Geopolitics, Innovation, and Deglobalization With Peter Zeihan
What this covers
- - The world is currently experiencing a multitude of historic events, from a global pandemic to the confounding invasion of Ukraine, to an ever-increasing rise in climate-related disasters. Here to help us unravel the influence of these events, as well as broader geopolitical trends on innovation, is a critically acclaimed author and geopolitical analyst, Peter Zeihan. His latest book The End of the World is Just the Beginning: Mapping the Collapse of Globalization looks into the wave of deglobalization the world is currently experiencing and what this means for the future of energy, finance, manufacturing, and innovation as we move through the coming decades. Today, you’ll hear an overview of Peter’s geopolitical worldview, how he expects deglobalization to affect innovation in the US and abroad, as well as some of the challenges facing green tech and its applications. We also delve into how authoritative governments can limit connection in the modern world, why nuclear power is a necessary part of our global future, as well as the merits and shortcomings of a decentralized currency like Bitcoin.
Key Points from this Episode - Get to know today’s guest Peter Zeihan, Geopolitical Strategist and author. - Introducing Peter’s latest book The End of the World is Just the Beginning. - An overview of deglobalization and depopulation in the context of the last century. - Peter’s thesis of the macroeconomic and technological impact of the end of deglobalization. - The types of terrain where autonomous electric trucks will have the biggest impact. - The countries expected to benefit most from autonomous electric trucks in their supply chain management. - The three technological revolutions that shifted society’s relationship to its economy and geographic positioning. - Peter’s expectations around deindustrialization in the next two decades. - Examples of how authoritative governments can limit global connection with the outside world. - The challenges of sourcing more raw materials for green energy. - How green tech is affected by geopolitics. - Why nuclear power is crucial for the future of global energy. - Peter’s views on Bitcoin and its shortcomings.
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Zeihan argues that deglobalization and depopulation are simultaneously unwinding the 75-year post-WWII security arrangement underwriting global trade, making complex supply chains unviable and forcing countries to regionalize manufacturing and energy systems, while technology cannot overcome these structural constraints.
- Globalization was always a US security strategy for the Cold War, not economics; it ends as isolationist politics take hold
- Demographic collapse (fewer working-age people globally) eliminates the consumer base and labor pools that enabled complex supply chains
- Technology advancement depends on the industrial base, energy, and global connectivity that are all breaking down simultaneously—it cannot substitute for these fundamentals
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The 2020s is the decade when global demographic collapse becomes irreversible; this was always predictable from the moment Gen X was born smaller than the Baby Boomers, with Millennials even smaller in most of the world.
“we've always known that the 2020s were the decade when we have a demographic bust globally that is irreparable and irrecoverable this was always come it's been coming ever since the gen x was born because everywhere in the world gen x's are smaller than the boomers and in most of the world the millennials are even smaller”
Global industrialization over the last 75 years has moved populations from farms to cities, freeing up child labor on farms but making children expensive to raise in cities, which depressed fertility rates and created a global demographic collapse where the advanced world now has more people in their 60s than in their 50s, 40s, 30s, etc.
“when the united states allowed global trade everyone could access all the capital and technologies and resources of the world so the whole world started to industrialize at a breakneck pace and when you industrialize you move the town and so on the farm kids are free labor in town they're just really really expensive pets you do this for 75 years and we now have a good chunk of the world the advanced world that has more people in their 60s than their 50s and their 40s and their 30s and 10s and so on”
Denmark is 'cheating' on its renewable energy statistics by building many wind towers but still sourcing the majority of its power from the European grid, rather than operating as a standalone national system.
“and that i'm not counting the cheating that places like denmark are currently doing where they have a lot of wind towers but they still source the majority of their power from the european grid i'm talking about if you're doing a standalone national system”
Germany's strategic mistake was shutting down nuclear power in pursuit of renewable energy, not moving away from coal; Germany now uses more coal than ever, relying on lignite as its primary fuel source because of flawed green energy policy.
“so they didn't move away from coal they didn't move away from coal they're using more coal than they've ever used and that was before the war they now get uh their single largest fuel source is lignite their number two source is coal their big mistake was shutting down nuclear”
Small ships cannot make cross-oceanic trips and lack the range; as soon as commercial vessels face piracy or conflict, maritime insurance industry withdraws coverage and no one enters those ports, as seen in the Black Sea currently.
