Let's start with the bad news first.
Apart from editorial asides by the author, the book has no footnotes. The bibliography only includes five titles. There is no reference to historical models of geopolitics. Facts are offered without citations. Now I'm not a great fan of scholarship--academic monographs are not just boring, but useless. Reading through a forest of footnotes is tedious.
But without any context I have no way to know how trustworthy Mr. Zeihan's sources are. Is he just cherry-picking factoids to fit his story? Is he really such a genius that he can develop a whole geopolitical theory de novo out of thin air?
Is the man a serious thinker?--or merely a huckster trolling for consulting dollars? Yes, and yes.
I loved this book!
For clarity and concision it is unmatched. He tells a simple (too simple by half) story of the globe's future for the next generation. Story is the operative word--the book reads like a well-plotted novel. That makes me suspicious (is life really that straightforward?), but it's very readable. I think he's wrong in big ways, as I'll explain below. But the basic story seems true enough.
It goes like this:
After WWII, the Soviet Union, despite its intrinsic weaknesses, represented an existential threat to the United States. Our ingenious counter was to mobilize the world to our side. This was not done by brute force, nor by appeal to humanitarian principles. For the most part we bribed other countries to be our allies. The bribe consisted of three parts:
- The US will guarantee your current borders. You do not need to defend yourself against your neighbors.
- The US will guarantee your trade routes. Our navy will patrol the world and keep the seas free of pirates and military foes. Not merely was transit through the Panama and Suez canals open to all, but also through the Malacca, Hormuz, and even the Bosporus Straits.
- The US market was open to your produce nearly without restriction. Whether German cars, Japanese electronics, Bengali textiles, or Chinese toys--anybody could sell anything in the USA tariff-free.
It worked like a charm. Apart from the US and the Soviet Union, military spending decreased around the globe. The NATO allies, for example, couldn't rouse themselves to even spend 2% of their GDP on defense. Piracy and privateering on the high seas, along with toll-collecting at choke points disappeared. Countries as diverse as Germany, South Korea and China got rich selling into US market.
The world got rich, including the United States. Mr. Zeihan refers to this era--from 1945 to nearly the present day--as the post-war Order. But now the Order is breaking down, again for three reasons.
- The Soviet Union is no more. The empire collapsed in 1991, and the successor state, Russia, is itself in terminal, demographic decline (so claims Zeihan).
- Fracking changes everything. North America is now energy independent, and indeed, we're a net energy exporter. The result is we have little cause to police the Middle East anymore, and certainly not the Persian Gulf or the Straits of Hormuz.
- While in 1950 the US produced about 50% of global gdp, today the number is only 25%. That's certainly not because the US is poorer, but rather because the Order hugely increased wealth globally. Thus we can no longer serve as a market of last resort, nor can we cover the world's defense costs.
As said, it's too simple by half. While the Soviets inspired NATO, it seems unlikely that they were the only reason for the Order. Surely American business understood the virtue of global markets, even in 1945. There were strong economic reasons for the Order. Accordingly, the collapse of the Soviets did not presage the imminent demise of the Order--it's hung on for nigh 30 years--again for its economic benefits.
Mr. Zeihan's tale leaves out some important trends. New technology spread around the world--the rise in global wealth is as much due to that as the American policeman. The Order’s decline may be due to a sharp drop in global productivity beginning in the mid '70s as much as anything else. Indeed, Mr. Zeihan’s story depends too heavily on geography and demographics--important topics to be sure, but not necessarily more important than technology, history, culture, or even genetics.
Still, I think he's mostly right, and the Order's inevitable demise may lead to the consequences he foretells. I think he's right about China. I think he's wrong about Germany.
China has five existential problems, and while it might survive one or two of them, solving all five of them simultaneously is impossible. The Chinese economy will crash, and Zeihan predicts the country will not survive as a unitary state. The five issues are:
- While Americans do farming, the Chinese do gardening. This is because they had a surplus of agricultural labor, and gardening is more productive per acre than farming. By shipping labor off to the cities, China was forced into mechanized farming, which hasn't worked too well. Despite the huge capital investment, agricultural productivity has not grown proportionately. Mr. Zeihan predicts famine in China's near future.
- China has over-invested in housing. Housing is the primary investment tool for middle-class Chinese, including many second- and vacation- homes, similar to what the stock market is in the US. By building too many houses, there will inevitably be a crash in prices, wiping out the wealth of much of the population.
- Chinese demography is terrible. Unlike the US (with our large Millennial Generation), Chinese baby boomers were limited to one child each. Thus China is older than the United States, and it's labor force is actually shrinking. It's very difficult to grow an economy when your labor force is shrinking and the bulk of your population is retiring.
- China has insufficient natural resources. It produces very little of its own energy, importing most from the Persian Gulf (to which, absent the US Navy, access is not guaranteed). It can't produce enough food to feed itself, and also must import the fertilizers and other inputs for its agriculture. Given the shortage of labor, the reversion to labor-intensive gardening looks unlikely.
- China is too big to be an export power. Economic success depends on a sharp increase in domestic consumption. But consumers are in the ages 30-50 demographic, i.e., the generation that doesn't exist in sufficient numbers in China. And they're not having any children, either. The result is Chinese consumption is purchased only by government debt, i.e., the government buying all kinds of products that citizens can no longer consume. Every financial institution in the country is insolvent. It will end badly.
Moral: Don't invest money in China!
Now for Germany: Mr. Zeihan takes the Marxist saw too literally: history repeats itself, first as tragedy, and then as farce. The "Germans" invaded Russia first in 1914, and then again in 1940. Contrary to Marx, Mr. Zeihan thinks they'll do it a third time. I believe he's ignoring history.
There were three "German" empires (Reich). The First Reich was under Charlemagne, founded in the Eighth Century, and that really was a German empire (without scare quotes). The capital was in Aachen, in the Rhineland. The Second Reich was founded by Bismarck in 1871, with it's capital in Berlin. But it wasn't really a German Empire, but rather a Prussian one.
The Prussians are originally a Baltic people--Old Prussian, spoken until the 18th Century, is related to Lithuanian. Ancestral Prussians lived in what became known as East Prussia, today parts of Lithuania and northeast Poland. They were first conquered by one of Charlemagne's heirs, and took to German language and culture with some enthusiasm. But they are not ethnic Germans--neither then nor now. They're Prussian. Mr. Zeihan seems to think they're just another species of "German."
Bismarck was very aware of this--his goal was a Prussian empire, not a German one. Indeed, he wanted the Kaiser to be dubbed the Emperor of the Germans rather than the German Emperor (it is only by accident that he didn't get his wish). He treated Germany proper (the Rhineland, Baden-Wurttemburg, Bavaria and Austria, along with Alsace and Lorraine--i.e., Catholic or Roman Germany) as colonies to be exploited. (This was especially true in Alsace and Lorraine.)
And even though Hitler was an ethnic German, the Third Reich was also a Prussian empire, not a German one. It's the Prussians who had an issue with Russia. The Drang nach Osten was never a German emotion, but solely a Prussian one.
In the meantime, Prussia has been completely destroyed. They've been ethnically cleansed from their native homeland. Today they live mostly in the former East Germany--a geography that has long been a Prussian satrapy. Berlin is the capital of Prussia, not Germany.
The Germans, properly understood, have no cause to pick a fight with Russia. And I doubt the Prussians have the resources to even think about it. More likely is Germany will re-divide into two states along the former iron curtain: proper Germany to the West, and a rump Prussia in the East.
I don't think Mr. Zeihan's story about Germany makes much sense, for this and other reasons. But his book is a lot of fun and well worth reading.
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