Peter Zeihan was interviewed by Joe Rogan where Zeihan again predicted the collapse of China. This time Zeihan says it will happen within ten years. Zeihan has been predicting China’s meltdown since 2005. He repeats the call for China meltdown and possible breakup or breakdown multiple times. In 2010, he said it would happen within 3-5 years.
Nextbigfuture agrees that China under President Xi is screwing up. I also agree that China screwed itself royally with the one-child policy. The demographic decline will be a 1-2% per year economic headwind from now to 2050 because of a declining working-age population.
Zeihan ignores that China can still increase rural efficiency and continue to train people from the countryside and bring them into the urban areas. Zeihan does not try to consider any counterarguments once he has brief problem he can describe in four sentences and a conclusion he can pitch out in one sentence with three sentences of detail.
Zeihan covers a lot of ground. He makes broad and incorrect statements and has a bad analysis of history. He works off of incorrect and over-stated premises around population pyramids. He ignores critical factors and vital specifics.
My Public Track Record of Being Right 90% of the Time – Skip if You Do Not Need to Know
Why am I one of right people to call Peter Zeihan on his BS? I have a public record of predictions. I am ranked 49th on the public prediction site Metaculus and this is out of over 3000 predictors on the site. I have been top 39-40th in the 3 month, 6-month and 12-month time frames. Some of the people ranked ahead of me have been predicting many years before I started in November, 2019. I am probably in the top 1% of predictors.
A brier score of 0.25 is associated with expectations for many random guesses with 50% confidence getting about 50% correct. My brier score of 0.089 on over 400 resolved predictions means about 90% right on 90% confidence. I have about 40 that were wrong out of 400 with scores worse than 0.25 brier score.
Zeihan Bias
Zeihan wants to conclude that China will collapse. There is an audience that wants to hear this conclusion. Anti-China speakers get paid to speak all the time.
Zeihan loves to use population pyramid analysis and some geography to come to absolute conclusions. It is easy to show this data and to make crazy conclusions that seem plausible at first.
There are times Zeihan and I can agree on a conclusion but often it is for different reasons. Here is a video where I explain why China loses badly attacking Taiwan and the US is guaranteed to defend. This is a case of a broken clock being right twice a day.
Zeihan Decades of Being Wrong
Zeihan has been repeating for a decade or two that the US will withdraw from being the global cop and will not protect the sealanes on the world’s oceans.
I have reviewed Zeihan and his mentor Freidman many times.
He makes too much of the Bretton Woods agreement.
He believes that when the US stops importing oil then they will stop protecting the seas and the US will lose interest in being the “global cop”.
He is overstating the US role policing order as opposed to the US and the US military industrial complex wanting to control things globally for different reasons.
For the last two years of the Trump administration there was a balance between oil supply and demand for total US oil usage. However, the US was still importing and exporting oil. They were taking in raw crude from others and refining it.
Here is a summary of what has been happening with US fossil fuel imports and exports.
Crude oil accounts for the largest share of U.S. total energy imports on an energy content basis. Even though the United States remained a net importer of crude oil in 2021, crude oil net imports were at the second lowest annual level since 1985. Some of imported crude oil is refined into petroleum products that are exported.
After declining nearly every year since 2005, U.S. total petroleum net imports increased in 2021, mostly because of an increase in U.S. crude oil net imports. U.S. crude oil imports increased in 2021 and crude oil exports decreased in part because of reductions in U.S. crude oil production in 2021 resulting from lingering effects of the economic response to the COVID-19 pandemic. U.S. crude oil exports dropped in 2021 after having increased every year since 2010 and reaching a record high in 2020. U.S. crude oil imports increased by about 235,000 b/d in 2021 to about 6.1 million b/d. Crude oil net imports were about 3.1 million b/d in 2021.
U.S. petroleum products (excluding crude oil) imports and exports both increased in 2021; imports by 19% and exports by 7%. Even though total annual petroleum products exports in 2021 were the highest on record, they were not enough to offset imports, and petroleum product net imports increased in 2021.
Total natural gas exports increased every year since 2014, and in 2017, the United States became a net exporter of natural gas for the first time since the late 1950s. In 2021, total natural gas exports reached a record high of 6.65 trillion cubic feet (Tcf), or about 18.23 billion cubic feet per day (Bcf/d). Increases in domestic natural gas production and increases in liquefied natural gas (LNG) export capacity have contributed to growth in U.S. natural gas exports. Even though U.S total imports of natural gas increased by 10% to about 7.69 Bc/d in 2021, natural gas exports contributed to record low natural gas net imports.
