Peter Zeihan on the Collapse of Globalization and Shifts in Global Power Dynamics | Technovation 887
What this covers
Peter Zeihan, renowned geopolitical strategist and founder of Zeihan on Geopolitics, wrote in his most recent book, "the seeds of deglobalization were sown decades ago." Since then, the world has seen both demographic and economic shifts that further validate his analysis. In this episode, Peter High interviews Peter Zeihan about his deep insights on topics intersecting demography, economics, energy, politics, technology, and security. The conversation delves into Zeihan's perspectives on Stalin's influence on the global order, the early indicators of deglobalization, and the demographic challenges leading to economic declines. Zeihan provides an in-depth look at the geopolitical futures of major powers like China, Russia, and the United States. He explains the mechanisms driving historic trends, the ongoing conflict with Ukraine, and what might be expected on the world stage in the coming years. Pivoting more locally, Zeihan discusses his predictions for the 2024 US Presidential elections, what each candidate’s win might mean for America’s role on the world stage, and what needs to happen for the US to keep pace with the shifting trends toward deglobalization. Finally, Zeihan gives his thoughts on which other countries might come out on top in the coming years once the dust settles.
**This interview was recorded on June 20th, 2024.**
00:00 Introduction to Technovation 00:51 Stalin's Influence on Global Order 02:03 The Seeds of Deglobalization 04:08 China's Demographic and Economic Crisis 17:30 India's Prospects and Challenges 20:57 Russia's Geopolitical Strategy and Ukraine Conflict 31:01 Nuclear Risks with China and Russia 31:31 Corruption in Chinese Military 32:48 US Missile Defense Limitations 33:19 Debate on US Response to Russian Aggression 34:32 Ukraine's Use of US Weapon Systems 35:50 Potential Conflict Over Taiwan 37:50 Impact of Deglobalization on the US 39:20 2024 US Presidential Election Predictions 47:22 Immigration's Role in US Demographics 50:28 Countries with Positive Long-Term Prospects 53:44 Challenges and Opportunities for the UK 55:48 Future Global Economic Models 56:38 Conclusion and Final Thoughts
An audio-only version of this interview is available as episode 887 of Metis Strategy’s podcast, #Technovation with Peter High. Learn more at http://bit.ly/Technovation-887.
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Zeihan argues that globalization was a temporary Cold War security bribe now ending due to changed geopolitical conditions and demographic collapse, fundamentally reshaping which countries will prosper or fail in the coming decades.
- Globalization was created to induce Europeans to contain Soviet threat, not an inherent economic optimum
- Demographic inversion across industrialized world makes mass consumption impossible, collapsing the system's foundation
- China faces civilizational collapse within 10 years due to population overshoot, famine risk, and loss of export markets; most other nations face similar demographic traps
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China is the king of low-end assembly and processing where labor is a significant cost driver, but as value-added increases, China brings less to the table. Labor costs have risen 15-16x in 25 years while productivity barely tripled, so only in low-value processing sectors (40-70% of global aluminum, cobalt, copper processing) are they competitive, usually through subsidies.
“the Chinese are the king of the low end if it deals with assembly or things that are not too technically um challenging this is where the Chinese can compete because they compete on scale as youve move up the value added scale they bring less and less to the table this is an an economy that is seen their cost of Labor go up by a factor of 15 or 16 in the last 25 years but labor productivity has barely tripled so there aren't a lot of sectors where value ad is the critical component of the mix where the Chinese are players unless they just massively subsidize it which they do the places where they are competitive are in Industries where the value added very low and it's usually about processing and in those sectors they're Barn in the world leader so whether it's aluminum or Cobalt or copper 40 to 70% of global processing for a lot of these materials is China Centric”
Processing of materials like aluminum, lithium, and copper can be relocated from China with ease and cheapness and speed, but easy/cheap/fast is not the same as immediate and free. The shock to the system if this relocation happened overnight would be significant, but it is not like moving high-end electronics or automotive production.
“there's nothing nothing about this processing process that is difficult or expensive or even timec consuming to relocate but easy and cheap and fast is not the same as immediate and free so when I think about things like aluminum or lithium that's where the biggest shock will be”
Russia's frontier in its current form is completely undefended and 5,000 kilometers long, making it impossible to patrol and secure. For Russia to achieve defensible borders similar to the Soviet period, it needs to advance past current borders and anchor military in geographic constraints (mountains, seas), reducing external boundaries to less than 500 miles. This has been the Russian state goal for four centuries—not Putin's innovation.
