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Politics21 min read
The End of the World Is Just the Beginning
by Peter Zeihan
Mapping the Collapse of Globalization
Published: January 29, 2023
4.4 (276 ratings)
Table of Contents
1
what’s in it for me? a short introduction to the end of the world.2
section one: globalization shapes every aspect of our lives.3
section two: america’s cold war strategy turbocharged global trade.4
section three: america’s strategic calculus changed after the cold war.5
section four: america is withdrawing from the world.6
final summaryBook Summary
This is a comprehensive summary of “The End of the World Is Just the Beginning” by Peter Zeihan. The book explores mapping the collapse of globalization.
what’s in it for me? a short introduction to the end of the world.#
Introduction
peter zeihan, the end of the world is just the beginning, mapping the collapse of globalization since the end of world war ii, society has advanced on a relatively straightforward track.
globally, billions of people were hauled out of poverty, the already wealthy got wealthier, trade blossomed, technology got faster and cheaper, and it's generally made living easier.
today, you can order pretty much anything you like and have it delivered to your front door in a matter of days or hours.
but that reality, according to geopolitical analyst peter zeihan, is about to disappear.
he believes that we've become too used to thinking about this world in purely economic terms.
it's all about trade flows and manufacturing jobs and new markets.
but, globalization wasn't a spontaneous development.
it didn't just start one day and continue trending upward under its own power.
it was the fruit of a political decision made by the united states to order the globe in a certain way.
as we'll see in this chapter, america had both idealistic and self-interested reasons to underwrite globalization.
today, however, those reasons no longer hold, which means america is withdrawing from the world.
and, according to peter zeihan's the end of the world is just the beginning, that's bad news for just about everyone else.
section 1.
section one: globalization shapes every aspect of our lives.#
globalization shapes every aspect of our lives zeihan says the world as we know it is ending, and we'll get into the why in a bit.
first, though, let's talk a little about the what.
in other words, what defines that world?
how, in the language of geopolitics, is it ordered?
those are big questions.
so, let's first make things a little less abstract.
picture a decently sized grocery store with its aisles of well-stocked shelves, beeping scanners, and customers.
now, go out back and take a look at the loading bay and the trucks, forklifts, and pallets.
wherever you look, it's the same.
endless goods everywhere.
in advanced economics, today's average grocery store offers around 40,000 individual items.
to put that into perspective, at the dawn of the last century, it was closer to 200.
so, what changed?
run an eye over those shelves.
there's himalayan salt, indonesian tuna, italian polenta, japanese miso, moroccan lemons, and argentinian merlot.
produce from every continent and ocean.
affordable.
always there.
defying nature's seasons.
and flying in the face of 250,000 years of human experience, which says that food is always scarce and always dear.
this kind of diversity, reliable availability, and reliably low cost is what globalization is all about.
and that's what defined our world over the last 70 years.
globalization is about more than how supermarkets are stocked, of course.
our meals are assembled with ingredients from every corner of the earth.
but so is everything else.
smartphones, fertilizers, diesel, and single malt whiskey.
everything we buy, use, and consume has been assembled half a world away.
goods are the blood cells.
transportation networks, especially oceanic networks, are the system's arteries.
giant freighters loaded with bulk goods – think cambodian rice, ukrainian grain, or australian bauxite – provide another thumbnail image of globalization.
so do the even vaster container ships that carry 90% of the world's non-bulk goods.
our laptops and tvs, calculators, cars, and cadmium batteries.
interoceanic transportation is the ultimate enabler of global trade, and it drove globalization.
but these networks didn't emerge spontaneously, as you'll learn in the next section.
section 2.
america's cold war strategy – turbocharged global trade global trade didn't exist before 1945.
section two: america’s cold war strategy turbocharged global trade.#
not really, anyway.
there was maritime commerce – lots of it, in fact.
but goods didn't circulate globally.
they moved within empires.
take the british empire in the period between roughly 1880 and the second world war.
indian tea, jamaican sugar, english tools, and australian wool covered huge distances.
