Latest / Technovation with Peter High (CIO, CTO, CDO, CXO Interviews) / Peter Zeihan on the Collapse of Globalization, Shifts in Global Power Dynamics, and America’s Changing Role

Transcript

Peter Zeihan on the Collapse of Globalization, Shifts in Global Power Dynamics, and America’s Changing Role · Technovation with Peter High (CIO, CTO, CDO, CXO Interviews)

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  This is a country that has a missile
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  system that was designed to obliterate the United
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  States.
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  And while they have lost over and over
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  and over and over and over about where
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  the red line is.
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  We only have to be wrong
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  1
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  for this to get out of control.
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  Welcome to activation. I'm your host, Peter High.
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  My guest is Peter Zion.
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  Peter a geopolitical strategist to his expertise is
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  at the intersection of demography,
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  economics, energy, politics,
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  technology and security. He founded his firm eye
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  on geopolitics in 20 12 following a dozen
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  years as a geopolitical analyst for Strat 4.
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  Peter's written 4 books, including the accidental superpower,
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  which has a new edition recently published providing
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  updates to his analysis from across the 10
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  years
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  since the book's first publication. His fourth book
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  is the end of the world is just
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  the beginning, mapping the collapse of globalization, which
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  was published in June of 20 22 and
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  was a new Times best seller.
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  Peter welcome back to. It's great to speak
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  with you today. To be back. Wonderful. I
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  thought we'd begin
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  Peter with some really interesting insights you have
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  about why you believe that Stalin was the
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  most important or influential person in the past
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  of, 500 years.
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  Explain how he set the table for the
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  world world order for most of the past
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  century.
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  It wasn't so much for what he did
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  or where he lived, but because of who
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  he terrified,
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  Americans realized in the late 19 forties that
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  we were
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  on the tail end of World War 2,
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  all of a sudden gearing up for another
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  war with a much more powerful enemy on
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  the planes of europe, and we knew that
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  it wasn't a war that we could not
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  win.
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  So we knew we needed tens of millions
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  of people to stand not with us, but
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  in front of us.
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  And convincing the Europeans to sign up to
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  be cannon fodder right after World war 2
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  as kind of a high bar. So we
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  knew we needed some way to induce them
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  to take that role, and our solution was
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  globalization. We sent out our navy to patrol
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  the global ocean so that any maritime shipping
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  can go anywhere without an s court that
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  never happened before in human history.
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  And the result was the prayed order that
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  we now have today.
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  None of that would have happened if we
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  weren't scarce. By stalin.
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  Well, you note in your most recent book,
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  the seeds of d globalization were so decades
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  ago,
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  provide an overview if you would of why
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  you happened and why it's been inevitable.
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  Well, keep in mind, globalization was a reaction
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  to an American
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  security fear.
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  So we never invested our economy in the
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  system in the first place. So number 1,
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  the security environment changed, even with the Russians
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  back on the war path or a pale
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  shadow of what they were during the cold
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  war. So we no longer feel we need
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  to have a global alliance. In addition, 75
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  years later, there are a lot of secondary
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  economies out there that have some he. So
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  the idea that the United States, even in
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  its current strength in terms of its consumer
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  base and the size of its economy could
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  directly subsidize all of that. That was never
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  gonna fly.
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  And politically, the Us has moved on. So
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  we never invested our economy in the system.
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  We don't have an inter international economy, but
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  we provide the security for everyone else to
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  have in the international economy, and that doesn't
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  fly anymore. So we're just backing away from
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  the system There's no country. There's no coalition
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  of countries that can take our place either
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  as the market of first and last resort
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  or as the global security gu. So that
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  ends it right there.
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  Second and just as importantly is after 75
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  years of
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  globalization, we have had 75 years of
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  globalization 75 years of
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  urbanization. And when you move from the farm
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  into the city, kids are no longer free
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  labor, they're an expense and adults aren't stupid.
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  So we had fewer of them. Do you
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  fast forward that from 19 50 to today,
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  we've seen global birth rates drop by more
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  than 3 quarters.
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  And in an increasing
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  percentage of the world's populations, there are no
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  longer enough people under age 45 to assume
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  in volume.
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  China's is on that list now. And so
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  there isn't a population structure to support global
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  trade in me more anyway. So whether you
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  look at it from the guns or the
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  butter point of view, this chapter of history
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  is very rapidly coming to a close.
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  Fascinating analysis, you note that
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  demographic conversion is going to lead to economic
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  free fall across many industrialized countries and you
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  point out they're they're simply aren't enough. You
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  own people across the industrial as world as
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  you noted, given the fall and birth rates.
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  You've also noted that many of these countries
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  past the point of over turn, so to
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  say, in the 19 eighties,
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  and you... You've also noted that the worst
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  stop of all is China, you just alluded
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  to that. In your latest book, you noted
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  in I quote here, China faces a d
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  industrialization that is nothing less than mythic. It
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  almost certainly
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  faces a political dis integration. And even des
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  civilization, Can you describe what that entails and
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  why that's the case? When an economic model
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  breaks the political
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  always breaks. There has not been an exception
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  to that throughout human history, and the Chinese
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  system is based on mass import of raw
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  commodities most notably energy and stuff they need
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  to grow their own food and a mass
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  export of finished goods to end markets that
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  have consumers.
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  Well, there... The consumer market is now danger
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  in shrinking and trade tensions are destroying the
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  front end of that as well. And that's
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  before you could start talking about Americans new
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  obsession with things like semiconductors
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  or rare earth metals.
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  There's
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  very little that the Chinese can do to
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  influence events in these topics on their shores,
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  much less dictate American policy.
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  So it was always an issue where
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  the single greatest gu tour of Chinese economic
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  success was the United States Navy and that
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  was never a very good long term bet
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  in the first place.
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  Since the book has come out, This situation
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  in China has gotten so
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  much
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  worse.
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  We now have
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  the public system in China admitting that they've
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  encountered their population by more than a hundred
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  million people. We now have official statistics suggesting
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  that their birth rate has dropped by more
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  in the last 6 years and what happened
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  to the Jews Europe during the holocaust.
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  And now we have private economists,
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  private
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  saying that the over count on the population
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  is probably closer to 250000000.
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  All of the missing millions under age 40.
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  So not only is consumption led growth now
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  impossible in the people's republic. They have age
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  passed even the theoretical
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  stage where you could press gang women into
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  rape camps to generate a higher birth rate,
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  which is something that every once in a
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  while I want I'm in Asia, people suggest
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  something that might happen, which
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  I might not have a high respect for
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  the humane levels of the Cp, but I
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  have never thought they wouldn't go that far.
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  But down not even that is an option.
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  I mean, unless we have, like, a sudden
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  breakthrough in Star Wars style cl
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  where you can grow a bunch of 20
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  something's
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  with full skill sets in under 2 years,
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  this ends
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  within 10 years. And by this, I mean
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  the Chinese system itself.
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  This is a system that can't feed itself.
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  Can't fuel itself, and it no longer has
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  enough people to try to go back to
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  a subs
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  agricultural system.
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  We are looking at a breaking of what
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  it means to have a hana ethnicity in
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  just the next few decades.
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  And what does that entail in in practice?
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  Gonna... What what will China? Obviously, people will
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  still be there? The land will still be
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  there
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  what what then range? Chaos
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  you know, who who leads that? How what
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  what sort of how does it function or
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  or how how does it not, according to
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  to Well, let's try. Start by saying that
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  this is all guess work because this has
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  never happened before civilization history. The closest,
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  perhaps parallel we have, and it's not a
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  great 1. Is the population collapse we saw
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  in the late Roman period when a combination
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  of sla and disease gutted a lot of
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  the provinces,
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  And, yes, you see a breakdown in civil
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  control to the degree that you basically had
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  a d population through lack of security, lack
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  of disease, lack of health care. Lack of
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  economic activity and entire area basically resort the
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  barb.
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  In this specific case, in China,
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  China's history is actually rep repeat with civilization
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  collapses in in the past. If my math
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  is right, This is gonna be the 20
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  seventh
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  civilization collapse. Where the central government has simply
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  collapsed,
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  huge swath of territory that we think today
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  of being economically vital, basically revert to the
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  the term marches
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  where basically you've got pockets of
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  civilization that can kinda hold back the night
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  and then big swath of territory where no
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  1 holds sway.
