The End of The World is Just The Beginning: Peter Zeihan

The American-led global system has led to remarkable peace and prosperity — and it is ending.

After World War II, unwilling or unable to maintain a truly global empire of old, the Americans built up Allies, not colonies — which would have been the historic norm. This worked, allowing a truly low cost and safe international trading regime which was subsidized by the US Navy. Supply anywhere could meet demand anywhere — a truly impossible utopian dream. This made sense for the US until the end of the Cold War, and it was continued in the 1990s unipolar world but it isn’t necessary. The threat of a rising China, which is aging rapidly and is heavily reliant on the American led global system too, is overblown. Globalization is over, and it’s time to understand what’s next.

That’s the bulk of geopolitical analyst Peter Zeihan, colorful, crisp and chilling book of realpolitik from last year: The End of the World Is Just the Beginning: Mapping the Collapse of Globalization (He has cool maps and visuals here). Zeihan’s speciality is in geopolitics and demography but he writes with clarity and humor while still retaining a sense of authority. He has his critics but I appreciated his voice. I’ve enjoyed his lectures online.

He’s all about “Geography of Success,” how much where you live determines your outcomes. His view of “deglobization” means the end of large-scale farming and return of widespread famine, he argues, but he bets that North America will do well in the coming decades. Central to this premise is US disinterest. Rather than active US involvement that many found “distasteful,” we’ll move to US disinterest that many around the world will find “terrifying,” he argues.

“Recent decades have been the best time in human history, and we are never going back.”

Below I share my notes for future reference.

My notes:

• “Location matters and which locations matter more changes with the technology of the day”: The territory of today’s Ethiopia was great for hunter/gatherers but was no good for farming
• Early civilizations had rivers (for irrigation, water wheel power to process grain, navigation) near protective deserts and sedentary agriculture (with our own fertilizer), such as Egypt and Middle East): Lower Tigris, Euphrates, Nile, mid-Indus (Pakistan), and to lesser degree upper yellow (north central China) had these qualities. Others starts on Missouri, Seine, Yangtze, Ganges or Kwanza but lacked protective desert so they were always battling. The Roman’s only lasted 500 years while Mesopotamia and Egypt lasted millennia
• The windmill came later and brought labor specialization farther from rivers. Now you wanted tough exteriors (to make invasion harder) and soft interiors (for farming) such as England, Japans, the Ottomans and Sweden
• Wind cultures were more common but less secure; generated a flywheel of skilled labor kicking off technological advancement
• “The first phase of sedentary agriculture kicked in with people more or less parking around 11,000 BCE. Another roughly three millennia and we figured out how to domesticate both animals and wheat. The jump to watermilling finally happened in the last couple of centuries BCE and was popularized thanks to the Greeks and Romans. The grinding windmill took several additional centuries, not becoming common until the seventh and eighth centuries CE. But now history sped up. Tens of thousands of proto-engineers found themselves constantly tinkering with dozens of windmill designs for the benefit of thousands of populated areas. All that nerdwork naturally had spin-off effects on a host of related wind-dependent technologies. One of the oldest wind technologies is the simple, square-rigged sail.”
• Improved sails led to deep water empires like Spain and Portugal that didn’t have to worry about land attacks and removing all the middle men reduced costs of luxury goods driving wealth and innovation, later the island nation of England and others conquered land. England generated Industrial Revolution
• Before 1700, all man’s output was trying to make more efficient use out of muscle, wind and water. Then came coal and then oil. Electricity expanded worker productivity and “Generated light, which manufactured time” by expanding the day. All this required capital systems, so capitalism and communism and fascism emerged