“small ships can't make cross-oceanic trips they just don't have the range two more importantly as soon as commercial vessels come under fire the global maritime insurance industry cuts coverage for those areas and no one goes into those ports we're seeing that in the black sea right now”
Zeihan predicted in Accidental Superpower (written ~2013-2014) that Russia would invade Ukraine by 2022, making specific long-range forecasts based on geopolitical structural analysis.
“i think it's in uh unintentional superpower or accidental superpower accidental accidental superpower in accident i love how you're doing this so i have to say the name over and over so people remember this yeah no no you you you actually called that russia was gonna gonna invade ukraine and not just called it but said hey by by 2022 that's when they have to do it”
The 70-year period of hyper-growth and hyper-technological advancement stops now because tech development requires large pools of young, bright workers, global connectivity to link them, and abundant capital—all of which are breaking down simultaneously.
“this 70 year period we've been in where it almost seems like hyper growth and hyper technological advancement because it has been that way that stops now tech development requires scads of young workers who are very bright the ability to connect them all and scads of capital to pay for the research the operationalization and the implementation once the baby boomers retire the money goes away and as de-globalization breaks those connections among workforces goes away”
Globalization as a system did not exist until 1945; before that, competing imperial systems kept resources, labor, and markets within their own borders, which ultimately generated the world wars.
“we do not have a history of trade as a species until really 1945. we had a series of competing imperial systems before that that went after resources and labor and markets and everything but they kept everything in house that ultimately generated the world wars”
Baby Boomer labor shortages will drive labor inflation locked in for at least the next decade, removing the specific software engineering shortage Brett mentioned as Zeihan predicted.
“baby boomers are leaving the market that takes a lot of blue collar that takes a lot of trucking and agriculture away gen xers are a small generation with low labor participation rate so that means labor inflation is locked in for at least the next decade”
Greater inequality will emerge not just within countries (via automation) but between countries—those that can maintain the infrastructure and capital for digital systems will pull away from those that cannot.
“i see not just rising inequality because of more automated systems within countries i see greater inequality between countries between the countries that can pull this off and the ones that can't”
Nuclear power is 1950s technology that should be improved; it has a simpler supply chain than solar panels even accounting for non-proliferation concerns, making it more viable in a deglobalized world than distributed renewables.
“on nuclear it is 1950s technology we should improve it obviously but i i think that nuclear is going to be a bigger part of the future than a lot of people think because believe it or not its supply chain is simpler even with non-proliferation concerns it's simpler than it is for solar panels”
To move from oil-based transport to electric vehicles, you must replace one oil supply chain (manageable with 5 key suppliers) with 13 new supply chains (requiring 60 countries), and if you lose access to any of them, the entire system collapses.
“we know we have to deal with iraq and iran and venezuela and russia it's a supply chain that's awkward and painful sometimes but we understand it if you want to move to ev you have to replace the oil supply chain system with 13 more and we have to deal with 60 countries instead of five and if we lose access to any of them the whole thing collapses”
When depopulation is combined with deglobalization, the concept of global complex supply chains goes away, the idea of a single price for oil disappears, and the idea that we can feed eight billion people disappears.
“you add depopulation to deglobalization and the very future of trade period has to change the concept of global complex supply chains goes away the idea of a single price for oil goes away the idea that we can feed eight billion people goes away”
The United States will navigate deglobalization relatively well because it is a net exporter of oil, the world's largest exporter of foodstuffs, and located in the Western Hemisphere which is demographically and resource-access-wise resistant to the worst impacts compared to the Eastern Hemisphere.
“for the united states this broadly works out the united states is a net exporter of oil and while we will absolutely have to retool some of our refineries and the price balances we're used to for refined products is going to shift we can get through this because we're going to be doing it in an environment of a saturated market uh we don't use a lot of russian crude uh we never did and refineries have been moving bit by bit in this direction for 15 years because of the shell revolution anyway to run on what is local so we'll be okay there we're the world's largest exporter of foodstuffs we'll be okay there and we're in the western hemisphere which is largely maybe immune is not the right word but certainly heavily resistant and atypical compared to the eastern hemisphere in terms of population structures and trade patterns and resource access so the united states will have some bumps on the way but five years from now we're going to be in a better place than we are now”
The United States proposed after WWII to use its navy to guarantee that all countries could trade with any partner and access any market, in exchange for those countries lining up to absorb Soviet aggression during the Cold War—this was a security plan, not primarily an economic one.
