France — the only significant European country that can take care of itself once the United States leaves. It has a stable population structure; it didn't internationalize manufacturing; it doesn't need a global market to sell to; and it doesn't have the same security concerns as Germany.
These four countries are odd contenders in some ways: Turkey has been out of commission for a century; the U.S. nuked Japan twice; and France used to be a major power, but Germany beat them in a global order world. (Argentina is a special case when it comes to national dysfunction.)
So why isn’t this as hurtful to the U.S.?
Well, the U.S. never really integrated their economy into the global whole like nearly everyone else did. And since we were the least integrated (of the significant countries) into the global trade system, we'd suffer the least, should that system collapse.
In short, the U.S. is the only power on the planet with global power and global reach — but it is transitioning into a power without global interests.
Yep: The country that controls the global ocean, global trade, and global energy no longer has an interest in global security.
This is bad for nearly everyone else. All the U.S. has to do to destroy the aforementioned "dependent" countries is go home. And that's what they're doing.
Just as the global economy tips into deflation, just as global energy is becoming dangerous, just as global demographics catastrophically reduce global consumption, just as the world really needs the U.S. to be engaged, the U.S. is... retreating.
Throughout human history, there has never been a multipolar period in which widespread wars among constantly-shifting alliances were not the norm — except the post-WWII order.
What happens if the U.S. stops guaranteeing security for everyone else?
Chaos. Disorder. Everything’s up for grabs.
To be sure, this retreat is likely temporary. After a 20-to-30-year hiatus, the U.S. will venture out again.
Due to the intervening global breakdown, when the U.S. does again venture forth it should be far more powerful relative to the rest of the world than it currently is. That imbalance may well prompt it to impose some new order, but only after much economic, political, and security degradation, chaos and disorder.
Zeihan's conclusion: The U.S. is the most powerful country in history and will remain so until long after our grandchildren are gone.
Note: One critique of Zeihan is that he underestimates technology. If we have break throughs in cyber warfare, fusion or other cheap energy sources, or AGI, his model of the world doesn’t account for that. He’s likely correct, but he’s a bit too dismissive of these potential innovations in terms of how they’ll change the overall landscape he presents.
Curious for more? Read Zeihan's books. The above has been just a cursory summary.
Read of the week: My friend Logan Ury’s “How To Not Die Alone”. One takeaway: don’t ghost people. Instead kindly—but firmly—reject them. Easier said than done, of course.
Watch of the week: Speaking of ghosting, my friend Frak has a great song about it
Read of the week: Continuing the Valentines Day theme, Nicole Krauss’s History of Love is a classic.
Thanks for reading this newsletter, it inspires me to keep writing it.
Until next week,