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  In Chinese Par,
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  it's warlord is.
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  The problem, of course, in a place like
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  China is most the people live in an
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  area where you can't grow food
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  unless you also have a significant water works
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  system.
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  So if you break down
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  civilization
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  pillars
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  and central control, the ability to maintain those
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  networks goes by also the Chinese import 80
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  percent of the inputs they need to grow
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  their own food. So on top of all
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  of this, having a a mass famine large
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  sections of the population,
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  especially in the North China plane where the
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  inputs are the highest and the demands
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  for a water work system are the highest.
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  Historically speaking.
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  Of those 27 collapses, about half of them
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  have kind of followed some version of of
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  the same pattern
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  where the north
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  North China plane has famine
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  has warlord ism has an attempt by Beijing
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  to basically invade ne depress itself to stability,
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  which typically kills half the population.
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  And then you have the southern city states
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  from Shanghai Guangzhou Joe that go their own
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  way.
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  And basically, cut deals with foreign powers to
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  import capital technology and above all else food.
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  In order to continue existing. Most of these
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  cities have imported the majority of their calories
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  for the last 1700 years.
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  And the modern era that we're in where
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  all of Mainland China under a single political
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  authority,
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  and Guangzhou gets its food from the planes
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  around Beijing. That's not normal for them. So
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  this is gonna sound horrible, but we're actually
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  reverting to something closer to the historical mean
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  here,
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  and the historical mean is not pretty.
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  Very interesting analysis.
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  You know, part of the demographic challenges you
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  described or part of the industrialization that most
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  countries have gone through, but part of it
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  also self inflicted of course with the 1
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  child policy on top of that. All that
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  you described, I would imagine would not be
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  news necessarily to to president Xi.
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  And what you said it in many ways,
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  his actions are actually listening the country's demise.
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  And I wonder how much of that is
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  to the unintended consequences,
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  you know, do you see him attempting to
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  to to put to action something that would
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  at least stave off the inevitable?
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  I think the government system at the top
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  is to degrade the point that useful policy
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  if it happens is more like monkeys on
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  a keyboard.
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  Don't mean that as a racial slur. I
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  just mean that she has so purge the
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  system of anyone who is competent that no
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  1 even brings some information anymore. So he's
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  making decisions in a complete vacuum guided by
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  nothing more than propaganda. Now we we know
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  5 years ago
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  before the purge of the bureaucracy he was
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  complete. But he was fully aware of the
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  limitations that China faced at home and abroad.
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  He knew he was dependent on the Us
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  market. He knew he was dependent on the
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  Us Navy. He knew he was dependent on
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  international trade to keep the lights on.
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  He was aware of all of this and
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  more. But with the purge of bureaucracy, no
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  1 is any longer presenting him with basic
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  information about what's going on at home or
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  abroad. And whenever something does penetrate this kind
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  of her meta seal he's got around himself
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  in the forbidden city. Everything's news.
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  And
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  1 person,
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  no matter how competent
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  can't micro manage a country of a billion
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  people,
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  and he's destroyed all the avenues of communication
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  and information flow.
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  So as a result, the government, the bureaucracy
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  is either making things up as they go
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  or more likely doing nothing
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  because they don't wanna be called to the
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  account for something they weren't specifically approved for
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  because that gets you killed. I don't see
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  them recovering from this.
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  The about the only scenario I can think
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  of right now,
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  where the Chinese might might might might be
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  able to start down a path, that's a
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  little bit more sustainable, at least buy them
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  a little bit of time. Is if she
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  were die to die by accident,
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  And all of these nearly brain dead people
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  that he's installed on the polar mirror not
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  because they're confident not because the... They're yes,
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  men. Because they're silence. If they were collectively
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  to come to the realization that they need
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  to go out and job hunt for people
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  who actually can do math.
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  And run a a small town.
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  That's a lot of ifs to get to
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  a possible then,
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  You, the the... I I wanna talk about
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  the broader implications of what you've described to
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  the the the the rest of the world.
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  China still produces as you noted,
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  a lot of goods for the rest of
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  the world is still being a manufacturing hub.
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  And it's not as though the the the
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  rest of the world, the Us very much
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  included among that
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  have
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  alternatives in place that would be able to
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  make up for this, Yeah. Especially if the
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  demise comes quickly, you you predicted perhaps even
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  in the next 10 years.
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  You know, what what would you if you
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  you were as as you do. In fact,
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  it was in the ear of a policy
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  makers in the United States,
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  what's I'm not the whispering kind of guy,
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  but thank you.
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  You're you're you're speaking loudly in rooms with
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  with leaders in the United States.
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  What sort of advice do you do you
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  provide to ensure that the downstream impact of
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  this isn't also disastrous for for economies like
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  ours? Well, let's start with the reality of
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  the exposure.
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  The Chinese are the king of low end.
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  If it deals with assembly or things that
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  are not too technically
• 13:55
  challenging, and this is where the Chinese can
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  compete because they compete on scale. As you
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  move up the value added scale, they bring
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  less and lists to the table.
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  This is an an economy that has seen
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  their costs of labor go up by a
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  factor of 15 or 16 in the last
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  25 years, but labor productivity is barely tripled.
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  So there aren't a lot of sectors where
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  value add is the critical component of the
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  mix where the Chinese are players and unless
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  they just massively suck Isaac it, which they
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  do.
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  The places where
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  they are competitive are in industries where the
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  value add is very low and it's usually
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  about processing
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  And in those sectors, they're born in the
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  world later. So whether it's aluminum or
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  cobalt or copper
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  40 to 70 percent of global processing for
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  a lot of these materials
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  is China centric. Now there's nothing nothing
• 14:47
  about this processing process that is difficult or
• 14:50
  expensive or even time consuming to relocate.
• 14:53
  But
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  easy and cheap and fast is not the
• 14:57
  same as immediate and free.
• 15:01
  So when I think about things like aluminum
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  or lithium,
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  that's where the biggest shock will be. When
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  I think about things like steel rebar where
• 15:09
  the Chinese
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  have an advantage because of their subsidies. It's
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  not that this can't be done either and
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  it's not that we don't do it ourselves.
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  It's just the shock to the system if
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  this word to end overnight would be significant.
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  But as you move up the value add,
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  it becomes less and less of a factor.
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  So high end chemicals, mid tier chemicals,
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  automotive,
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  things as simple as a spark plug the
• 15:30
  Chinese Do and they do it scale, but
• 15:31
  they don't do it well, and they don't
• 15:33
  do it at a particularly competitive price point.
• 15:36
  So there really are for
• 15:38
  the end result of things.
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  The the the point of the spear and
• 15:42
  manufacturing if you will.
• 15:44
  That I'm less worried about. It's the building
• 15:48
  block or I'm most
• 15:49
  concerned. Now
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  If you love the chips fall where they
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  may in a free market system.
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  Most of that sort of industry is going
• 15:57
  to go to places with the cheapest energy
• 15:59
  and the cheapest cost of production of the
• 16:01
  ore.
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  For most of these things, the ore is
• 16:05
  pretty spread out around the world, and the
• 16:07
  United States does have by far the cheap
• 16:09
  electricity in the world because we have the
• 16:11
  best territory on the planet aside from Australia
• 16:13
  for Green tech, and we have the cheapest
• 16:15
  natural gas. On the planet, and we have
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  the cheapest high caloric content coal.
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  So if you let everything go in time,
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  it will all back here. My concern is
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  it's gonna be a shock. So I'm of
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  the opinion that every day that China doesn't
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  collapse.
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  Is a gift
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  because it gives us a day to get
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  ready for the end of those supply lines.
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  And we are seeing more and more and
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  more of even the
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  low end stuff coming back to the United
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  States, with I would argue the Gulf coast
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  being in the area that's going to be
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  adding the most not only does it have
• 16:48
  the really cheap electricity and approximate industrial capacity
• 16:52
  places like the Texas triangle.
• 16:54
  The view of invite metal production in places
• 16:57
  like Louisiana and the Texas Coast are somewhat
• 16:59
  lower than the national average, which provides us
• 17:01
  some opportunity in that space.