“the Russian Frontier in its current form is completely undefended it's it's wide open it's populated there's no way for the Russians in any form with no matter how competent their government no matter how powerful their military to patrol and secure the entire border system it's something like 5,000 kilometers long but if they were Advanced to advance past their current borders and to get something a little bit more similar to what they had in the Soviet period they could anchor their military in places of geographic constraint where mountains and seas can provide a defensive Bull workk and then they concentrate their forces on the places between those like the Polish Gap like the best Arabian Gap in Romania like the caucuses um Coastal strips and then their entire external boundaries are less than 500 miles”
China historically experienced roughly 27 civilizational collapses where the central government collapsed, with about half following a pattern where famine and warlordism hit the North China Plain, Beijing attempts invasion and oppression to restore stability (killing half the population), and southern city-states from Shanghai to Guangzhou separate and make foreign deals for capital, technology, and food. This pattern is 'closer to the historical mean' for China.
“uh in Chinese parlament uh it's warlordism uh the problem of course in a place like China is most of the people live in an area where you can't grow food unless you also have a significant Waterworks system so if you break down civilizational pillars and central control the ability to maintain those networks goes by also the Chinese import 80% of of the inputs they need to grow their own food so on top of all of this having a mass famine in large sections of the population especially the North China plane where the inputs are the highest and the demands for a Waterworks system are the highest historically speaking of those 27 collapses about half of them have kind of followed some version of of the same pattern where the north North China plane has famine has warlordism has an attempt by Beijing to basically invade and oppress itself to stability which typically kills half the population and then you have the southern city states from Shanghai to Guang Joo that go their own way uh and basically cut deals with foreign powers to import Capital technology and above all else food”
Stalin was the most important or influential person in the past 500 years because American fear of him led to globalization—we created the global trade order and naval protection of shipping specifically to convince Europeans to stand against Soviet threat, something that had never happened before in human history.
“Americans realized in the late 1940s that we were on the tail end of world War II all of a sudden gearing up for another war with a much more powerful enemy on the plains of Europe and we knew that it wasn't a war that we could not win so we knew we needed tens of millions of people to stand not with us but in front of us and convincing the Europeans to sign up to be Canon fodder right after World War II was kind of a high bar so we knew we needed some way to induce them to take that role and our solution was globalization we send out our Navy to patrol the global ocean so that any Maritime shipping could go anywhere without an escort it never happened before in human history”
Russia made nine post-war military attempts to establish outer crustal defense and secure territory, and Ukraine is the ninth such attempt, not the first. The Russian state (not Putin specifically) has pursued this objective since 1989 and earlier. This predates Putin as a pattern in Russian strategy.
“Ukraine's not the first posts war with that goal it's the ninth and it won't be the last if they win so that's the why the why now is demographic Russia has these Peaks and troughs in their demographic structure that largely line up with either major Wars or major centralization collapses and Mis mismanagement whether it's crua forcing everyone into apartments or World War II causing 20 million civilian deaths you got these giant gouges out of their demographic structure but none of them are as severe as what happened after 1992 the economic system collapsed we had several years of a corrupt government under yelton”
Russia's demographic structure collapsed after 1992 due to economic system collapse, corrupt government under Yeltsin, and economic famine of 1998. Death rates became twice birth rates for almost 20 years. This created a demographic crisis so severe that recovery is theoretically impossible, and the men in their 20s now are the last deployable forces Russia will ever have, making 2022 the middle of a date range when Russia had to move or lose the capability forever.
“the economic system collapsed we had several years of a corrupt government under yelton that basically did nothing to stop the freef fall culminating into the collapse of 1998 and during that period the death rate soared the birth rate crashed and for almost 20 years we had a death rate that was twice as high as the birth rate and even if you believe the statistics that the Russians started making up 15 years ago this is a population structure that is so far past the pale that recovery just isn't even theoretically possible which means that the men that they have in their 20s are really their last group of Deployable forces that they will ever have and 2022 was kind of in the middle of a date range that I saw where if they were going to if they waited any longer they simply wouldn't have the people to even theoretically attempt a military solution”
War with Taiwan would end the People's Republic even if China conquered Taiwan intact in two weeks. It wouldn't solve any of China's problems. China can't operate TSMC semiconductor fabs (manned by critical staff from other countries), so conquest of Taiwan gives no economic gain—just nationalist drum-beating while the country collapses.