“at the end of the war the americans proposed that they would use their navy so that everyone could go anywhere at any time and interface with any market partner with any foreign country participate in any supply chain and the united states would open its market if in exchange everyone would line up shoulder to shoulder not behind us or with us but in front of us to absorb any ammo that happened to come in from the soviet union we purchased an alliance to fight the cold war that's globalization it was always a security plan for the americans not an economic one”
Companies that refused to diversify or reshore manufacturing back to North America during COVID are now severely disadvantaged, especially because Baby Boomer retirement is taking away skilled labor at the same time reshoring needs to happen at scale.
“the companies that were unable or unwilling or just didn't believe it uh during covid and refused to diversify or reshore things back to north america they're so screwed uh because now we're at that point demographically where the baby boomers are retiring and that's taking our biggest chunk of skilled labor with them”
There have been only three technological revolutions in human history that changed a society's relationship to its economy and geography: sedentary agriculture, deep-water navigation, and the industrial revolution. The digital revolution is real but dependent on the industrial revolution and is not a fundamental quantum leap beyond it.
“there have only been one two three technology three technological revolutions in human history that have actually changed the relationship of a society to its economy and a society to its geographic positioning sedentary agriculture deep water navigation and the industrial revolution the digital revolution is real it is changing many things about how we live and how we earn income but it is dependent upon the industrial revolution it is not a fundamental quantum leap beyond it”
Zeihan agrees that software transmissibility is meaningful, but is concerned that the 'building blocks' that allow digital systems to maintain coherence (energy, physical infrastructure, stability) are being challenged, which will shrink the pool of places where digital tech remains relevant.
“i think it's very meaningful in systems that can maintain a degree of coherence i'm concerned that the building blocks that of what allows that coherence themselves are being challenged and that's going to shrink the pool of places where this is relevant”
China imports 85 percent of its oil, with 85 percent of that coming from the Persian Gulf; the United States is no longer there to keep those shipping lines open, so China faces famine because it also imports 85 percent of the materials that allow it to feed its population.
“the chinese import 85 percent of their oil 85 of that comes from the persian gulf and the united states is no longer there to keep the lines open they import 85 percent of the stuff that allows them to feed their population so they're looking down famine”
In a deglobalized world with regionalization of manufacturing, supply chains will fragment into regional systems with minimal connections between regions, not form a resilient mesh network as Nathan suggests.
“this scenario you're talking about is a renationalization or at least a regionalization of manufacturing i agree we're going that direction but there's not going to be a lot of connections between the regions”
Silicon Valley will persist, but it will not have the global network it used to have due to de-globalization, so everything is going to slow down.
“silicon valley will still be there but it won't have the global network that it's used to so everything is going to slow down”
Even though digital platforms enable connections across borders (Facebook, Zoom, social media), government information control systems—digital 'kill switches' at internet cable chokepoints—have been deployed by authoritarian governments (Russia, Egypt) and render these connections fragile and dependent on government tolerance.
“every authority authoritative system in the world has done some equivalent like that and so the degree to which you can have honest direct open globalized if you will connections is a much smaller part of the world than you might think and it is dependent upon governments feeling secure enough and cultures being secure enough in their identity to not limit the digital connections between them and everyone else”
Green energy technologies (wind, solar, EVs, e-trucks) require an order of magnitude more materials than conventional technologies, with highly fragmented supply chains (60 countries) sourced from uncomfortable places, making decarbonization impossible in a deglobalized world.
“whether you're looking at wind or solar whether you're looking at evs or e-trucks the materials that you need you're talking in excess of an order of magnitude more in order to build the stuff compared to conventional tech so for example your conventional car has about two pounds of copper maybe five or six pounds of nickel your average electric car needs geez 130 of each”
The last 75 years of hyper-growth and technological advancement were possible because of a unique macro-strategic environment where capital, labor, energy, finance, and technology could be accessed from anywhere and go anywhere—breaking this system will prevent broad-based technological advancement, though some countries like the US may still pursue innovation.