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  But China was long the most populous country
• 17:06
  in the world.
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  You've noted that perhaps by 20 55 that
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  will have half its current population.
• 17:12
  It's just recent months that at least officially,
• 17:15
  India re... Has taken over the title of
• 17:17
  most populous
• 17:19
  country in the world.
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  How bullish or bearish are you regarding India's
• 17:22
  prospects?
• 17:23
  Whenever I talk to the Indians, I... First
• 17:26
  thing I make clear is you are not
• 17:27
  going to be the next China and you
• 17:29
  do not want to be.
• 17:31
  The the strength of the Chinese system is,
• 17:35
  a dictator state forces everybody into the same
• 17:38
  page and a a huge subsidy system that
• 17:42
  is financially wildly
• 17:44
  inefficient, but does allocate
• 17:47
  capital to productive uses in order to keep
• 17:49
  those populations
• 17:50
  happy and marching in the same direction. You're
• 17:53
  never gonna get that in India. In India,
• 17:55
  capital isn't a political good. It actually has
• 17:58
  a value, which means that you don't make
• 18:00
  loans just to make loans. You don't make
• 18:01
  loans to guarantee high employment. You make loans
• 18:03
  because there might be turn on the other
• 18:05
  side. It's much more efficient in that way.
• 18:09
  And if you were to apply the Chinese
• 18:11
  mile to India, you'd probably end up with
• 18:13
  the same rapid
• 18:15
  industrialization, but then followed by the same civilization
• 18:17
  collapse and India is smarter than that. They're
• 18:19
  better than that.
• 18:20
  That doesn't mean that India doesn't have its
• 18:22
  own problems well My God India has its
• 18:24
  problems.
• 18:25
  Their problem is that they basically have 30
• 18:27
  different regions at 30 different countries, 30 different
• 18:29
  economics systems, and they don't integrate well.
• 18:32
  The... It's not just a policy issue. It's
• 18:34
  not just a geography issue. It's it's a
• 18:37
  corruption issue.
• 18:38
  And that makes it difficult for the political
• 18:41
  leadership of 1
• 18:42
  Indian state to integrate with another 1 even
• 18:45
  if it's a perfect match.
• 18:47
  Politics there are very
• 18:49
  localized. It's a true federal system kinda like
• 18:51
  the United States or Germany, where the national
• 18:54
  state and local governments all have roughly the
• 18:56
  same amount of power And it makes policy
• 18:58
  making a mess,
• 19:00
  but it does mean that you can always
• 19:02
  learn from 1 another, which is why you
• 19:03
  have places like the Bangalore corridor that are
• 19:05
  basically first world economies and other places are
• 19:08
  basically giant call centers and other places have
• 19:11
  failed.
• 19:12
  But let me under something on the population.
• 19:15
  Chinese data isn't great. They're keep updating it
• 19:19
  Thank God.
• 19:21
  But I would argue that India surpassed the
• 19:24
  Chinese population something like 15 years ago. With
• 19:27
  the new insight we've gotten in just the
• 19:29
  last 12 months,
• 19:30
  So we've already been not so tip toe
• 19:33
  towards this new world for quite some time
• 19:36
  now, and we had 5 year period where
• 19:39
  the Chinese were in a degree of information
• 19:40
  locked down during Covid where we didn't get
• 19:42
  any good information. On the backside of that,
• 19:45
  we're finally seen that
• 19:47
  A lot of these peaks
• 19:49
  in China,
• 19:50
  car sales, cover consumption maybe didn't simply come
• 19:54
  in the last 12 months or even during
• 19:56
  Covid, but actually date back to like, 20
• 19:58
  17 20 18. On the demographic picture, it
• 20:01
  looks like it was a lot. Further back
• 20:02
  than that. Like, we now know that the
• 20:04
  Chinese birth rate probably dropped below the American
• 20:07
  birth rate back in the early nineties.
• 20:10
  Interesting points about how how, how accurate the
• 20:13
  data is and how that might
• 20:15
  reflect differences there as as you point out,
• 20:17
  Well, we we started our conversation with 1
• 20:19
  Russian strong man. Let's let's move on to
• 20:21
  another 1,
• 20:23
  in Putin,
• 20:24
  in 20 10, you predicted that Russia would
• 20:26
  invade the ukraine in 20 22,
• 20:30
  quite quite a prediction while done Peter.
• 20:32
  Sorry why
• 20:34
  was that so clear to you, then?
• 20:37
  Okay. So there's 2 pieces to this. First,
• 20:39
  the why it has to happen.
• 20:41
  The Russian frontier in its current forms is
• 20:43
  completely offended. It's it's wide open it's populated.
• 20:46
  There's no way for the Russians in any
• 20:48
  form with no matter how confident their government
• 20:50
  no matter how powerful for their military. To
• 20:53
  patrol and secure the entire border system. It's
• 20:55
  something like 5000
• 20:57
  kilometers long.
• 20:58
  But
• 21:00
  if they were advanced
• 21:01
  to advance past their current borders and to
• 21:03
  get something a little bit more similar to
• 21:05
  what they had in the Soviet period. They
• 21:07
  could anchor their military in places of geographic
• 21:11
  constraint
• 21:12
  where mountains and seas can provide a defensive
• 21:15
  bull work, and then they concentrate their forces
• 21:17
  on the places between those. Like the Polish
• 21:19
  gap, like the best Arabian gap in Romania,
• 21:22
  like the caucus is
• 21:24
  coastal strips. And then their entire
• 21:27
  internal boundaries are less than 500 miles. That's
• 21:31
  something that they can do. So they've been
• 21:33
  working on some version of this for the
• 21:35
  entirety that we have had an entity called
• 21:37
  Russia over 4 centuries.
• 21:39
  They achieved it under Stalin, they lost it
• 21:42
  with the post Soviet collapse. And everything that
• 21:44
  they've done, and by they, I mean, the
• 21:46
  Russian state, not putin. This pre dates putin.
• 21:49
  Everything that the Russian this state has done
• 21:51
  since 19 89 has been about out been
• 21:53
  about reestablish that outer crust defense.
• 21:57
  Ukraine is not the first post soviet war
• 21:59
  with that goal. It's the ninth, and it
• 22:01
  won't be the last if they win. So
• 22:03
  that's the why. The why now is demographic.
• 22:06
  Russia has these peaks and trough in the
• 22:09
  demographic structure that largely
• 22:11
  line up with either major wars or majors
• 22:15
  centralization collapses, and
• 22:18
  mismanagement,
• 22:19
  whether it's k jaw forcing everyone into apartments,
• 22:22
  or World War 2 causing 20000000 civilian deaths.
• 22:24
  You got these giant go out of their
• 22:26
  demographic structure.
• 22:28
  But none of them are a of severe
• 22:30
  is what happened after 19 92.
• 22:32
  The economic system collapsed,
• 22:35
  we had several years of a corrupt government
• 22:38
  under yelp and that basically did nothing to
• 22:40
  stop the free fall.
• 22:42
  Culminating into the collapse of 19 98.
• 22:44
  And during that period, the death rates stored
• 22:46
  the birth rate crash and for almost 20
• 22:49
  years, we had a death rate that was
• 22:50
  twice as high as the birth rate.
• 22:52
  And even if you believe the statistics that
• 22:55
  the Russians started making up 15 years ago,
• 22:58
  This is a population structure that is so
• 23:00
  far past the pale that recovery just isn't
• 23:02
  even theoretically possible,
• 23:04
  which means that the men that they have
• 23:05
  in their twenties are really their last
• 23:07
  group of deployable forces that they will ever
• 23:11
  have.
• 23:12
  And 20 22 was kind of in the
• 23:13
  middle of the date range that I saw
• 23:15
  where if they were gonna... If they waited
• 23:17
  any longer,
• 23:18
  they simply wouldn't have the people to even
• 23:20
  theoretically
• 23:21
  attempt a military solution.
• 23:22
  So it always had to happen. It always
• 23:24
  had to happen about them.
• 23:27
  And if they keep losing people at their
• 23:28
  current rate and there's
• 23:30
  thousand ifs that are condensed into that if.