The US is now sending more oil to Europe and liquified natural gas because of the Ukraine War and forcing Europe to stop importing Russian oil.
The fracking revolution has been substantially reduced. There are anti-US domestic oil production policies.
Even if the US increases oil supply or drastically reduces demand.
1. Net Zero would not mean millions of barrels of different oil products are not moving in and out.
2. The US would not stop at net zero. They might end up being a net exporter which means sending oil and LNG out.
They still need to defend the in and out movement and trade.
The US is still making other stuff. Huge amounts of money need to be defended to move things in and out.
If the economy evolved where production and demand were more localized. The US military industrial complex would make up reasons to intervene and “protect things” or “defend things”.
Zeihan is predicting that the US military industrial complex will choose to go into permanent retirement. Does he even try to listen to his bizarro bottom lines?
Zeihan makes a big deal of the Pax Americana period. Pax Americana (Latin for “American Peace”) is a term applied to the concept of relative peace in the Western Hemisphere and later the world beginning around the middle of the 20th century. It was caused by the preponderance of power enjoyed by the United States. Although some would also credit several powers having nuclear weapons.
Zeihan ignores the Pax Britannica. Pax Britannica (Latin for “British Peace”) was the period of relative peace between the Great Powers during which the British Empire became the global hegemonic power and adopted the role of a global police force. Between 1815 and 1914, a period referred to as Britain’s “imperial century”, around 10,000,000 square miles (26,000,000 km2) of territory and roughly 400 million people were added to the British Empire. Britain’s Royal Navy controlled most of the key maritime trade routes and enjoyed unchallenged sea power.
Zeihan predicts that without America as cop that world will go into fighting and chaos and world trade will collapse. This will be followed by the collapse of countries.
Zeihan has decent population pyramid analysis and some of his other analysis and problem identification is useful.
However, I do not agree with the end predictions and conclusions that emerge after the analysis.
I have listed what are some Zeihan predictions and I have put up counter predictions. So we will see who is right.
There does need to some time ranges on the predictions.
Reviewing Zeihan and STRATFOR
In 2010, Peter Zeihan was Vice President of Strategic Intelligence for STRATFOR.
STRATFOR is a geopolitical consultancy which was founded in 1996 by George Friedman. Friedman wrote the book “The Coming War with Japan” in 1991. For prediction accuracy, you may recall the terrible second war of the Pacific between the USA and Japan…Oh that’s right it never happened in our reality.
The book claimed a military confrontation between the United States and Japan is likely within the next 20 years. According to the authors, the issues are the same as they were in 1941: Japan needs to control access to its mineral supplies in Southeast Asia and to have an export market it can dominate. In order to do this, Japan must force the United States out of the western Pacific. There is little effort to explore the substantial differences between the 1940s and the 1990s.
Those were Friedman’s mistakes. Let us look at Zeihan.
Zeihan led the 2010 STRATFOR forecast for the decade. Zeihan was at STRATFOR from 2000 to 2012. He made their predictive models.
The 2005 prediction of Zeihan and STRATFOR:
In 2005, STRATFOR forecasted – China will suffer a meltdown like Japan and East and Southeast Asia before it. The staggering proportion of bad debt, enormous even in relation to official dollar reserves, represents a defining crisis for China. China will not disappear by any means, any more than Japan or South Korea has. However, extrapolating from the last 30 years is unreasonable. … At the same time that we see China shifting into a dramatically different mode.
In their 2010 Review of 2005, they claim that China’s slowdown from 2005-2010 meant that they were somewhat right about China. Nothing remotely similar to a Japan-style crisis happened and the slowdown was similar to China’s growth changes from 1993-2000.
Southeast Asia had the big recession in 1997. Malaysia and Thailand had a few more stumbles afterward. They are back to growth in the 4-8% per year range. So even if China has a full-blown recession, it does not follow that it would not return to 4-6% GDP growth. The US has recessions and then returns to 1 to 4% GDP growth. The US had -3 to 2.5% GDP growth during the 2008-2016 Obama Presidency.
Japan’s growth has been -2% to 2% from 1989 onwards. With a -5% in 2009.
source:
China has not yet faced its Japan-style crisis but we continue to forecast that it will — and before 2015. [per Zeihan]
The ability of China to continue to supply cheap exports to the United States might come into danger. Not on the whole, because all of the Chinese regional cities will still have an interest in doing that, even once the Chinese system cracks. But you’re going to have to pay very close attention to your supply chain there as the politics of China become unglued.
