Episode 73
This Is The Way The World Ends (w/ Zeihan & Gertken)
Sixteen years after last sharing a table together, four Stratfor alumni reunite for a wide-ranging conversation on the decade ahead. Jacob and Marko are joined by Peter Zeihan, and Matt Gertken to tackle three questions: How does the world end in the next 10 years? What core belief could each of us get wrong? And what's the least expected, most likely thing to happen next?
The conversation ranges from deglobalization and collapsing oil supply chains to the demographic cliff facing the developed world, the odds of deflation versus inflation in the 2030s, and whether the global order ends up multipolar, bipolar, or unipolar. They also debate the odds of a US-China clash over Taiwan, and whether the nation-state can survive a coming showdown with the tech companies and billionaires who increasingly control critical infrastructure - including orbit.
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Timestamps:
(00:00) - Welcome and Setup
(02:05) - Reunion at the Table
(03:11) - Episode Premise and Format
(04:22) - Zeihan on Deglobalization
(06:42) - Energy Shock Fallout
(08:52) - Demographics and Demand Crash
(11:03) - Deflation vs Inflation Debate
(16:25) - Drone Warfare Dark Turn
(18:21) - Semiconductors Reality Check
(27:27) - Marco Goes Nuclear
(30:10) - Russia Collapse Scenarios
(33:18) - Nukes Spread and Ukraine Endgame
(35:31) - Supply Chain Shockwaves
(36:34) - Putin Hell Bar Joke
(37:18) - Europe Expansion Debate
(39:26) - EU Becomes Military Union
(40:37) - Post Putin Chaos Risks
(43:08) - Russian Elite Succession
(44:27) - Civil War Nuclear Fear
(47:34) - China Fills The Vacuum
(52:26) - Taiwan Timeline Scenario
(53:59) - Drones Nukes And Invasion
(56:43) - Deterrence And Flashpoints
(01:03:34) - China Demographics Clash
(01:05:15) - Depopulation Not Disaster
(01:06:14) - Black Plague Lessons
(01:07:11) - Automation Versus Depopulation
(01:07:22) - Japan China Depopulation Debate
(01:09:31) - End of Nation State
(01:11:18) - Shocks and State Capacity
(01:12:04) - Broken World of More
(01:13:07) - Knowledge Networks Collapse
(01:14:31) - Affluence Feudalism Demand
(01:16:51) - Brittle AI Chip Supply
(01:21:39) - Ingenuity Gap Reversal
(01:23:34) - Rapid Fire Predictions
(01:35:47) - State Versus Tech Showdown
(01:40:24) - Wrap and Break
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Referenced in the Show:
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Jacob Shapiro Site: jacobshapiro.com
Jacob Shapiro LinkedIn: linkedin.com/in/jacob-l-s-a9337416
Jacob Twitter: x.com/JacobShap
Jacob Shapiro Substack: jashap.substack.com/subscribe
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The Jacob Shapiro Show is produced and edited by Audiographies LLC. More information at audiographies.com
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Jacob Shapiro is a speaker, consultant, author, and researcher covering global politics and affairs, economics, markets, technology, history, and culture. He speaks to audiences of all sizes around the world, helps global multinationals make strategic decisions about political risks and opportunities, and works directly with investors to grow and protect their assets in today’s volatile global environment. His insights help audiences across industries like finance, agriculture, and energy make sense of the world.
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Transcript
I apologize that it took us a little while to produce it. it's a long story that has to do with a video editor in Nepal and lots of other things that are not interesting. It's also, rare for us as this was, really the first time as the cousins that we decided to do something in person, so we wanted to line up the video editing, with the audio editing as well.
if you haven't checked out our YouTube page, by the way, you can find this video on YouTube. the audio content will be the same, but since we were all in person, I think it actually does add something. part one, the prompt for this, the, the prompt for this episode was how does the world end in the next 10 years, which was perfectly suited, for Peter's appearance and also challenged me and Matt, and Marco to come up with our own versions of how the world ends in 10 years.
Peter obviously, the best at all of this and us, going at him. I hope that the episode is as rewarding for all of you as it was for us. I think I've said this a few times on the podcast, analysis can be a very lonely space. when you're doing good analysis, it usually means that your opinions, seem a little out there and seem a little wacky.
They only seem clairvoyant, after what you've said comes to pass. and it also means doing a lot of work by yourself, a lot of reading by yourself, a lot of research by yourself. and it was really nice to talk to other analysts, who have been in geopolitics for 15 plus years and talk about how the world has changed and how has our work changed or not changed, or how has AI affected it or not affected it, things like that.
so thank you to Peter, thank you to Matt, thank you to Marco, thank you to the video editors and the audio editors that helped us out here. Without further ado, we hope you enjoy these episodes. Cheers, and we will see you out there
Okay. Very special. Peter, thank you for joining us. I don't know if anybody else is getting, a weird sense of deja vu. I don't remember the last time- It's creepy ... the four of us were around a table or talking to each other.
[: [:That window.
[: [: [: [: [: [:He said, what do you wanna be when you grow up?"
[:You haven't sent in your piece yet." I remember. I- Very sorry. It was not my choice. I was just doing... I was following orders. You were thrusted around. Yeah. Nor-
[: [:all right. So for this first session, we're gonna talk, we're gonna keep it mainly geopolitics. We'll wax philosophical and sentimental at the second. and we thought, what better way to get the band back together, than to talk about how the world is gonna end for the next 10 years? So aggregators, we are not saying this is what is going to happen.
