You will need to be on Spotify to view the 2 hour interview.
Here:Crossover of the Year: Rogan x Zeihan - Zeihan on Geopolitics
You can view Zeihan talks (15 minutes) about China only has 10 years or less before it implodes. Zeihan says China won’t invade Taiwan. Gaining Taiwan doesn’t solve their demographic sitiuation.
If Zeihan is right; the US approach would be the sit back and wait until China implodes then we are crowned sole world superpower.
I can’t imagine what leads him to believe China will be removed from the world stage in 10 years or less - especially since they have single party control of their communist system which includes not only their people but also their economy and natural resources.
Even more so since they are in the process of reopening without all the previous Covid restrictions. Part of the reason international markets have performed so well in the last four weeks is the reopening of China.
Listen to a few of his Podcast episodes about it and it starts to make sense. I’m not completely sold, but he has some solid reasoning for this. (maybe it will take longer than 10 years). China really messed themselves up over their one-child policy is the big reason. They are a demographic nightmare.
That, and the Sinovaccine is really ineffective at COVID. Like nearly worthless.
Give me your tired, your poor, your huddled masses yearning to breathe free, the wretched refuse of your teeming shore. Send these, the homeless, tempest-tossed to me, I lift my lamp beside the golden door!” This country’s greatness and true genius lies in its diversity.
The demographics are a duality. The reason is it is does not take relatively speaking that many people to manufacture goods. Having larger cities is necessary though pay for the factories quickly before exporting.
The central manufacturer has been China in the last two decades. Not so much by value added but by growth.
This is where Zeihan falls down. China was exporting deflationary forces in manufacturing. In the first world that is the definition of being powerful and wealthy. There are reasons why China is tumbling or failing.
When we look at the conflict in global trade it is really centered on the economics of exporting from one central player/country deflationary economic forces. Zeihan never gets into this. Without this there is no analysis he can do that works. He is being superfluous with all his talk on demographics.
He is right things are failing. The result though is a China that has failure from a very rural poverty eroding the wealth in the cities from here. In other words a reversal of fortunes. China is not going to make it economically.
Zeihan introduced me to how Mexico will be working with the US for Mexico to build products with a lower added value, more like China has been doing, as a global deflationary force. He was very good at seeing that.
If China had more people even in a better demographic mix that would not save the Chinese economy. That is one factor but there are several bigger factors.
In that regard the largest countries population wise China and India can not become massive powers ongoing. As Britain was for hundreds of years and the US has been really since WW I. The reason is the cost of the population creates too much debt compared to the smaller manufacturing demands for manpower on that population. How do I say that simpler terms? Deficit spending to create the wealth and factories whether on infrastructure or other means can not be sustained against manufacturing output to pay for the debt on a revolving basis if at all. It collapses in on itself.
India is taking a different approach where there will be some longer term winners. But the promises are not the same as China’s.
The collapse of the global economy plays into why the US should invest internally. The next wave of press reports in 2024 will be “The New Globalism and How America Leads”. Global trade will be reborn.
It will cost China greatly. That is not factored in yet. Not discussed yet that the ascent of US/Mexico manufacturing will cost China. Zeihan gets close to discussing that.
His argument is largely demographics. If you click on “Crossover of the Year” link in the OP you will hear his reasoning.
On top the demographic issue, I believe the US is conducting economic warfare upon China. The chip restrictions are merely the most recent attack. I expect more sanctions will follow. US corporations can read the tea leaves plus China no longer has the cheapest labor. So factories are leaving China. Death of China economy from a thousand cuts.
Now I am sitting down to listen to him on Rogan. I
Peter & Joe first talked about the Ukraine War.
Zeihan said that war was inevitable. It is about defensible borders.
I am reminded about my world history class 40 years ago. Catherine the Great;“I have no way to defend my borders but to extend them.” She roughly expanded the Russian nation to the Soviet Union borders. That expansion included the partition of Kingdom of Poland and the Grand Duchy of Lithuania with Prussia & Austria.
The expansion of NATO did cause concern within Russia. But problem is for Russia to gain defensible borders it would require that the Baltic States, Belarus, part of Poland, most f the Ukraine, Moldova, & part of Romania to return to Russia. Well that ain’t gonna happen. The invasion of Ukraine was step one.
Russia like China has a demographic problem.It pretty will cease to exist by 2025 as ethnic Russians become a minority in their own country. They had to make a move now.
Rogan brings up the poorly trained Russian troops. Zeihan shrugs and states that always how the Russians fight-throw massive number of untrained troops in and grind the opponent down. That method has been successful 50% of the time. This time there is a huge problem. The minister of Defense who is a Putin toady who is very corrupt and is syphoning a third of the defense budget for his personal use.
Zeihan sees only one instance of use of nuclear weapons by Russia. Ukrainian penetration into Russia proper. He postulates that the US will pull back on the leash to stop that occurrence.