• Slavery entrenched in the US South because poor soil required intensive fertilizing. As the Midwest opened up vast farmland, the south focused on speciality crops that required lots of cheap labor like tobacco and cotton and indigo
• Midwestern small town culture developed because density of uninterrupted farm land justified banks and culture until Appalachia
• Rather than establishing a traditional empire after WW2, the Americans used the Bretton Woods for a new allied world order (a naval power with not big enough army and plenty of land at home to still conquer meant that friendship was better than an occupying force)
• The British took seven generations to industrialize; Since they worked out the kinks, it took Germans 4 generations (and rapid population growth due to less infant mortality and longer lifespans), and in a small contained geography gave rise to Hitler. The Germans perfected the rise. to industrialization. The Canadians, Japanese Koreans Italians and Argentines did it in 2.5 generations, while Spain, Portugal and Greece did it in two. Chinese, Brazilians and Vietnamese flipped in one
• Americans kept global security but that stopped making sense after fall of Berlin War
• In 1700, British woman 4.6 kids, same for German in 1800, Korean woman in 1960, and the Chinese in 1970s; Now all below 1.8 and falling
• “China in 2022 is the fastest aging society in human history”
• US, France, Argentina, Sweden and New Zealand are the only countries that developed but haven’t had birth rates collapse: can they last? And why so few?
• The 70 years especially 1980-2015 were a blessed historical anomaly. (This is a theme of both Robert Gordon’s 2016 book The Rise and Fall of American Growth and Bradford Delong’s Slouching Towards Utopia)
• Warring competition drove innovation: The Romans built roads to carry troops; Hannibal trained elephants to attack. The Mongols got iron stirrups to attack by horse; the Poles invented horse resistant castles
• Feudal and imperial systems were the most complex we got until Columbus set off the interconnected world, first dispatching local feudal lords (who only offered subsistence living). Now suddenly the pie started growing “a world of more”
• Capitalism, socialism and communism (perhaps fascism too) are dominant systems for distributing that pie
• Socialism has never actually been about workers owning the means of production, just that government is part of economic model. Germany and Canada are the best-known well-run socialistic states. It’s a “kaleidoscope” of how involved the state is in the economy
• Communism is just an extreme version of socialism; argues China is more like a fascist corporatism than socialism or capitalism
  • Capitalism: trade equality for growth
  • Socialism: trade growth for inclusivity
  • Communism: trade innovation for stability
  • Fascism: trade popular will for control
• Capitalism and socialism work with democracy but the other two don’t, author argues
• In 2019, for the first time in history, the world had more people aged 65 and over than 5 or younger. By 2030, twice as many 65+
• “Capitalism without growth generates massive inequality”
• In a shrinking world, imperialism and mercantilism might do better than the four other systems of growth but there are “too many guns, not enough boots” to execute and enforce. The British Raj (1858 to 1947) lasted only as long as they stayed technologically advanced over Indians. The US couldn’t occupy even Afghanistan because the tech gap isn’t as big as it once was.
• No country has enough young men to be an occupying force anymore
• Japan’s “desourcing” like Toyotas “build where you sell” allowed it to export production and sales while bringing some money home to keep Japan rich despite its older population. Unlikely others can follow that
• After WWI, millions of veterans returning home brought an over supply of labor and contributed to the Depression. In response, after WW2, the GI Bill put some veterans to work and sent many more to university to delay their spread to labor
• Boomers are so big a population that their departure from the labor force has to shift to labor inflation and shortages; Boomers had a lot of kids the Millennials. (I wrote a story on this)