We are not saying the end- I'm fine. you, yeah, you might. Yeah. But yeah, the, we're not saying the end of the world is nigh. These are- Yeah ... suggestions. every- everybody can caveat to their
[: [: [:The
[: [: [: [: [:So the first... And we're gonna try and hit three questions. We're gonna try and hit, how does the world end in 10 years? We're gonna ask each, everybody to say, how will you be wrong in one of your core views over the next 10 years? And then the least expected, most likely thing that we think is gonna occur over the next 10 years.
So that, that's our run of show here for this first part. I will start with Peter, obviously. Peter, how is the world going
[:we bought an alliance, and then we did not invest our economy in it because then it wouldn't have been a bribe. So every manufacturing supply chain, all of globalized agriculture with fertilizer coming from here, equipment from there, demand here, production here, all of that is possible because of the American security guarantee.
And the United States is no longer capable politically and militarily- to guarantee that any longer, and we have seen that. I think the first real exposure was with Yemen, of all places, which I loathe, because you had every missile defense system that we have that is mobile, and they couldn't even protect shipping in the Red Sea, much less someplace that mattered to anyone.
And we've certainly seen in the most recent war with Iran, we've now used half of our global supply of interceptors. We can't do another Iran fight at all. that's piece one. Piece two, when globalization happened, people started taking manufacturing and services jobs because everyone could specialize for the first time.
All those jobs are in town, and when you move from the farm into the city, you have fewer kids because they're no longer an economic asset. You play that forward 80 years, and it's not that we're running out of children on a global basis. That happened in the '80s. We're now running out of 50-year-olds, and if there's no one to purchase the product, there is no trade So it doesn't really matter now where you poke the system hard.
You could do it in tech, you can do it in ag, you can do it in finance, you can do it in energy. We're now at a point where the system is so vulnerable and so overexposed and so interconnected and so fragile that you start a cascade of events, and there's a really real concern right now that we're gonna hit global operating minimums for oil processing before the end of the summer, and that's more than enough to do it.
So we might not have to wait 10 years, and that's just... That's the proximate current event. There's plenty more out there.
[: [: [: [: [: [: [: [: [: [:It's what allows regional transport and local transport in most cases to happen. We can talk about why EVs aren't gonna work writ large, separate topic. you remove the mobility, and there is no trade. There's really not even regional distribution even within a major country. Now, keep in mind, with everything you poke at, there's different highs and lows based on the country.
So the United States is now not just a net exporter of oil, but we export 5 million barrels per day of a refined product, so that gives the United States a lot of options that nobody else has. But what we would gain there, and maybe with agriculture, we would suffer immensely on the manufacturing side.
[: [: [: [: [: [:Other countries, if the oil situation goes away, for many of them, that also means the agricultural system goes away, and you're now talking about de-industrialization, and every population on the planet uses industrialized agriculture to exist in its current form. So we're talking about, for a lot of places, some sort of neo-Dark Age sort of situation where a 50% reduction in the population is probably one of the more positive cases.
[:Sure. the disruption of core moves. Let's just say everything's fine. Yeah,
[:just, the one that's on my mind at the moment.
[: [: [:Yeah. Like global final demand just gets-
[:We're gonna have- But they're
[: [: [: [: [: [:It's just we're overachievers and we're doing it early.
[:I would have thought more fireworks, This is a very like- Oh,
[:But like China, you import everything and then you export to everywhere. What war can you possibly launch that will help that?
[: [: [:but I, think it's interesting because there is something that you're saying that I think resonates with me. One of the reasons that we got, World War II, in many ways, was the Great Depression, and- Sure ... there was, like, massive disinflation. And so I'm just thinking,
[: [:Because part of deglobalization is rebuilding supply that's just in case, as everyone likes to talk about. It's not just-in-time inventory. So we're creating these redundancies of goods, and in, critical goods, not critical goods. no. but it's funny you say that because your other side of the...
We actually don't need that. Well- If demand, if global d- final demand is collapsing, you don't actually need just-in-time inventory, right?
[: [: [: [:no. i- in the, run-up, everyone's trying to build a semiconductor fab now. No, I- So that's
[:For sure.
[: [: [: [: [:that is a problem that everybody knows, right? it's in The Economist. Yeah. the fact the supply chains- Oh.
You know what
[: [: [: [:What we're not... What we're missing, and where you actually bring something new to the table, is that but demand is gonna collapse too. So we're gonna h- we're gonna happen to live in a world five, six years from now where we've built all this supply for some sort of an event that may not ever happen.
We suddenly have all this unnecessary supply, but demand actually starts getting collapsed. Yeah. So why is that bad? Deflation is bad.
[: [: [:So you can have massive deflation in particular steps and still inflation when it comes to finished goods.
[: [: [: [: [: [: [: [: [: [: [:Homer Dixon wrote The Ingenuity Gap.
own a path that will make the:Too much deflation, too much political polarization. I hope it's that good. I don't know if that's good. that's-
[: [: [: [: [:we are currently de-industrializing at the fastest pace in my life right now. So we're, that specific concern isn't on the table at the moment. Are there, are there- I would love to have that concern.
[: [: [:But then it's not the end of the world, though.
we need, humanity ends.