“if there was a war with Taiwan it would be the end of China not that there wouldn't be Fallout not that there wouldn't be blood but it would be the end of the People's Republic also even if in their wildest dreams that version of Chinese nationalism happened where they were able to conquer Taiwan intact in two weeks so doesn't solve any of their problems and they can't operate their own semiconductor Fabs that's those are manned by critical staff from other countries you put them in charge of tsmc they wouldn't know what to do with it I don't see the game here aside from a little nationalist drum beating that you can then keep beating that drum as your country collapses around you”
The U.S. must double its industrial plant to prepare for post-globalization world because it won't be able to import finished goods or intermediate goods critical for manufacturing. While inefficient by economist standards, building out with subsidies (even imperfect plants) is worthwhile because it develops electrical systems, physical infrastructure, and population that can be retooled between now and when plants become obsolete.
“we need to basically double our industrial plant to prepare for a post- globalization world because we won't be able to import those finished goods or maybe the intermediate Goods that are important in our own manufacturing with the benefit of hindsight I think a lot of people realize that we should have started building this out years ago as opposed to relatively recently but I mean here's the thing think of say the inflation inflation reduction act you know couple trillion dollars of investment into various Green Tech to build out new industrial plants so we can compete in these spaces The Economist in me is like this is wildly inefficient but we're kind of on the clock and even if we build with subsidies an industrial plant that isn't perfect for what we need 10 years from now we're still building out the electrical systems the physical infrastructure moving the populations that are necessary to have what we need at the end and if we have to retool this stuff between now and then fine uh the efficient time to start this process was 2010 we started in 2021 I'll take what I can get at this point”
Mexico is a big win if not for Americans' cocaine obsession. Mexico's demographic structure perfectly complements the U.S., is already on verge of trillion-dollar consumer market, and is not just manufacturing source but export partner. This is very important for the post-globalization economy.
“I'm also very bullish on Mexico uh if it wasn't for Americans obsession with cocaine this would be one of the most successful states in the world and their demographic structure perfectly complements ours they're already on the verge of having a trillion dollar consumer Market uh because of their structure so it's not just a source of manufacturing for us it's also an export partner which is very very important”
Southeast Asia looks good because of young population, multifaceted manufacturing system, and region benefits most from industry leaving China. Multiple Southeast Asian states are at similar economic development to each other but more efficient than China. Few serious local military competitions. Can maintain regional globalization while global system ends, trading with Japan and U.S.
“southeast Asia looks very good for similar reasons and has less cocaine uh young population multifaceted manufacturing system and it's as a region probably the part of the world that will benefit the most from uh industry moving out of the People's Republic they're at a similar stage they have several states that are at a similar stage of Economic Development that're actually far more economically efficient already and there aren't a lot of local military compet itions that are a serious problem so you can end globalization on a global level but still have a regional globalized system within southeast Asia that can then trade with Japan and the United States”
After 75 years of industrialization and urbanization, global birth rates have dropped by more than three-quarters because children are no longer free labor on farms but an expense in cities, and adults aren't stupid so they have fewer of them. An increasing percentage of the world's population no longer has enough people under age 45 to consume in volume, including China, meaning there's no longer a population structure to support global trade.
“after 75 years of globalization we have had 75 years of industrialization and 75 years of urbanization and when you move from the farm into the city kids are no longer Free Labor they're an expense and adults aren't stupid so we had fewer of them if you fast forward that from 1950 to today we've seen Global birth rates drop by more than three quarters and in an increasing percentage of the world's populations there are no longer enough people under age 45 to consume in volume uh China's on that list now and so there isn't a population structure to support global trade anymore anyway”
Globalization was never invested in by the U.S. economy itself; instead, the U.S. provided security for everyone else to have an internationalized economy. The U.S. is a continental economy that doesn't require the global system, so when security needs changed and the system became politically unsustainable, the U.S. simply backed away.
“we never invested our economy in the system in the first place so number one the security environment's changed even with the Russians back on the war path they a pale shadow of what they were during the Cold War so we no longer feel we need to have a Global Alliance in addition 75 years later there are a lot of secondary economies out there that have some heft so the idea that the United States even in its current strength in terms of its consumer base in the size of its economy could directly subsidize all of that that was never going to fly and politically the US has moved on so we never invested our economy in the system we don't have an internationalized economy but we provide the security for everyone else to have an internationalized economy and that doesn't fly anymore so we're just backing away from the system”
China's modern era of unified political control over all mainland territory and food distribution from plains around Beijing is not historically normal for China; the country will revert toward historical mean of regional fragmentation where southern city-states import most calories (as they have for 1700 years).