In 2010, Zeihan said we expect the economic collapse of China in this coming decade. We’ve been talking for awhile about how the economic system there is remarkably unstable and we think that they’re going to reach a break point as all of the internal inconsistencies come to light and shatter. By the end of the decade, it’ll be pretty obvious to everybody that the China miracle is over.
China is now having slower growth. This has been made worse by the COVID pandemic for the past two to three years and because President Xi has been prioritizing his own power over allowing China’s technology companies to grow. China also had a property bubble and debt bubble.
There are debt bubbles and recessions but has not headed into a Japan-style lost decade.
Zeihan also says that China has not had innovation and China’s workers are less productive than Mexican workers. Yes, China has stolen or copied technology but China has companies and people that are innovation in science and technology.
Zeihan covers a lot of ground. He makes broad and incorrect statements and analysis of history. He works off of incorrect and over-stated premises around population pyramids. He ignores critical factors and vital specifics. His methodology is flawed, broken and his track record is terrible.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
A frequent speaker at corporations, he has been a TEDx speaker, a Singularity University speaker and guest at numerous interviews for radio and podcasts. He is open to public speaking and advising engagements.
If we want to prevent China invading Taiwan, the US should sell some missiles with nuclear warheads to them. These can be aimed at major Chinese cities so if Taiwan appears to be losing a war they can destroy these cities. It is the same thing that prevents any invasion of N. Korea. Bold and effective.
Peter Zeihan is a talented speaker but I can’t take anything serious after hearing his Arguments on Bitcoin. He made the argument that Bitcoin has no intrinsic value. This is true, but only because “intrinsic value” is not a real thing. The value of all things is determined buy want/need and scarcity. A glass of water in the middle of the Gobi desert is worth a fortune, but along the shore of Lake Michigan not so much. He made the claim that Bitcoin is not a store of value, which is insane. It is objectively true that you can exchange it for currency, and have been able to for years. smh
Robots can make up for a labor shortage however robots don’t buy stuff.
And older domestic population means less consumers
Also the EU and Russia are facing demographic collapse
I guess tbe CCP can trade with BRICs countries but they don’t have any money
And won’t have globalization anymore to get rich from
The CCP is going to get hit with a consumer shortage both at home and abroad
China is not a democratic republic. So China is not the Chinese people. China is the ruling oligarchy. And the oligarchy does what is best for themselves. The Chinese people are simply their minions.
Do these new war game results affect your conclusions? Especially if we lose most of our planes on the ground…
https://www.csis.org/events/report-launch%E2%80%95-first-battle-next-war-wargaming-chinese-invasion-taiwan
I have seen the wargaming. The wargame assumes that China can pound Taiwan for weeks and months to take out air and missile defenses in the mountains. They do not mention that global stock and financial markets crash by 50% on the first day or two of this offensive.
It also does not go into how utterly crappy China’s pilots are and have they have no hope of succeeding in taking out air defenses in the mountains.
The conclusion seems to be lets spend hundreds of billions more on smaller ships to keep aircraft carriers further back.
They do not discuss transferring 100-300 older F-16 and F-18 to Taiwan in any (prewar phase) and loading Taiwan up with more missiles and artillery.
The military and US intelligence would be some kind of massively incompetent to allow planes to get wrecked on the ground. Intelligence got wind of the Russian pre-emptive attempt to take out Ukrainian planes on the ground. Russia tried and they failed.
Brian, what about AI in all of this? Surely its ability to replace humans in many ways will solve at least the workforce half of the issue for China right? Also isn’t China working on being able to incubate a child outside of a woman’s womb?
If there is complete Teslabot success then the economy of the world is solved and decoupled from per capita aspects. Then a trillion Teslabots can make Singapore have a larger economy the China today. If there is complete technological transcendence then I would argue we need more humans. One human per asteroid. One human per solar system in the galaxy. A billion or trillion people per solar system. Billions of galaxies.
It’s rather common in the new competitive digital media to carve out a niche. One such niche is the cottage industry that uses “bashing the current enemy of the US” as the click-bait hook on which to base one’s business model.
That’s all Ziehan does. The flag-draped US patriots love China bashers. Thus Zeihan’s audience, his “rice bowl”, and his key to financial success
He has the requisite air of “confidence” and the “raw meat” for his audience. Other then that, he’s no one to be taken seriously..