Russia & China have two common similarities. 1)Putin & Xi had either killed or imprisoned or drove anyone capable of governing the country out of the country. 2) they both have severe demographic problem.
The devolution of China economy is in the cards. Cost of Chinese labor has increase by a factor of 14. Mexico is a third of that and Mexico labor force is more skilled. He predict China will break into city-states as it has done in the past.
Russia is different in that it is a world supplier of fertilizer & oil & mined minerals. Once Russia breaks up that production goes away. A world problem as energy & food production hits the skids and people starve and freeze. Canada & the US are ramping up fertilizer production but that takes years. It is gonna be messy.
World trade will devolve into regional trade. North America will do well as its demographics is better than most other regions.
But as Russia, China & Germany’s industrial base goes into the toilet due to demographics the US will be forced to double its industrial base.
Then they moved onto EVs. Zeihan states EVs will NOT be an appreciable part of US transportation for 10 to 30 years. From a carbon point of view EVs do not stack up very well. They consume energy produced by fossil fuel energy plants. And the production of an EV is very energy intensive. He reckons it takes 10 years for an EV to be more carbon friendly than an IC vehicle. And switching from IC vehicle manufacture to EV production will require double the copper & zinc, 4 times the chromium and 10 times the lithium. Such material production does not happen over night.
Below is a link to his dissing of EVs:
He thinks the most bang for the buck in reducing carbon is via wind turbines on very tall towers in the Great Plains. He believes ultimately a third of US power could come from that. https://windexchange.energy.gov/maps-data/319
There are better videos out there about his book"The End of the World is Just the Beginning". You just have to google and watch his interviews. The Rogan interview just wasn’t comprehensive enough.
Today’s world economy will be effected by demographics. There will be labor shortage, a consumer shortage, and investment shortage. Some countries will disappear. Doubling the US industrial base will have to be done with diminishing labor force and capital. Very difficult.
Trade will be regional and some countries will lose access to some commodies. There will be food & energy shortages. And there will be a shortage of capital. Thus there will be winners and losers. The US just won’t have enough food to export to prevent starvation. Africa & unindustrialized Middle East will in a tough spot. They will lose a third of their populations. The Saudis of course has oil to trade for food.
The supply disruption due to Covid will have been just a taste of what is coming.
From the Chinese point of view that was the case already.
From the US point of view we had propaganda on globalization. It was an excuse for cronyism, using workers and laying them off. Implying workers would get rich if they had tax breaks. This is America there is a sucker born every day.
For a thumbnail look at Zeihan beliefs I suggest perusing :
I assume some will view Zeihan as merely a modern day Thomas Malthus. Though Malthhus based his catastrophe upon an every increasing population while Zeihan’s is based on an ever decreasing population.
I’ve looking around the internet to see whether any economist reviewed or would take Zeihan on claiming his book was sensational pap. I found nada. Perhaps others would have better luck.
I enjoy listening to him as he definitely thinks outside the box.
Very difficult to see a shortage of labor or shortage of capital, especially on a global basis.
The last two asset bubbles show there is an abundance of money in the hands of wealthy individuals and countries yearning to be invested in just about anything: low yield bonds, speculative equity startups, crypto, NFTs, single family rentals, you name it. That concentration of wealth has not changed and if anything it is getting more concentrated with a healthy demand for ROI.
As far as labor, there is no shortage on a global basis: there are 8 billion earthly inhabitants. With reasonable migration, labor can move where it needs to be. I grant that there could be issues within regions that have enough restrictions on migration, but with each day that goes by our capital, because of technology, requires less and less labor to produce a unit widget.
tjscott0 did an excellent job of summarizing Zeihan’s arguments. I’m reading The End Of the World Is Just the Beginning now. I think Zeihan is basically correct about China, but he puts a lot of emphasis on global trade breaking down and making it difficult for China to import raw materials and food, as well as the lack of young people (especially women). I’m not so sure this will happen as fast as Zeihan predicts. I think automation can partially compensate for the demographic challenge, but nothing can compensate for disease (COVID) and famine (because rice is heavily dependent on importing fertilizer).
He sees the Mexico-U.S. partnership as crucial and sees the U.S. as thriving in ten years while most of the rest of the world struggles. He predicts a return to privateering on the oceans, which I’m not prepared to quite believe yet. At any rate, I think he has absolutely nailed the causes and consequences of the Russian attempts to take Ukraine.
I never intended to invest in China or Russia anyway, but at this point I do tend to look at a corporation’s dependence on those two countries as a negative.
I listed to the podcast and it was enjoyable, but he’s not really correct on this point. This question has come up a lot over the years and there have been tons of studies by a variety of entities done (example below). The outputs vary quite a bit depending on the assumptions, but basically over the vehicle’s life, the total carbon footprint of an EV will be much less than an ICE.