The rich world was a population column from [as opposed to a pyramid] 1945 to 1992, and with the end of the Cold War, the developing world became a column in 1992 until now. The problem is that this is all temporary, because birth rate keeps dropping. People keep living older and your column eventually inverts into an open pyramid upside down. And now you no longer have children, you no longer have a replacement generation at all, and there aren’t enough people in their 20s and 30s to buy everything, and there aren’t enough people in their 40s and 50s to pay for the retirees. So this decade was always going to be the decade that most of the advanced world moves into mass retirement, and the economic model collapses, and next decade was always going to be the decade that that happened to the developing world.
“The Chinese have jumped the ship and this is their last decade, too.”
“We now know that they’ve lied about their population statistics and they’re they over counted their population by over 100 million people, all of whom would have been born since the one child policy was adopted. So this is one of those places where they’ve got more people in their 60s and their 50s and their 40s and their 30s and their 20s.”
“Mao was concerned that as the country was modernizing, the birth rate wasn’t dropping fast enough, and that the young generation was literally going to eat the country alive. So they went through a breakneck urbanization program which destroyed the birth rate, at the same time they penalized anyone who wanted to have kids, and both of those at the same time have generated the demographic collapse we’re in now.”
The male to female sex ratio in China was bad before, and now it’s obviously worse.
“Without young people, we’ve seen their labor costs increase by a factor of 14 since the year 2000, so Mexican labor is now one-third the cost of Chinese labor. Their educational system focuses on memorization over skills, so despite a trillion dollars of investment in a bottomless supply of intellectual property theft, they really haven’t advanced technologically in the last 15 years. Mexican labor is probably about twice as skilled as Chinese labor now, even though it’s one-third the cost.”
“They’ve consolidated into an ethnic-based paranoid nationalistic cult of
personality, and it’s very difficult for the XI Administration to even run it, because it’s not an administration anymore no one wants to bring Xi information on anything.”
The Biden Administration has adopted the Trump Administration’s trade policies on China.
“They now have tech barricades that prevent the Chinese from buying the equipment, the tools or the software that’s necessary to make semiconductors. In fact, [Biden] went so far as to say any Americans working in the sector have to either quit or give up their American citizenship. Every single one of them either quit or was transferred abroad within 24 hours.”
“They’re completely dependent on the U.S Navy to access international trade, they are the most vulnerable country in the world right now. And based on how things go with Russia, we’re looking at a significant amount of raw materials falling off the map, specifically food and energy, and the Chinese are the world’s largest importer of both of those things. So there’s no version of this where China comes through looking good.”
“Say what you will about the Russian economy (it’s corrupt, it’s inefficient, it’s not very high value-add), but it’s a massive producer and exporter of food and energy. You put the sanctions that are on the Russians on Beijing and you get a de-industrialization collapse and a famine that kills 500 million people in under a year.”
“Even if the Chinese were able to capture Taiwan without firing a shot, it doesn’t solve anything for them. They’re still food importers, they’re still dependent on the United States, they’re still energy importers. And even if they take every single one of those semiconductor fab facilities intact, they don’t know how to operate them, because they can’t operate their own, their own are among the worst in the world.”
“One of the fun things about Russia versus China right now is that the Russian information security is so poor that American intelligence is literally listening on everything, but in China we can hear into the office but there are no conversations happening.” I suggest taking both these revelations with a few grains of salt. Maybe Zeihan has great sources in the intelligence community, or maybe Zeihan’s great sources are lying.
Plus more on how Xi has killed or exiled any possible challenger to his power, and how they’re now having a massive Flu Manchu outbreak. “Their overall health is worse than ours, diabetes as a percentage of the population is higher, they don’t have a critical care system like we have, and their hospitals are really their only line of defense.”
Next: Why EVs are a disaster.
“All kinds of people think I’m full of shit!”