[: [: [: [: [: [: [:let's plumb the depths and then ask Marco to give us even more darkness.
[:You're in control of it until it gets to a certain point, and then you release it. And with the tech that we have today, and when I s- say we, humans, it can then follow a route- Thanks for clarifying ... until it finds its target. '
[: [:This is what the Ukrainians have developed in just the last couple of months. the technology required to make that will survive this fallback. There's nothing about that needs global supply chains at all. And so you can see military force being democratized. At the same time, what supports the normal way of life goes away.
And today, remember, these drones didn't exist four months ago at all.
[: [: [:Yeah. So now we're getting like, you know-
[: [: [: [: [:no, they're gonna have to build this themselves. Yeah, this is book two, by the way.
[: [:They're about the size of a bus. You use them to etch the chips. They're the only ones who make 'em.
[: [:I'm sorry, 4,500 companies involved that only make one product for one end user.
So you remove a few of those, and the whole thing stops, and this is touching 60 countries. So we're going to lose all of that. if we rebuild the supply chain in a more demographically stable, geopolitically stable area, that's a 30-year program 'cause it took us 60 years to do it the first time around Dumber chips that use direct ultraviolet, older technology, there are a number of companies that do it.
The Chinese do it, and the Chinese suck at semiconductors. that level of technology, with plenty of exceptions, is pretty durable to a de-globalized scenario. and these new memory drones that I call them all use that tier, and not even the advanced part of that tier.
So we've got this new technology that is potentially very, very destructive, that is probably gonna remove Russia as an energy exporter this year, and then God knows what it's gonna do to the rest of the front once they turn, the Ukrainians turn their mind at something else.
That's gonna go global easily, Best guess is that the hits on US, military assets in the Gulf during the Gulf War, which the US has really been playing down, were all these memory drones. Because once they make... Once the drone gets in the area, it looks around, it makes a decision once, and then it goes.
You can't jam that. Your only option is physical interception, and that's here. That's now.
[: [: [: [:we do. They're too expensive, and we spent them, and, there's ways to intercept them with like-
[: [:have used less- Why not- Half of our global supply.
[: [: [: [:Because I would imagine they could.
[:I don't wanna say it can't work because it hasn't been invented at scale yet. But that seems to be the weakness as to where we are, that the Ukrainians have already identified. because they've brought some of their interceptors, which are about the size of a duffle bag. You can just tote 'em wherever you want, and their hit rate is maybe half of, say, a PAC-3 out of a Patriot system.
But they've only got a range of about 20 kilometers, and they're fairly slow. But this is- So you only get one shot at everything coming in. Yeah. So you have to take lots of shots. I'm not saying it can't be improved, but the offensive curve is so much steeper right now.
[: [: [: [: [:The war becomes, cheaper.
[:No ... and said, "Oh, it's still there. Send one." how long that will last is unclear.
[: [: [: [:for example, the Ukrainian acoustic signature system on their border for picking up Shaheds as they come in, that means that they get a warning of 10, 20, 30, 60 minutes, and they can concentrate their defense on the vector. You can't do that on water. And so you just, because the ship moves.
Now, that might change, and one of the things we're seeing in the Black Sea is they now have these, the Sea Babys- Sea drones.
[: [: [: [: [: [:'Cause like a ship that's on the water, a drone that's on the water just doesn't have much of a detection radius. You need to pair it with something else.
[:But interestingly, all this also makes offensive operations less effective. Not more. you can destroy- How you can destroy things.
[: [:correct about that. But you still have a problem, right? If you're fighting somebody else who has the same technology, occupying land becomes very
[:Very difficult, yeah.
[: [: [: [: [:Because, you can defend yourself from stronger powers, and it actually becomes very difficult to have these, territorial ambitions in this world. That's what you're- It's very
[: [: [: [: [: [: [: [:We don't need Moore's law anymore, we got Tao's law. can they be good enough to
[: [:which Chinese
[: [:I think that the amount of technology you need to effectively become relevant geopolitically is actually much lower than people think.
[: [:than for a memory drone to choose. Don't get me
[: [:Without... sorry. You can keep emphasizing if you want. No, I'm,
[: [:Yeah. Well- And then Peter Zeihan shows up, he's like, "No, actually, future wars will be fought with spears and these drones." But this is how- And that's
[:I mean- Yeah ... at least from my point, the, the ground has
[: [:for 30 years. And so we've become used to that being the norm. Yeah. But that's not today's technology. That's yesterday's technology. Yeah. So of course other countries are moving into that, and a lot of them are moving into it in a different way than we did it.
[: [: [: [:Dark Ages thing. whatever. Dark Ages was so fun. de Camero, read that if you want to see how fun it was. so look, where do I wanna go? I wanna go to nuclear war. Like- Oh, okay ... I'm j- I'm just gonna work with what's, in front of me. Peter is, the fancy, Japanese fusion Mexican chef who's bringing all these new ingredients.
I'm just gonna stick, like-
[: [: [: [:So look, what caused World War I, right? It took, 80 years to happen, but it was the sick man of Europe. It was the Ottoman Empire, basically creating a power vacuum, right? When you create power vacuums, it, sucks other countries in. And, I think the biggest-
[: [:Yeah. The
[: [: [: [: [: [: [: [: [:that political support was based on a quid pro quo, like I get to conquer half of Ukraine or more, but nothing happens to you domestically. you will, your life will be just the same as well. You can go to the same grocery stores that Tucker Carlson loved, And, eat the same crumbly- Such a fuckwit.