• 23:34
  They probably can only sustain this for about
• 23:38
  another 6 to 9 years
• 23:40
  and then they simply don't have the people
• 23:41
  to try.
• 23:43
  Well, you've noted that Russia always does long
• 23:45
  wars, not quick ones. Right. And when you're
• 23:48
  running out of people that's strategy doesn't work
• 23:51
  as well. Exactly Right.
• 23:53
  Well, you... You've noted that you're out of
• 23:55
  the prediction game on the world Ukraine on
• 23:57
  multiple places I've seen you you speak. And
• 23:59
  but I wonder if you can walk through
• 24:01
  what would need to happen for Ukraine to
• 24:04
  get the upper hand versus what would need
• 24:06
  to happen for Russia to to do so.
• 24:09
  Well, let's start with the Russians.
• 24:11
  As long as they can maintain supply flows
• 24:14
  from North Korea
• 24:15
  for artillery from Iran for drones and should
• 24:19
  for China for electronics and metallurgy.
• 24:22
  You marry that to the Soviet arsenal, and
• 24:24
  they are not looking at it a meaningful
• 24:26
  equipment shortage within the next 5 years.
• 24:29
  Based on how long China lasts, it could
• 24:31
  be a little bit longer than that. So
• 24:33
  at least in the midterm, they're fine on
• 24:35
  equipment. And because this is their last war
• 24:38
  and they realize that, the manpower issue is
• 24:41
  not an issue either it's just a question
• 24:43
  of how they politically manage drafting.
• 24:45
  I don't think that is going to be
• 24:46
  the thing that bring down the government. So
• 24:48
  minimum 5 years for the Russians things look,
• 24:51
  I don't wanna say hun dory, but they
• 24:52
  can maintain their flows.
• 24:54
  And they're finding new and innovative ways to
• 24:56
  use their old weapon systems in did more
• 24:59
  devastating capacity. So for example, the glide bombs
• 25:02
  or the most recent innovation basically dropping a
• 25:05
  metric ton of explosives on an urban center
• 25:07
  and just bit by bit making the front
• 25:10
  zone completely une inhabit
• 25:12
  so that if you're the Cra military, you
• 25:14
  lose an interest in defending something that no
• 25:17
  longer has a value.
• 25:19
  They started with the power centers. They're now
• 25:21
  going after things like apartment blocks and just
• 25:23
  making places completely un unbelievable.
• 25:26
  That's not... It it's in humane, but it's
• 25:29
  not a stupid strategy from a strategic point
• 25:31
  of view. And if you can cause enough
• 25:33
  havoc
• 25:34
  that the West realizes that the rebuilding might
• 25:37
  not be worth the cost, maybe maybe maybe,
• 25:40
  it's an open question about how long the
• 25:42
  Ukrainians can.
• 25:44
  Maintain defensive operations.
• 25:46
  It's a legitimate conclusion no matter how horrible
• 25:49
  it sounds.
• 25:50
  On the other side, the issues is Crimea
• 25:53
  Because of the shape of the land because
• 25:56
  of the presence of the Ne river,
• 25:59
  any sub apply going into crimea, it basically
• 26:01
  has to come from 1 of 3 routes.
• 26:04
  You've got a rail ferry bridge, basically bringing
• 26:06
  things in by water. That the Ukrainians have
• 26:09
  largely destroyed. They've also destroyed most of the
• 26:12
  Russian landing ships in general. So supplying by
• 26:15
  see has become very, very hard. Number 2,
• 26:17
  you got the Kirk Bridge,
• 26:18
  which goes from Ross Don or, the railway
• 26:21
  goes in from Ross,
• 26:23
  south
• 26:24
  into the k straight and then crossing in
• 26:27
  primary pet Peninsula. That's taken enough hits that
• 26:29
  its ability to take mass cargo has been
• 26:32
  limited pretty strict fleet.
• 26:34
  And I think with these new weapon systems
• 26:36
  that the Ukraine recently gotten, the K bridge
• 26:39
  is not gonna be around much longer anyway.
• 26:41
  Then third, you've got a series of rail
• 26:44
  connections that are on
• 26:45
  southern shore Ukraine proper,
• 26:47
  and while they are in long range rock
• 26:50
  artillery range in many cases,
• 26:52
  the Ukrainians don't have a liability to target
• 26:54
  the trains with artillery.
• 26:56
  So that's where the bulk of things are
• 26:57
  going right now.
• 26:59
  If
• 27:00
  Ukraine
• 27:01
  can cut that final rail system,
• 27:04
  then the Russians would be
• 27:07
  forced to ship anything
• 27:10
  to crimea by truck
• 27:12
  from Russia Proper through the Don boss,
• 27:14
  past mir and multiple
• 27:17
  and across a single road and rail system
• 27:19
  to get into Crimea proper.
• 27:23
  That's over a thousand kilometer long supply line
• 27:26
  by
• 27:27
  truck
• 27:28
  with the Ukrainians being able able to basically
• 27:30
  interject in multiple spots. If we get to
• 27:33
  that point, and that is basically what seems
• 27:35
  to be the Ukrainian goal for this summer
• 27:37
  once they get air power to try to
• 27:39
  cut that line. If they can do that,
• 27:42
  Crimea goes from a potential launch point Russian
• 27:45
  forces to the most
• 27:47
  exposed
• 27:48
  portion of the entire Russian land mass.
• 27:51
  And the public
• 27:53
  humiliation of having a couple million Russians in
• 27:55
  crimea starving because the Russians can't supply their
• 27:58
  own civilian population, much lesser military
• 28:00
  population.
• 28:02
  Ukrainians don't have to capture
• 28:04
  crimea to generate that outcome. They simply have
• 28:06
  to interject 1 train.
• 28:09
  And if you can have a global
• 28:12
  humiliation of putin,
• 28:14
  This is how about half of the governing
• 28:18
  systems in Russian history have ended from either
• 28:20
  internal collapse,
• 28:22
  or popular
• 28:23
  uprising
• 28:24
  because the Russians have lost a war very,
• 28:26
  very, very, very publicly, so some version of
• 28:29
  this is what went down for world war
• 28:31
  1 from some version of this is what
• 28:32
  went down for the Crimean war ironically.
• 28:36
  And that seems to be the Ukrainian short
• 28:38
  term goal, and that is also not a
• 28:40
  stupid strategy.
• 28:42
  So both of these things
• 28:45
  can work,
• 28:46
  and both of them are very, very ugly.
• 28:49
  Yeah. Very interesting.
• 28:51
  You Ukraine has the support of the Western
• 28:53
  world.
• 28:54
  And Russia has a support of countries like
• 28:56
  China and North Korea.
• 28:57
  So in many ways, this is a proxy
• 28:59
  war for China and the west to some
• 29:01
  degree and that the primary factors are of
• 29:03
  course, Russia and Ukraine.
• 29:04
  Are you are you fearful at all that
• 29:07
  the proxies might be drawn into the conflict?
• 29:09
  At the moment, no.
• 29:11
  If there is going to be a conflict
• 29:12
  that involves China it'll be under a a
• 29:14
  series of very, very different circumstances. Remember, the
• 29:16
  Chinese can't project power more than about a
• 29:18
  thousand miles. Thousand kilometers really, from their own
• 29:21
  shore. So the idea that they could get
• 29:23
  involved in something involving sea lanes in South
• 29:25
  Asia or much less in Ukraine
• 29:28
  beyond the pale, North Korea's, obviously significantly less
• 29:31
  capacity in that regard.
• 29:33
  And in the case of Iran, Iran and
• 29:35
  Israel are actually getting along as well it's
• 29:36
  possible for the 2 of them to get
• 29:38
  along right now. So I don't think that's
• 29:39
  a serious conflict either.
• 29:42
  I have never been of the opinion that
• 29:45
  a war between the United States China isn't
• 29:47
  inevitable, much less imminent. I don't wanna say
• 29:49
  it can't happen.
• 29:50
  But if we do get into a slug
• 29:53
  fast
• 29:54
  The United States is gonna put a few
• 29:55
  ships in Indian Ocean Basin, cut the energy
• 29:58
  artery, cut the manufactured goods artery, and we'll
• 30:00
  have a des civilization collapse China and under
• 30:03
  your complete the famine. 5 years ago she
• 30:05
  knew that. My only concern today is that
• 30:08
  he is so destroyed the capacity of information
• 30:11
  to flow within the Chinese system that maybe
• 30:13
  he's forgotten it.