• Gen x was small and had more single-income households than Boomers and then had Gen Z which js also very small . American Boomers had way more kids than other rich-world boomers
• Improvement tech like smartphones is important but not transformative like transportation tech that fundamentally changed our relationship to space
• Floating transport is so much more efficient than overland: Rome had those famous roads but cost more in 300CE to move grain 70 miles over road than to sail 1400 miles from Egypt to Rome. The barge was important until the “deep water age” of the 15th century
• Industrial Revolution made it cheaper to transport internationally; the American post WW2 Order made it safer (no piracy on their watch) corporate shift from security to efficiency
• Containerizaton! TEUs and FEUs (all ships loaded portside) this uniformity of trade came from the American Breton Woods order
• As ships got more mega, smaller upriver ports became redundant (is Philadelphia big enough?)
• Single metro ports (Brooklyn or London) traded for mega regions (New Jersey, Houston, Rotterdam)
• Total cost of transporting goods: 1% of today’s costs; before industrialization 75%; before deep water 99%
• This transport safety meant geography (river and ocean access) once again changed. Other nations got richer: South Korea, Brazil, India and China excelled where the US Rust Belt and canal-rich Britain fell
• “History has no endgame”
• Big winners of the author’s projected breakdown are those that entered the Industrial Revolution with geography of success including navigable waterways to make return to less efficient smaller regional ports near population centers: US, UK, Japan, France, Turkey and Argentina
• Of the first three civilizations: Mesopotamia was the traders and they used barley but too heavy to transport so they invented the sheckle
• The 90s American tech boom benefited from post Soviet exodus
• The Late Bronze Age collapse is historical term for what Christian’s call exodus
• In present-day Bolivia, the Diego Huallpa silver discovery kicks off the modern world in 1545, author says
• Spanish silver replaced by British gold backed pounds and then by Americans who sold WWI goods to Europe and brought all the European gold they had colonized into Fort Knox. The dollar reigns but they find that gold standard or any asset backed currencies can’t work with rapid growth or total peace, two things the Americans brought. The economic size and reach was far beyond even possible limits for gold backing
• Before 1971, there was never enough money, then limitations became a “purely political question”
• Japanese tokusei debt forgiveness was an old sign that debt purely served the emperor
• That’s the Asian financial model: debt is for political stability not just economic stability
• “China is worried about idle hands not bottom lines”
• The Shale Revolution was only possible because of the world’s new finance debt. Many bets went flat but the risk was worth it because of fiat currency debt bets
• “When capital is cheap enough, even pigs can fly. Once”
• Author argues government has to go back not to 1950s but to 1850s level of services (203)
• “Recent decades have been the best time in human history, and we are never going back.”
• As an example, the Kashagan oil field in Eastern Europe has been nicknamed “cash all gone”, which would never happen with American Order and won’t last
• Titusville Pa was where the first “rock” oil well was discovered, which solved expensive kerosene, depleted whale oil and dangerous methane
• Oil is energy dense enough to carry it in a vehicle
• Pennsylvania and Texas oil powered WW2, whereas other empires had oil in far flung places; Post WW2, the American order established a global trade in oil (with the US navy protecting it; it was economics for security exchange to combat the Soviet empire)
• Climate change happens very unevenly across the world and oil will stay with us a long time, he says
• Argues green tech will make environmental and economic sense in less than 1/5 of the land of populated continents (says construction of green tech often causes more carbon dioxide than saves)
• Green tech takes space, is not dense like cities (a third of US population lives between Boston and DC)
• 95% of humanity gets electricity from power plants less than 50 miles away
• (Author says both oil and green tech future is dangerous so I don’t know why he’d fault someone for pursuing that green tech option
• Pumped storage is cool
• To support full EV autos, we’d need to double electric generating at a time we also want to green the grid. He argues we need to green the grid before expanding it
• Grid storage can shave down daily demand but we don’t have enough lithium to do enough storage for months long seasons
• Conventional power systems cost similar to solar or wind now but just 1/5 of total costs upfront for formal and 2/3 for wind (since fuel costs are zero), which has been fine now but if capital gets harder these systems may be more difficult to price out
• Pirates will be back (state backed and otherwise)
• US energy independence: 15 years ago, the US was still one of the world’s largest net importers and now the world’s largest net exporter. Shale oil creates natural gas as a by-product (we can’t even use it) ; We also have great areas for solar (southwest) and wind (Great Plains). Australia is only big country better suited to green tech (Germany isn’t)
• (Lithium deposits in Australia and Chile)
• Copper age was about getting relatively common copper; Iron Age was about skilled labor. More likely to abduct blacksmiths than conquer mines; Stone, bronze and Iron Age before fall of Roman Empire, Islamic Jonah’s of 622-750 and European dark ages : all slowed technological preservation and advancement
• Black Death: first brought by rats on a boat from Genoese traders fleeing a Mongol attack on Kaffa, to Constantinople which was a major trade crossroads
• 1/3 population died; population density took 150 years to come back. In that time, skilled labor costs went up and trade guilds were develooped to add training
• Knowledge preserved (but not fully implemented) by the Arabs helped form the renaissance
• The minerals necessary for green transition and EVs will require more war than the lil era
• What is always locally available? Low quality coal
• In particular this author’s stance on China comes in stark contrast to Ray Dalio’s book World Order championing China. It is easy to compare Zeihan to a Paul Ehrlich-type figure (who in the 1960s predicted overpopulation would result in mass starvation because he didn’t foresee remarkable agricultural innovation changing). That’s why this stuff is so complex. So what could Zeihan be overlooking? AI? A hold to global norms or truly breakthrough battery technology? Declining population spurring a post Black Death labor and tech innovation?
• Stone to bronze to iron to industrial to digital
