Making Sense - Sam Harris - #288 — The End of Global Order

00:00:00.000 welcome to the making sense podcast this is sam harris just a note to say that if you're hearing

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00:00:38.840 okay still a lot happening in the world it is crazy out there and today's podcast will take a

00:00:55.480 major slice of that craziness and hopefully put some order to it just a couple of housekeeping items

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00:04:36.380 in the best of making sense okay today we're talking about the end of the world as we know it

00:04:46.100 that really is not much of an exaggeration because today I'm speaking with Peter Zion and Ian Bremmer

00:04:54.540 and we're focusing on Peter's new book titled The End of the World is Just the Beginning

00:05:00.700 which is a fairly dire look at the implications of deglobalization and demographic collapse

00:05:09.180 as I say at the beginning I invited Ian to help co-host this episode essentially because so much of

00:05:15.540 what Peter has written about is just not in my wheelhouse so I invited Ian to ride shotgun with me

00:05:21.620 which happily he did and I thought it was a great conversation we track through a lot of what's

00:05:27.660 in Peter's book why deglobalization is happening why he's so confident that it will continue to happen

00:05:33.840 how it has different implications for countries like China versus countries like America and as you'll hear

00:05:43.660 there are not too many countries like America in his estimation and there's a long discussion on the

00:05:49.240 implications of demography and demographic collapse and just what is the relationship between labor

00:05:56.180 and consumption and investment and urbanization what does the world look like with shrinking

00:06:03.280 populations as you'll hear it is a bracing and fairly alarming picture of guaranteed disorder and scarcity

00:06:13.320 and there's also some discussion about the significance of the war in Ukraine and

00:06:18.640 and other recent developments there anyway I found it fascinating I hope you enjoy it Peter Zion is a

00:06:25.680 geopolitical strategist and founder of the consulting firm Zion on geopolitics his clients include energy

00:06:33.540 corporations financial institutions business associations agricultural interests universities and the U.S.

00:06:40.640 military he is the author of the accidental superpower the absent superpower disunited nations and most

00:06:48.860 recently the end of the world is just the beginning Ian Bremmer is president and founder of Eurasia Group

00:06:55.320 a leading global research and consulting firm and GZERO Media a company dedicated to provide an intelligent

00:07:03.140 and engaging coverage of international affairs he currently teaches at Columbia University School of

00:07:08.520 International and Public Affairs and he has published 10 books including the New York Times bestseller

00:07:14.340 Us vs. Them the failure of globalism and his most recent book is The Power of Crisis how three threats

00:07:21.980 and our response will change the world Ian is also a foreign affairs columnist and editor at large for

00:07:28.600 Time magazine apologies for some of the audio especially on Peter's side Peter's in the middle of a book tour and we were

00:07:36.680 unable to send him the gear we usually send to guests so it sounds more like a phone call on his end

00:07:43.280 but his words are clear enough and I bring you Peter Zion and Ian Bremmer

00:07:49.960 I am here with Peter Zion and Ian Bremmer Peter Ian thanks for joining me it's great to be here good to be with you

00:08:03.760 Peter the occasion for this conversation is your fairly astounding new book the title of which is

00:08:11.400 The End of the World is Just the Beginning which I read last week and I knew I wanted to speak with you

00:08:18.180 I also knew that I am not entirely qualified to absorb every aspect of your thesis I mean you cover so many topics

00:08:28.820 which are really not my wheelhouse things like geography and manufacturing and

00:08:33.580 agriculture and industrial materials etc so I invited Ian on really to kind of co-pilot the plane with me

00:08:42.500 here and be a backstop against some of my ignorance about these matters and Ian is a

00:08:49.200 frequent guest on the podcast so it's great to talk to you both I think before I'll just see I'd like you to roll out

00:08:56.680 your thesis as you present it in the book at kind of a high level at the beginning here I guess I'll just

00:09:02.380 kick you off by reminding you that one of the more provocative and unequivocal things you say in the

00:09:08.360 book among many provocative and unequivocal things is that quote the world of the past few decades is

00:09:15.320 the best the world is ever going to be in our lifetime and so basically your claim that surfaces

00:09:21.260 throughout the book is that the world as we have known it ended more or less in 2019 and there is no

00:09:28.820 going back and globally speaking more or less everything that matters is going to get worse

00:09:34.460 and it's going to be worse for the rest of our lives whether there as well here that you posit that

00:09:41.460 there'll be islands of relative advantage and America is going to do much better than China for instance

00:09:46.700 but basically the sky really is falling on your account so I would I'd love you just to jump in

00:09:52.400 and give us a first pass at this argument of course so let's start at the beginning before

00:10:00.120 World War II global trade in the way that we think of it today did not exist there was no

00:10:05.480 manufacturer's trade certainly not supply chains energy and agriculture tended to be kept in a house

00:10:10.760 you if you wanted something you went out you took it colonized it you expanded into empire and those

00:10:16.540 empires clashed those clashes brought us the destruction of the world wars and the end of

00:10:22.240 the imperial era at the end of that conflict the Americans proposed a new way of functioning