“why do you think about why we've been able to do what we've done for the last 75 years we've had a change in the macro strategic environment and that's allowed access from labor or energy or finance or tech from anywhere in the world to go anywhere else the whole world has been a single system and the economies of scale have been massive that's now breaking down now will the changes you're identifying not happen not what i'm saying i'm saying that they can't be broad based”
Germany is the 'shining example' of how green tech fails; it has built 155 percent of peak demand in wind and solar generating capacity but only generates about 7 percent of actual electricity because Germany is neither sunny nor windy, and it now uses more coal than ever before, including lignite as its single largest fuel source.
“i would hold out germany as the shining example of how green tech doesn't work in most places because they've built out a hundred and i think they're up to 155 percent in terms of generating capacity 155 percent of their peak demand in generating capacity from wind for sol and wind and solar but only generates about seven percent of their actual electricity because germany is neither sunny nor windy”
Only a handful of countries have sufficient renewable energy resources to theoretically power themselves on 50+ percent renewable electricity without external dependencies: Australia, United States, Mexico, Britain, Denmark, Argentina, and Chile.
“with today's technology you know it might change in time well it will change in time uh with days technology we're talking australia the united states mexico britain denmark assuming they can get their head out of their asses argentina and chile those are the only countries in the world that have a good enough green tech solar and wind profile to theoretically get more than half of their electricity”
Zeihan notes that with autonomous truck convoys, cartel dynamics in Mexico and the United States could change significantly due to altered logistics control, but expects manufacturing to instead co-locate with population centers, making long-haul freight (autonomous or otherwise) less relevant.
“i will underline that in that scenario you're going to have some very interesting evolutions in the cartels in the united states in the united states not so much because either you're in california where the truck the traffic is too bad for convoys or you're in the midwest where rail and water works better um i would expect i mean we're talking here about a transformation of distribution systems for for this to happen and i'm not saying that can't happen i'm not saying that's not going to happen but in the future i see i see manufacturing going to be co-located with population centers”
A hypothetical currency with fixed supply (predictable and unchangeable rules) would be preferable to fiat currencies controlled by central banks whose policies hurt dollar-dependent emerging markets by pursuing US domestic interests.
“imagine that there is a currency that has a fixed supply imagine if there if the u.s was going to say you know we are going to have this other thing called the trawler or a non-dollar asset call it a i don't know coin or whatever they guarantee it but somehow everybody can trust them they know they're it's statistically guaranteed that there's a fixed supply... the foreign government like a problem with the dollar for emerging markets is that you know the dollar supply is uh controlled to the interest of the us domestic economy uh and often in a way that negatively impacts other dollar sensitive or other dollar dependent economies”
Electric vehicles require an order of magnitude more raw materials than conventional vehicles; a conventional car needs about 2 pounds of copper and 5-6 pounds of nickel, while an EV needs 130 of each, plus many other specialty materials with concentrated global supply chains.
“whether you're looking at wind or solar whether you're looking at evs or e-trucks the materials that you need you're talking in excess of an order of magnitude more in order to build the stuff compared to conventional tech so for example your conventional car has about two pounds of copper maybe five or six pounds of nickel your average electric car needs geez 130 of each”
Russia and Egypt both deployed internet 'kill switches' at physical cable chokepoints to centralize control over information: Egypt initially allowed open digital connections which enabled the 2011 revolution against Mubarak, then reversed course and cut the two undersea cables, allowing the military to retake control.
“so very short version uh the mubarak dynasty were a bunch of and so when the people rose up against it the military stood back and made sure that all the digital avenues were open and it resulted in the mubarak fall two years later the military was like we don't like what's replaced it so they cut the cables linking egypt to the rest of the world there were only two and they controlled the information space and they were able to take over very easily about a year after that the russians came to egypt to find out how it was done so then the russians went and put digital kill switches on the four cables that go in and out of russia”
European integration of Ukraine's electricity grid in 1.5 weeks (normally a 5-year project) was one of the most impressive technical feats of the last decade, demonstrating what is possible under duress when traditional procurement timelines are bypassed.
“one of the most impressive technical feats i've seen in the last decade is the europeans linking the ukrainians up to their in their electricity grid in like a week and a half that's normally like a five-year project”
Starlink satellite internet could theoretically bypass information controls and provide connectivity independent of terrestrial cables, but the counterargument is that receivers must exist on the ground and require government tolerance; Ukraine is an exception, but most authoritarian systems will prevent Starlink deployment.