Rogan: “What is your perspective on EVS?” Zeihan: “They’re not nearly
as good on carbon as people think. Most of the data that exists doesn’t take into the fact that most of this stuff is processed in China where it’s all coal doesn’t take [into account] the fact that most grids they run out are also majority fossil fuels. And that extends the break-even time for carbon from one year to either five or ten based on what model you’re talking. Cyber trucks are far worse than EVs, but the bigger problems we’re just not going to be able to make them much longer.”
To electrify everything “We need twice as much copper and four times as much chromium and four times as much nickel and ten times as much lithium, and so on. We have never, ever, in any decade in human history, doubled the amount of a mainline material production in ten years, ever, and we need all of this by 2030. No, it’s just not technically possible.”
Zeihan says California’s mandates for phasing out gasoline by 2035 aren’t quite as bad as they seem, as the bureaucracy has the ability to move the goal posts if they prove to be unfeasible. Pardon me if I’m not sold on the beneficent rationality of California’s hard left bureaucracy.
Speaking of things I’m skeptical of:
There is a fascinating discussion happening in the environmental community right now, because they’re being confronted with reality. So California and Germany have very similar Green Tech policies, but the Germans have spent three times as much as California, but are only getting about a fifth as much power. I don’t know if you’ve ever been to Germany, but the sun doesn’t shine in Germany. And now, with the Russians on the warpath and their clean-ish energy from natural gas going away, they’re going back to lignite coal in force. It was already their number one source of power. The idea that Germany’s green is ridiculous, because they rely on really, really dirty coal, now especially. But there’s now a conversation going on between the German environmentalists and the Californian environmentalists about why California, in relative terms of doing so well at this, while Germany is not. And the answer is simple geography, but that’s never been part of the conversation in the environmental community before. Now it is. They should have had this conversation 15-20 years ago, but they’re having it now. And as soon as they come to the conclusion, unwillingly but they’ll get there, that we have to choose where we put our copper and our lithium and our nickle, EVs are not going to make the cut.
This assumes that California environmentalists are susceptible to the sweet voice of reason, and that modern environmentalism isn’t half religion and half scam. “It is difficult to get a man to understand something when his salary depends upon his not understanding it.” California’s Democratic power establishment has shown an amazing propensity to impose radical solutions that bring obvious and immediate harm to people that are not them. Why should they worry about forcing other people to buy pricey EVs when they already have theirs?
Next up: The drug war, both here and in Mexico.
Rogan starts by noting that marijuana legalization in California led to cartels planting massive amounts of weed in national forests, and suddenly guys who were game wardens are now wearing tactical gear and carrying machine guns.
“I think the mafia is a great example for why you shouldn’t look for the silver bullet [of drug legalization], because, yes, that in the 1920s during prohibition, was one of the big reasons it got going, but the mafia didn’t waste any time in diversifying and neither have the cartels.”
“They’ve gotten into cargo theft and kidnapping and avocados and limes and real estate and local government.”
“Now the attractiveness of gutting them of some of their primary income. Should we look at that? Of course! But it’s not so simple as removing one and it just all stops.”
“The challenge we’re seeing in Mexico right now is that the, uh, the air quotes “good” cartel the, one that saw drugs as a business, is being broken up. If you remember El Chapo—” Rogan: “That’s the good cartel?” Zeihan: “Sinaloa cartel, yeah. He thought of himself as a Korean conglomerate president. So it was like ‘We smuggle drugs. That’s our business. You don’t mess with things that mess with the business. You don’t trip the old lady, you don’t steal her purse, you don’t shoot at the cops. These are people who live where we operate, we want them to be on our side, so maybe even throw a party every once in a while. You focus on the business.'”
“The replacement cartel is Jalisco New Generation, They’re led by a former Mexican military officer who thinks that rather than don’t shit where you sleep so that the people on your side whenever you move into a town, you shoot it up. You do kick over the old lady, you do take her purse, you make the people scared of you, that’s the point of this. Drug running is a side gig.”