It depends on how you define “collapse”.
Future China is demographically destined to be the world’s largest old age home, one controlled by Orwellian social controls that will snuff out political opposition and dissent, while strangling innovation and initiative.
It will be the Sick Old Man of the World in the 21st century (like the Ottoman Empire was the Sick Old Man of Europe in the 19th century). It may not break apart in a new Warlord Era, but it will no longer be important on the world stage.
If China doesn’t end in a bang, it will end in a whimper.
Brian’s getting a little payback for Zeihan bashing Tesla.
Zeihan and Tesla have a lot in common. Spot on the long-term predictions and ultimate outcomes.
Terrible on timing. (By years for Tesla, and Decades for Zeihan)
You will notice that I was criticizing Zeihan and Friedman for over 5 years on topics they got wrong consistently for over 20 years. Their wrong track record pre-dates the recent also wrong EV claims.
No spot on long-term predictions for Zeihan unless you are saying that repeating recession/depression in China for 20 years and getting a recession in 2021-2022 counts as being right with two years out of 20. It is like better 29 on the roulette wheel and getting it wrong 30 times before getting it right.
I found this guy devoid of anything based on reality. Don’t know why Rogan allows clowns like this on his show. And if he must have them why he doesn’t push back.
PZ is far more accurate (he predicted Putin’s invasion of Ukraine for 2022 because the Russian are running out of young males after 2022 to fill the ranks of the Russian army – demographics is destiny).
You want crazy? Try watching JRE podcasts with Hancock and his pre-ice age civilization hypothesis.
I do not believe Putin had that PZ analysis. Stalin did not care about wasting 20 million Soviet men in WW2. Putin still has 14 million military-age men. (20-34). He can expand the window to 20-44 in ten years. The 2022 invasion was inevitable because Putin has been complaining about NATO breaking the 1990s agreement to not expand NATO into the x-Eastern Block. NATO started expanding in 1997. Putin said repeatedly to back off. Putin said he wanted to restore much of the Soviet Empire. He invaded Crimea in 2014.
https://www.bbc.com/news/world-europe-56720589
Troops starting building up in March 2021.
https://en.wikipedia.org/wiki/Prelude_to_the_2022_Russian_invasion_of_Ukraine
Biden publicly said a small incursion into Ukraine was OK and might not get a response and the US disastrously pulled out of Afghanistan.
Putin thought hitting them in Crimea went pretty well and russia just did not have enough to take everything in 2014. But now he had a buildup and thought it would be Crimea part 2 and he would sweep to Kyiv and get it all or most of it in a month or so.
Putin believed he had further modernized and underestimated the corruption in procurement and logistics (bad and undermaintained trucks.)
Nothing to do with go now because I have 14 million men of good age now and 30 million of OK age and in ten or twenty years I have 10-12 million good age and 25 million OK age.
I probably did have something to do with Putin is 70 and he can only count on being in control til he is 80 and he wanted to leave a legacy.
Give it a little time. Joe usually presents people from both sides of any topic, I’d bet he is working on scheduling a guest that will present a different perspective, because Joe is not a historian he would not attempt to argue against his ideas, but it’s coming.
Last summer, Zeihan predicted a mass famine in the developing world that was supposed to start in September. Obviously that has not happened either. It was both TDS (Trump Derangement Syndrome) as well as the covid-19 debacle that broke Peter Zeihan’s brain.
As you can tell, I really don’t like Peter Zeihan any more. He just gets under my skin with his cognitive dissonance.
I’ve posted too much in here anyways. I will shut up for a while.
Consider the following: The U.S. went through 7 depressions (yes, spelled with a “D”), a civil war, two world wars, and extended periods of no effective law and order; and still emerged as the dominant power by 1950. Who says the Chinese cannot undergo a similar tumultuous rise to power as well? China could very well have a major depression. Then they will come out of it and grow even more economically and technologically. Peter Zeihan and his mentor George Freidman are one-dimensional thinkers.
“Who says the Chinese cannot undergo a similar tumultuous rise to power as well?”
Demographics say so.
China has a declining and aging population that peaked years ago.
America has always had a growing population.
A declining population can be over come through increased technological innovation, automation, and general improvements in productivity. Declining demographics is overrated as a problem.
Innovation requires investment.
Without young people saving for their retirement there isn’t enough capital formation to provide the investment for innovation.