• 30:15
  The 2 countries we primarily spoken about so
• 30:17
  far,
• 30:18
  China and Russia are also led by paranoid
• 30:21
  dictators who have nuclear arms.
• 30:24
  And talk about the risks of the combination
• 30:25
  of those factors. Yeah. Not a non factor.
• 30:28
  Now.
• 30:29
  To the degree that the United States has
• 30:30
  a missile defense system, it was designed for
• 30:32
  the Chinese system and while they have been
• 30:34
  adding more and more silos,
• 30:35
  we have learned in the last year that
• 30:37
  corruption and theft within the Chinese procurement system
• 30:39
  is if anything bigger than what's going on
• 30:42
  in the Russian procurement. System with the nuclear
• 30:44
  forces being the 1 that has leaked out
• 30:46
  the most.
• 30:48
  Specifically, the Chinese general who is responsible for
• 30:50
  maintaining the silos,
• 30:52
  stole the money that was supposed to go
• 30:54
  for the fuel for the rockets and just
• 30:55
  filled them up with water, which probably makes
• 30:57
  the rockets useless.
• 31:00
  I would not be willing to bet the
• 31:01
  existence of the United States on that fact,
• 31:04
  but there is no way that this is
• 31:06
  a single data point.
• 31:08
  This is something that is very easy to
• 31:10
  discover. So anything that he was trying to
• 31:11
  actually hide is probably worse.
• 31:15
  I I wanna say I'm not... I don't
• 31:16
  worry about China at all, but not to
• 31:19
  the same degree as most people in the
• 31:20
  military industrial complex in the United. States. I
• 31:22
  just I don't see it. I don't see
• 31:24
  the capacity for power for projection.
• 31:27
  In the case of Russia, that isn't much
• 31:28
  more serious threat. A number of deliverable weapon
• 31:31
  systems is much higher, and that's before you
• 31:34
  include the ones that have been moth ball,
• 31:35
  but not dismantled.
• 31:37
  So you're talking about basically a thousand delivery
• 31:39
  platforms today. And if if if they decided
• 31:42
  they wanted to bring their old stuff out.
• 31:44
  They could expand that by a factor of
• 31:46
  5 or 6 theoretically.
• 31:47
  Our missile system is not designed for that,
• 31:50
  not just in terms of numbers in terms
• 31:52
  of coverage,
• 31:54
  Our hardware our fixed ground placements are on
• 31:57
  the West coast and Alaska, designed for North
• 31:59
  Korea assigned for China,
• 32:01
  our East Coast doesn't have that. We've got
• 32:03
  a lot of mobile systems, but not sufficient
• 32:05
  to cover all of our population centers. So
• 32:07
  if
• 32:09
  1 of these red lines that the Russians
• 32:11
  keep lying about actually turns out to be
• 32:13
  real,
• 32:15
  then we could have a very serious problem.
• 32:17
  So we've got this fun little situation where
• 32:20
  we've got 2 kind of general camps in
• 32:22
  the United states. Those who take the red
• 32:24
  lines very, very seriously.
• 32:25
  And think that as a result, we should
• 32:28
  become Neville Chamberlain and just let the Russians
• 32:30
  have whatever they want. They want you Ukraine
• 32:31
  and let them have it. They went poland
• 32:32
  and they let them know happen. They want
• 32:33
  Germany let them have it. Let them have
• 32:35
  all of nature. Let them have Mexico. Basically
• 32:37
  just stand by,
• 32:38
  stand back and let them brushes do whatever
• 32:40
  they want. You know, that that's idiotic.
• 32:43
  And not very American.
• 32:45
  The other side,
• 32:48
  it's like, we should give the Ukrainians every
• 32:50
  weapon system they possibly can. We should allow
• 32:52
  them to target everything they want whenever they
• 32:54
  want. However they want and we should actively
• 32:55
  assist them.
• 32:57
  That's too extreme in the other direction.
• 33:00
  This is a country that has a missile
• 33:01
  system that was designed to obliterate the United
• 33:04
  States.
• 33:05
  And while they have bluff over and over
• 33:08
  and over and over and over about where
• 33:10
  the red line is.
• 33:11
  We only have to be wrong
• 33:13
  once.
• 33:15
  For this to get out of control. So
• 33:17
  I think the Biden
• 33:18
  administration when it comes to security policy relating
• 33:20
  to Ukraine
• 33:22
  has broadly
• 33:24
  struck
• 33:25
  the right degree of caution versus aggressive miss.
• 33:30
  Basically what we've done for the last 2
• 33:32
  years is when the Russians
• 33:34
  state a red line,
• 33:36
  1 country in Nato.
• 33:39
  Puts a toe across it just to see
• 33:40
  what happens, and then they step across it,
• 33:43
  and then other countries join in.
• 33:46
  And 3 weeks later, everyone's doing it. So
• 33:48
  this happened with artillery. This happened with the
• 33:50
  storm shadows has happened with the Ja most
• 33:52
  recently
• 33:53
  It happened with allowing the Russians to use
• 33:56
  the outcome system to target Russian assets
• 33:59
  across the border from Car.
• 34:02
  And to go after the places where the
• 34:03
  Russians were launching assaults on civilian populations. And
• 34:06
  just in the last 48 hours, that has
• 34:08
  now been expanded to pretty much the entire
• 34:11
  front.
• 34:11
  Ukraine in the American eyes now can use
• 34:13
  our weapon systems to target any place in
• 34:16
  Russia that is actively
• 34:18
  generating a logistical hub to target
• 34:21
  Ukraine proper.
• 34:22
  And I would guess that in the next
• 34:24
  couple of months, even that limited restriction will
• 34:26
  go away as well.
• 34:29
  But 1 of these days, 1 of these
• 34:30
  red lines might actually be real.
• 34:33
  I am guessing here, but I would guess
• 34:35
  that it will be when you Ukrainian forces
• 34:37
  field they need to cross the border into
• 34:38
  Russia proper to physically break it up the
• 34:40
  logistical hiccups ups we're not gonna hit that
• 34:43
  this year.
• 34:45
  But it is something to start stressing about.
• 34:47
  Yeah. Another
• 34:50
  strategic and important part of the world is
• 34:51
  Taiwan.
• 34:53
  And there's a a lot of, a reason
• 34:55
  why that is
• 34:57
  contemplated as,
• 34:59
  a risk in the future. And I wonder
• 35:02
  that that is conflict with China. And I
• 35:04
  wonder to what extent not only what you've
• 35:07
  described in terms of the
• 35:09
  existential challenges that China has But on top
• 35:11
  of it, the... What they are seeing with
• 35:13
  the war in Ukraine, to what extent do
• 35:16
  you
• 35:17
  believe that this is dampened cheese enthusiasm for
• 35:20
  conflicts.
• 35:21
  It's really hard to get a read on
• 35:23
  g because he doesn't have conversations with everybody
• 35:26
  with anybody. So, you know, you can tap
• 35:28
  phones and hack fax lines and emails in
• 35:31
  Rush and get a decent view of what's
• 35:33
  going on in the Kremlin, but she has
• 35:34
  conversations with no 1. So it's all guest
• 35:36
  work. And the fact that his decisions are
• 35:38
  not driven by what's going on in the
• 35:40
  world. They're just driven by what rare bits
• 35:41
  of information get into his head
• 35:44
  and then conversations with no 1 about the
• 35:45
  details, it... It's kind of a fool errand
• 35:47
  to predict. I would just underline that
• 35:51
  If there was a war with Taiwan, it
• 35:53
  would be the end of China, not that
• 35:55
  there wouldn't be fallout, not that there wouldn't
• 35:57
  be blood, but it would be the
• 35:59
  end of the people's republic.
• 36:02
  Also,
• 36:04
  even if
• 36:05
  in their wildest dreams, that version of Chinese
• 36:08
  nationalism happened where they were able to conquer
• 36:10
  Taiwan intact in 2 weeks.
