The End of the World Is Just the Beginning: Mapping the Collapse of Globalization

“Having a slow-moving desert river running through the hearts of our first homelands enabled humans to relocate everything from where it was in surplus to where it was in demand.”

Transporting goods and people via water is much easier than over land. As a result, areas that had internal waterways were geographically advantaged before the period of globalization. With the return of de-globalization, geographic challenges would again become relevant.

“The American story is the story of the perfect Geography of Success. That geography determines not only American power, but also America’s role in the world.”

Geography has enabled the US to have dominant roles in both global trade and a de-globalized future. The US has fertile farmland, inland waterways, and very secure borders, which make it geographically advantaged. Additionally, the shale revolution has made the US the largest single-country oil producer.

“At war’s end the Americans used Bretton Woods to create the globalized Order and fundamentally change the rules of the game. Instead of subjugating their allies and enemies, they offered peace and protection.”

Although the world had the technology to create a global economy, it refrained from doing so for fear of the security of transported goods. The US guaranteed such security and thereby enabled a global economy. As the enabler of global trade, the US played a dominant role in it.

“Globalization was always dependent upon the Americans’ commitment to the global Order and that Order hasn’t served Americans’ strategic interests since the Berlin Wall fell in 1989.”

The period of globalization is a historical anomaly. Since it depends on the US and no longer serves US interests, it would come to an end. The consequence would be a de-globalized world and a return of geographic challenges to relevance.

“Everything about this moment—from the American rewiring of the security architecture to the historically unprecedented demographic structure—is artificial. And it is failing.”

The book’s central premise is that the world is on the cusp of a dramatic economic restructuring for two reasons. First, the author posits that the US is withdrawing from assuring the security of shipments. Second, because of declining birth rates, demographic collapse is imminent in multiple countries in Asia and Europe. That demographic structure, as well as increased life spans and lower birth rates, occurred because of rapid industrialization and urbanization, both products of globalization in many places.

“Between demographic collapse in much of the world and demographic stability in the United States, America’s share of the total global population is certain to increase within just the next couple of generations—probably by more than half.”

Zeihan argues that because of demographics, geographic advantages, and a strong military, the US would have a dominant role in a de-globalized future. In fact, the US would be more dominant than it was during the global trade era. The author maintains that the US at times sacrificed its economic interests during the global trade era to strengthen its alliances against the USSR.

“While the Industrial Revolution made it much cheaper to ship products from A to B, it took the Americans’ global Order to make transport much safer.”

Technological developments, such as steamships and railroads, made global trade economically attractive. However, the world remained de-globalized until after World War II because of the threat of theft on the waterways. The US promise of shipping security enabled a globalized economy.

“Combined with bigger, slower ships, containerization has reduced the total cost of transporting goods to less than 1 percent of said goods’ overall cost. Before industrialization, the figure was typically more than three-quarters. Pre-deepwater, the figure was often north of 99 percent.”

Because shipping costs were so low, international trading of all manner of goods became cost effective. Most countries rearranged their production to maximize their export earnings and import cheaper goods, including food. Consequently, de-globalization would disrupt food supplies as well as other goods.

“In a world ‘safe’ for all, the world’s ‘successful’ geographies could no longer lord over and/or exploit the rest. A somewhat unintended side effect of this was to demote geography from its fairly deterministic role in gauging the success or failure of a country, to something that became little more than background noise.”

From the beginning of human history until the globalization of trading, geography mattered greatly in determining the fortunes of a people. Globalization was artificial precisely because it eliminated that relevance. In a de-globalized era, geographic challenges would return with a vengeance.

“The defining characteristic of the new era is that we will no longer all be on the same side. […] [W]hat made the Order work is that we all collectively agreed that there were limits as to what form intrastate competition could take. No one uses military force to confront an economic competitor.”

Limits on intrastate competition, which the US enforced during globalization, would cease to exist in a de-globalized world. Consequently, piracy would return, and shipping would no longer be safe or economically viable for many countries. This change would force countries to rely on regional powers and their own production to supply their needs.

“As soon as word leaks out that you are lying about how much gold (or Parmesan) you have in that government vault, folks stop accepting payment in the official currency, or refuse services altogether if crap cash is all on offer. Currency, after all, is about trust.”

Simply printing more money to resolve political problems is tempting for regimes. Throughout history, financial collapses stemming from such irresponsible practices have been common. Since the 1970s, reserves of precious metals have not backed currencies at all. As a result, many countries, such as China, have overspent, and for them, financial disaster looms.

“But it is the Europeans and Japanese who have gone off the deep end, while the Chinese have swum out to sea during a hurricane and dived headfirst into the Texas-sized whirlpool that serves as Godzilla’s front door. Scale matters.”