“most of these cities have imported the majority of their calories for the last 1700 years uh and the modern era that we're in where all of mainland China is under a single political Authority and Guang gets its food from the PLS around Beijing that's not normal for them so this is going to sound horrible but we're actually reverting to something closer to the historical mean here uh and the historical mean is not pretty”
Japan looks like a demographic no-brainer for failure, yet under Trump they cut a humiliating trade deal that brought them into the American inner circle of allies. Japan is doubling down on this, finding a way to get long-term U.S. market access and merged security interests. Zeihan is 'very very bullish' on Japan's prospects despite demographics.
“the first one is one that from a demographic point of view looks like a a no-brainer for being a failure and that's be Japan it's the oldest demographic structure in the world they have managed to bring their birth rate back up or at least its reduction but under Trump they were able to cut a trade deal that was humiliating which almost brought them into the American Inner Circle of allies and they're basically doubling and tripling down on that right now so they found a way to get access to the US market over the long term uh and a merger of security interests over the long term that I think will do them very very well”
Turkey has positive demographics and is geopolitically positioned like Mexico vs. Europe (France). France has the healthiest demography in rich world outside U.S., has some issues to work out, but never spread out manufacturing system like others, so hasn't been efficient recently. As globalization fades, France doesn't need to retool as much to take advantage of new world order.
“watch turkey positive demographics again kind of like that Mexico us sort of thing between turkey and Europe France healthiest demography in the rich World outside of the United States uh they've got some issues to work out but unlike Germany or the United States they never spread out their manufacturing system it's not as efficient as a result and they've kind of missed out on a growth boom these last 30 40 years but as globalization Fades away they actually don't have to retool much to take advantage of the world in the form it's going to be in”
Ukraine's strategic advantage is that supply lines into Crimea have only three routes: ferry/rail connection destroyed by Ukraine, Kerch Bridge with limited cargo capacity and vulnerable to new weapons, and southern rail lines where trains operate in long-range rocket/artillery range. If Ukraine cuts the final rail system, Russians would be forced to supply Crimea by truck over 1000+ km, interdictable at multiple points, starving Crimea and creating public humiliation that could trigger Russian political collapse.
“Crimea because of the shape of the land because of the presence of the Neer River any Supply going into Crimea basically has to come from one of three routes you've got a rail ferry bridge basically bringing things in by water that the ukrainians have largely destroyed they've also destroyed most of the Russian Landing ships in general so supplying by sea has become very very hard number two you've got the Kirch Bridge which goes from Rost ofon Don or sorry the railway goes in from Rost of Von South into the Kirch straight and then Crossing into crime a peninsula that's taken enough hits that its ability to take Mass cargo has been limited pretty strictly uh and I think with these new weapons systems that the ukrainians have Rec recently gotten the kurch bridge is not going to be around much longer anyway then third you've got a series of rail connections that are on the southern shore of Ukraine proper and while they are in Long Range rocket and artillery range in many cases uh the ukrainians don't have liability to Target the trains with artillery so that's where the bulk of things are going right now if Ukraine can cut that final rail system then the Russians would be forced to ship anything to crimeia by truck from Russia proper through the daboss pass marapole and mapole and across a single Road and rail system to get into crimeia proper that's over a thousand kilometer long supply line by truck with the ukrainians being able to basically interdict it at multiple spots”
The U.S. has two camps regarding Ukraine policy: one thinks red lines are real and advocates capitulation (Chamberlain approach), one advocates maximum support to Ukraine with full targeting freedom. Both are extreme. Biden administration has struck right degree of caution versus aggressiveness by letting NATO allies incrementally test Russian red lines, and when Russians don't react, expanding the boundary—this happened with artillery, storm shadows, javelins, ATACMS against Russian territory.
“I think the Biden Administration when it comes to security policy relating to Ukraine has broadly struck the right degree of caution versus aggressiveness uh basically what we've done for the last two years is when the Russians stayed a red line one country in NATO puts a toe across it just to see what happens and then they step across it and then other countries join in and three weeks later everyone's doing it so this happened with artillery this happened with the storm Shadows this happened with the javelins most recently it happened with allowing the Russians to use the atom system to Target Russian assets across the border from KV uh and to go after the places where the Russians were launching assaults on civilian populations and just in the last 48 hours that has now been expanded to pretty much the entire front Ukraine”
China faces demographic inversion resulting in de-industrialization and economic freefall. The government publicly admits overcount of population by more than 100 million; official statistics show birth rate dropped more in last six years than what happened to Jews of Europe during Holocaust; private demographers estimate overcount closer to 250 million, all under age 40.