Without young people purchasing goods (old people primarily purchase services, especially medical services, later in life – they don’t need or want a new car or larger flat screen tv) there is no return on technical investment.
China’s one baby policy created a one generation long demographic sweep spot with a very low dependency ratio (non-workers to workers) because for a few decades they had relatively few children and retirees and a massive worker bulge. This low dependency ratio was the foundation of China’s economic success.
That worker bulge is aging out of the work force creating huge financial burdens on the remining workers to pay for the pensions and medical expenses of their elders.
Robots don’t buys stuff.
Tbe CCP has a demographic problem
Tne EU has a demographic problem
Russia has a demographic problem
Bad demographics = low consumption
Low consumption = low business profits
After real estate and infrastructure
Exports are the biggest part of the CCPs economy
Domestic consumption will fall
And Exports will fall
Brics countries dont have any money
The US doesnt trust the CCP
Except that the US birth rate has been declining for two decades. It won’t be long until we have the same problem unless something drastically changes. Between effective contraception, depressed wages, increases in student and other debt among the younger population, and the cost of healthcare; people are waiting longer to have children or not having them at all. It’s happening to a degree in all industrialized countries.
I sent the following to my two Senators (both Dems) as well as my Representative (moderate Republican);
[start]
About 8-10 years ago, based partly on books such as those by Peter Zeihan as well as many other sources, I became convinced the U.S. would undergo an economic renaissance due to the fracking revolution as well as a resurgence in American manufacturing. My reasoning was thus. The fracking revolution would give us the lowest cost energy anywhere in the world. It would also make us an energy exporter. Call it Saudi America. We actually became this in 2020. Additionally, the increased cost of labor in China coupled with increases in industrial automation (my profession) would reduce the labor arbitrage benefits of manufacturing in China. This, combined with the lower energy costs of the fracking revolution would return a lot of manufacturing to the U.S. Call it Asian-export America. We would have been both an OPEC-export economy as well as an “East-Asian” export economy. This combination would have resulted in at least a 30 year economic expansion that would deliver lots of tax revenues to the Federal government, not to mention untold economic prosperity across the board. It would have put the Reagan (PBUH) revolution to shame.
I expected the federal government to become totally addicted to the tax revenues resulting from such an economic boom. No politician in either political party could ever be so silly as to kill these two golden geese that lay the golden eggs. Or so I thought.
The last year has proven me wrong. As a member of the political class, what is your response to this?
[end]
My representative, or at least someone in her office, wrote back to me essentially agreeing with me. I never heard back from either of my senators.
Yes, Biden and the Greens are absolutely wrong to target natural gas as a “problem”.
Expanding NG production and electricity generation is the only realistic way to quickly eliminate coal, which is the most sensible target if you want to reduce CO2.
And NG is the obvious answer to the “weeks or months of storage” problem Zeihan cites for renewables. As we increase renewables, NG gets used less and less, but with appropriate subsidies we keep NG generation capacity around for when we need it.
And maybe long term we start capturing the NG generators’ CO2 exhaust and use excess renewable power to make and store gas (and oxygen as a side product), getting us to net zero – has to be a heck of a lot easier than capturing CO2 from 400ppm atmosphere.
I’m glad you’re calling Zeihan out instead of me. I read Zeihan’s first three books and found them quite insightful. I generally agreed with his predictions on everything EXCEPT for China. China will not permanently collapse for the simple reason they have too much good human capital for that to happen. China likely has more decent engineers than the rest of the world put together and Chinese people have good work ethic. Yeah, China might have a “1930’s” style depression. But they will come out of it stronger than ever, just like we did.
Zeihan’s latest book is execrable. Where Zeihan has lost it with me is, if you read his books and accept them as real, the logical path forward for the U.S. in terms of socio-economic policy is essentially Trump’s “America First” policy. Yet, Zeihan opposed everything that Trump did and thought that Biden was the better choice, despite that the latter is trying to abort the fracking revolution that is the basis of all of Zeihan’s geopolitical predictions. The Zeihan himself supports policies that are the diametric opposite of what his books suggest as the proper way forward is the reason I have come to reject everything he has written and to despise the man himself.
The below in quotes is what I actually submitted to Zeihan through his website sometime last year:
[start]
I am writing you because I think your books are great! Your ideas dovetails with one of my own.