“the technology of the moment the technology of the moment you have to have the receiver so again you have to have a system that is okay with that so in the case of ukraine yeah they're totally okay with it and one of the most impressive technical feats i've seen in the last decade is the europeans linking the ukrainians up to their in their electricity grid in like a week and a half”
Only about 10% of the U.S. population has sufficient solar intensity (roughly from central Texas to Los Angeles) to power a house on solar alone; six kilowatts of solar takes three days to charge a Tesla without using any household power.
“what you described with having a house with solar and a battery system that might work for about a tenth maybe maybe a tenth of the us population we're the first world country with the best solar profile but if you're not in a kind of a belt from central texas to los angeles roughly you're not going to have enough solar intensity to be able to power a house also remember that if you've got a six kilowatt solar system which is about as big as you can put on most houses it's going to take three days to charge your tesla assuming you're not using the power for anything else”
Iran has been banned from satellite TV forever, yet apartment buildings have satellite dishes on rooftops, showing that information control is imperfect and people will use technology to evade it; Starlink receivers are smaller than these dishes, making evasion easier than ever.
“so you can see an apartment building has all the satellite tv dishes on top right and those are much bigger than a starlink receiver is uh and so it it certainly seems possible that um kind of the great firewall in china that you know the information controls in russia will come under at least erosion from the fact that there's an alternative mechanism by which people can be connected”
Bitcoin is useful for moving money out of a country when banking systems fail (as in Ukraine), but this is not a systemic currency property—it is a niche use case for emergency capital flight, similar to money laundering.
“you accept that that it's useful to have a money that is robust to for instance an entire banking system getting shut down or or the local currencies getting into the scenarios where it is useful or not good enough for it to be used regularly in any sort of civilized system what you basically just described as money laundering”
China is the country Zeihan is most concerned about; when de-industrialization begins, cities become 'death traps' and populations will have to leave cities and return to subsistence agriculture to survive.
“the country i am bar none most concerned about is china that simply aren't going to have access to the materials that they need to continue in a modern industrialized lifestyle and if you start to de-industrialize cities are a death trap and so you're going to see the cities in these areas to a degree empty so that people can go back to at least somewhere where they can eat”
60 percent of cobalt comes from one place, the second largest source just went offline (Russia due to Ukraine war), and Russia is essential to the green transition for almost every material needed, making the green energy transition impossible without Russia.
“you know 60 of the cobalt comes from one place and the second biggest source just went offline in russia so while we can't have inexpensive oil without the russians we absolutely cannot have the green transition without the russians and that plays for almost every piece of everything in the western hemisphere to a degree this is less true because a lot of those raw materials are sourced here or maybe in australia”
Manufacturing is the second leading sector in deglobalization because supply chains are so complicated and complex; the Chinese are now panicking about supply chains because their vaccine doesn't work so they can't avoid COVID lockdowns, and they have two back-to-back hyper-populist US presidents (Trump and Biden) pursuing decoupling policies.
“the other one is manufacturing because supply chains are so complicated and complex and we started seeing that three years ago actually with covid and with the rising trade tensions with the chinese we now have the chinese actively panicking about supply chains because they can't not do covet lockdowns because their vaccine doesn't work and they now realize that they've had two american presidents back to back that are hyper populist and everything that trump said he was going to do biden is actually turning into policy so that decoupling we've started musing about a few years ago is happening at light speeds now”
Bitcoin is being used in banned countries despite prohibition because it is 'resilient' to government control, and governments trying to shut it down are actually strengthening it by proving its censorship resistance—this is part of its value proposition.
“the fact is it's still being used in those places despite the fact that it's been banned the bitcoin system is actually resilient and possibly strengthened by government attempts to shut it down that's that's part of its value proposition”
Half of Tesla's recent sales in China were lithium iron phosphate (LFP) batteries, which do not use cobalt; Tesla can achieve good range on LFP due to efficient drivetrains and power electronics, while most other manufacturers cannot, placing Tesla three to four years ahead in cost-adjusted range.
“half of i think that's nathaniel correct me if i'm not half of tesla's sales in this last quarter were lithium iron phosphate so uh don't have those itty-bitty itty-bitty itty-bitty cars in china tesla doesn't sell itty-bitty cars so they they they're doing china that's that's the lithium-ion battery yeah well okay it's a model three though it's not a different footprint”
Autonomous trucks could theoretically cost-compete with rail freight, but only in mountainous regions where rail is infeasible (slopes > 1 percent); Mexico is identified as the country that would benefit most from autonomous truck delivery.