“we now have the public system in China admitting that they've over countered their population by more than a 100 million people we now have official statistics suggesting that their birth rate has dropped by more in the last six years than what happened to the Jews of Europe during the Holocaust and now we have private economists and private demographers saying that the overcount in the population is probably closer to 250 million all of the missing Millions under age 40”
As long as Russia maintains supply flows from North Korea (artillery), Iran (drones), and China (electronics and metals), plus Soviet Arsenal, Russia faces no meaningful equipment shortage for years. Manpower is not a limiting factor if politically managed through drafting. Russia can sustain war minimum five years, and their innovation with glide bombs and destroying infrastructure to make areas uninhabitable is strategically sound even if inhumane.
“as long as they can maintain Supply flows from North Korea for artillery from Iran for drones and for China for electronics and metal energy you marry that to the Soviet Arsenal and they are not looking at a meaningful equipment shortage within the next years uh based on how long China lasts it could be a little bit longer than that so at least in the midterm they're fine on equipment and because this is their last war and they realize that uh the Manpower issue is not an issue either it's just a question of how they politically manage drafting I don't think that is going to be the thing that brings down the government so minimum five years for the Russians things look I want to say hunky dory but they can maintain their flows and they're finding new and innovative ways to use their old weapon systems in in more devastating capacity so for example the Glide bombs or the most recent Innovation basically dropping a metric ton of explosives on an urban center and just bit by bit making the front Zone completely uninhabitable”
Immigration requires deep historical roots and a society that can assimilate large numbers without triggering backlash that changes core national identity. The U.S. is on a sine curve of immigration acceptance—currently at a low. Trump criminalized all legal immigration routes, Biden doubled down. This forces migration through illegal channels. Two million were brought in illegally last year; without them, inflation would be much higher (2-3x).
“for immigration to be a meaningful part of the solution is it has it has has to be something that has Deep Roots and you have to have a society that can regularly assimilate relatively large numbers of people without changing the core uh identity of the country uh to the point that it triggers a backlash now in the United States here we're kind of on a sign curve we have highs and lows and right now we're definitely at a low uh Trump basically criminalized all legal routes something that Biden doubled down on which he should get full credit for that or full blame based on where you are uh which means that the only way to come to the United States now is to come in illegally and that's why we're seeing a surge of people from Russia and from India from China the southern border because we've closed off all the normal ways that they would have used to get here I will point out that we brought in about two million people illegally last year and if it not for those people going into the workforce our inflation problem would be much higher than it is right now at least double probably triple”
Having a global humiliation of Putin through his inability to supply civilians in Crimea is how approximately half of Russian governing systems have historically ended—through internal collapse or popular uprising following very public military defeat. This historical pattern (Crimean War, World War I) suggests Ukrainian strategy of public humiliation could trigger Russian internal collapse.
“the public humiliation of having a couple million Russians in Crimea starving because the Russians can't Supply their own civilian population much less their military population the ukrainians don't have to capture Crimea to generate that outcome they simply have to introduct one trend line and if you can have a global humiliation of Putin this is how about half of the governing systems in Russian history have ended from either internal collapse or popular Uprising because the Russians have lost a war very very very very public so some version of this is what went down for World War I from some version of this is what went down for the Crimean War ironically uh and that seems to be the Ukrainian short-term goal”
The U.S. missile defense system is designed for China and North Korea on the west coast and Alaska, but doesn't have sufficient East Coast coverage. Russia has 1000+ deliverable weapon systems and if they brought mothballed systems out, could expand by 5-6x. The U.S. doesn't have sufficient mobile systems to cover all population centers if Russia decides a red line is real.
“our Hardware our fixed ground imp placements are on the west coast and Alaska designed for North Korea designed for China our East Coast doesn't have that we've got a lot of mobile systems but not sufficient to cover all of our population centers so if one of these red lines that the Russians keep lying about actually turns out to be real then we could have a very serious problem”
Russia does long wars, not quick ones. When running out of people, this strategy doesn't work as well because a protracted conflict requires sustaining losses across years without adequate demographic replacement.
“Russia always does long Wars not quick ones right and when you're running out of people that strategy doesn't work as well exactly right”
Only about 15% of U.S. GDP comes from international trade; roughly half of that is Mexico and Canada, and roughly half of what's left is exports of raw commodities (crude oil, refined products, grain). Total exposure is 3-4% of GDP, mostly in manufactured goods. If global trade cut off overnight, the U.S. would have gluts in finance, food, energy, and shortage in electronics, but this isn't civilization-ending like it is elsewhere.
