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

Reading this book reminded me of another business book that made just as much of a splash twenty years ago but preached the opposite. The World is Flat by Thomas Friedman spoke of erasing borders, a level playing field for the entire world where international economic cooperation would increase efficiency and drive down price. This book “The End of the World..” tells us this model is crumbling as the world regresses, walls are going back up. The book argues that the US Navy from the start of the Bretton-Woods agreement at the end of World War Two has propped up this new system but as the trend of looking inward gains steam, America is tiring of doing all the work with little thanks.

This system, in simple words, made countries stop fighting each other in return for guaranteeing worldwide trade and economic prosperity. The Navy would ensure that products could be shipped safely and thus companies were free to chase that cheap labor in less developed countries. The negative for the US was that in doing so we completely gutted our own manufacturing base, sending people’s jobs overseas thus sacrificing it’s own economy in return for peace as well as skyrocketing profits for companies.

In theory this should have been beneficial for everyone but as we’ve seen, especially since the 1970s is that the top 1% has profited while subsequent generations wealth has been in decline versus that of their parents. Thus one of the greatest threats to the international order comes from within: the working class is getting poorer and thus elect a demagogue / populist like Trump who promises “America First.” These demagogues are very good at stirring up anger but are not very good at policy. People in the USA are angry so will elect anyone who promises to “Make America Great” even without any sort of coherent policy. The masses do not want to hear about the complexities of international trade, they just want someone to make it better and the demagogues do the best at that.

In any case, here are the passages that stood out to me in this book:

The world of the past few decades has been the best it will ever be in our lifetime. Instead of cheap and better and faster, we’re rapidly transitioning into a world that’s pricier and worse and slower. Because the world—our world—is breaking apart.

The 2020s will see a collapse of consumption and production and investment and trade almost everywhere. Globalization will shatter into pieces.

Perhaps, but I think it will take a lot more time than that. If it is going to shatter I think that would be at least a 20 year time frame as the consequences *should* be apparent to leadership. But as we’ve seen with the Republican Party they will do whatever necessary to get elected and remain in power, even if it means burning down the entire house.

The Industrial Revolution reduced Spain to a backwater, while heralding the beginning of the English Imperium. The coming global Disorder and demographic collapse will do more than condemn a multitude of countries to the past; it will herald the rise of others.

Smarter powers* didn’t content themselves with sourcing and distribution, but also nabbed ports all along the sailing route so that their cargo and military vessels had places to shelter and resupply.

Midwestern growth also nudged the South into cash crops. Growing indigo, cotton, or tobacco is far more labor intensive than growing wheat or corn. The Midwest didn’t have the labor to pull it off, but courtesy of slavery, the South did.

The South rose on the backs of slaves, it was free labor after all. Now here we are with controversy around “Critical Race Theory” which is true. A good part of the USA was built on slavery but many do not want to hear that. They want to cheer USA and waive flags, not recognize the sins of the past. Also, recognizing the difficult periods of the past do not win elections. Erecting 60 plus flags and wearing red hats that say “Make America Great” do.

The easy movement of people and goods throughout the river network forced Americans to interact with one another regularly, contributing to the unification of American culture despite a wide variety of ethnic backgrounds.

Good point. Humans inherently are still very tribal and stick to their own. Money is the grease that is most effective in overcoming this barrier of bias towards different groups.

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.

Japan’s transformation to a postgrowth system occurred under ironclad American security cover. Tokyo never had to fear for its own physical protection at home. Contemporary America’s disinterest indicates such cover will not be available for most countries.

This continues to this day if you’re paying attention. There is a big news article today “Biden and Kishida to Bolster U.S. – Japan Alliance Amid China’s Growing Power. Amazing to see aspects of the international order put in place after World War II still alive and functioning strongly today.

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.”

One of the main cases for Bitcoin and other crypto. There is nothing backing the fiat system other than “Trust me.” All it takes for cryptocurrency to succeed is the belief of a critical mass of people. That’s it!

The specific focus was less on the repair and expansion of physical infrastructure and industrial plant than on maximizing market share and throughput as a means of achieving mass employment. Purchasing the loyalty and happiness of the population—who rightly felt betrayed by their wartime leadership—was more important than generating profits or building stuff. That a loyal and happy population was pretty good at building stuff didn’t hurt.

Unfortunately the jobs that made “mass employment” went overseas in the chase of greater profits. The citizenry were sacrificed on the alter of corporate greed.

Japan crashed in 1989 and took thirty years to emerge from under the debt. The recovery took so long that Japan lost the entirety of its demographic dividend and is unlikely to ever have meaningful economic growth again.

Yep, still the case in Tokyo now. I was shocked to learn the average salary is only $60K for a Japanese “salaryman.” The average comes in a bit worse in the USA at $57K.

Cyptocurrencies like Bitcoin are not backed by a government, are not readily exchangeable, are not useful in making payments, have no intrinsic value, and are primarily generated by Chinese magnates seeking an end run around sanctions, yet the combined value of all cryptos is in excess of $2 trillion. My personal favorite is something called Dogecoin, which was literally formed as a joke to highlight how idiotic crypto investors could be. At times the total value of dogecoins has topped $50 billion. All of this and more is textbook overcapitalization of a nearly Chinese scale. When capital is cheap enough, even pigs can fly. Once.

The author fails to see the future. Crypto will be able to be used to make payments on a massive scale in the future. Not only that but many crypto coins are programmable meaning they can do things “dumb fiat” cannot. The author is obviously very intelligent in geopolitics and international trade but he fails to see the future of crypto just as many smart people failed to see how computers would become part of our lives and change the world. Crypto will change the world as well, most people just cannot see it yet.

By the early 1970s, economic growth back at home had reached the point that America’s own energy demands outstripped its production capacity. Not only could the Americans no longer fuel their allies, but they couldn’t even fuel themselves. In many ways it was the same problem that ultimately gutted the gold standard: success begot use begot more success begot more use begot failure. The Arab Oil Embargos of 1973 and 1979 turned what had until then been a hypothetical discussion in America into brass tacks. When events transpired that threatened oil access, the Americans responded as if the end was nigh because, well, it was. 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.

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.

Here it is: American jobs were sacrificed to achieve security control. Bye-bye American manufacturing and hello corporate profits. I think we’re all still waiting for that “Trickle Down Economics” promised by Raegan aren’t we?

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.

Categorized as Books

By Mateo de Colón

Global Citizen! こんにちは!僕の名前はマットです. Es decir soy Mateo. Aussi, je m'appelle Mathieu. Likes: Languages, Cultures, Computers, History, being Alive! \(^.^)/