“uh you can't build rail lines uh to transport large amounts of cargo where the slope is any more than one percent uh so the competitive advantage you'd be seeing for trucks are going to be in places that are all already have to be truck centric i would expect the single the country where that could potentially benefit the most is going to be mexico”
The idea that technology can change energy sources is fundamentally disagree-able to Zeihan, who asserts that technology is dependent on the industrial system and does not create substitutes for fundamental physical inputs.
“i'm gonna disagree with you completely on that point... well technology's at the top of the pyramid for a modern economy foods at the bottom then agriculture then industrial materials then you get into things like manufacturing and finance and if you don't have all of that the tech doesn't happen”
Technology is positioned at the top of an economic pyramid, with food at the bottom, then agriculture, then industrial materials, then manufacturing and finance—tech does not function if energy and food are compromised.
“technology is at the top of the pyramid for a modern economy foods at the bottom then agriculture then industrial materials then you get into things like manufacturing and finance and if you don't have all of that the tech doesn't happen tech is something that is added on top that does not function if you don't have energy or food or manufacturing”
Software and digital products, once developed, can be transmitted anywhere in the world instantaneously and are thus exempt from supply chain constraints; this gives technology a unique advantage over physical goods in a deglobalized world.
“once a piece of software is developed no matter where in the world it's developed you can sell it anywhere right and so an advance in software uh is something that is transmissible anywhere in the world instantaneously regardless of whether or not it has electricity”
The dollar has structural advantages (controlled by a single sovereign, manipulated only to serve that sovereign's interests) that cannot be replicated by any decentralized or blockchain-based currency; the dollar or something like it is the only viable global trade currency.
“the problem is we have yet to find anything better and i would argue that that's never going to be something like bitcoin we actually have found something better yeah it's just you haven't you haven't come to terms with it yet okay okay we are yeah i hear that a lot from people who really like bitcoin you should read the white paper”
Renewable energy paired with battery storage systems, potentially integrated with Bitcoin mining, could create resilient, decentralized energy systems independent of grid interconnects, allowing self-sovereign individuals and communities to operate independently of state energy systems.
“there's one of the really provocative vectors of technology right now is there are a set of technologies that i i feel like are our resilience and decentralized building and so i'm going to lead us into cryptocurrency here in a moment but starlink is one of them i think that if you think about kind of your concerns around the the access to energy if you are pairing battery systems with renewable energy potentially integrated with bitcoin mining to to make the economics work then you can get much more um kind of um resilient um kind of energy systems that that aren't dependent upon kind of interconnects with other”
Everyone outside the United States is in a much worse position; East Asia's primary source of income is manufacturing, which will relocate away from the region because East Asian countries lack sufficient 20-, 30-, and early-40-something consumers to buy the goods they produce.
“everybody else is so screwed the primary source of income for east asia is manufacturing and a lot of that's going to go away because the east asian countries don't have sufficient numbers of 20 somethings and 30 somethings and early 40-somethings that people who consume to buy what they produce so when those supply chains relocate there's nothing left”
The US will experience de-industrialization over the next 20 years as trade breaks down and access to key materials (oil, natural gas, copper, iron ore) becomes impossible for regions dependent on international trade.
“i would argue that we're going to see a great deal of de-industrialization around the world in the next 20 years... places that depend upon international trade to get the building blocks of modern society oil natural gas copper iron ore and so on we're entering a period of abject shortage as global trade links break down”
Zeihan claims he has solar on his house (Colorado at 7,500 feet with good solar potential) and asserts that the same solar panels put in Ontario would generate only 18 percent of the electricity, demonstrating that geography limits renewable energy feasibility.
“you know i live in the highlands of colorado i'm at 7 500 feet my solar panels do great if i were to take those same solar panels and put them in ontario they would generate 18 of the electricity that i get here right”
The transition to on-demand, localized manufacturing is happening right now because Chinese ports (Hong Kong, Shenzhen, Shanghai) are offline due to zero-COVID lockdowns, forcing companies to re-evaluate supply chains immediately.
“well right now hong kong shenzhen and shanghai are offline we don't know when they're going to come back and this is the new normal for china because they don't have a vaccine so anyone who hasn't already moved their manufacturing is just absolutely getting beaten about the head and shoulders right now so what you're seeing what you're talking about there that transition is happening right now”
Energy is the leading sector in deglobalization because it is so sensitive to disruptions and demand is inelastic; Zeihan expects the majority of Russian oil to fall off the market within the next couple of months.