but they were loaded onto british ships traveling between british ports.
manufacturing and consumption were kept in-house.
goods were made and consumed within the empire.
the french, russian, japanese, and ottoman empires did the same.
it wasn't just that relying on other empires for food, industrial components, or export markets made you vulnerable to being cut off if relations soured.
in this age of fierce imperial rivalry, competitors went out of their way to hurt you.
that was the logic of this all-against-all system.
expanding your empire, after all, meant taking a big bite out of another empire.
wars were inevitable.
the problem was, they got bigger and nastier over time.
in the 30s, the nazis decided that germany could only expand if it took on every empire in europe.
britain, france, the soviet union, even the netherlands.
total competition for resources meant total war.
fast forward to 1945.
europe is a smoking crater and capitalism is on the ropes.
the red army has swallowed half the continent.
if it carries on rolling westward, it might deliver a knockout blow.
so, the united states, the only major capitalist power still standing, intervenes.
the americans don't try to resuscitate the old system, however.
instead, they hold a series of meetings in bretton woods, new hampshire, to hash out the details of a new global order.
call it the bretton woods system.
the centerpiece of this system is free trade.
participants give up imperial trading blocks and preferential access to colonial markets.
in return, the united states guarantees security.
its navy patrols the world's oceans, ensuring the safety of maritime shipping.
its diplomats draw on their hosts into dropping protectionist tariffs and opening their ports.
this creates a level playing field.
every participant has access to the resources and financial systems of others, including the united states.
to gain admission to the system, you have to do two things.
hate the soviets, or pretend to, and let the americans write your foreign policy.
bretton woods worked like a charm.
everyone who mattered joined.
old axis powers like germany and japan, old allies like britain and france, resource-rich developing nations like saudi arabia and iran, iceland, norway, and turkey, countries straddling the geographic chokepoints needed to stop soviet fleets from entering the atlantic and the mediterranean.
in the 70s, even communist china joined.
the broadness of this block was one of the reasons the soviet union overextended itself and, eventually, collapsed.
that was the point.
bretton woods was an economic system, but it was shaped by a strategic rationale.
the united states needed it to win the cold war, but the system had its drawbacks.
policing the world was irksome and expensive.
free trade wasn't always a boon.
america wanted industrial powers like germany and japan in its corner, which is why you rebuilt them once it was done bombing them.
bringing china into the system drove a wedge through the communist world.
but those strategic coups didn't make it any less painful when german automobiles, japanese electronics, and chinese steel destroyed american manufacturing and turned industrial heartlands into rust belts.
but as long as the soviet union was around, america continued to hold up the ceiling.
and as long as america did that, global trade blossomed.
global security made everything a lot more profitable.
take maritime shipping, for instance.
with america policing the seas, slower ships were suddenly safe to travel through international waters.
this, in turn, made slower ships become bigger ships.
that's how you get to today's supersized container ships, which are around 16 times larger than their counterparts in 1945 and run at about one-quarter of the cost per unit of cargo.
that's a big part of the story behind the 40,000 items on the average ship.
that's a big part of the story behind the 40,000 items on the average grocery store shelves.
section 3.
section three: america’s strategic calculus changed after the cold war.#
america's strategic calculus changed after the cold war okay, let's recap.
free trade, the linchpin of bretton woods, turbocharged globalization.
but that wasn't its purpose.
really, it was a bribe.
america offered allies a deal.
help us contain the soviets, and we'll give you access to the most dynamic economic system on earth.
america won the cold war, but it lost its industrial base and manufacturing jobs.
communism was a great motivator.
political leaders and voters accepted the cost of policing the world because there was no greater threat to america.
however, it was harder to sell that ongoing investment in global order after the fall of the soviet union.
free trade, for example, had been important because it served america's security objectives.
was that still true after 1989?
for around two decades, the answer appeared to be yes.
the united states continued to uphold the status quo.
to understand why, we have to switch our perspective from global trade in general to the global trade of a specific commodity, oil.