[: [: [: [: [: [: [: [:You just- Yeah, withdrawing ... you got huge, supply lines. That
[: [: [: [:You gotta go back in time. So-
[: [: [: [: [: [: [: [: [:That's what I'm getting at. If you don't have a leadership that is reform oriented, then that decision-making might not-
[: [: [: [: [: [: [: [:Fall of the Soviet Union. Chechnya, fall of Yeltsin. Ukraine, fall of Putin. After every single failed offensive operation, domestically they, suffer. So I think that the part of my forecast that's easy to kinda make is that I think that there is disruption coming to Russia. that's, where I'm, like, that.
Now, why does it go nuclear? first of all, you need a lot of nukes to end the world, and Russia has a lot of them. I know. It's obvious. You're looking
[: [: [:Define destroy. make city, make every city with over two million people uninhabitable
[: [: [: [: [: [: [: [:I think- Is
[: [: [:Yeah,
[: [: [: [: [:to get a nuclear arsenal.
[: [:Those are the two, transport hubs that are being used for the entire military operation. So if Ukraine does manage to push forward and push through this, they will continue pushing until those two cities are no longer a problem. And that- Plus
[: [: [: [:it's much more roundabout. I'm not suggesting that it couldn't fall in it, but these two cities have to go, one way or the other. And now you're talking about a physical invasion of the motherland, and that's a very different political conversation for Moscow.
[:The other scenario is just that the countries around Russia, once, once the sclerotic political system starts to erode, there's plenty of countries around Russia that may want to participate in its dissolution. Finland,
[: [:Yeah ... And so anyways, I, fear that over the next 10 years, the biggest geopolitical issue is actually going to be this weakness of Russia. I can even see a world where us in the West, we're actually propping a regime in Moscow, in, which happened with the Ottoman Empire, by the way, in order to ensure that it's an operating, vacuum filler so as not to allow others to come in.
[:find that unlikely, primarily because the Trump administration has gutted all the people who are capable of thinking that way.
[: [: [: [: [: [: [: [:in five years you don't know what, what goes on, but what you can say is that, if a vacuum is a problem, right? If it's a problem. Yeah. Like- And by the way, what's great about your thesis is, you're setting up a stage for the rest of the world, for the rest of us. the supply chains are at risk.
Sorry, I gotta open up this a little bit more. I'm s- like, the name-
[: [:Look at the output of oil or nickel or any other commodity out of Russia in the '90s. It's not like Russia completely collapsed. It still had the Duma, it still had the president. It was still, Yeltsin was running around and they had elections, And yet, look at what production of all the things the world needs Russia to do, look at what happened to it.
It didn't do well. Halved. Halved all of it.
[:'Cause the bar is low. Exactly. Okay. So, they let him go to Moscow and do whatever he wants for a night. So he goes to a bar in Moscow and orders a vodka, and he starts asking the bartender questions. The first question is, "So is Crimea still ours?" And the bartender says, "Yes, Crimea is ours." He goes, is the Donbas still, ours?"
He says, "Yes, the Donbas is ours." And then he works up courage. is Kiev still ours?" And he says, "Yes, we have Kiev. That'll be eight euros, please
So
[:But obviously they ultimately did want to take Belarus and others. And in a period where Russia is receding, there's, probably going to be a continued impetus for Europe to expand, and the reason for that is to absorb those dangerous territories. In other words, rather than dangle out the, this no man's land as an enticement to Russia to be aggressive because they're weak and crumbling and lashing out, it would be better to absorb them and continue this sort of forward march of the European project.
[: [: [: cal theor- theorists from the: [:They, also, and let me just say- Yeah ... for those who are saying, yeah, but Europe is old and they're not aggressive," but look, Charles XII, Napoleon, Hitler, you have plenty of examples of this- It's not accidental ... like you would say, revealed preference that Europe- No ... wants to invade Russia.
They do. They always have.
[: [: [:But what, all, I would say is like we don't have to go that far. I just think, you know-
[: [: [: [:They're an export union now.
They've aged out from being a consumption-based system. But everything else you said I agree with completely, which just means that the evolution of the EU is not a financial, monetary, economic trade union. It's a military political union, and that's a different beast.
[:that's why- They're, they've
[: [: [: [:because y- you, ultimately, you want the Caucasus as well.
[: [: [: [: [: [: [: [:What
[: [: [: [: [: [:Agreed. And, like I always joke with, some of my clients and so on when, I say something they say, I don't see that happening." Non-linearity is, built into geopolitics. we have a guy who was member of Al-Qaeda on Christiane Amanpour in CNN giving an interview in a tie. You know what I mean, this is-
[: [: [: [:you can't go that far." I literally think that, whatever comes after Putin in Russia, it will be disarray, and that disarray will be the greatest risk to humanity.
[: [: [:That's coming from Churchill, but, his behavior aligns with that constantly offensive response to negative-
[: [: [: [: [: [:It means-
[: [: [: [: [: [: [:of Austria that juts out near the very-
[: [: [:Yeah ...
[: [:based on whether or not he believed they believed what he believed in.
and whether or not he could completely manipulate anything that he said and did.