“the leading wave was always going to be one of two sectors energy because it's so sensitive to disruptions and demand is inelastic and we're definitely we're on the leading edge of seeing that we haven't gotten there quite yet i'm expecting the majority of russian oil to just fall off the market within the next couple of months”
Trump sped up deglobalization, Biden sped it up more, COVID really did a number on it, and the Ukraine war is a hard stop—the old era of globalization is already gone.
“we are trump sped things up a little bit biden sped them up more covid really did a number on it and the ukraine war is a hard stop so the old era is already gone”
Since the Cold War ended, every US election has elected progressively more isolationist and populist presidents, with Biden being more populist and less of a globalist than Trump, showing this is a trend not an aberration.
“in the last seven elections since the cold war ended we've elected more and more isolationist and populist country or presidents and biden is the culmination of that he is more populist and he is more or less of a globalist than even trump was this isn't an aberration this is a trend”
Bitcoin has been banned in 10 of the top 20 economies; in terms of carbon intensity, Bitcoin has negative value if a carbon tax is ever implemented; Bitcoin is not productive and adds nothing to the real economy.
“it's already been banned in 10 of the top 20 economies in the world and in terms of productivity oh my god to generate it you're talking about something that if we ever get a carbon tax has a negative value”
Bearer assets (physical assets you can carry across borders under $10,000 without reporting) have always been currency alternatives, but the US government has criminalized their use through anti-money-laundering frameworks; Bitcoin is being used for the same purpose but is being banned by governments.
“it's not money laundering it's it's a bearer asset as in if if i bear an asset if i have right now a dollar bill is a bearer asset so if i cross a border with i think it's less than ten thousand dollars that's not money laundering that's me moving with my bearer assets to another country”
For a global trade currency to work in a deglobalized world, it must be: large (liquid), liquid, and controlled by an entity that does not regularly manipulate it—Bitcoin is not any of these things.
“if we're moving into our world where trade breaks down what you need for a global trade currency is something that's large something that's liquid and something where the controlling body of the currency does not regularly manipulate it so it can be used with a degree of confidence that's not bitcoin”
Zeihan dismisses the entire vision of self-sovereign, energy-independent individuals with decentralized renewable systems, Bitcoin, and Starlink in a single phrase: 'i don't think anything you said in the last 30 seconds is going to happen.'
“i don't think anything you said in the last 30 seconds is going to happen”
Manufacturing will co-locate with population centers in the future due to just-in-time manufacturing and 3D printing capabilities, reducing ton-freight-miles by over 95 percent and fundamentally changing distribution economics.
“i would say that we're having seen a quantum leap in the move in that direction right now hong kong shenzhen and shanghai are offline we don't know when they're going to come back and this is the new normal for china... instead of like hey i'm relying on this thing to successfully ship from china by two days from now because it's part number 500 of my 500 part thing that i'm going to plug in right at that time instead i have like actually on site when i need it i press the button i get the thing off the line”
Millennials are the least skilled generation ever for their age, due to either fitting negative stereotypes or entering the workforce during the 2008 financial crisis and all getting fired; Gen Z (Zoomers) are anti-social, raised by Gen X to be hyper-competitive, and want only to code—their labor supply will solve tech skills shortages.
“the millennials lost three to five years of expertise either because they meet the negative stereotypes or because they entered the workforce just in time for the financial crisis and all got fired at the same time either way they're the least skilled generation we've ever had and that's where you're feeling the pressure in terms of software because they're just not skilled enough for their age but the next generation down the zoomers they're anti-social they were raised by gen x they were told that you had to be better than everyone else if you wanted to survive their dream job is to live in a closet coding it's the only job they want”
The current distribution system model cannot be used to evaluate the economics of a fundamentally different distributed manufacturing model; current data would be obsoleted by the shift to on-demand, localized production.
“i'm not saying what you're saying is wrong i'm saying you can't use any of the data we have for our current distribution system to apply that not to that model because that model fundamentally obliviates the old system”
Autonomous electric vehicles cannot achieve cost parity with rail for freight because a typical rail line can transport 6,000 containers, which would be extremely difficult to replace with trucks; terrain limitations make trucks competitive only in non-flat regions where rail cannot be built.