“We are here to be powerful, and drug running is just one of the ways we make that happen. And he has taken the fight to every cartel and the Mexican government, and they’re in the process of trying to break into the United States.”
“El Chapo and the Sinaloa became the largest drug trafficking organization in America under the Obama Administration. And one of the reasons our birth rate went down, so far so fast is they basically either co-opted or killed American gangs. So they killed the people who were doing the killing. Not a lot of Americans got killed after that.” I think he meant to say murder rate.
“All of the other cartels control the access points in the United States, but
Jalisco New Generation now is challenging every single one of them trying to break through. And if they do, and they bring their business acumen, if you will north of the border, they’re going to start killing white chicks named Sheila in Phoenix and then we’re gonna have a very different conversation.”
“Sinaloa they co-opted the Hispanic gangs, especially the Mexican gangs, because there wasn’t a language barrier there, and they really targeted and gutted a lot of the African-American gangs. They took over drug smuggling and distribution from them to deny them income and then they just shot a lot of people…it was pretty much completed by the time we got to 2013.”
“Look at the violent crime rates in the United States, they’ve been trending down really significantly since about 2004 and the drop from 2004 to roughly 2014 was amazing. That’s largely Sinaloa.”
And now all the cartels are fighting and the murder rate in Mexico is skyrocketing.
He’s not a fan of legalizing cocaine:
Also says that cartels are now laundering money via marijuana dispensaries using the federal reserve.
And he’s not a fan of Crypto:
Bonus: “Maxine Waters is not exactly the brightest person in congress.”
In this sentence “And one of the reasons our birth rate went down” you’ll want to replace birth rate with murder rate. Birth rates are a massive Zeihan topic of course, but here he meant murder rate.
One question I keep coming away with. Let’s say he’s correct about Russia, China, or both. Some major internal turmoil will happen, and they will cease to be major powers due to demographic death spiral.
They both have thousands of nukes. So … what happens?
China in particular, if they run out of food/fertilizer/energy … are they simply going to go quietly into that good night? Or are they going to start a war with ___ in order to secure at least some food/fertilizer/energy and last a decade or two longer, prolong the inevitable?
Or Russia. I don’t know that many countries really want Russian land (maybe the Siberian oil), so I don’t see invasion beyond the periphery being an issue. Will they simply pass on peacefully?
Again, thousands of nukes, in both places. A decade or so ago when there were rumors of Pakistan collapsing, I heard rumbles about American assets planning to go and “secure” (i.e. steal) the nukes to keep them away from other troublemakers. Even if that dubious idea was possible, it wouldn’t work for Russia or China.
So … what happens?
TL/DR:
• Before Russia or China collapse, what kind of wars can we expect them to start?
• If/when Russia or China collapse, what happens to their nukes?
• Should we resign ourselves to the likelihood of a few mushroom clouds in our future? Or a whole lot of them? Some interpretations of the Old Testament say the latter is likely.
That’s the billion-dollar question. With Russia, there’s at least a decent chance that a number of their warheads (or delivery systems thereof) simply fail to work correctly because the money intended for maintenance went into somebody’s yacht. With China, there’s a non-zero risk that when the CCP falls, regional warlords fight a civil war in which nukes (depending upon how PLA’s version of PAL works) are in play.
In any event, if the CIA was actually worth anything, they’d have a bunch of plans drawn up for various means of rapidly acquiring nukes from failed states, starting with legally purchasing them from successor governments and moving on from there. Don’t forget that the US successfully removed tens of thousands of warheads from Russia after the USSR collapsed, and did so above-board and with full cooperation from the Yetlsin government.
Regarding the previous comment on what happens to the nukes of a terminally declining great power, we are helped by the fact that keeping nuclear weapons in working order requires a whole stack of rigorous technical support, many layers of which require personal integrity to properly draw conclusions from indirect data (without the benefit of live tests), of the sort that disappears quickly when organizations get politicized. By the time rival powers start impinging on territory occupied by the ruling classes, the nukes may not even work.