About 8-10 years ago, based partly on books such as yours and many other sources, I became convinced the U.S. would undergo an economic renaissance due to the fracking revolution as well as a resurgence in American manufacturing. My reasoning was thus. The fracking revolution would give us the lowest cost energy anywhere in the world. It would also make us an energy exporter. Call it Saudi America. We actually became this in 2020. Additionally, the increased cost of labor in China coupled with increases in industrial automation (my profession) would reduce the labor arbitrage benefits of manufacturing in China. This, combined with the lower energy costs of the fracking revolution would return a lot of manufacturing to the U.S. Call it Asian-export America. The combination of being both Saudi America and Asian-export America would result in at least a 30 year economic expansion that would deliver lots of tax revenues to the Federal government, not to mention untold economic prosperity across the board. It would have put the Reagan (PBUH) revolution to shame.
No politician in either political party could even be so silly as to kill these two golden geese that lay these golden eggs. Or so I thought.
All of your books strongly promote an “America First” policy as the most optimal for the next 40 years of our country. Yet, you did not like the president who favored the policies your books suggest. Instead, you described the current white house inhabitant, who is doing everything possible to abort the energy impendence of North America despite the outbreak of one of the wars you predicted in your last book, as “the return of the adults”.
I have to ask because I like your books and have actually cited them as support arguments for Trump’s “America First” policies while he was in office. Yet you support the guy who has done everything possible to oppose the policies espoused by your books.
You do have to admit this is quite a cognitive dissonance.
So I got to ask: What gives?
[end]
I never received any response.
I think you are over-estimating the percentage and type of people in the US who truly favor aggressive socio-economic growth. Of course, most want the wealth, but fewer want to put in the time and effort, are capable of the focus and concentration and commitment, and can not avoid being easily distracted by flavor-of-the-month causes, over-zealous news-tainment, and a lack of structure in work and health. Further, they see those in their 60s plus as decrepit, sickly, tired, and worn-out – why would they want to work that hard if you end up that way, so early?
Also, the easiest future-proof job in the world: amazon warehouse automation support, is increasingly being lambasted as an inhuman, dickensian work hive – an undignifed use of their existence. I suspect that when the next decade of near-0 GDP follows this current 5-yr world-events episode, they will complain that the Boomers ruined the world for them anyway. Best just to isolate and bunker-up.
Perhaps. But the same things were said about Gen-X in the early 90’s. They were all slackers who wanted the easy way and blamed older generations (Silents, Boomers) for their problems. However, once the economy picked up and generated more opportunities, those Gen-X slackers ended up having a strong work ethic. Incentives matter, incentives generated by a growth-oriented economy. Perhaps you are correct that the Millennials and Zoomers are not of the same caliber as Gen-X. I would hope you are wrong.
Incentives are a complex and remarkable thing. Those who give and those who receive. To be effective you typically need the ‘carrot and the stick (or at least the threat of it)’. It is often what separates us as a culture from Others. I agree that for all their distractability, the Zoomers, are likely very receptive to incentives and they are not burdened by old-timey concepts of standard work hours or standard work locations – they may prosper and show us the way. However, their parents’ parenting may have weakened that.
That being said, I worry about their over-zealous reaction to irrational levels of environmental, light-wokeism, and other related soft issues. Forsake not the threat of digital/ real NIMBYism, online protests, and an approach to domestic democracy (i.e. voting) that is more about removing disagreeable old cultures (i.e. cancelling) than actually promoting policies of opportunity and growth. The last half of this decade should be interesting.
China is facing a LOT of problems that the US wasn’t facing in the Great Depression, so that doesn’t seem a very convincing argument that China will come out of a depression OK :
– We weren’t dependent on imported energy – China imports nearly 40% of its energy. (That would fall if exports fell – but that’d hardly be a good thing.)
– Our population was still growing rapidly, giving an inherent boost to demand over time to help us recover – China is probably now shrinking.
– The US had excess food production for its demand – China’s net imports of food are somewhere around $100B/yr.
– We still had a lot of excess farm labor that could be pulled into the cities to increase production – China has already pulled the vast majority of what can be pulled without further increasing dependence on food imports.
Guy is a clown, like all others predicting China “collapse” since like 2000. Always wrong. Completely clueless, extremely biased.
Technology is accelerating exponentially, with advanced AI, automation, future is bright for everyone. Post 2030 world= extreme abundance world. Generally more people = better, but even regions with declining populations like EU and East Asia will be fine due to, once again, extreme automation and ultra advanced AI.
China will be fine, as the US, EU, SEA, India LA, Africa. Doomerism sells, but for me all these doomers are boring and lame people.
Thanks, you cheered up my monday morning!