• Copper is anti microbial and antiseptic
• Cobalt is only energy dense material that could power rechargeable batteries enough for our green goals (The African country of Congo is responsible for half of it)
• Lithium is energy intensiv, e,art of why a Tesla isn’t very green to produce ; aluminum lightens EVs (rather than steel for safety) but aluminum is much more energy intensive to make than steel
• In part gold has always had value because it doesn’t corrode, it got associated with wealth because of that
• Lead reductions in our systems in the 1970s led to reduced violent crime, and also there’s a related but less agreed-upon argument that lead in Roman aqueducts led to late-stage imperial mismanagement
• China subsidized the world’s processing of rare earth metals since 1980s, absorbing the pollution and giving low cost products for computing and smartphones in digital revolution. But author argues already redundancy in this supply chain because of past China threats at pullbacks
• 80% of high quality quartz comes from North Carolina, base material of the digital age
• “If you lack the industrial inputs, you cannot achieve industrial outcomes”
• The United States will alone have access (like a new Monroe Doctrine) to all material, with its western hemisphere and Australia and strong navy. He argues few could even try: UK, France, Turkey, Japan and Russia
• Central to this premise is US disinterest. Rather than active US involvement that many found “distasteful,” we’ll move to US disinterest that many around the world will find “terrifying”
• The collapse of widespread intermediate goods trade
• The Industrial Revolution gave us specialization (mass production of steel), scale (precision manufacturing) and geography (pier fuels of oil and coal and all fossil fuels)
• The American-led order was so effective that the transition went from big cities to small economies (anyone that had a port and some infrastructure): in 1969, the first full year of containerized service between Japan and California, the volume of trade increased between Japan and US by a quarter;
• “Taiwan was the original land of plastic toys but now makes the worlds most advanced computer chips.”
• Taiwan as ultimate ecosystem: a few world class giants like TSMC benefit by the talent and hyper focused and highly competitive small and value add firms
• China hadn’t gone up value chain and in 3,500 years of empire the Chinese have had the longest period of not losing territory: 70 years right now
• Between Detroit-Windsor: “The single bridge connecting the two cities carries more cargo traffic by value than America’s total trade with all, but its top three trading partners.”
• The US has less wage variation than China and even Europe but it makes up for this with geographic variation
• NAFTA: American market and worker and businesses was traded: We gave up economic dynamism for security control
• 8 in 10 dollars (or pesos) of income generated in North American is from within the continent of Mexico Canada and US, by far the most insulated system in the world.
• North America cheaper and safer and getting better than Asia or Europe as contained manufacturing region, he argues
• Breton Woods: “The United States disadvantaged itself economically in order to purchase the loyalty of a global alliance. That is what globalization is. The past several decades haven’t been American Century. They’ve been in American sacrifice.” (366)
• Author argues Colombia could finally make sense for integration due to better-skilled and larger labor force than Central America but still cheaper labor than Mexico; needs infrastructure
• Author predicts half the world’s population will revert to wood-burning for warmth and energy even though more carbon intensive than coal because they’ll have difficulty sourcing other energies
• Author predicts semiconductors will move to US but though it does high-end chips, can’t do mid and cheap market cheaply (says Mexico doesn’t have the workforce); Difficult for the internet of things to happen with a chip shortage, but Mexico and Colombia will play a role for what chips can happen here
• Labor differentiation: skill set and price point of every single product and intermediate product can range by geography
• Iraqi Kurdistan in 10th BCE where wheat was first grown and “wheat is a weed” because it’s so relatively easy and fast growing it is grown nearly everywhere; wheat-eating societies typically outcompeted non wheaties. Cows in Europe and sheep In Middle East got attention because wheat let them grow many more calories per hour
• Deglobization means the end of large-scale farming and return of widespread famine
• “Desert is death. Temperate is seasonal. But desert plus irrigation is Kablam!… For the era, it was absolutely the perfect geography of success. All of the first three civilizations married the potential of wheat to irrigation to generate the worlds first large scale food surplus is, necessitating pottery to store the surpluses, roads to collect the surpluses, writing, and arithmetic to keep track of the food surplus is and cities full of non-farmers, to eat the surpluses.” (394)
• Empires conquered breadbaskets until fertilizers and other technologies made farming more ubiquitous
• Egypt and New Zealand could grow wheat but instead they specialize on products they can do best, and import cheap wheat: that’s the globalized food order. Everyone specializes
• The industrialized order has enabled global calories grown to increase by a factor of seven since 1945, and allowed population growth in places it would t have supported (like explosion in North Africa). This won’t sustain after end of the order
• EVs don’t work for tractors or oceanic liners because they’re used too much and too far from a power source
• 70% corn and 85% of soy exports come from Argentina, Brazil and U.S.
• Egypt cannot support 100m people in the desert without the American order of globalization and specialized, efficient monoculture farming. Go less efficient and more local and difficult to hit calorie counts, he argues
• Sweet corn takes up less than 1% of US corn. Mostly field corn or dent corn for high fructose corn syrup and feed and ethanol
• International food shipments don’t make sense unless transit is very cheap reliable and efficient (cause soy is cheap per pound compared to gold or metals)
• Basic chemistry of climate change: hotter air can hold more moisture so low humidity areas will fry less rainfall (Australia and desserts) while high humidity will net more rain full (Illinois and also tropics)
• Geography of Success: few places have agricultural regions that get both monsoonal and jet stream rains making drought unlikely; US Midwest (gulf and west to east jet); France, Argentina and New Zealand, all ag super powers
• Beet sugar created by Germans as alternative to finicky tropical cane sugar
• By 2040s millennial investment capital will flood the system again but could be lean for 2020s and 2030s