00:10:29.760 instead of everyone having to have their own sequestered protected militarized convoyed systems

00:10:35.620 the U.S. would use its navy which was the only one of size to survive the war and would protect

00:10:40.620 everyone's commerce everywhere at any time no matter who you wanted to partner with where you wanted to go

00:10:45.160 where you wanted to sell if in exchange you would serve as cannon fodder in the cold war

00:10:51.600 we bribed up an alliance and it worked but the cold war ended 30 years ago and we've been backing away

00:10:59.540 ever since and in every presidential election we have gone with the more populous candidate and I would

00:11:04.640 not exclude Biden from that statement we're done and at the time that the Ukraine war started we

00:11:11.480 actually had fewer troops stationed abroad than at any time since reconstruction so the American

00:11:18.180 commitment to this sort of structure which was always a security structure for us is now gone

00:11:23.560 second that structure changed the way we live in a pre-world war ii pre-urbanized pre-industrial

00:11:31.500 system everyone lived on the farm and kids were free labor so you had a lot of them

00:11:35.640 but when globalization happened urbanization happened and everyone took those industrial

00:11:41.480 and service jobs and manufacturing jobs in the cities and when you move into a condo kids are no

00:11:46.840 longer free labor they're just a really expensive headache adults aren't dumb so we had fewer of them

00:11:52.560 you fast forward that 75 years and it's not that we're running out of children that happened 40 years

00:11:58.720 ago it's that we're running out of adults and we do not have an economic theory for what a world

00:12:05.600 where the retirees outnumber the children and the adults looks like but we're about to live in that

00:12:11.980 in the naked now it's it feels good until now because as you age if you're part of the global system if

00:12:19.280 you have a lot of people in their 40s and 50s you know people who have literally been in their careers

00:12:23.740 their whole lives well they're very productive but they've got to export that product in order to

00:12:30.600 make it work and in a globalized system you can export from the more advanced aged economies into

00:12:35.320 the younger ones but that only works until you hit mass retirement and at that point you don't just

00:12:41.340 have you don't only lack consumption you also lack production and investment and that is a position

00:12:47.860 where the chinese the japanese the koreans the italians the belgians the germans and more are all

00:12:53.500 edging into in the first half of this decade and there is no system that we are aware of even

00:13:00.020 theoretically where that works so we are now at the end of what has been the greatest period of

00:13:06.480 economic growth in human history and now we get to figure out what's next well so there are two

00:13:11.760 main pieces here there there there's the claim about deglobalization and then the claim about

00:13:18.180 demographics i don't know which we should take first i bet there's there must be a few assumptions

00:13:24.360 built into each of them i'm wondering i mean let's take deglobalization first that seems to be

00:13:31.020 sure it's a very simple claim why is it happening and what if we i mean it's just just imagine a case where

00:13:40.360 i mean you see you're claiming that america long ago decided to stop being the world's cop and pull

00:13:46.720 back and i'm wondering what ian thinks of that but let's just say that's true and it's been true and

00:13:54.660 it currently is true that's the kind of thing that could change right and that would upend at least

00:14:01.000 one crucial part of this thesis what if everyone who mattered read your book next week and thought

00:14:08.100 we have to arrest this slide toward the brink we have to secure a globalized supply chain and

00:14:15.340 make the world safe for commerce once again why couldn't that happen well let's start with why it

00:14:22.460 can't happen and then we can go into why it won't happen first the can't if you want to patrol the

00:14:27.700 global oceans you need to make sure that there's one overarching naval power who has the capacity to do

00:14:33.600 it and there are not challengers to the throne who could potentially disrupt it the u.s navy is

00:14:38.020 potent but it is designed to smash countries not protect trade anymore we have 11 super carriers

00:14:44.260 another three are on their way fantastic tools for military power projection but if you want to

00:14:49.320 patrol the global oceans you need destroyers i would say you probably need about 800 of them

00:14:53.900 we have 70 and half of those are dedicated to protecting the carriers it's also the 1960s anymore

00:15:02.080 the soviets were never great at anything naval but now there's a wider range of middle powers of

00:15:08.520 which china is one who would like to have their own sphere of influence in terms of maritime power

00:15:12.840 and that is just not something that works in terms of unrestricted merchant activity so even if the united

00:15:21.680 states wanted to do this we no longer have the capacity to do it and nor is there a country or

00:15:28.300 coalition of countries that have the naval power that would be necessary to build some sort of

00:15:33.660 packs global system we just have sailed past that to put it bluntly in terms of why it won't happen

00:15:41.180 the united states politically has moved on and part of what made globalization work is that for the

00:15:46.680 americans globalization was a security pact not an economic one everyone else got the economic benefits

00:15:51.920 we got to be able to write everybody's security policies that was the deal you do that for 70 years

00:15:59.200 and economics change in the home country and so we have seen the the gradual departing of manufacturing

00:16:07.260 for example from american shores to the wider world we have seen countries that normally could not have

00:16:13.240 built the institutional or physical infrastructure or industrial plant be able to do so because of global