it's impossible to undersell the importance of oil to our civilization.
it propels us to work and powers those supersized tankers we mentioned.
and it's everywhere.
it's in our roof shingles and smartphones, shoes and spatulas.
without it, supermarket shelves would be empty.
without it, our world would grind to a halt.
literally.
for all its remarkable properties, however, oil isn't perfect.
burning it at scale is environmentally catastrophic, for one.
even if we leave that fairly major caveat aside, there's still another issue.
getting it to where it needs to be.
that's not a question of technology or logistics.
there's hardly an oil deposit left on the planet that can't be exploited if you have enough money.
consider an oil well in kazakhstan called kashagan.
it's two miles beneath the caspian sea in an area that's regularly buffeted by 60 mph winds.
in winter, there's moving sea ice and sea spray, which freezes and encases the production facility in feet of ice.
accessing the kashagan deposit required an upfront investment of $150 billion.
oil, though, is really, really important in an advanced, manufacturing-heavy economy like japan's.
that's where the oil ends up after it's traveled through 1,000 miles of pipeline and covered 8,000 miles at sea in a supertanker.
oil's importance means the oil market is extremely volatile.
oil has to flow.
constantly.
or the market goes haywire.
and when that happens, the entire global economy goes haywire.
even relatively minor interruptions can have that effect.
during the 80s, for instance, two of the world's largest oil producers, iran and iraq, fought a brutal and futile war.
the fighting itself didn't interrupt oil flows.
both countries were still pumping out crude oil.
but once iraqi and iranian generals realized that they had reached a stalemate on the battlefield, they started lobbing missiles at each other's tankers in the persian gulf.
the missiles weren't even especially effective.
just 12 ships were sunk in total.
a drop in the ocean in terms of global ocean supply.
but that was enough to almost trigger a catastrophic financial meltdown.
america's security guarantees were thought to be ironclad.
in 1983, no insurer on the planet had any reason to expect states to attack oil tankers in international waters.
so, they didn't put money aside for that.
when the claims from the iran-iraq war came in, they quickly realized that the world was in a crisis.
and when the iraq war came in, they quickly ran out of cash.
so, too, did the reinsurance firms they filed claims with.
soon enough, the global insurance market was in trouble.
health insurance, car insurance, it didn't matter.
insurers were broke.
they couldn't pay out.
add in the close link between the insurance and bond markets, and you've got a recipe for a 2008-sized disaster.
that was only averted when america decided to physically escort non-iranian ships in the gulf and backstop the insurance market.
in other words, two countries which didn't even have financial sectors sinking 12 ships almost took down a good chunk of the global economy.
that's the problem with oil.
keeping it flowing became an open-ended commitment by the united states to police the middle east as well as international shipping lanes.
but that's what america did after the cold war.
it went to war with iraq in the first gulf war to bring kuwaiti oil back online.
it battled islamist groups inspired by osama bin laden, a man hellbent on toppling the government of america's most reliable middle eastern ally and the world's largest producer of high-quality crude oil, saudi arabia.
these entanglements cost trillions of dollars and the lives of thousands of soldiers.
but that was a price worth paying.
until it wasn't.
america has opted out of its middle eastern wars, loser wars in the words of former president donald trump.
so, what changed?
well, the scary answer for countries that still rely on middle eastern oil is that the united states is losing interest in supporting a system it doesn't need anymore.
energy independence has changed america's strategic calculus.
section 4.
america is withdrawing from the world.
section four: america is withdrawing from the world.#
there was one very clear reason for america to continue policing the world after the collapse of soviet communism.
ensuring access to low-cost, high-quality middle eastern oil.
that era, zion argues, is over.
lots of factors come together here.
demography plays a role.
so does declining domestic support for globalization, a force many hold responsible for the disappearance of skilled jobs and middle-class affluence.
we can't cover them all here, but we can highlight one of the most significant factors.
today, the united states is a major conventional oil producer on its own.
in fact, it produces around 4 million barrels per day, as much as iran was pumping out in its 70s heyday.
