Saturday, March 21, 2015

The Accidental Superpower by Peter Zeihan

I’ve heard Zeihan speak at some of the conferences I attend. In fact, we’ve had him speak at one of the conferences my own association manages. He’s insightful, opinionated, and entertaining. A great combination, if you ask me, for any conference speaker.

In The Accidental Superpower, Zeihan puts all three traits on display. The book is almost a manifesto, describing from a very deep well of geopolitical knowledge and analysis the factors that make “the countries that rule the world the countries that rule the world,” and why America is and will continue to be the pre-eminent superpower for generations to come.

The balance of transport determines wealth and security. Deepwater navigation determines reach. Industrialization determines economic muscle tone. And the three combined shape everything from exposure to durability to economic cycles to outlook. The Americans have been remarkably fortunate in that their geography is the best in the world for all three factors, and beginning in 1890 they finally started leveraging that geography to become the world’s superpower.

America’s geographic superiority is so strong, Zeihan frequently argues during that book, that even incompetence can’t keep it from being a superpower.

Only the United States could engage in a war as dubious as Iraq or roll out a social policy as byzantine as Obamacare and walk away largely unscathed. In most countries, suspect leadership is often rewarded with national destruction. By contrast, the United States is so huge and so far removed from the world and has such deep reserves of national power that highly questionable or even failed policies can lead to a second term.

I love this perspective. The dynamic Zeihan is describing, I think, leads directly to the paradox of American exceptionalism. As a nation, the United States can be incompetent. But it is also so rich that its incompetence is not capable of bringing it down. In some respects, the nation itself is like the billionaires living in horse-blinded gated communities that are so often parodied in its media. Blind to their own ignorance and incompetence, they have the money they need to solve any problem, and eliminate any threat--or at least build a taller wall around themselves to hide the more disturbing realities of the world from their view. We are the best country in the world, they proclaim, but because of their wealth, they really have no objective standard by which such a comparison could be made.

Another underlying premise of Zeihan’s thesis is that the United States is the imperial power it is, not because an unbroken succession of Ceasars have occupied the White House, but because of something called Bretton Woods--a conference of world leaders held in the wake of World War 2 in which the United States agreed to guarantee the safety of the seas for global trade. That’s a stark contrast to some of the libertarian-themed books I’ve been reading lately, in which the growing imperial power of the American president is only a repudiation of the nation’s founding principles and an irrevocable slide towards despotism and chaos. Maybe it is that, but Zeihan’s perspective gives a much less nefarious motive to that trend.

Looking at American power projection through this lens allows Zeihan to paint a much different picture than the one I’ve been looking at as of late.

American involvement in the Persian Gulf has not been in order to secure energy supplies for the United States, but instead to supply energy for its energy-starved Bretton Woods partners in Europe and Asia. Put more directly, the Americans do not protect the Persian Gulf kingdoms and emirates so that the Americans can use Middle Eastern oil, but so that their Bretton Woods partners in Japan, Korea, China, Taiwan, Thailand, India, and Pakistan can.

But Zeihan only describes the world this way to make the larger point that all that is going to change in the next ten to twenty years. The stirrings of that change are already being felt. The cause is bred into our very culture, which has been shaped by generations of insulated plenty. Zeihan describes this reality of the United States of the past and the near future like this.

Every culture has a certain personality impressed upon it during the first century or two of its existence as geography and history intermingle to shape exactly who the people in question turn out to be. The formative period for American culture was the pioneer era. Consider the time frame:

While Napoleonic France was reintroducing Europe’s peasant armies to the horrors of war, famine, and massed relocations, American freeman were happily pushing west to settle some of the world’s best lands. Within a year of breaking ground, all could--via the world’s best maritime transit system--sell grain on global markets for hard currency.

It is largely irrelevant that the Americans’ ability to collectively capitalize upon its advantages was due more to an unplanned confluence of unprecedented factors--the arrival of millions of Europeans anxious to escape Europe’s wars, the largely completed genocide of the natives, the ease of accessing the Ohio valley, the presence of the world’s best natural waterway network, the availability of the world’s largest contiguous piece or arable land--rather than some grand scheme. But such a phalanx of coincidences does not diminish one bit that the Americans’ frontier period was the largest and fastest cultural and economic expansion in human history. And it held for five generations: The Americans found more and better lands, serviced by more and better waterways. It may have been accidental, but it held for so long and was so core to the lives of so many Americans that as a national culture Americans came to think of such an upward trajectory as normal. Ordained even. God shed his grace on thee indeed.

But what happens when things do not get better each and every year? What happens when the Americans suffer a stinging, public setback? What happens when the rest of the world reaches out and touches Americans on terms other than America’s?

They panic. They panic with the desperation of a people who have no sense of balance, no perspective, no understanding of context, no sense that not everyone in the world wins every time. And then they fight back with everything they have. Were the United States a small country such overreactions would be odd, perhaps even comical. But the United States is the global superpower and its overreactions typically reshape both itself and the wider world.

These overreactions have happened before. Sputnik and the resulting space race. Vietnam and the resulting hyper-militarization. Japanophobia and the resulting technological revolution. September 11 and the resulting change to a continual and pre-emptive war footing.

But the granddaddy of overreactions is yet to come, and one of its core stimulants are the lop-sided generational demographics that are facing the United States and most of the world’s democracies. In most places, there are already too many old people and not enough young people to support them. As a result:

Governments the world over will have to make ever more difficult decisions. One route is to placate the aged with the levels of income support and health care that they have been promised, but to do so by increasingly taxing an ever-shrinking pool of workers and therefore enervating the economy. The other is to dispossess retirees in an attempt to husband the economy’s every-shrinking size and strength, not a likely outcome considering that most of the world’s democracies are aging into gerontocracies. Regardless of path, lower standards of living will be on deck for most segments of most societies. ...