“only about 15% of our GDP comes from International Trade roughly half of that is Mexico and Canada roughly half of what's left left is exports of raw Commodities like uh crude oil refined product and grain so now you're talking about a total exposure of three to 4% of GDP now that's not nothing and most of that is in the form of manufactured goods so if we were to see a cut off of everything overnight we would have a glut of Finance food and energy and a shortage in electronics that would be would basically feel it uh we don't move on from that overnight we don't move on from that without a considerable expense but this isn't a civilization ending event like it will be in other places”
Xi Jinping's purge of the bureaucracy has degraded the government system at the top to the point where useful policy is 'like monkeys on a keyboard'; no one presents him with information anymore, he makes decisions in a vacuum guided by propaganda, destroying all avenues of information flow about domestic or foreign conditions.
“I think the government system at the top has degraded to the point that useful policy if it happens is more like monkeys on a keyboard I don't mean that as a racial slur I just mean that X is so person the system of anyone who is competent that no one even brings him information anymore so he's making decisions in a complete vacuum Guided by nothing more than propaganda”
On Brexit: Brits wasted the last decade since the vote doing nothing to figure out what Brexit actually means. Now demographic problems are biting. They don't have time to rejoin EU to salvage it. Only path forward is joining NAFTA, but U.S. will browbeat concessions the British don't want. They'll never have as good a deal as they had with EU, but there isn't a sufficiently large alternative consumption source.
“it's been seven years since the brexit vote and the Brits have done nothing and they basically wasted the last decade and now their demographic problems are starting to bite now they're not nearly as bad as iy or Germany or Russia or China's but they are serious what the Brits need to do is make up their goddamn mind and what brickit actually means and it's too late now to go back into the EU and try to salvage it so they do need a third way the only way that I can see that that works now is to basically get into NAA and if they decide to do that the United States will browbeat number of concessions into the agreement that the Brits really don't want to agree they will never have as good of a deal as they had with the European Union if they go with the United States but there isn't a sufficiently large source of consumption anywhere else within reach”
Trump and Biden have very similar policies on international economic affairs—both are tough on China and both are dividing the Chinese system from the American system. They approach it differently but reach the same result. Trump deserves credit for starting the conversation. Beyond that, Trump's policies are shaped by whoever flattered him most recently, making him unpredictable.
“the only thing that we know that he would do for certain is be as tough on China as Biden now they have a very very similar policy when it comes to International economic Affairs in fact I would argue that the two most similar presidents we've ever had in that regard coming from different points and applying policy differently but getting to the same general result of basically dividing the Chinese system from the American system and while I could sit back here in armchair quarter quarterback for both of their strategy but how they could do it with less pain or more Effectiveness most Americans are broadly on board with that push uh and Trump does deserve credit for starting that conversation but beyond that Trump's policies are basically shaped by whoever flattered him most recently uh and I can't predict that”
China's system cannot recover from its demographic collapse within 10 years because consumption-led growth is now impossible with 100+ million missing people under age 40, the country has aged past any theoretical option (including coercive reproduction measures), and without immigration or rapid cloning, the Chinese system itself will end within 10 years.
“all of the missing Millions under age 40 so not only is consumption Le growth now in possible in the People's Republic they have aged past even the theoretical stage where could press gang women into rape camps to generate a higher birth rate which is something that every once in a while when I'm in Asia people suggest is something that might happen which I might not have a high respect for the Humane levels of the CPC but I've never thought they would go that far but now not even that is an option I mean unless we have like an sudden breakthrough in Star Wars style cloning where you can grow a bunch of 20s somethings with full skill sets in under two years this ends Within 10 years and by this I mean the Chinese system itself this is a system that can't feed itself it can't fuel itself and it no longer has enough people to try to go back to a subsistence agricultural system”
Smart immigration policy now would combine border toughening with new legal avenues for entry. Until that conversation happens, immigration is not part of the solution in traditional sense—only illegal immigration to keep inflation under control, missing out on skills transfer.
“the smart play now would be to have a degree of immigration form that doesn't just toughen up the Border but opens up new avenues for people to come in Legally but until we can have that conversation immigration is not part of the solution in a traditional sense we might be able to bring in bring in wrong toward probably a lot of illegals to do work to keep inflation under control but that's about it we're missing out on what should be right now the greatest skills transfer in modern history”
America's primary rival will not be identified for about 20 years because we must first figure out what the economic model is for post-globalized, post-demographic-collapse world. Consumption, production, investment, and labor are the four pillars of all current economic models, but won't be relevant in 20 years on global basis, so we can't imagine what geography of success will look like.