[: [: [: [: [: [:And the total elite now is barely over 100 people. Oh, no, no- Or just blown up,
[: [: [: [:And they'd probably run it by committee. It would be inefficient. And then we'll have some backstabbing, and that number gets whittled down pretty quick. but these are the people who hold all the levers of power.
[: [: [: [: [: [:who looks from a regional- Yeah ... point of view and then grows out. Okay,
[: [: [: [: [: [: [: [:What Peter just referenced
[: [: [:And I'm not saying that they won't nuke anyone else. I'm just saying if you start going back to the Red versus White and the civil wars of Russia, the degree of barbarity they've always been willing to bring on one another- has always been higher- So
[:Yeah, let's double click on this. And they have
[: [: [: [: [: [: [: [: [: [: [: [:But I still don't think that gets us to the end of the world. You're right. I think what you need is you need Europe- That's correct ... to expand.
[: [: [: [: [: [: [: [: [: [: [: [: [: [: [: [: [: [: [: [: [: [: [: [:and really bad. So I just-
[:we're doing great. So Matt? Yeah. How does the world end in the next 10 years?
[: [: [: [: [: [: [:Okay But what I would say about going back to World War I and World War II is it's not just the power vacuum. The emergence of a power vacuum at the same time as the emergence of an expressive power, which was Germany attempting to unify and create a continental empire. So they wanted to exploit the vacuum, and the only power that can fill that role is China.
Now, so th- now everyone's gonna think, oh, okay, now we're gonna start China hate hour, right? But that's not what I'm doing. I'm not, saying that... So for example, I wouldn't say that Chinese leadership shows the characteristics of Russian leadership where they could become ideologically fanatical within the next 10 years.
Why not?
[: [: [: [: [: [: [: [:I'm not gonna
[: [: [: [: [: [: It was Xinjiang in:But what interestingly what this creates is a dynamic that when China takes Taiwan, and however they do it, the problem is that Japan and South Korea panic, and they go nuclear. And so then what we have is a world where you're reviving all the ancient animosities between China and Japan, and then the final ingredient is the decay of deterrence.
So this connects with either your scenario or my scenario- is that we always talk about the post-World War II environment as one where, trade is expanding, globalization, and so nobody has any wars. But there was also the belief that there was a revolution caused by nuclear weapons that created strategic stability so that nobody was going to actually use them, mutually assured destruction.
And what we're seeing with the advance of technology, first of all, countries are willing to fight wars, including by attacking nuclear powers. But second of all, they might innovate new technologies that enable them to attack the second strike response. So all I'm saying is that if you create a powder keg in Asia- With knowing that there's a battle over influence in Russia, knowing that, there's going to be a battle between the US and China over Taiwan, you create an overall context of a powder keg, but you're simultaneously losing strategic or nuclear deterrent.
That to me is like a, it's a World War III scenario. I don't know if it's an end of the world scenario. World War III would be bad enough for me.
[: [: [:And then no one was gonna, point out that, China and the US don't like each other. Yeah, the obvious. the obvious. And we should spend some time talking about that as well. I think, Yeah, we do have a 10-year time horizon. This isn't 100, right? it's interesting to me, though, that you're trying to fit what's happened over the last 10 years into the paradigm of Chinese expansionism.
I struggle to agree with that- necessarily. I don't really see it. Xinjiang and Tibet were part of China. Like- Yeah ... they suppressed, domestic sort of angst. I don't see that as- Or you mean- ... qualifying ...
[: [:Like-
[: [: [:There's the World War II paradigm, where you have a madman or a fanatic.
[: [: [: [: [: [: [: [: [:You may have somebody who counters what's going on w- in the United States of America with President Trump.
Maybe China's ready for a little bit more of that kind of European-style nationalism, and that's where you add a little bit of, hot cayenne pepper into- Yeah ... your brew that gives some spice to it.
[:if we want to. first of all, I think the US is more likely to be led by a Democratic and an internationalist administration that actually does wanna defend Taiwan. Second of all, I think, yeah, you're, you
[: [: [: [: [: [: [: [: [: [: ally run Taiwan. So in around:And at that point, I think China could turn in a much more aggressive direction because they will have seen that even when the Guomindang is back, even when they negotiate a trade deal, even when they do all the things that they're supposed to be doing politically, they still don't actually control Taiwan, and that's where it goes in a much-
hink we have a problem in the: [:And to think that the South Koreans and the Taiwanese are not comparing notes with the Ukrainians every single day.
[: [:they'll just nuke them.
[: [: [:you made a point earlier that the, the drones that are really good, like the bar is really low. Yeah. the Ukrainians are making these, as they go from like a van on the- next to the, trench.
[: [:consumer electronics. You know what I mean? so-
[: [: [: [: [: [: [: [: [: [: [:It's about whether there's Taiwanese will to do so. The thing about the
[: [:Yeah,
[: [:We still get to nuclear war. let's
[: [: [: [: [:There
[: [:You know why?
[: [: [: [: [: [: [:Yes. I think every single-
[:It's Taiwan. Yeah. to your point.
[: [:this piece of territory? Austria, Hungary, Russia, this, Serbia. and then it ended up being like, "Oh, shit, World War I started in Sarajevo." who knew? Yeah. no, everybody knew. Yeah. Everybody knew for 30 freaking years, we knew that's what was gonna happen.
[: [: [: [: [: [: [: [:Yeah. I think we're, sold.
