8 Aug 2022

Globalisation's days are numbered, says US strategist

From Afternoons, 3:10 pm on 8 August 2022

Globalisation lifted the standard of living for many across the globe, but the party is over, says author and geopolitical strategist Peter Zeihan.

His new book The End of the World Is Just the Beginning: Mapping the Collapse of Globalization, paints a somewhat gloomy view of the future.

Post-war globalisation drove urbanisation and that in turn has driven population decline, he told Jesse Mulligan.

Container ship

Photo: Massey University

“When people got the opportunity to industrialise and globalise, we urbanised, we moved off the farm to take those manufacturing and services jobs.

“And when you live on a farm kids are free labour. So, you have a whole bunch of them. But when you live in a condo, kids are really loud, really expensive, really annoying pieces of mobile furniture and adults are not stupid.

“So, we had fewer, you play that forward 70 years. And it's not that we're running out of children. That happened 40 years ago, we're now running out of adults.”

It is impossible to run a modern economy without a consumption base and a worker base, Zeihan says.

“We've always known we were going to hit this point in this decade. And now here we are.”

Add to that, global supply chains are unravelling, he says.

“We were always going to hit a breakpoint this decade, but certain things have been able to speed up the process a little bit. Covid is absolutely near the top of that list. Because all of a sudden, everyone saw a health reason to re-shore a lot of the supply chain.

“So, we got to have a jumpstart on reshoring. And breaking up the globalized system of supply that we've become used to.”

There were signs of the globalised system starting to come apart long before this however, he says.

“Barack Obama was part of this, we basically had eight years of no foreign policy in the United States, because he just didn't find the topic interesting.

“And as a result, all of our alliances withered. Then we had four years of Trump, which was actively anti-globalist, followed by Biden, who is actually even more anti-globalist, when it comes to trade topics.”

Consequently, the United States’ willingness to hold up the “civilizational ceiling and keep the world safe for transport is gone”, he says.

He believes that existing “isms” are incapable of meeting the realities of today.

“Consider American-led capitalism or European democratic socialism or fascism. These are all different methods for managing economic systems, for regulating supply and demand, labour and investment and so on.

“But every single one of them is predicated on something that has been true since the dawn of recorded history, populations get bigger, not at the same rate, not the same every year, but the pie always increases.

“So, it's about divvying up a larger and larger resource. That's not the world we're in anymore. The advanced world's population has already peaked. In the case of Germany and Japan, it's been declining for quite some time.”

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Photo: Harper Collins

Economic super power China is heading for serious demographic trouble too, he says.

“We’re going to see the end of the Chinese system this decade,” he says.

China’s rapid industrialisation has been coupled with a collapse in population, he says.  

“So, they went from having six and seven children per woman back in 1970s to 1.1 today, which means that the Chinese population is already in collapse.

“And with the new data that has come out, actually, since the book published, we now know that there's going to be less than 650 million Chinese by 2050.

“And that means a complete economic collapse this decade, because by the time we get to 2030, there will actually be far more retirees in China than there are working age people, and no children to speak of to generate the next generation at all.”

Shanghai and Beijing have the lowest birth rate of any metro region, of any era in any country in history, he says.

“They aged past the point of being able to repopulate probably 15 years ago, and their population probably actually peaked around 2005.”

A de-globalised world would have more regional powers, he says.

“I expect we'll have a series of regional powers that are, if not immune, heavily resistant to the trends that I've identified.”

“The United States and New Zealand are not the only countries that have been able to maintain a reasonable birth rate, France and Turkey both make that list.

“So, if your population is stable, and you have a military that is kind of right-sized to your needs, and the resources you need are relatively close at hand so you can get them yourself as opposed to having depend on a global system that's breaking down, you can do pretty well.”

New Zealand and Australia will be a force in this region, he says.

“You've got Southeast Asia right there, which broadly speaking is self-sufficient in basic foodstuffs, and energy and raw materials.

“But if they're going to grow, they're going to need more of all of it. And that's where you and the Australians come into play in a very, very big way.”

A fly in the ointment for New Zealand is energy, he says.

“You're gonna have to get your petroleum from somewhere and the Middle East is going to be as dicey as it's ever been, especially with the United States no longer there. A lot of these regional powers are going to have to try to get there themselves to get the energy, and the United States just doesn't care.

“So that means for the Kiwis, you either need to find another source of energy, or do what the Japanese have done and find a way to cut a deal long term with the Americans.”

The war in Ukraine has not just disrupted energy supplies he says, just as serious is the global trade in fertilizer.

“The breakdown in the fertilizer system, it was going to happen anyway, because of the Ukraine war it's happening much faster.

“That is by far the thing I'm most concerned about overall, it will take us 20 to 30 years to rebuild the supply systems that we're losing right now.

“And in the time that we don't have enough fertilizer to grow food for 8 billion people, we won't have 8 billion people any longer.”