• 36:13
  So
• 36:14
  doesn't solve any of their problems,
• 36:16
  and they can't operate their own semiconductor fab.
• 36:18
  That's... Those are manned by critical staff from
• 36:21
  other countries. You put them in charge of
• 36:23
  Ts see they wouldn't know what to do
• 36:25
  with it. I don't see the gain here,
• 36:28
  aside from a little nationalist drum beating that
• 36:30
  you can then keep beating that drum As
• 36:32
  country cole is around you and maybe use
• 36:34
  that to write the narrative for the next
• 36:37
  iteration of the Chinese government in an era
• 36:38
  of famine and no electricity.
• 36:41
  Doesn't seem like a winning play to me.
• 36:43
  Yeah. That makes sense. Let's turn to the
• 36:45
  United States a little bit more than we
• 36:46
  have so far.
• 36:48
  You've noted, you you alluded earlier to the
• 36:51
  fact that we are a continental economy. And
• 36:53
  I know from from past conversations that you've
• 36:57
  you've talked about the impact of d globalization
• 36:59
  is, therefore not going to be an existential
• 37:02
  problem for the United States, provide your analysis
• 37:05
  there, please. Sure. So remember globalization for us
• 37:08
  was ploy to get everybody on our side.
• 37:10
  And if we had invested our economy into
• 37:12
  the global commons, it wouldn't have been a
• 37:14
  bribe. Wouldn't have been nearly as attractive.
• 37:16
  So today, only about 15 percent of our
• 37:19
  Gdp comes from international trade.
• 37:22
  Roughly half of that is mix and Canada.
• 37:26
  Roughly half of what's left is exports of
• 37:29
  raw commodities like
• 37:31
  crude oil, refined product and grain.
• 37:33
  So now you're talking about a total exposure
• 37:35
  of 3 to 4 percent of Gdp.
• 37:37
  Now that's not nothing, and most of that
• 37:40
  is in the form of manufactured goods.
• 37:44
  So if we were to see a cut
• 37:46
  of everything
• 37:47
  overnight, we would have a glut of finance
• 37:51
  food and energy and a shortage
• 37:54
  in
• 37:55
  electronics.
• 37:57
  That would be how we would basically feel
• 37:58
  it.
• 38:00
  We don't move along from that overnight. We
• 38:02
  don't move on from that without a considerable
• 38:04
  expense, but this isn't a
• 38:07
  civilization ending
• 38:08
  event like it will be in other places.
• 38:11
  I I've been fascinated by your analysis of
• 38:14
  the presidential and we're speaking now in the
• 38:16
  summer boy be 20 growth.
• 38:19
  But I mean, you you you are une.
• 38:21
  You you say this will be a Biden
• 38:23
  win by a land wide. Yeah. To describe
• 38:26
  why that's the case. Okay. So, 3 3
• 38:29
  and a half things.
• 38:31
  Number 1, there's fewer Republicans than Democrats.
• 38:35
  And so the Republicans have always done well
• 38:37
  at the national level because the factions that
• 38:40
  make up the coalition don't fight among themselves.
• 38:43
  Well, Trump has not only started a civil
• 38:44
  war among Republicans he's actually purged some of
• 38:47
  these factions like the business community and the
• 38:49
  National security community, from the coalition altogether. So
• 38:52
  without all the Republicans and locks up, there's
• 38:55
  no chance of a victory.
• 38:56
  Number 2,
• 38:58
  people seem to have forgotten what happened during
• 39:00
  the midterms.
• 39:01
  Donald Trump told independence that their vote doesn't
• 39:04
  matter in the general election, and that's the
• 39:06
  only place. But independents vote matters.
• 39:09
  Trump wants it to be all about the
• 39:10
  primaries because that's where he dominates.
• 39:12
  And so in elections where he put his
• 39:15
  finger on the scale and was, like, a
• 39:17
  really heavily campaign through specific candidates,
• 39:19
  independents showed up and drove to vote against
• 39:21
  those candidates.
• 39:24
  Well, again, if fewer
• 39:26
  Republicans than Democrats.
• 39:28
  The Republicans have never won the presidency without
• 39:30
  capturing 2 thirds of the independent vote.
• 39:33
  They're gonna lose the independent vote. So now
• 39:34
  we're not just talking about it feet. We're
• 39:36
  talking about a route.
• 39:38
  Third,
• 39:40
  or of Kennedy junior.
• 39:42
  Trump thought he had cornered the bat shit
• 39:44
  crazy vote, and now it split. So you're
• 39:46
  talking about a loss of vote even in
• 39:48
  strongholds.
• 39:51
  And this is before he became a convicted
• 39:53
  felon.
• 39:54
  So we're looking at the second or third
• 39:57
  worst electoral defeat for any
• 40:00
  presidential candidate in American history. I mean, this
• 40:02
  is gonna be like gold water or worse.
• 40:06
  Assuming Biden doesn't die. Biden doesn't die I
• 40:08
  reserve or... If Biden die, I reserve the
• 40:09
  right to change my mind but that's where
• 40:11
  we are today. Well, let's let's assume for
• 40:13
  for 1 reason or another that you're incorrect.
• 40:15
  And and Trump wins. What do you see
• 40:17
  is some of the things that he would
• 40:18
  do or perhaps some of the risks of
• 40:19
  a second Trump term. Well, the only thing
• 40:21
  that we know that he would do for
• 40:24
  certain is be as tough on China as
• 40:27
  Biden. Now, they have a very, very similar
• 40:30
  policy when it comes to international economic affairs.
• 40:32
  In fact, I would argue that the 2
• 40:33
  most similar presence we've ever had in that
• 40:35
  regard, coming from different points and a decline
• 40:37
  policy differently, but getting to the same general
• 40:40
  result of basically
• 40:42
  dividing the Chinese
• 40:43
  from the American system.
• 40:45
  And while I could sit back here in
• 40:47
  arm share quarter, quarterback for both of their
• 40:49
  strategy that how like could do it with
• 40:51
  less pain, more more effectiveness.
• 40:54
  Most Americans are broadly on board with that
• 40:57
  push,
• 40:58
  and Trump does deserve credit for starting that
• 41:00
  conversation. But beyond that,
• 41:02
  Trump's policies are basically shaped by whoever flattered
• 41:05
  him most recently.
• 41:07
  And I can't predict that.
• 41:10
  If it happens to be somebody in Mexico,
• 41:12
  then Mexican relations will be great. If it
• 41:14
  happens to be putin then look out Ukraine.
• 41:16
  But if Z Z gets to him first
• 41:18
  look out Russia.
• 41:19
  He's in unpredictable because he has no attention
• 41:22
  span. He ignores the information that is available
• 41:25
  to him. He ignores his advisers mean that
• 41:27
  he doesn't fire them outright. So predicting the
• 41:30
  specifics,
• 41:32
  I can tell you though that the general
• 41:33
  engagement
• 41:34
  through government assets,
• 41:36
  whether it's the military, the bureaucracy,
• 41:39
  the state department, he just doesn't use those
• 41:41
  tools in a way that a normal president
• 41:43
  would. Just makes everything very erratic.
• 41:45
  Mh. If Biden wins, of course, as you
• 41:47
  predict, do you have a sense of any
• 41:49
  changes in direction or or policy,
• 41:53
  modifications when when he will not have any
• 41:54
  more races to run?
• 41:56
  In foreign policy, I would expect it to
• 41:58
  be reasonably steady state. So, again, steady reduction
• 42:02
  in anything that globalization has to do, no
• 42:04
  new trade deals.
• 42:05
  Ever tighter options on the Chinese moving down,
• 42:08
  the technological
• 42:10
  platform from things that the Chinese have no
• 42:12
  chance of doing themselves to things where the
• 42:15
  Chinese are dependent foreign corn supply chains, and
• 42:17
  then only in the later on, things where
• 42:19
  the Chinese depend on foreign markets, basically ratchet
• 42:21
  up the pressure steadily.
• 42:24
  On domestic affairs, it really depends upon what
• 42:26
  happens with the congress.
• 42:28
  I think at this point, it's kind of
• 42:29
  a shoo in that the Democrats are gonna
• 42:31
  win the house. The question is the senate.