[: [: [: [: [: [:Now I'm just like, "Holy shit, this is so easy." no, but before this- I was, definitely didn't think there was going to be a war. China's the most dependent upon glob- the globalized system of any country on the planet. And Australia now has the offensive firepower to end China's connection to the world.
So does Singapore, Malaysia, and Indonesia, Taiwan, Vietnam, Japan, the United States, India, Iran, Pakistan. Yeah, but
[: [: [:I hear you. Not because they did a rational, holistic, Kantian assessment- fair ... of where it
[:80% of it's from the Persian Gulf, and we're seeing some wobble this year, but that's, a lot.
80% of what they use to grow their own food is imported
[: [: [:If,
the- 20% of their income comes from
[: [: [:the, the world being permanently accessible. Yeah. But any conflict with Taiwan ends that.
[: [: [: [: [:Neither did Bosnia and Herzegovina for Austria-Hungary.
[: [:A lot of these scenarios require almost like an absence, not of rationality, but absence of reasoned th- thought. Because, if you sit down and reasonably say, there's this new technology that now the Taiwanese have. we don't want to mess with that," what ends up happening is you need...
The reason that I start my scenario with Russian, post-Ukraine political disaster is that you r- you need to introduce a level of, nationalism, of passion- Yeah. Of non... and that's to your point-
[:He realized deeply w- at every level why a war with Taiwan would be the end of modern China.
[: [: [:Literary
[: [: [: [:But you don't even need that. you can have changes in leadership. I- You know, there's also, like-
[: [:There's Acts of Da- God, dog
[: [: [: But:All those things combined can create this toxic brew.
[: [: [: [: [: [: [: [:Robots, drones-
[: [: [: [: [: [:like rearing to go at
[:I don't like demographics or destiny either. However, I would just say that-
[: [: [: [: [: [: [:But they- Which is awful.
[: [: [: [: [: [: [: [: [: [: [: [: [: [: [: [:gonna get by with 20% of what they have ... but why would they go away? And this is the most fertilized- Look ... land on the planet after Brazil. If-
[: [: [: [:Second of all, like- When we look
[: [: [: [: [: [:Even, in the rural areas, there's nothing... depopulation is a problem actually, I think, in a non-globalized world. In a globalized world, the problem that you're de- describing, which I agree- If you
[: [:It's, it's a global demographic issue. Yeah.
[: [: [:yeah. the potential error in my argument- Okay ...
[: [: [: [: [:I don't know ... whoa, whoa, let me double-click on that. Yeah. one of the greatest things that happened to Western civilization was the Black Plague. Now, I'm not saying that I would love to see millions of people die. However- You'll be in France ... however, what it h- what, the Black Plague did to Europe is it created a power vacuum from the perspective of feudal lords and serfs.
Suddenly you could say, maybe you shouldn't have the right to tell me who to marry or how many kids to have on my plot of land, 'cause you need me to grow food for you and
[: [: [: [: [:Urbanization, all
[: [: [: [: [:And you can, yeah, you can pay for more- You know what I mean? super subtle humor here. But look, what I'm getting at is- Kind
[: [: [: [: [:And what, I would say with China may fit a more aggressive or extroverted
[: [: [: [: [: [: [: [: [: [:But I'm glad you said that because it, it relates to the scenario that I wanted to, bring up, because I think we haven't been here before. And I, wouldn't take it back to the, Black Plague. I would take it to modernity, 'cause modernity has always been about the more. We need to produce more for more people, for more consumption.
And for the first time in modernity, we need to figure out how to keep a standard of living while producing less for smaller numbers of people, and this literally hasn't happened for centuries.
[: [:This is not my base case. Yeah. It's the death of the nation state. Oh. The nation state was built out of the combination of nationalism and industrialization- Oh,
[: [:It looks like, we were talking about this earlier, it looks like South Africa, where you have elites in gated communities and governments that don't actually function, and basically slave labor classes who don't have the promise of stability or employment or anything else like that, and we have this pleasant fiction.
Now, that's all on the periphery, and us in the West, we like to comfortably import our cobalt and our resources and have everything that we want from all this and pretend that the core is fine. I already talked about the Cylons. This is where it's, like I'm riffing now off of a foundation, that the empire, the center of everything, goes away.
And instead of a state that controls things, you have a hollowed-out state which doesn't have power. To the extent it does have power, it's to pr- protect the oligarchy or the oligopolies. You have elites in gated communities who don't care about society anymore. You have young people who have no attachment or meaning to that state anymore because they're not in factories rubbing shoulders with their counterparts, meeting new people, and going to the bar and having beers.
They're in their basements talking to ChatGPT or Claude or whoever else. And when you get that sort... This is, I think, is why kids don't have irony these days. we can't do satire anymore because our politicians are beyond what we could satirize. Yeah. it's impossible for comedians to do anything with s- with what we have.
And this is where I do get spooky, 'cause I don't think it's World War III and nuclear weapons. I'm thinking, so what happens in this hollowed out sort of state of being where the nation state is no longer there and no longer organized?
[:can have both.
[: [: [: [: [: [: [: [:I
[: [: [: [: [:No, but I'm starting with the geopolitics. Yeah, he did. Yeah, I agree. I'm saying it, it's not like it's any one thing. I agree. I like it. Is it rising sea levels? It made it better. Is it droughts? All these things are gonna keep happening to us, and our capacity to respond... Because I've, actually come to the conclu- it's not gonna be a pandemic if we're organized, 'cause we can figure out how to solve a pandemic.
