well so there are two main pieces here there there there's the claim about deglobalization
and then the claim about demographics i don't know which we should take first i there's
there must be a few assumptions built into each of them i'm wondering maybe let's take
deglobalization first that seems to be sure it's a very simple claim why is it happening and
what if we i mean just just imagine a case where you see you're claiming that america long ago
decided to stop being the world's cop and pull back and i'm wondering what ian thinks of that but
let's just say that's true and it's been true and it currently is true that's the kind of thing that
could change right and that would upend at least one crucial part of this thesis what if everyone
who mattered read your book next week and and thought oh we have to arrest this slide toward the
brink we have to secure a globalized supply chain and make the world safe for commerce once again
why couldn't that happen well let's start with why it can't happen and then we can go into why
it won't happen first the can't if you want to patrol the global oceans you need to make sure
that there's one overarching naval power who has the capacity to do it and there are not
challengers to the throne who could potentially disrupt it the us navy is potent but it is
designed to smash countries not protect trade anymore we have 11 super carriers another three
are on their way fantastic tools for military power projection but if you want to patrol the
global oceans you need destroyers i would say you probably need about 800 of them we have
70 and half of those are dedicated to protecting the carriers it's also not the 1960s anymore
the soviets were never great at anything naval but now there is a wide range of middle powers
of which china is one who would like to have their own sphere of influence in terms of maritime power
and that is just not something that works in terms of unrestricted merchant activity so even if the
united states wanted to do this we no longer have the capacity to do it and nor is there a country
or a coalition of countries that have the naval power that would be necessary to build some sort
of pax global system we just have sailed past that to put it warmly in terms of why it won't happen
the united states politically has moved on and part of what made globalization work is that
for the americans globalization was a security pact not an economic one everyone else got the
economic benefits we got to be able to write everybody's security policies that was the deal
you do that for 70 years and economics change in the home country and so we have seen the
the gradual departing of manufacturing for example from american shores to the wider world
we have seen countries that normally could not have built the institutional
or physical infrastructure or industrial plant be able to do so because of global finance
and we've seen other players come into the market in terms of energy and agriculture that
couldn't have done so in the imperial era except as colonies they're all independent countries now
and there's some resentment in the united states this is part of the rise of donald
trump and joe biden part of the return of populism to the core of our political debates
the idea that the united states has gotten a raw deal even though the deal is one we made
even if though it's one we pioneered and the idea that the united states is going to build
out a navy so it can bleed and die so that the chinese can import raw materials and export
machined products that was always a dubious line and so here we are at the end of the system
i would say when i first met what was that nine years ago eight years ago yeah
yeah what he just laid out was one of my scenarios that uh this could happen quickly
this could happen over a large period of time there could be a transition period
uh events of the last eight years however have changed my mind on that i've seen significant
short-sightedness in foreign policy making in the united states and europe but most of all in china
i've seen a collapse of china's institutional capacity to process information leading to ever
and ever worse problems and now we've got a little bit better demographic data that has come out of
china which is truly horrific it's actually it's come out since the book published just a month ago
and we're now looking at a chinese population that's less than half of what it is today as
early as 2050 and in that sort of environment china's just not competitive in anything
and that assumes there are no interruptions to the flows of stuff into china so i have lost track of
the number of clients that have come to me in a panic and wondering when things are going to go
back to 2019 whether it's because of trump or because of china and i really don't have a lot
of good news for them anymore and just in the last 48 hours i am very concerned about germany's role
now that nordstream is offline we don't know if it's going back online the blast of the
four pillars that support german industrialization manufacturing are in the process of crumpling we
have become so vulnerable in the last eight years and everything has become so exposed and just the
bedrock that allows globalization to function the idea that materials energy food and manufactured
products intermediate products in particular can just flow effortlessly that's all stopped
and when i look at a country with a terminal demography who has no control over its energy
or its machine inputs it does not take much of a breath knock that over and i think we're going
to see in very real time in just the next three months just how bad this can get for
germany very quickly and if we've got germany and china and a degree of economic duress at
more or less the same time but for different reasons i don't see how we pull out of this
i would love to be wrong i would love for there be a transition period where we have a chance to plan
but everything has gone so far with no mitigation that i think we're well past the point of no
return now i think it's its own variable but demographics are perfectly capable of killing
it all by itself either of these issues from my point of view are death blows and having them both
in roughly the same time frame is just really bad luck i'd like to go back to something that ian
said about the russians i am not convinced that they're going to turn nordstrom back on or not
i don't know that's an internal russian political move that it's entirely possible they haven't made
the decision on i am far more convinced that even if you put nordstrom to the side for the moment
all of the pipes that traverse belarus and ukraine are ones that are probably not long for this world
it's difficult for me to see a ukraine that believes it's losing the war
to allow those to continue to operate and i think one way or another we're going to
be seeing russian energy fall off the market for a significant period of time
and by significant i mean decades the last time the russians for whatever reason had to shut in
their oil it was 1992 because their exports their raw production was fine but their internal market
collapsed so industrial demand went away and that meant you had wells shut in the permafrost
and when that happened the wells become damaged and you get frost and water expansion damage up
and down the pipes and in the wellheads themselves and eventually you have to rebuild most of the
system that took them 30 years last time so nordstrom is like the issue of the moment
like literally right now this moment but there is a half of other than other things that are
semi-related behind the scenes that are perfectly capable of making any german hope for getting back
to some sort of old normal or transitioning to a new normal on a time frame they can't control and
in that sort of environment i am very concerned about what happens with german manufacturing
and i'm even more concerned about what that means for germany's position within the western world
because it feels to me like the russians are presenting the germans with a simple choice
we can keep the lights on for you but that means you're out of the coalition that is supporting
ukraine and that means the logistics that you have that is supporting ukraine are no longer in play
or you can do this without us and good luck with that okay so economically
russia is the source of largest world's largest source of fertilizer in the components that are
necessary to make fertilizers specifically 40 of potash russia is the world's second largest energy
exporter in terms of oil number one with natural gas which is not just used for fuel especially
in germany it is used as an industrial input it's the base of german heavy industry it is
arguably one of the top three items that the germans have in
terms of making their industry globally competitive and so if something happens
to that you're talking about a loss of the world's third largest manufacturing base
the energy that the russians export in oil form that's about five to eight percent based on who's
doing the math in terms of global energy supply and oil supply and demand mechanics are inelastic
so if you take off five percent of global energy you can count on prices roughly doubling there's
no way we can have globally available fossil fuels without the russians as part of the system
on the flip side they are also major players in things like platinum and palladium and lithium
and rhodium and nickel and copper you also can't have the green transition without the russians
so the russians and germans time and time again generation on generation have had this weird dance
where they have to be each other's largest economic partner but they are also each other's
largest strategic rival so they move together to try to avoid a war a conflict happens anyway
they hive apart there's economic dislocation as a result which the rest of the world knows as a
recession or depression and then they repeat it they've been doing this for centuries
and this is probably the last time they do it in my opinion because of demographic restrictions
so who quote wins unquote this time around really matters
this time passing zero seven zero four one four zero rgb linking via septum
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