This analogy is an example of Zeihan’s use of humor throughout to make the work accessible. Comparing the US 2007-2009 recession to the problems of Europe and China, the author makes the case that the US economy reformed and is in better shape. In contrast, Europe and especially China have irresponsibly expanded money supplies. Financial calamity awaits China in particular given its demographic challenges.

“The later a country began the urbanization process, the faster the urbanization process unfolded and the faster that birth rates crashed.”

Industrialization changed the demographics of age groups in the population by expanding life spans and reducing birth rates. Urban populations have fewer children. Globalization enabled every country to industrialize and urbanize. Because they could skip multiple phases of the industrialization process, these countries experienced rapidly declining birth rates.

“Oil’s power is such that in many ways, it has almost enabled us to ignore nothing less than geography itself.”

Zeihan emphasizes the transformational power of oil, which enables electricity, dramatically increases productivity, and allows people to travel anywhere. In the globalization era, it is a commodity and all countries have access to it. However, it is available only in select places. In a de-globalized world, geographic challenges would prevent many countries from accessing enough oil to sustain modern lifestyles.

“With the Cold War’s end, the Americans may have wanted to take a less active role in global affairs, they may have wanted to disengage, but a single global oil price meant that doing so would risk instability, supply shortages, and oil prices so high as to wreck the American economy.”

Because the US purchased some of its oil from foreign sources, it had to protect all oil shipments given the price inelasticity of oil. Not until the shale revolution in the 2010s did this calculus break down. By 2015, according to Zeihan, protecting global trade was no longer in the US’s interests.

“The Order may not have been possible without these countries’ oil, but neither would these countries have been possible without the strategic overwatch of the Order.”

The Persian Gulf supplies half of the world’s internationally traded crude oil and therefore has made industrialization possible globally. However, the eight countries that supply this oil to the world rely on foreign workers for technological advice and do not have the military capacity to protect shipping lanes. Therefore, the world has relied on the US to protect oil shipments from the Persian Gulf. By removing this protection, de-globalization promises the consequence of oil shortages.

“Zones for which today’s Greentech makes both environmental and economic sense comprise less than one-fifth of the land area of the populated continents, most of which is far removed from our major population centers.”

Solar and wind power cannot replace fossil fuels given their inability to service large cities and function effectively in many of the world’s most common climates. Zeihan fears that oil and gas shortages would force many people to rely on the dirtiest fossil fuel, coal, which is cheaply and widely available.

“As a planet, we are perfectly capable of suffering broad-scale economic collapse and vastly increasing our carbon emissions at the same time.”

With de-globalization, many countries would be unable to access oil and natural gas. Explaining that most people would refuse to return to preindustrial conditions, Zeihan predicts that coal usage would increase, as a result increasing carbon emissions and exacerbating climate change.

“In all cases, the dominant technologies of the age demanded that every country either have sufficient access to all these inputs and more, or be lorded over by others.”

Unlike in the Bronze or Iron Ages, the industrialized world requires access to several inputs, or industrial materials. In the globalization era, all countries could access these. With de-globalization, almost all countries would lack access to some critical inputs. Since China supplies many of them, Zeihan anticipates worldwide shortages when that country experiences financial and demographic collapse.

“With the exception of the United States, which will retain full access to the Western Hemisphere and Australia, as well as the military capacity to reach anywhere in the world, no one will be able to access all the necessary materials.”

Because a lack of access to these materials can return countries to preindustrial conditions, Zeihan anticipates that six countries would attempt access. Others would have no chance of obtaining these materials without resorting to smuggling, which would become prevalent. In addition, the potential for war over such materials would increase.

“The whole basis of just-in-time inventorying is that the stability of the various manufacturing partners is so reliable that you can bet the future of your firm on the next shipment arriving, well, just in time. In most of Asia that entire concept is about to fail. Not so in the NAFTA region.”

Global trade could function so efficiently, with very limited inventories, because of the security of global transport. If the US no longer provides this function, companies would be unable to depend on timely shipments or, for that matter, shipments arriving at all. This development would shift the hub of manufacturing from Asia to North America, where shipments would be secure.

“For agriculture, industrial technologies changed the where and how much of the possible, the Order changed the access and reach of the possible, while mass displacement changed the what and variety of the possible.”

Because of globalization, more foods are internationally traded than ever before. In fact, agriculture has the largest value of any sector. The consequences of de-globalization would be especially dire in this area. Famine would likely result in many regions during the transition from globalization to de-globalization.

“Simply put, disruption in nearly any sector immediately translates into a disruption of agricultural production with catastrophic consequences.”

Zeihan explains how various sectors impact the global food trade. For example, financing must be available for farmers to purchase seeds and maintain equipment. Safe transport is essential given the perishability of food. Given the disruptions in all sectors that would result from de-globalization, the author fears food shortages and potential political fallout.