Peter Zeihan, widely considered an expert in geopolitics and demographics, recently wrote a bestselling book called The End of the World Is Just the Beginning. In this book, he weaves these two forces into a tale of aging, deglobalization, and hardship.
Post-Cold War
The past 77 years since the end of World War II has been a golden era created by the United States. The country built a grand coalition of democratic people and military might to fend off the expansionist policies of the Soviet Union. The U.S. has 13 aircraft carrier fleets and spends more on the military than the rest of the world combined.
On the butter side of the guns-and-butter ledger, in exchange for military hegemony, the United States offered up free trade, new markets, and secure sea lanes. For the past three-quarters of a century, the United States Navy has patrolled the oceans. It's stared down dictators in the Gulf of Aden, the Taiwan Strait, and even crossed Muammar al-Qaddafi's line of death.
All of this was to ensure that the Saudis could ship oil, the Brazilians could export their soybeans, and the Chinese could ship everything else without hindrance, pirates, or tolls.
And it’s worked like a charm.
Globalization and free trade have pulled 2 billion people out of poverty; they have greatly reduced famines, disease, and wars. We are the best fed, most educated, and longest-lasting humans the world has ever seen.
Not only that but this era has unleashed technological change at a rapid pace and transformed every locality everywhere. You can have what you want when you want it.
By almost any measure, we’ve never had it so good.
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Deal’s Over
However, this deal stopped being useful when the Soviet Union collapsed 31 years ago. NATO and free trade have been running on inertia ever since. President George Bush the elder tried to address the problem and was voted out for his troubles.
Zeihan warns that this deal is no longer in America’s interest… or perhaps America is no longer interested in this deal.
As the book description notes:
All of this was artificial. All this was temporary. All this is ending. In The End of the World Is Just the Beginning, author and geopolitical strategist Peter Zeihan maps out the next world: a world where countries or regions will have no choice but to make their own goods, grow their own food, secure their own energy, and fight their own battles.
There is only one region that will excel at this. That is the U.S. and North America. The U.S. share of global trade as a percentage of GDP is 10.03%. Of that, more than half is with Mexico and Canada. Half of what is left is oil imports. So we really trade about 3% of GDP with the outside world.
Not only does the U.S. not need global trade but it is also dangerous.
The situation with Taiwan and China underlines the need to bring high-tech manufacturing back to North America. Taiwan is the leading maker of semiconductor chips. China claims Taiwan as its own and in the last week has shown it is willing to display a heavy show of force to make the rest of the world believe it.
The problem is that the U.S. can’t manufacture cars, spaceships, computers, and missiles without semiconductors built here at home.
The threat to national security and our economy is too great. This is why the government is spending $52 billion to ensure semiconductors are made here in the United States.
According to CNET:
President Joe Biden will sign the CHIPS and Science Act of 2022 into law on August 9 in a Rose Garden ceremony, the White House said in a press statement Wednesday, a move that will flood $52.7 billion in funding to U.S. chipmakers over five years.
I’ve discovered one company that makes chips in the Midwest. It is Department of Defense A1-certified, and it makes radiation-hardened chips that can survive the radiation of a nuclear war.
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To your wealth,
Christian DeHaemer Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.
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