“I I think we're gonna take about 20 years off from even having that conversation uh we have to figure out when I say we I mean Humanity has to figure out what the econom IC model is for post- globalized post- demographic collapse world and until we know what that is and we haven't really started vestigating that yet we can't imagine what the geography of success for that new model is going to be because whatever it is it can't be based on consumption production or investment those are the three pillars well consumption production investment and labor those are the four pillars of all economic models in the world today and they're not going to be relevant in 20 years on a global basis so until we figure out what that new model is I have no idea”
Poland is interesting because it's demographically similar to Mexico versus Germany—Poland versus other European countries. Poland still has many people aged 30-50, and if they build pro-natalist policy system, they could regenerate population in next 20 years. They have a moment when Germany and Russia fail where they could be 'guiding star of Europe,' but only if they act soon or they'll run out of time.
“I'm interested in Poland right now uh Poland today is kind of like Mexico Poland versus Germany is a little bit like Mexico versus the United States um but whereas a lot of the other European countries have aged out the polls still have a lot of people aged roughly 30 to 50 and if they can build out a Pro-Am natalist policy system the idea that they could regenerate their population over the next 20 years is not Beyond The Pale but if they don't do it soon they're going to run out of time they'll have a moment when Germany has failed when Russia has failed and they're like The Guiding star of Europe at that point but um it's only a moment unless they can get their demographics back up”
The U.S. missile defense system was designed for the Chinese system and while China has added more silos, corruption and theft in Chinese procurement is as big as or bigger than Russian procurement. A Chinese general responsible for maintaining silos stole fuel money and filled rockets with water, making them useless. This is likely not an isolated data point, suggesting hidden problems are probably worse.
“to the degree that the United States has a missile defense system it was designed for the Chinese system and while they have been adding more and more silos we have learned in the last year that corruption and theft within the Chinese procurement system is if anything bigger than what's going on in the Russian procurement system with the nuclear forces being the one that has leaked out the most uh specifically the Chinese General who is responsible for maintaining the silos stole the money that was supposed to go for the fuel for the rockets and just filled them up with water which probably makes Rockets useless I would not be willing to bet the existence of the United States on that fact but there's no way that this is a single data point this is something that is very easy to discover so anything that he was trying to actually hide is probably worse”
The real Russian red line will likely be when Ukrainian forces need to cross into Russian territory proper to physically break up logistical hubs and disrupt launch points for assaults on civilians. The U.S. probably won't permit this current year but it's 'something to start stressing about' as a potential escalation point.
“I am guessing here but I would guess that it will be when Ukrainian forces feel they need to cross the border into Russia proper to physically break up the logistical hubs we're not going to hit that this year but it is something to start stressing about”
Until U.S. political system settles and can have meaningful conversation about immigration, there will be no change in current structure for five years. This is a missed opportunity because now is the time to set up policies to absorb labor and skilled workforces from falling countries—the 'greatest skills transfer in modern history'—and most countries won't be able to benefit.
“until such time as our political system settles I don't think we're going to be able to have a meaningful conversation about immigration in the United States which means we won't probably have a change in our current structure for five years uh it's a missed opportunity because as we see countries Fall Apart around the world now is the time to be setting up the policies so you can hoover up that labor and those skilled workforces and we're not going to be able to benefit from that not a lot of places are uh really the only country I would argue that has kind of made immigration kind of a day in day out part of their system is Canada but even they are experiencing some significant backlash because when you you bring in a large number of people year on year on year for 15 years they all need homes”
When economic models break, political systems always break—there has never been an exception throughout history. China's economic model (mass import of raw commodities and energy, mass export of finished goods to consumer markets) is breaking because end consumer markets are shrinking and trade tensions are destroying supply chains, making political disintegration inevitable.
“when an economic model breaks the political system always breaks there has not been an exception to that throughout history and the Chinese system is based on mass import of raw Commodities most notably energy and stuff they need to grow their own food and a mass export of finished goods to end markets that have consumers well the the consumer Market is now in danger and shrinking and trade tensions are destroying the front end of that as well”
If Democrats win both House and Senate in 2024 landslide, and Biden has no more races to run, we'll find out 'just how economically liberal and incompetent the Biden team can be.' Zeihan was not impressed by Biden, Trump, or Obama economic policy and says it's been a long time since someone who could do math was in the White House.
