By: Peter Zeihan
Given the state of our country, economy, and our world, last year I sought out several different economists to look at the current state of affairs, what has happened throughout history, and what that might mean going forward.
Through that journey I found Peter Zeihan, a geopolitical analyst. He makes that study fun and fascinating. He lectures regularly, has been on several podcasts (including Joe Rogan), releases daily videos, and has published multiple books. This was one of his firsts.
This book covered so much. It is overwhelming. But the two topics that blew me away were the United States’ geography and global demographic trends.
United States Geography:
The accidental superpower he is referring to is the United States. Because of a myriad of factors out of our control, the US was always going to be a superpower. Geography is one of those main factors.
Borders: The US borders are made up of Canada, Mexico, the Pacific, and Atlantic Oceans. It is much more difficult to attack from the Ocean as it is from land. So two of the sides are protected there, while the US maintains the most powerful navy in the world. Canada and Mexico are both very disconnected countries because of their internal geography and their populations, economies, and militaries are laughable in comparison to the US. Attacking the US on US soil is more difficult than any other country in the world.
Waterway Network: For an economy and trade, transportation is a major factor. It is much cheaper to ship something by water than by land or air. Being more inexpensive gives you a competitive advantage. The US dominates here as well. The US has 12 interconnected rivers, including the Mississippi, which is the longest navigable river in the world – a perfect route for trade. Additionally, much of the US coastline is lined with barrier islands, which break up the waves generated from storms and the like. This makes navigating our ports much easier than most other ports in the world.
Fertile Land: The US has a very diverse climate and because of that can grow a wide variety of crops well. Combine the low cost of energy and abundance of waterways and the US can effectively feed its own population without importing goods if need be. The same cannot be said for most of the rest of the world.
Navigable Mountain Ranges: The mountain ranges in the US have several naturally occurring mountain passes. In countries where this isn’t the case, like Mexico, it is extremely capital intensive to create passes through mountain ranges. And so the countries are disconnected and cannot readily trade with one another.
Oil and Gas: The US oil and gas industry is the cleanest and strongest in the world. The Shale revolution brought natural gas to abundance, which burns far cleaner than coal and is cheaper and cleaner than oil. Because of this, the US has and can achieve oil independence. This is not the case for pretty much the rest of the world, not to mention the poorer qualities of crude delivered by the Russian and Arab states.
Wind: The US has multiple wind streams that cross its territories. When one isn’t blowing, the other is. This makes the US one of the best cases in the world for generating wind energy.
Solar: The sunbelt in the US receives some of the most sun (accumulative days per year) out of anywhere in the world. To generate solar energy, you need to have abundant sun. This isn’t the case for most of Europe and Asia.
All of these physical characteristics of the United States’ geography, give the US a competitive advantage in the global marketplace as well as making the US robustly independent from the rest of the world. We are indeed lucky to live in the USA.
Global Demographic Trends:
Historically, most civilizations were primarily agrarian. Meaning, most people worked on the farm and had lots of kids because they were free labor and child mortality rates were higher. This meant that there were many more children than the middle ages and more middle aged compared to elderly. Like Laos of today.
A demographic pyramid like this is inflationary because the population continues to grow. Those ages 20-40 are the primary consumers because they are having kids, buying cars, and houses. Those in their 40s and 50s are the most productive in their careers because they have experience. They make the largest incomes and invest in businesses that add productivity to an economy. When there is a large portion of the population in this age range, capital is cheap. As a population ages into their 60s and beyond, they begin to retire and rely on state programs to support them. They stop investing and consumption decreases drastically.
Enter the industrial age. As technology improved, more of the population moved into the city and off the farm. People started living longer and having less children because frankly they didn’t need the labor and kids are expensive. Slowly the population pyramid begins to flip. Like Japan.
When a population has more elderly than 20 and 30 year olds, a collapse is inevitable. There is not enough labor in the 20-50 age range to support the state programs of the elderly. There are not enough 20 to 30s to provide enough consumption to sustain the economy or have enough babies to grow the population out of this slump. Eventually, you run out of enough military age males (18 to 35 year olds) to defend your country. This is what is happening with Russia and China. The world events we are seeing right now have been 30 years in the making starting with China’s one child policy. They will soon not have enough military aged males to defend their country. They are desperately clinging to life right now.
Isn’t that fascinating? You don’t hear this on the news. China and Russia are in a fragile place and on the verge of collapse primarily because of population collapse.
What about the US?
The US has a more stable population because of our immigration policies and the baby boomers having so many kids, AKA Millennials. The Zoomers are slightly smaller due to Gen X being smaller than the Boomers. Capital has been cheap for a long time because the Boomers were so large. As they retire, the smaller Gen X population will make capital more expensive, likely for a decade, until the Millennials mature in their careers. The Millennials really need to pull their weight and make some babies though.
The US is the superpower that it is today in large part because of its geographical characteristics. Those competitive advantages give us options where the rest of the world does not. We may be trying our best to screw it up right now but the rest of the world has much stronger headwinds. The future has its challenges but make no mistake, we live in the best country in the world. Thank your lucky stars.