• 42:33
  Now normally, and until a month ago, I
• 42:36
  would have said that the Republicans will probably
• 42:39
  hold the majority in the senate There's 33
• 42:42
  seats up. 20 of those are being defended
• 42:44
  by Democrats.
• 42:46
  In order to get a majority, the Democrats
• 42:48
  would have to defend every seat and then
• 42:51
  gets 10
• 42:53
  more
• 42:54
  seats from the Republicans.
• 42:56
  That just doesn't happen. I'm mean Sorry. Not
• 42:58
  majority clot.
• 42:59
  To get 60 60 seats in order to
• 43:01
  basically control things. I would've have said no
• 43:04
  way.
• 43:05
  And then Trump was convicted.
• 43:08
  And so there are going to be negative
• 43:11
  coat tails for Trump in this scenario. The
• 43:13
  question is how big, but I have gone
• 43:14
  in the last month from thinking there was
• 43:16
  no chance. That the Republicans could lose the
• 43:19
  senate to that degree to all a sudden
• 43:20
  like it's within the realm possibility.
• 43:23
  Now if if if
• 43:25
  we have that sort of just dynamic
• 43:29
  blow out.
• 43:30
  Then we're gonna find out just how economically
• 43:34
  liberal and incompetent the Biden team can be.
• 43:37
  I have not been impressed by their domestic
• 43:39
  economic policy. I was not impressed by trump's
• 43:41
  economic policy. I was not impressed by, Obama's
• 43:45
  economic policy. It's been a long time since
• 43:47
  we had someone who could do math in
• 43:48
  the White House.
• 43:50
  Odds are,
• 43:51
  strong presidential result, strong house result, both the
• 43:54
  Democrats
• 43:55
  and then a split senate are probably even
• 43:58
  a Republican majority.
• 44:01
  As long as the Republicans have 50 seats,
• 44:04
  there's a break.
• 44:06
  That's probably where we're going. So clearly, your
• 44:09
  analysis generally speaking,
• 44:11
  based on
• 44:12
  demography based on we can including, you know,
• 44:14
  the the fact that we are surrounded by
• 44:16
  2 oceans here in the Us.
• 44:18
  But based on
• 44:20
  just the the the dynamics in the rest
• 44:22
  of the world,
• 44:24
  the United States is positioned to be the
• 44:26
  big winner in the years decades ahead.
• 44:30
  What capacity do you feel the the government
• 44:33
  has to potentially slow our progress or or,
• 44:37
  you know, be be b the the 1
• 44:39
  thing that gets in the way of that
• 44:40
  outcome. Well, I'm fur in the Beg can't
• 44:42
  be Choose camp. We need to basically double
• 44:45
  our industrial plant to prepare for a post
• 44:47
  globalization world because we won't be able to
• 44:49
  import those finished goods. Or maybe the intermediate
• 44:51
  goods that are important in our own manufacturing.
• 44:56
  With the benefit of Hindsight, I think a
• 44:58
  lot of people realize that we should started
• 44:59
  building this out years ago as opposed to
• 45:02
  relatively recently, but I mean, here's a thing.
• 45:04
  Think of, say the
• 45:06
  inflation reduction act.
• 45:08
  Couple trillion dollars of investment into various green
• 45:10
  tech to build out new industrial plants so
• 45:12
  we can compete in these spaces.
• 45:15
  The economist in me is like, this is
• 45:17
  wildly
• 45:18
  inefficient.
• 45:18
  But we're kind of on the clock.
• 45:21
  And even if we build with subsidies an
• 45:24
  industrial plant that isn't perfect for what we
• 45:26
  need 05:10 years from now. We're still building
• 45:29
  out the electrical systems a physical infrastructure, moving
• 45:31
  the populations that are necessary to have what
• 45:34
  we need at the end. And if we
• 45:35
  have to re tool this stuff between now
• 45:37
  and then fine.
• 45:40
  The efficient time to start this process was
• 45:43
  20 10.
• 45:44
  We started in 20 21.
• 45:48
  I'll take what I can get at this
• 45:50
  point. And even if we're not building the
• 45:51
  perfect thing, we're building something that we can
• 45:54
  then reuse.
• 45:56
  Talk about the role of immigration?
• 45:58
  The countries we've spoken about primarily,
• 46:01
  the only 1 that has a history of
• 46:02
  immigration is the States and in many ways,
• 46:04
  actually, our demo... Demography
• 46:06
  is is is it's the primary benefit. Demographic,
• 46:09
  the fact that we are a young nation
• 46:11
  in many cases because of immigration.
• 46:14
  Talk about the role that that plays as
• 46:17
  a potential
• 46:19
  force multiplier to the advantage of the United
• 46:21
  states relative to some of the other countries
• 46:22
  you're doing. Yeah. The issue is for immigration
• 46:24
  to be a meaningful part of the solution
• 46:26
  is it has... It has to be something
• 46:27
  that has deep roots and you have to
• 46:29
  have a society that can regularly
• 46:31
  assimilate relatively large numbers of people without changing
• 46:33
  the core,
• 46:35
  identity of the country to point that it
• 46:37
  triggers a backlash. Now in the United States
• 46:39
  here, we're kind of on sign curve. We
• 46:40
  have Highs and lows. And right now, we're
• 46:41
  definitely at a low,
• 46:43
  Trump basically criminal all legal route something that
• 46:47
  biden doubled down on, which he should get
• 46:49
  full credit for that or full blame based
• 46:52
  on where you are.
• 46:55
  Which means that the only way to come
• 46:56
  into the United States now is should come
• 46:57
  in illegally. And that's why we're seeing a
• 46:59
  surge of people from Russians from India from
• 47:01
  China to Southern border because close off all
• 47:03
  the normal wet ways that they would have
• 47:05
  used to get here. I will point out
• 47:07
  that we brought in about 2000000 people illegally
• 47:09
  last year. And if it not for those
• 47:11
  people going into the work force our inflation
• 47:13
  problem would be much higher than it is
• 47:15
  right now, at least double, probably triple.
• 47:17
  Until such time as our political systems settle.
• 47:20
  I don't think we're gonna be able to
• 47:22
  have a meaningful conversation about immigration in the
• 47:24
  United States, which means we won't probably have
• 47:26
  a change in our current structure
• 47:29
  for 5 years.
• 47:31
  It's a missed opportunity because as we see
• 47:33
  countries fall apart around the world,
• 47:35
  Now is the time to be setting up
• 47:37
  the policy so you can hoover up that
• 47:39
  labor in those skilled workforce,
• 47:42
  and we're not gonna be able to benefit
• 47:43
  from that.
• 47:44
  Not a lot of places are.
• 47:46
  Really the only country I would argue that
• 47:48
  has kind of made immigration kind of a
• 47:50
  day in day out part of their systems
• 47:52
  Canada,
• 47:53
  But even they are experiencing some significant ba
• 47:56
  because when you bring in a large number
• 47:58
  of people year on year on year for
• 48:00
  15 years,
• 48:01
  they all need homes and they're relatively price
• 48:04
  sensitive when they go looking for them because
• 48:05
  you have to have 1. And so there's
• 48:07
  now an affordability crisis in most of the
• 48:09
  major metro in Canada,
• 48:11
  With most of the people who were born
• 48:12
  in Canada no longer being able to afford
• 48:14
  a house.
• 48:15
  It's a different sort of problem.
• 48:17
  It's not a perceived as a crime issue,
• 48:19
  it's perceived as a cost of living issue.
• 48:22
  So the smart play now would be to
• 48:25
  have a degree of immigration reform that doesn't
• 48:27
  just tough up the border, but opens up
• 48:30
  new avenues for people to come in legally,
• 48:33
  but until we can have that conversation.
• 48:35
  Immigration is not part of the solution in
• 48:37
  a traditional sense. We might be able to
• 48:39
  bring in,
• 48:40
  bring in, run toward probably. A lot of
• 48:43
  illegal to do work
• 48:45
  to keep inflation under control, but that's about
• 48:47
  it.
• 48:49
  We're missing out on what should be right
• 48:51
  now the greatest skills transfer in modern history?
• 48:56
  What other countries are you bullish on in
• 48:59
  terms of long term prospects beyond the United
• 49:01
  States?