but it also consumes a lot of oil, which for a long time made it the world's largest importer of oil.
america's dependency on foreign oil shaped its foreign policy.
that's why it prompted the saudi monarchy and kicked the iraqi army out of kuwait in the 90s.
today, however, it's a net exporter.
that's down to fracking.
but before we get to that, a little context.
between 1998 and 2008, the price of oil jumped from around $10 a barrel to over $150.
that matters for two reasons.
one, it means that importing oil really hurt.
two, it gave oil companies a really good reason to find and tap new domestic sources for oil.
conventional drilling is great if you've got a large pocket of oil beneath your feet.
but there are also trillions of tiny pockets of oil.
no one used to go after them.
it was too expensive and too time-consuming.
fracking, essentially, is about accessing those pockets.
like conventioning drillers, shale operators drill down vertically.
but when they hit a petroleum-rich rock strata, they change direction and start drilling horizontally along that layer.
then they pump in water and sand at high pressure, fracturing the rock.
hence the name fracking.
that releases all those tiny pockets of oil.
the sand props the cracks open, and reverse pressure sends the water back up a pipe.
once the water is cleared, the oil keeps flowing.
individually, american shale wells can be as prolific as any well in saudi arabia or iraq.
collectively, they produce around 10 million barrels of oil per day.
add in conventional wells, and the united states is now the world's largest oil producer.
it's energy independent.
that fact alters the calculus underpinning globalization.
for the first time since 1945, the united states doesn't have a strategic rationale to underwrite global free trade.
some americans believe the united states should do that anyway.
it's the right thing to do, they say.
that's a different kind of argument to the one voters are used to hearing, though.
morality and self-interest align more neatly in the past, and there used to be less emphasis on the costs of policing the world.
isolationists, advocates of the view that americans should put their own interests first and let the world sort out its own problems, now have the win in their sails.
so, what happens if the united states does isolate itself?
well, let's just focus on oil.
oil is a very important resource.
say, iran and saudi arabia's mini-cold war gets hot.
that would take 27 million barrels of oil offline per day.
or, say that power is seized in egypt and the suez canal is closed.
that's 5 million barrels of oil gone per day.
only four states other than the united states have militaries capable of reaching the middle east.
france, britain, japan, and china.
only japan has the technical capacity to stage offensive operations.
so, there's the short answer.
without america's security architecture, the rest of the world is extremely vulnerable to oil shocks.
how vulnerable?
take the world's manufacturing powerhouses.
china imports 70% of the 14 million barrels of oil it consumes per day.
taiwan, the united states, and the united kingdom are all oil-producing countries.
they import oil per day.
taiwan, south korea, and japan only need between 1 and 4 million barrels a day each.
but they import more than 95% of what they use.
an oil shock, in other words, would wipe out east asian manufacturing.
it would also bring inter-oceanic transportation to a standstill.
the thing about modern container ships is that they don't transport single products from one port to the next.
they run circuits, picking up and dropping off containers containing unique parts from multiple ports.
take one ship offline, and entire supply chains get jammed up.
as people in the car industry say, it takes 30,000 parts to make a car.
if you only have 29,999, you've got an expensive paperweight.
that, in a nutshell, is how our world ends.
remove american security commitments, and everything else falls apart.
you've just listened to our chapter-2, the end of the world is just beginning, by peter zayan.
final summary#
Conclusion
the key message here is that globalization was underpinned by the united states' strategic objectives in the cold war and its reliance on foreign oil.
securing the conditions for global trade was a way of bribing america's allies to help them contain the soviets.
after 1989, america continued supporting global free trade.
like most developed nations, it couldn't meet its own fuel needs.
but those two rationales no longer apply.
the soviet union is gone, and the united states is energy independent.
america isn't going to police the world anymore.
so, the rest of us should buckle up.
we may be in for a bumpy ride.
thanks so much for listening.
if you can, please leave us a rating.
we always appreciate your feedback.
see you in the next chapter!
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