“that's that's tough i mean your your average rail line can take 6 000 containers so to be able to replace that with trucks i'm i'm going to call that a little squishy i don't know one way or the other”
Zeihan has a solar system on his house and believes the climate change data, but is a skeptic on the specific technologies (wind, solar, EVs, e-trucks) that the world has latched onto to fix the problem.
“well let's start with battery systems green tech in general and just to establish my bonafides here i've got a solar system on my house i believe in the climate change data i'm not i'm not a skeptic on that uh i'm a skeptic on the technologies that we seem to have all latched on to to fix it”
Artificial intelligence and code completion tools (like OpenAI's Codex) will improve software engineer productivity significantly, helping to address software engineer scarcity without requiring global labor arbitrage.
“with advances in artificial intelligence the reason we are uh kind of bullish on software engineering supply call it is because kind of code completion software like what's released by openai codex is only going to get better and so the productivity of the average software engineer is going to improve”
Zaihan categorically rejects the idea that battery systems, renewable energy, Bitcoin mining integration, and resilient decentralized energy systems will happen; the technologies are not at the required stage of development.
“i don't think anything you said in the last 30 seconds is going to happen oh okay start which one which one is least likely”
Bitcoin is 'a dumpster fire' that emerged during an environment of cheap capital (low interest rates and abundant Baby Boomer investment capital), will not persist as rates rise and Boomers retire and stop investing, and cannot serve as a global currency because it is not a store of value, not a method of exchange, not readily shiftable to the real economy, and dependent on the traditional financial system for access.
“bitcoins a dumpster fire that's uh i mean what you described with having a house with solar and a battery system that might work for about a tenth maybe maybe a tenth of the us population”
Software engineer labor shortages will disappear soon because baby boomers are leaving the market, taking blue-collar labor out, and the next generation (Gen Z, or 'Zoomers') are anti-social, raised by Gen X to be competitive, and have coding as their dream job.
“oh why so baby boomers are leaving the market that takes a lot of blue collar that takes a lot of trucking and agriculture away gen xers are a small generation with low labor participation rate so that means labor inflation is locked in for at least the next decade uh the millennials lost three to five years of expertise either because they meet the negative stereotypes or because they entered the workforce just in time for the financial crisis and all got fired at the same time either way they're the least skilled generation we've ever had and that's where you're feeling the pressure in terms of software because they're just not skilled enough for their age but the next generation down the zoomers they're anti-social they were raised by gen x they were told that you had to be better than everyone else if you wanted to survive their dream job is to live in a closet coding it's the only job they want”
Technology has enabled people in disparate geographies to connect digitally (via social media, video conferencing, etc.), potentially reducing animosity and conflict between regions and creating bonds that prevent geopolitical instability.
“these new technologies like zoom but also just like facebook you know all these socially connected platforms allow lots of different places to be connected and it creates a sense of connection between disparate places we've gone all the way from like the vietnam war being on tv to feeling very connected with people what's going on in hong kong you know what's going on in ukraine right now”
The United States will be able to pursue new technologies more successfully than most other countries, which positions the U.S. to benefit from technological innovation even as the broader world struggles.
“that will be countries i think the us is at the top of that list that will be able to pursue these things and that'll allow us to then have the argument about whether they're ready for prime time or not”
The United States will be in a more stable position in five years than now, with a more stable supply chain system, despite awkward transition steps getting there; everyone else is 'so screwed'.
“five years from now we're going to be in a better place than we are now with a more stable supply chain system getting here from here to there it'll be awkward at times everybody else is so screwed”
Technology transmitted digitally (like software code or AI models) can be sent anywhere in the world and will improve productivity even in places without electricity, because digital advances are universally applicable.
“you can try to use like a buggy non-zoom video conference software and be like oh man we need better software engineers and once a piece of software is developed no matter where in the world it's developed you can sell it anywhere right and so an advance in software uh is something that is transmissible anywhere in the world instantaneously regardless of whether or not it has electricity”
Peter Zaihan's forthcoming book 'The End of the World is Just the Beginning' is about what the world looks like on the backside of the deglobalization wave, focusing on the future of energy, finance, and manufacturing in a post-global system.
“the new one is the end of the world is just the beginning and whereas my first three books are all about the rise and fall of nations this new one is about what the world looks like on the backside of the deglobalization wave we're going through right now so what's the future of energy and finance and manufacturing and so on”