• 49:02
  Well, the first 1 is 1 that from
• 49:03
  a demographic point of view looks like a
• 49:05
  no brainer for being a failure in that'd
• 49:07
  be Japan.
• 49:08
  It's the oldest
• 49:09
  demographic structure in the world, they have managed
• 49:12
  to bring the birth rate back up or
• 49:13
  at least re target's reduction.
• 49:15
  But under Trump, they were able to cut
• 49:17
  a trade deal that was humiliating, which almost
• 49:20
  brought them into the American inner circle of
• 49:22
  allies, and there's basically doubling and tripling down
• 49:24
  on that right now. So they found a
• 49:26
  way to get access to Us market over
• 49:28
  the long term,
• 49:29
  and a merger of security interest over the
• 49:30
  long term, but I think we'll do them
• 49:32
  very very well.
• 49:34
  I'm also very bullish on Mexico.
• 49:37
  If it wasn't for Americans
• 49:39
  obsession with cocaine, this should be 1 of
• 49:40
  the most successful states in the world.
• 49:43
  And their demographic structure perfectly complements ours. They're
• 49:46
  already on the verge of having a trillion
• 49:48
  dollar consumer market
• 49:50
  because of their structure. So it's not just
• 49:52
  a source of manufacturing for us. It's also
• 49:55
  an export partner, which is very, very important.
• 49:58
  Southeast Asia, looks very good for similar reasons
• 50:01
  and has less cocaine.
• 50:02
  Young population,
• 50:04
  multifaceted manufacturing system. And it's as a region,
• 50:07
  probably the part of the world that will
• 50:09
  benefit the most from
• 50:11
  industry moving out of the people's republic. They're
• 50:14
  at a similar state... They've several states that
• 50:16
  are at a similar stage of economic development
• 50:18
  that are actually far more economically efficient
• 50:21
  already.
• 50:22
  And there aren't a lot of local
• 50:25
  military
• 50:26
  competitions that are a serious problem. So you
• 50:29
  can end globalization on a global level. Still
• 50:31
  have a regional globalized system within Southeast Asia
• 50:35
  that can then trade with Japan and the
• 50:36
  United States.
• 50:37
  Those are my big 3.
• 50:39
  Would talked about a number of countries that
• 50:41
  are on negative trajectories that you believe can't
• 50:43
  be corrected. Are there any that have negative
• 50:45
  trajectories that can? And if so, what are
• 50:47
  the actions they you do? I mean, I'll
• 50:49
  never sell short the Koreans because they keep
• 50:51
  rewriting the rules of physics to make things
• 50:53
  happen. But, I mean, their demographics are, like
• 50:55
  the second or third worst in the world.
• 50:59
  I'm interested in Poland right now. Poland
• 51:02
  today is kind of like Mexico. Poland versus
• 51:05
  Germany is a little bit like Mexico versus
• 51:06
  the United States.
• 51:08
  But whereas a, a lot of the other
• 51:10
  European countries have aged out,
• 51:12
  the polls still have a lot of people
• 51:14
  aged roughly 30 to 50,
• 51:16
  and if they can build out a pro
• 51:18
  family nat list policy system, the idea that
• 51:21
  they could regenerate their population over the next
• 51:22
  20 years is it's not beyond the pale.
• 51:24
  But if they don't do it soon if
• 51:26
  they're gonna run out of time, they'll have
• 51:27
  a moment. When Germany has failed, when Russia
• 51:30
  has failed and they're like the guiding star
• 51:31
  of Europe at that point.
• 51:33
  But it's only a moment unless they can
• 51:35
  get their demographics back up, watch turkey, positive
• 51:39
  demographics. Again, to like that Mexico, Us sort
• 51:42
  of thing between Turkey and Europe,
• 51:45
  France,
• 51:46
  healthiest demography in the rich world outside of
• 51:48
  the United States.
• 51:49
  They've got some issues to work out, but
• 51:52
  unlike Germany or the United States, they never
• 51:54
  spread out their manufacturing system.
• 51:56
  It's not as efficient as a result and
• 51:58
  they've kind of missed out on a growth
• 51:59
  boom these last 30, 40 years.
• 52:02
  But as globalization fades away, they actually don't
• 52:05
  have to re tool much. Take advantage of
• 52:07
  the world and the form it's going to
• 52:08
  be in.
• 52:10
  About the Uk, that all the data seems
• 52:12
  to suggest that there's now a pretty strong
• 52:14
  majority that feel that Brexit was a mistake.
• 52:16
  Many any chances in your mind that there
• 52:18
  would be, I'm never gonna tell a country
• 52:20
  what to do when it comes to international
• 52:22
  organization membership because there's too many pieces in
• 52:24
  play. Now when when Brexit was first brought
• 52:27
  up, or was it 10 years Ago I
• 52:28
  was like, why no, I can see the
• 52:29
  point of that? Because without
• 52:31
  globalization,
• 52:32
  the Eu has no chance,
• 52:34
  especially once you think that the Germans who
• 52:36
  pay for everything or aging out and aren't
• 52:37
  gonna be able to pay for everything. So
• 52:39
  getting out ahead of it,
• 52:41
  figuring out what's next. That made some sense
• 52:43
  to me.
• 52:44
  It's been 7 years since the Brexit vote
• 52:46
  and the Brits had done nothing.
• 52:49
  And they basically wasted the last decade. And
• 52:51
  now their demographic problems are starting to bite.
• 52:54
  Now, they're not nearly as bad as Italy's
• 52:56
  or Germany's or Russia's China's, but they are
• 52:59
  serious.
• 53:00
  What the brits need to do is make
• 53:02
  up their goddamn damn mind and what Brexit
• 53:05
  actually
• 53:06
  means.
• 53:07
  And it's too late now to go back
• 53:09
  into the Eu and try to salvage it.
• 53:11
  So they do need a third way
• 53:15
  The only way that I can see that
• 53:17
  that works now is to basically get into
• 53:20
  Nafta
• 53:21
  And if they decide to do that, the
• 53:23
  United States will brow beat
• 53:26
  a number of concessions into the agreement
• 53:29
  that the brits really don't wanna agree. They
• 53:31
  will never have as good a deal as
• 53:32
  they head with the European Union. If think
• 53:34
  go with the United States.
• 53:35
  But there isn't a sufficiently large source of
• 53:38
  consumption anywhere else within reach if it's the
• 53:41
  United States or you become a failed middle
• 53:43
  power.
• 53:45
  None of these are good solutions for the
• 53:46
  British.
• 53:48
  So so humiliation like Japan, but but with
• 53:51
  longer term positive implications of of of of
• 53:54
  bending.
• 53:55
  Exactly. I mean, the world has changed and
• 53:57
  it's changing in a direction that is not
• 53:59
  favorable for what the brits have normally been
• 54:02
  good at. So they're gonna have to take
• 54:03
  a deal that they don't want or they
• 54:06
  have to go it completely alone
• 54:08
  and
• 54:10
  that doesn't look nearly as frankly.
• 54:12
  Who who do you see as America's primary
• 54:14
  rival as the century rolls on?
• 54:17
  I I think we're gonna take about 20
• 54:19
  years off from even having that conversation.
• 54:22
  We have to figure out when I say
• 54:24
  We Human humanity has to figure out what
• 54:26
  the economic model is for post globalized
• 54:28
  post demographic collapse world and until we know
• 54:31
  what that is,
• 54:32
  and we haven't really started
• 54:34
  that yet. We can't imagine what the geography
• 54:37
  of excess for that new model is going
• 54:40
  to be. Because whatever it is. It can't
• 54:41
  be based on consumption, production or investment.
• 54:44
  Those are the 3 pillars
• 54:47
  Well, consumption, production investment in labor. Those are
• 54:49
  the 4 pillars of all economic models in
• 54:51
  the world today, and they're not gonna be
• 54:53
  relevant in 20 years on a global basis.
• 54:55
  So until we figure out what that new
• 54:56
  model is, I have no idea.
• 54:59
  Peter Zion, thank you so much for joining
• 55:01
  me. Again today,
• 55:03
  always a pleasure to access to your insights,
• 55:05
  and to spend a little time with you
• 55:07
  I'm grateful for him. My pleasure.