On Zeihan’s skepticism of Bitcoin, that’s not terribly surprising. He is a data guy who looks at numbers, but that assumes that there are numbers. We can’t measure (directly, at least) the cost of making the financial system “legible” to the ruling class, almost by definition. If we could measure it, then the things we are measuring are legible and therefore not the things we want to measure. To a data guy like this, Bitcoin is tautologically worthless, and indeed, it is quite common for Bitcoiners to have come to the space through some off-the-wall epiphany, and then “down the rabbit hole” they went, discovering a whole world of heretofore unimagined possibilities brought on by a *permissionless* system.
In this sentence “And one of the reasons our birth rate went down” you’ll want to replace birth rate with murder rate. Birth rates are a massive Zeihan topic of course, but here he meant murder rate.
Oh, crap. You literally said that right after. Wups!
That’s already noted it at the end of the bullet point. It was Zeihan who made the slip, so they transcript reflects that.
One question I keep coming away with. Let’s say he’s correct about Russia, China, or both. Some major internal turmoil will happen, and they will cease to be major powers due to demographic death spiral.
They both have thousands of nukes. So … what happens?
China in particular, if they run out of food/fertilizer/energy … are they simply going to go quietly into that good night? Or are they going to start a war with ___ in order to secure at least some food/fertilizer/energy and last a decade or two longer, prolong the inevitable?
Or Russia. I don’t know that many countries really want Russian land (maybe the Siberian oil), so I don’t see invasion beyond the periphery being an issue. Will they simply pass on peacefully?
Again, thousands of nukes, in both places. A decade or so ago when there were rumors of Pakistan collapsing, I heard rumbles about American assets planning to go and “secure” (i.e. steal) the nukes to keep them away from other troublemakers. Even if that dubious idea was possible, it wouldn’t work for Russia or China.
So … what happens?
TL/DR:
• Before Russia or China collapse, what kind of wars can we expect them to start?
• If/when Russia or China collapse, what happens to their nukes?
• Should we resign ourselves to the likelihood of a few mushroom clouds in our future? Or a whole lot of them? Some interpretations of the Old Testament say the latter is likely.
“So … what happens?”
That’s the billion-dollar question. With Russia, there’s at least a decent chance that a number of their warheads (or delivery systems thereof) simply fail to work correctly because the money intended for maintenance went into somebody’s yacht. With China, there’s a non-zero risk that when the CCP falls, regional warlords fight a civil war in which nukes (depending upon how PLA’s version of PAL works) are in play.
In any event, if the CIA was actually worth anything, they’d have a bunch of plans drawn up for various means of rapidly acquiring nukes from failed states, starting with legally purchasing them from successor governments and moving on from there. Don’t forget that the US successfully removed tens of thousands of warheads from Russia after the USSR collapsed, and did so above-board and with full cooperation from the Yetlsin government.
My two points:
Regarding the previous comment on what happens to the nukes of a terminally declining great power, we are helped by the fact that keeping nuclear weapons in working order requires a whole stack of rigorous technical support, many layers of which require personal integrity to properly draw conclusions from indirect data (without the benefit of live tests), of the sort that disappears quickly when organizations get politicized. By the time rival powers start impinging on territory occupied by the ruling classes, the nukes may not even work.
On Zeihan’s skepticism of Bitcoin, that’s not terribly surprising. He is a data guy who looks at numbers, but that assumes that there are numbers. We can’t measure (directly, at least) the cost of making the financial system “legible” to the ruling class, almost by definition. If we could measure it, then the things we are measuring are legible and therefore not the things we want to measure. To a data guy like this, Bitcoin is tautologically worthless, and indeed, it is quite common for Bitcoiners to have come to the space through some off-the-wall epiphany, and then “down the rabbit hole” they went, discovering a whole world of heretofore unimagined possibilities brought on by a *permissionless* system.