And that inevitable contraction will have a ripple effect across the global economy. Zeihan describes it like this:

… The international economy will spasm and contract. The loss of the developed world’s capital surplus as well as the developed world’s consuming demographics will force harsh decisions on every economic entity, whether state or private, across the world.

Consumption of both raw commodities and finished goods will plummet. Countries dependent upon exports for their livelihood will suffer immeasurably. Lower demand for finished good in the developed world will leave droves of firms and workers in both the developed and developing world destitute. But lower demand for the inputs that go into the infrastructure and industry that make global manufacturing possible will not necessarily reduce their price, just their sales volume. Without the rubric of the free trade order or the active management and protection of U.S. forces [withdrawn because the U.S. will no longer be able to afford nor see a need for it], the shipment of commodities will no longer be a risk-free venture. Between higher capital costs and higher insurance costs, only the lower-cost producers will have a relatively secure place in the market, and that assumes that either they or their clients are able to guarantee passage. The stage will be set for lower and more erratic supplies of industrial commodities, but not necessarily at lower price points. ...

It’s a bleak picture that Zeihan paints. One that this Gen Xer would prefer to blame on the selfishness of the Boomers, but that is probably too simplistic a construction. Even if the aging population is force to tighten its belt, the effects Zeihan predicts are sure to come about since they will not be part of the world’s “consuming demographic”--the young people building lives by buying houses and raising children. But, in this dark future…

… The one exception to the rule will be energy supplies sourced from shale in North America. The mix of local political stability, local supply, and local demand will prove the magic mix to uncouple North American oil prices from global pricing patterns, much in the way that the early years of the shale revolution did the same for natural gas prices.

In many ways, Zeihan argues, energy from its own shale deposits is the factor that almost guarantees the continued ascendancy of the United States. Dependent on no other part of the world for its energy needs, able to easily trade with its giant neighbors to the north and south, there will be some suffering in America as the rest of the world remakes itself, but not nearly to a degree that will cause anything here to topple over.

Unless, that is, you start thinking about the coming drug war. Not the one the federal government is waging in Central and South America, but the one the drug cartels are already beginning to wage on the streets of many American cities. And their fuel, according to Zeihan, is not spoiled and addicted Americans who demand their product, but the legions of undocumented immigrants that they can force and extort into working for them.

Because illegal immigrants are undocumented, they have difficulty gaining access to the basic pieces of modern society, including identification such as driver’s licenses and financial access such as bank accounts. That has far more damning impact than it may seem at first blush. With limited access to the banking system, illegals operate in the cash economy--they are far more likely to have significant quantities of cash on their person or in their home at any given time. Since illegals fear being discovered and deported, they often do not contact law enforcement when such inevitable attacks occur. In the modern age of credit cards and PayPal, that makes illegals a far more lucrative target for robbers and muggers than even rich Caucasians. There is a term for areas where people who live outside of normal social support networks exist: ghettos. Unique among American immigrant communities, Mexican and Central American illegals live in ghettos.

And, it is in these ghettos that the drug cartels are finding the Spanish-speaking population that it needs to take over not just the delivery of illegal drugs to the United States, but the distribution of those substances in many American cities.

The American method for “managing” its illegal population has created a large community in each major city that lives outside the protection of local law enforcement and financial monitoring. The cops’ patrols are less effective without the illegals’ active participation. The Fed has no data bank to work from. The illegals speak the same language--and often come from the same country--as the cartels’ front men. It is a community setup that is perfect for the cartels to recruit from and ultimately control.

Zeihan tips his hand when he refers to the American method for “managing” its illegal population, for his prescribed solution to this vexing problem the United States will face in its near future is for legalization.

Not of drugs, but of immigration. Opening the border with the issuance of worker and travel permits would with the speed of a printer transform America’s Hispanic ghettos into areas where people have legitimate identification and store their money in banks like everyone else. Cooperation with police would no longer be perceived as a sharp negative, and the Federal Reserve’s anti-money laundering tools would suddenly have data to work with. Most of all, the cartels would lose their fertile rest-and-recruitment grounds north of the border. Legalization wouldn’t solve everything, but it is the single biggest step that the United States could take.

Zeihan’s book is filled with insights like this. Prescriptions that, out of context, may sound ludicrous to those steeped in the political currents of the United States. But with Zeihan’s searing analysis, many of them seem not so crazy after all.

His whole take on China is an exemplary case in point.

China is the country that has benefited the most from the American Cold War strategy of market access and defanging the various maritime powers, and therefore has the most to lose. In the imminent future, the Chinese face three crushing challenges. First, Japan is likely to start acting less like an NGO and more like the Japan of ages past. Second, China’s geography is nearly as riven as Europe’s, with the great myth of Chinese history that unity is normal soon to give way to a more complex and messier reality. Third, everything that made the Chinese economy a success, everything that has put cars on the road, roads on the map, money in the citizens’ pockets, and food in their mouths, is completely dependent upon an international economic and strategic environment wholly maintained by a country that doesn’t like China all that much.

Indeed, his perspective that the ascendant China of today is an aberration, not a preordained dynasty, seems to be becoming more and more credible every day.

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This post was written by Eric Lanke, an association executive, blogger and author. For more information, visit www.ericlanke.blogspot.com, follow him on Twitter @ericlanke or contact him at eric.lanke@gmail.com.


2 comments:

  1. You could at least spell his surname correctly.

    ReplyDelete
  2. Apologies! I fixed all the typos.

    ReplyDelete