“if if if we have that sort of just Dynamic blowout then we're GNA find out just how economically liberal and incompetent the Biden team can be I have not been impressed by their domestic Economic Policy I was not impressed by Trump's Economic Policy I was not impressed by Obama's Economic Policy it's been a long time since we had someone who could do math in the White House”
Every day China doesn't collapse is a gift that gives the U.S. a day to get ready for the end of those supply lines. Most low-end manufacturing will come back to the U.S. in time if allowed to move in a free market system because the U.S. has the cheapest electricity in the world (best territory for green tech, cheapest natural gas, cheapest high-caloric coal), but Zeihan's concern is the shock will be severe.
“so I'm of the opinion that every day that China doesn't collapse is a gift because it gives us a day to get ready for the end of those supply lines and we are seeing more and more and more of even this low-end stuff coming back to the United States with I would argue the Gulf Coast being the area that's going to be adding the most not only does it have the really cheap electricity and approximate industrial capacity in places like the Texas triangle the view of environmental production in places like Louisiana the Texas coast somewhat lower than the national average which provides us some opportunity in that space”
The only scenario where China might buy time on a more sustainable path is if Xi died accidentally and the nearly brain-dead people he installed on the Politburo collectively realized they need to find people who can actually do math and run a small town.
“the only scenario I can think of right now where the Chinese might might might might be able to start down a path that's a little bit more sustainable at least buy them a little bit of time is if XI were die to die by accident and all of these nearly brain dead people that he's installed on the poit bureau not because they're competent not because they they're Yes Men because they're silent if they were collectively to come to the realization that they need to go out and job hunt for people who actually can do math and run a small town um that's a lot of ifs to get to a possible then yeah”
It's hard to get a read on Xi because he has conversations with nobody. You can tap phones and hack communications in Russia and get decent view of Kremlin, but Xi has conversations with no one. His decisions are driven by what rare information gets to him and conversations with no one, making him unpredictable and predictions a 'fool's errand'.
“it's really hard to get a read on G because he doesn't have conversations with everybody with anybody so you know you can tap phones and hack fax lines and emails in Russia and get a decent view of what's going on in the Kremlin but she has conversations with no one so it's all guesswork and the fact that his decisions are not driven by what's going on in the world they're just driven by what rare bits of information get into his head and then conversations with no one about the details it it's kind of a Fool's errand to predict”
Biden will win the 2024 presidential election by a landslide because: (1) fewer Republicans than Democrats and Trump has purged business/national security communities from the coalition; (2) Independents showed up in droves in midterms to vote against Trump candidates, and Republicans need 2/3 of independents to win; (3) RFK Jr split the 'batshit crazy vote' Trump thought he had. This is second or third worst electoral defeat in American history, assuming Biden doesn't die.
“uh three three and a half things uh number one there's fewer Republicans than Democrats and so the Republicans have always done well at the national level because the factions that make up the Coalition don't fight among themselves well Trump has not only started a civil war among Republicans he's actually purged some of these factions like the business community and the National Security Community from the Coalition altogether so without all the Republicans in lock step there's no chance of a victory number two people seem to have forgotten what happened during the midterms Donald Trump told Independence that their vote doesn't matter in the general election and that's the only place that independence vote matters uh Trump wants it to be all about the primaries because that's where he dominates and so in elections where he put his finger on the scale and was like really heavily campaigning for specific candidates Independents showed up in droves to vote against those candidates well again fewer Republicans than Democrats the Republicans have never won the presidency without capturing two-thirds of the independent vote they're going to lose the independent vote so now we're not just talking about a defeat we're talking about a route third RF Kennedy Jr Trump thought he had cornered the batshit crazy vote and now it's split so you're talking about a loss of vote even in strongholds and this is before he became a convicted felon so we're looking at the second or third worst electoral defeat for any presidential candidate in American history I mean this is going to be like gold water or Worse assuming Biden doesn't die if Biden doesn't die I reserve the if Biden dies I reserve the right to change my mind”
Both Ukrainian and Russian military strategies are 'very very ugly' but 'not stupid'—Russia can sustain through supply flows and innovative tactics, Ukraine can inflict strategic humiliation through infrastructure destruction and supply interdiction. Both paths can work and lead to different end states.
“both of these things can work uh and both of them are very very ugly”
South Korea's demographics are second or third worst in the world, but 'never sell the Koreans short because they keep rewriting the rules of physics to make things happen.' Despite this caveat, Zeihan expresses uncertainty about their long-term prospects.
“I mean I'll never sell short the Koreans because they keep rewriting the rules of physics to make things happen but I mean their demographics are like the second or third worst in the world”