We can solve climate change. We can solve all this stuff. What we can't solve is if the state has no ability to function- Yeah, no, that's- ... and nobody gives a crap ... it's
[: [: [: [: [:The idea that there's more people, more interaction, more trade, more technology, more finance, back to more people. That loop has defined the last 500 years. Now, it took us 250 of those years to figure out those four models, and I wouldn't say that we perfected them until the 20th century That loop's broken.
We're no longer in a world of more.
[: [: [: [: [: [: [: [:It's a living thing that requires thousands, if not tens of thousands, of people to make it work.
[: [: [: [: [: [: [:One is, pop-
[: [: [: [:Actually,
[: [: [: [: [: [:No. But let's take the US economy right now. let's take the US economy right now. 20% of Americans are consuming 50%. one- I thought it was more than that, but
[: [: [: [: [: [: [: [: [: [: [: [: [:and, and-
[: [: [: [:But I'm just saying you could see the-
[: [: [:I agree with you. That's, those days are gone. The second thing is you said you had a counter to the technologies, right? Because what I see right now is, idiosyncratically, not really connected, we have robotics became better, the drone technologies, stuff like that, and then you have AI as well, all coming in at the same time.
You have to have a pretty negative view of those technologies, like almost a Luddite view, to say that they will not
[: [:We just-
[:But-
[: [:So all of that stalls or goes back. Now, it doesn't happen like that. From the point that the system breaks, and it'll be pretty obvious, 'cause it's an input throughput thing. From the, 'cause from the point that you design a chip to the fa- to the point that you can actually have an intermediate chip that can then be incorporated into a product- No, I get that
is three to four years. and so you're gonna have the throughput that's going through the system for at least 12 months to produce the last batch of chips, and then those will get tested and incorporated into systems over the next six to 12 months.
[:And the reason I say that is because demand itself flailing is not enough of a catalyst.
[: [: [:Fair. And, we're entering a period where the state is going to consume more and more.
[: [:That's the affluence that we're-
[: [: [: [:But after that, healthcare is less of a growing, but then now more and more people are going into these supply chain and logistical type of jobs you're talking about in order to buy- In
[: [: [: [: [: [: [:Well- Because robots and everything else are gonna replace all those things. You're not gonna need those people
[: [:If you can-
[: [:Everybody forgets about that half of the equation
[: [: [: [: [: [:I know it's very- yeah ... it's very real, but- Yeah ... we're, if you wanna use the term late stage capitalism, that might apply here
[:Now on the other side of it, you have a new demographic makeup But the knowledge of how to produce the amount of goods required for the amount of people is still existent. The knowledge persists.
[: [: [: [: [: [: [: [: [: [: [: [: [:there was... That didn't happen. Market didn't clear in, when Rome collapsed. I do think that there's something of, that we're all landing on almost, which is that there is no linearity in geopolitics. Things reverse. That'd
[: [: s or early:We could go in reverse on some of these things, and I think that's, yeah, that's a really... We're... Interesting concept to think of because most are, of our viewers, even if they're sad about the state of the world, most of them have seen nothing but Better life, over the course of the last 10, 20 years
[: [: [: [: [: [:would then be the, like the edu... I guess it would be the f- a combination of education and free markets, right? Because in the past, there's been all kinds of challenges.
Why were they solved? It was just 'cause people were hungry, they were working hard, they were coming up with ideas. Now, if you take away their ability, the ingenuity gap or whatever, if you take away their ability to innovate, to solve problems so that they can feed and buy things, then you have...
That's when you have massive failures. But as long as people are still free enough to pursue their interests, then you usually tend to evolve out of problems.
[:that, that's not going to be an option, I would argue. Yeah. All
[: [: [:this can relate to the Fed thing- I think I already did that ... or anything else. You did that one. And then also least expected, most likely thing to occur. So maybe we do a little rapid fire. We'll start, Marco, and go this way down, and each do it, and then we'll talk
[: [: [: [: [: [: [: [: [: [:let's all do rapid fire at
[: [: [:Which seems like a pro.
[: [:this rear guard action by states to ban kids on social media, good luck with that. they'll find a-
[: [: [: [:I think it's gonna be difficult to do that, but I think, rise of, s- sclerotic policymaking, legislative activity, just, basically inability to really control the institutions that mattered. these institutions, everybody thinks nation state collapses because it just doesn't exist anymore, or, it's a, it's an orgy of violence.
It can also just happen where, the, nobody cares that the Holy Roman Empire has been here for 1,000 years. Like- yeah, sure ... the, the emperor, let me write back to him. So that's the first. the second thing, was-
[: [:but that power doesn't go as far as it used to, to effectuate, like- Yeah ... reality. so I think for that view to be wrong, I think, something has to reverse that. Either China and the US rise up and create the bipolar system, which most people love because it's very mathematical. It's easy to theorize.
Game theory is easy to do. the national security establishment of the United States of America loves this 'cause they can pull the playbook, and it's like, "Oh, we know how to win this thing," so I actually don't think that's likely, largely because of a lot of problems, with China that Peter has laid out in all his research.
so it would really have to be America reassert its dominance, And I think that, I think you can point to all the technological things that America's really good at, and you can make an argument that, the US exploits AI and those technologies better than the rest of the world, for whatever reason.