It appears it’s far more exciting to the average user that a significant geopolitical event will happen in the near future, than to simply suggest that a slow geopolitical transition will happen.
These attempts to get the viewer interested takes the form of absurd claims such as China collapsing, or China, and the USA will go to war.
As much as I respect Joe Rogan for providing an entertaining platform, and for giving regular people a larger range of insight than what standard entertainment offers. His show still suffers from interviewing guests, who lack intrinsic knowledge into there own statements. whose only real substance is to make outlandish and controversial claims to drive interest, and to make controversy.
This guy is just whistling in the dark.
There are several revolutions going on that Zeihan, and to a lesser extent, even Brian Wang, miss out on:
1. The WFH revolution. Working From Home increased in stealth mode for the past decade, but got its big public push during the Covid lockdowns, which probably accelerated the trend from 7-10 years. It’s now unstoppable, and is the biggest labor change since the 40-hour workweek/8-hour day. Many developers who build offices have refused to accept this trend and insist that workers will go to the office if they want to succeed. They build in all kinds of expensive amenities that don’t enhance productivity – from food courts to daily Covid-rated cleaning rituals. These kinds of expensive will work for only a small number of C-suite or S(mart)-cubicle tech workers, but look how many of the latter are being laid off now. Many will never return. Wokeness is a lie being used to demand things that aren’t really needs or even wants, but are used as an excuse to continue WFH, where conditions are infinitely more adaptable, comfortable, customizable, and now, thanks to high speed internet and Zoom (mostly Zoom), are actually more accessible to/from the remaining office and to other WFH workers than ever.
Further, as Zeihan correctly points out, the millennials don’t want to interact with real people. They grew up with screens, and Gen Z even missed going to school entirely during Covid, 2 years that they will in many cases never fully recover from. A recent study claimed that today’s 18-year olds have the social resilience of previous 12-year olds. These do not make for future happy office workers.
It gets worse. Some companies or universities – also locked down and still largely empty of administrative staff – have gone the other way, getting rid of leased office space, leaving shared cubicles to people who used to have their own offices, to save money and in recognition that less than 50% of people will come to work in any given day so why maintain empty office real estate? But these shared spaces may be left dirty (some companies, like Musk’s Twitter, have even fired their Janitorial staff, though Musk is surprisingly backward when it comes to insisting that people return to offices to work, even tech workers who can easily work from home). They are open to noise, and Covid risks (real, imagined, or even contrived as an excuse to WFH).
The office had become a toxic political landmine, with faux diversity policies masking and in many cases, exacerbating an inescapable inability to get along with truly diverse co-workers. The freedom to WFH provided by Covid showed that people could actually produce as much or more at home than they could in the office. Add to that soul-draining commutes that have only gotten worse, and a mass transit system with rising levels of crime and even faster rising levels in quantity and quality of media coverage of that crime. It’s only gotten worse during Covid because it was easy to create diversity policies when people were at home and didn’t have to live with them. Many people privately grumble about diversity hires and rules, and want to go back to a merit system, something that they can doing while working from home, unjudged.
Who would WANT to go to work in that environment?
I’ll have more to say in another message.
The next revolution is Monetary Reform:
2. Money can be produced by sovereign governments in any amount, for any reason. It was always clear that those in power had access to money beyond what their contributions were, but still, the issues were seen as mostly distributional. That is, the elite 1% hoarded a disproportionate share of money, collecting economic rent, while labor – largely landless – sold their work for capital. Some of this could be tweaked, or even overthrown for temporary attempts at equity that always failed.
But something else happened during the Covid years and in the Great Financial Recession 2008-09. It had become clear that money was not really finite since the U.S. and the rest of the world moved off a gold standard. Gold never prevented depressions anyway, and today no mainstream or serious economist recommends returning the the “barbarous relic.” But it’s now become obvious that a sovereign government or its Central Bank at least, can and do create money at will, whenever they want for the purposes of keeping the economy afloat. This has implications for inflation only if human or natural supply can’t meet demand. Indeed, supply shortages such as during Covid and from increasing de-globalization, as Zeihan points to, will/are causing more supply chain disruptions, but that is a discussion for another time.
