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

In both the globalized economy and a future de-globalized economy, the US plays a dominant role, according to Zeihan. The US’s decision to protect global shipping and to open its markets to foreign products following World War II enabled global integration of the world’s economies. The US made this decision to ensure allies in its Cold War with the Soviet Union. When the Berlin Wall fell in 1989, the US continued to protect global trade. It remained in US interests to protect oil shipments to ensure price stability. However, given the end of the Cold War and the advent of the shale revolution, which made the US the largest producer of oil, it no longer has an interest in protecting global shipping.

According to the author, the US would be the dominant power in a de-globalized world for several reasons. Compared to the rest of the world, the US has reasonably healthy demographics. By the 2040s, the Millennial generation will be contributing to the economy. In addition, the US benefits from proximity to Mexico, which also has good demographics. More importantly, the US has a strong military and strong geographic attributes. Its borders are safe from security threats, and it has access to energy, internal waterways for transport, the world’s richest farmland, and good wage variation for manufacturing when combined with Mexico; additionally, the US is home to some key industrial inputs, such as silicon. Although the US would experience some discomfort during the transition to a de-globalized world, it is the driver and beneficiary of the transformation: “The 2040s should be a great time to be in North America,” and the transition would be “an uncomfortable memory” (474).

Zeihan repeatedly identifies China as potentially being the most impacted in a de-globalized world. In the global economy, Northeast Asia is the world’s manufacturing hub. China performs much of the low-wage assembly work and is the largest importer and processor of many material inputs. It benefits enormously from safe shipping and access to European and American consumer markets. Given its own shrinking population, it depends on the sale of exported products.

Already in 2022, China faces two upcoming crises, one demographic and the other financial. The author predicts that China’s population will decline by as much as 50%. Its population is aging, and its two largest cities have the world’s lowest birth rates. Because China’s government has printed cash and spent wildly to appease its people and stay politically popular, it will likely experience financial collapse in the coming years. Without the promise of secure shipping, manufacturing facilities would move closer to markets in the US and Europe. China relies on oil from the Persian Gulf, and that oil would be in danger of interception during transport even if China can afford it in a de-globalized era. Sitting at the end of a dangerous transport route, China lacks a strong enough navy to protect it from this geographic challenge. Zeihan does not anticipate that China would maintain its role in processing material inputs given labor shortages and insecure shipping. With climate change threatening rice production in Asia, China would likely face food shortages too. The author speculates that deindustrialization, in which people return to rural areas and grow food, might help save the country but would entail severe repression and may or may not work.

With the North American Free Trade Agreement (NAFTA) in place, North America would emerge as the strongest region in a de-globalized world. The economies of Mexico, Canada, and the US are integrated, and North America has the geographic advantages to supply its own needs in terms of energy and food. In addition, both the US and Mexico have healthy demographics, which promises a market for consumer goods. Although Mexico does not have optimal geography for manufacturing, Zeihan speculates that Colombia could serve as a low-wage partner. Skilled labor, which is available in Colombia, costs two-thirds as much as the same labor in Mexico. The US would ensure that shipping in the Western Hemisphere is safe, allowing for this type of economic partnership.

South America’s fortunes would vary by country. Colombia could fare well if partnered with North America. Brazil, conversely, would face severe recession given its past financial practices. However, the author notes a potential for a “manufacturing renaissance” (368), albeit one dependent on investments in infrastructure. Its output would have to be sold internally. Additionally, Brazil is a source of soy and some industrial inputs. Argentina, meanwhile, is one of three countries that could benefit from climate change and is already an exporter of food. It is the only country in South America that has developed without a collapse in birth rates. Therefore, its geographic and demographic challenges are much less daunting than those of other countries. Argentina has access to shale oil, providing energy, and is one of the few places that grows wheat.

In a de-globalized economy, Northeast Asia would no longer be the world’s manufacturing hub. Zeihan predicts that Japan would emerge as the regional power in this area and argues that shipping would remain dangerous unless China completely collapsed. Japan has a powerful navy, capable of projecting force a continent away. It would likely interrupt food shipments to the Asian mainland, calling it “regulation.” Although its demographics are poor, Japan has already adjusted for its aging population via its de-sourcing program. That program would not work well in a de-globalized environment, but Japan may have the opportunity to partner with the US.

The author sees more promise for Southeast Asia, which has “labor variation in spades” (369), with Singapore at the high-wage end, Thailand and Malaysia in the middle, and Vietnam and Indonesia at the low-wage end. That variation could lead to a healthy division of labor. Rapid urbanization has already led to labor costs below global norms. The region has supplies of industrial inputs and is “nearly self-sufficient for its oil and natural gas” (369). In addition, the area’s geography reduces the likelihood of wars. The region is dependent on food from elsewhere, but sources are Australia and New Zealand. While no country is an obvious regional leader, Zeihan posits the idea of an alliance with Japan, which could ensure safe shipping in the area.

In a de-globalized world, according to Zeihan, Europe would become disassembled. Europe has four major problems: its need to import energy, its demographics, its socialist model, and its variety of countries. Energy imports would be the most difficult for eastern and inland countries given that Germany and central Europe would seek alternatives to Russian oil. Europe has an aging population and expects mass retirements in the 2020s. It will be unable to absorb its own products and will need to export to markets in the US or Asia. Shipping routes to Asia could be perilous.

Sweden is well-positioned in manufacturing and could partner with the UK, which has a healthy consumer market. The UK and Sweden have the capacity to protect shipping in northern Europe. France is positioned for some success too, given its position as a major food exporter and its military capacity. Additionally, France is one of the few countries that has avoided a collapse in birth rates. The author paints a more worrisome picture for Germany, which would once again face severe demographic and geographic challenges. Zeihan argues that Germany would be unable to maintain production or import necessary industrial commodities (379). It would instead ally with central European countries. More than one regional power would emerge in Europe.

Together, Australia and New Zealand have “far more resources and foodstuffs than they could ever consume” (156). In addition, New Zealand is one of the few countries that did not experience a collapse in birth rates, and it has available land. The region is one of the major suppliers of industrial commodities, and it has supplies of oil. Zeihan posits that these two countries would partner with Southeast Asia and that they would be okay in a de-globalized world or “be able to squeak by” (157).