[: [:And there's also 100 years of history where that's been the case. And it starts scaling up into technologies that we haven't really talked about, quantum- fusion, all that stuff, and just- That's a good one. Yeah, that's right, Derek. I know, you talked about quantum before yourself.
And, fusion, other things, like just that we don't see coming down the pipeline. and then, yeah, and then the world is not actually multipolar. It's a unipolar world, and there you go. I'll be wrong. Okay.
[: [: [:It's yeah, this is actually the majority likelihood. if I wanted to make it just a little bit worse-
Please ... Turn up the dial ... combining ours, there is no example in world history of a country going through a rapid shift in economic paradigm peacefully, with one exception, South Korea, 'cause that's, they're weird.
and but they were living under the threat of war the whole time. Everyone else who has done it, it's, there's either been severe internal disruption- often ending in a civil war, or some sort of external conflict. If you look at all of the major wars from the last 200 years, there is a very, strong economic- Yep
angle that involved one of the isms.
[: [: [:That's usually where Matt Birkin comes in.
[: [: [: [: [: [:But
[: [:one of the things that's becoming really accessible is lab engineered pathogens. Yes. That are, like, super engineered to particularly target specific ethnic groups, things like that.
[:we had a vaccine for COVID within two, three weeks. Now, we had a whole regulatory process and everything else, and I don't wanna get into the vaccine politics, but Moderna had the vaccine designed in three weeks.
[: [: [:Yeah.
[: [: [: [: [: [:no, not like that. You don't have to grow anything. No, you don't have to
[: [: [:It's absolutely terrible, and the WHO has said within six to nine months they'll probably have a vaccine Cool. that's awesome. that, a, a pandemic is not gonna wipe us out if in six months we can have a vaccine to this thing, Okay. so that's why I went a different direction. Cool. And wh- and why I went on capacity, because you need state capacity in order to do that.
I
[: [:Anyway, to Matt.
[: [: [:So I think it is important, but I just don't think it will. Yeah. I don't think the US is facing a civil war. again, there's some ma- there's some easy things you could say, like for example, just as long as you have real GDP growth of 2% and people are generally doing pretty well- It's a good ball. Yeah, it's, it's a good ball.
Anyway, so there's ways in which the US just constantly has political dysfunction, but it never really detracts from the overall economy, and so we don't end up fighting over it. We don't end up fighting for food, for example. But the one thing I would say is So my explanation for this has been there's a generational change.
emblema- emblematized by the: [: [: enter into is a period in the:But they are younger, so they might be better at problem-solving. They also might be better at compromising depending on what
[: [:The- it's gonna be entering into a generational change that's actually somewhat optimistic in the sense that we won't be ruled by octogenarians who are, like, ideologically or just nonsensically driven-
[: [: [: [: [: [: [: [:if MAGA had some great triumph, maybe they really could shut down immigration substantially enough that we'd have a s- really significant slowdown in economic growth, and then that would breed further political problems. Or if the left wing came, maybe they would overly redistribute wealth and they would disincentivize investment, and we would backtrack.
So what I'm saying is, for me, I think we're actually entering an era of depolarization and probably continued prosperity, generally speaking.
[: [: [: [: [: [: [: [: [: [: [: [:Maybe green technologies is just not there and renewables is gonna cap. Maybe we'll have a small modular reactor disaster in China and nobody's gonna touch nuclear again. maybe climate change does something. Maybe, we n- we get a huge hurricane that knocks off, American production or something like that.
I'm more optimistic about the:But there's all sorts of ways that could be wrong. And then I, for the thing that's most likely to happen, I wanted to go off the wall, like Korean unification or something, but the whole prompt is that it's likely to happen.
And so I'll just close on, I think in t- I think on the battle between states and AI companies and tech companies, the state wins.
[: [:but I think the state will, control the men with guns and will eventually, put this to rest. There will,
[: [: [: [: [: [: [: [: [:That's, an option.
[: [: [: [: [:Or is, do you think that there's- Well, no, is there a dy- ... an impersonal solution to the thing that you were raising?
[:And that fight is gonna wreck so much shit. Yeah. That's book four.
[:Who are we gonna put our faith in? It's gonna be a celebrity, or it's gonna be some sports star, somebody who actually unites everyone without having any depth. It's
[: [:somebody who uses his celebrity to surround himself with- Uses his power for good ... or Kennedy. Yes. J- J.F. Kennedy or something like that. By the way, just- and the bad version of this is-
[:know.
[: [:There were a few moments when it was like touch and go, and the state always won. the, you, you just- You are gonna love book
[: [: [:the American Revolution, the French Revolution- no, wait a second ... we tore down the old- No, but
[: [: [:owning land and- Yeah ... and armies, right? And they always succumb, succumbed to the state, And I think that's- But
[: [: [: [: [: [:but again, it's something you said earlier I thought was really interesting was, like, that some of these companies might actually have drone armies or robot armies or something.
[: [: [:Do we really think that's not a strategic question?
[: [: [: [:and maybe today's cartels become tomorrow's states or- and- ... maybe other paramilitary.
[: [: [: [: [: [:It always comes.
[: [: [: [: [:Yeah, let's, let's- Of course we do ... well into it. We gotta go pee. Yeah, I gotta pee. I gotta pee. Are we gonna do the second one sober? What's the plan?