The part Zeihan and other get wrong is to keep thinking that debt is a limit to a country’s growth. If that was true then the country’s with the highest debt would be the slowest growing (this only applies to countries that are sovereign, which leaves out the EU) and that isn’t true. China is the poster child for debt-burdened yet fast-growing countries. China is slowing down for other reasons, like worker shortages (or, at least, qualified worker shortages; there are plenty of “bodies” in the rural areas, it’s the “minds” that are short). But, to the consternation of Western geo-strategists like Zeihan, China forces its banks to produce money through loans whenever there’s a slowdown, or creates stimulus in other ways. This also angers the private banking system, whose money monopoly is threatened like never in hundreds of years, even under communism and fascism. That money could be simply created ex nihilo is anathema to these parties, even to many in government who have the power to do it. But the public is beginning to realize on gut level that money does not work at the federal government (states and cities are still constrained by real budget and tax limits) like it does for private citizens and companies. They are demanding a different system, maybe public banks or debt forgiveness (at least where government has made the loans), etc. It’s not clear yet how this will all shake out, but the elite’s claim that there is no money rings hollow with a new generation that sees there is always money for wars, bailouts, tax breaks to the rich. This understanding is growing and won’t be denied much longer.
Countries with large debts like Japan and the U.S., are actually mostly nice places to live, while countries with little to no debt, like Russia and North Korea range from bad to horrible places to live: https://en.wikipedia.org/wiki/List_of_countries_by_external_debt.
Enough for tonight.
Except for the fact that productivity goes down with WFM. Big problem in Europe, big problem in Sweden.
Agreed. Any type of high tech or intelligent industry has seen huge drops in average productivity, quality of work, and Client attention, though of course there are outliers who prosper. I, for one, love it – though the work-home life fuzzy-blend is disruptive and expectations of being ‘always available’ have increased. I think it’s great, but most have abused it, aren’t wired for it, and if ‘really that’ easy – likely will be off-shored anyway.
Dollars and cents. New Reality. Save more on reduced ‘physical’ office costs vs losses in productivity? Many companies are in conflict on how to proceed with this equation – layoffs or space down-size? Of course, that human airhorn Musk cut Silicon Valley quickly. Maybe a good time to invest in WeWork or equivalent.
Seems like there will be a big market for Tesla Optimus robots when they go into mass production.
yuge
I thought of the “move more rurals to urban” argument years ago when considering Zeihan’s China thesis – but it just doesn’t pencil out.
To assume China could do something is to assume that China hasn’t been trying to do that thing and cannot quickly take it much further. They’ve got the Ghost Cities to move people into, if it were practical. Wages have been rising, so they’ve got the motivation to get more urban workers.
There’s under 500M left in rural China, the majority of which are actual farmers. If those were age-distributed the same as China on average, about 1/5th might be of age (20 – 34) suitable to move to the cities to work. But a lot of that age group has already moved to the big cities, so maybe 1/10th – 50M rural younger people might be spared for the city IF their labor was completely replaced.
A lot of China’s farm land is not suitable for the sort of heavily mechanized farming that allowed the US to urbanize down to 25% rural (2% farm) over roughly a century. So perhaps 30M younger workers could be freed up by heavy investment in mechanization. But mechanization would be a massive effort – it’d be unrealistic to expect the job to be more than 2/3rds completed (20M) within a mere decade. Maybe the last 10M could be freed up in another decade, and that’d be it. (Sure, build greenhouses – but that’s an even BIGGER effort than supplying a bunch of tractors and forcing farmers to consolidate land.)
In a decade, about 202M chinese workers will age out, while about 166M will age into working, leaving a shortfall of 36M. Another decade will bring another ~25M shortfall. That doesn’t take into account Zeihan’s claim of China overestimating their population by 100M mostly young people, which might easily increase the shortfall to 60M+ this decade, 100M+ in another decade.
In short – there aren’t enough young rural workers to keep China’s urban working population at current levels. This shortfall is hitting now and will continue at least another 20 years even if China immediately returns to at least 2.1 children per family versus their claimed (ergo exaggerated) 1.7. This will continue to boost urban wages, driving more manufacturing to lower-cost nations even before considering the US effort to on- and near-shore critical manufacturing.
Agree with this.
It shows a lack of understanding to say that China will simply shift workers from the country to the city. Why? Because that’s already happened. Rural villages are already empty of working age people. Grandparents looking after the children while the parents live in the city is a common sight.
On PZ, I listened to the podcast and found it hugely insightful. A few hours later though, critical thinking kicked in and I realised I had likely found it more entertaining than insightful.
Zeihan: “most distorted in the world, even more than Sri lanka”
Absolute rubbish, Sri Lanka never had an issue with the gender ratio