00:16:18.080 finance and we've seen other players come into the market in terms of energy and agriculture that

00:16:23.540 couldn't have done so in the imperial era except as colonies they're all independent countries now

00:16:27.940 and there's some resentment in the united states this is part of the rise of donald trump and joe biden

00:16:33.920 part of the return of populism to the core of our political debates the idea that the united states

00:16:39.560 has gotten a raw deal even though the deal is one we made even it's though it's one we pioneered

00:16:46.280 and the idea that the united states is going to build out a navy so it can bleed and die so that

00:16:52.600 the chinese can import raw materials and export machined products that was always a dubious line

00:16:59.960 and so here we are at the end of the system so let me jump in yeah and let me let me say first of all

00:17:07.060 that i think it's appropriate that we well actually big picture i should say that peter and i agree on

00:17:13.040 much more than we disagree on we've known each other for a long time uh i read the book a few

00:17:18.440 months ago uh i liked it quite a bit uh so uh we're getting this is i think this is going to be

00:17:24.000 more about nuance and deep conversation uh that elucidates as opposed to fiery disagree with each

00:17:31.520 other on everything i will say that to the extent that we disagree we probably disagree a lot more on

00:17:37.860 the de-globalization piece and how far it goes than we do on demographics so i would spend more

00:17:42.760 time on that i think demographics one of the few areas that we can make very strong predictions with

00:17:47.240 confidence about where we are heading over the next 30 50 years because most of it has already

00:17:51.940 happened it just hasn't happened it hasn't played out yet as you know as peter said those people are

00:17:57.040 born uh but we haven't seen what happens as they become old and we're going to exactly we know exactly

00:18:01.720 how many 50 year olds we're going to have in 20 years because they're all 30 now we do now i don't think

00:18:06.440 we necessarily agree on how many we need and what the implications of that are and one place that we

00:18:10.880 will have an interesting disagreement later is about whether china necessarily loses because they

00:18:16.880 have demographic challenges i'm utterly not convinced about that and i think that'll be an interesting

00:18:20.840 conversation but that's not where we are yet where we are now is a big question about de-globalization

00:18:27.100 i think one thing that's very interesting is the tension in this book it's tension with peter's argument

00:18:32.200 is that he said we just lived through the most staggering and extraordinary sort of 50 years

00:18:38.100 that the world has ever had and now it's over but at the same time he said that part of the reason that

00:18:43.840 the americans aren't going to do this and don't want to do this is because so many americans feel

00:18:48.760 like globalization this wonderful period was such a raw deal for them and those things are i mean i'm not

00:18:55.460 trying to be too cute here but those things they overlap but they don't overlap perfectly so we need

00:19:01.200 to recognize that actually globalization was an enormous benefit for a certain number of americans

00:19:08.500 an enormous economic benefit for a certain number of people and banks and multinational corporations

00:19:14.120 that were largely had shareholders in the advanced industrial democracies but that the the middle

00:19:20.480 classes and the working classes in those same countries were largely hollowed out and so

00:19:25.420 globalization wasn't such an amazing time for those people for the last 50 years and thomas piketty

00:19:32.300 has written about that a lot of people have written about that and that's why you're getting all of this

00:19:36.100 populism and anti-establishment sentiment in the u.s so there's an argument to be made there the second

00:19:42.360 argument to be made is that deglobalization is not a switch we have had almost unfettered period of

00:19:51.800 globalization for the last 50 years and i have been a staggering enthusiast for it and frankly so has

00:19:57.460 peter um in the sense that we know that we've created a global middle class and we know that

00:20:02.900 there's been unprecedented amounts of human development and wealth and factfulness and you

00:20:07.180 can read that wonderful book by hans rossling who just departed a few years ago and you can see all

00:20:11.440 those numbers that's great but we aren't right now in one period of deglobalization i would argue

00:20:19.880 that there are three separate types of deglobalization that are presently happening they are different

00:20:25.280 and they are constrained the first is russia and russia's being deglobalized and decoupled from the

00:20:33.580 developed world because they invaded ukraine they hadn't that wouldn't be happening as we've seen from the

00:20:40.560 europeans in their energy policy over the last 10 20 years a second deglobalization is between the

00:20:46.500 united states and china but it is relatively limited to areas that are considered to be critical for

00:20:53.440 national security those are defined differently between the united states and china and a lot of

00:20:57.500 other countries around the world including the europeans and the asians want none of it so even the

00:21:02.300 japanese who are deeply concerned about national security tensions with china and we saw that with

00:21:08.780 abe and of course we now see that with kushida want to ensure that they can continue to do more and

00:21:14.120 more and more business with the chinese the chinese feel the same way so there's a constraint there in

00:21:18.480 the same way you feel that constraint for much of the private sector in the united states and then

00:21:22.320 finally there's this every nation for itself america first india first malaysia first which is this

00:21:28.820 knee-jerk reactionary populism to global bits of globalization not working for parts of your

00:21:35.100 populations and that's absolutely everywhere but it doesn't have a lot of power and as a consequence

00:21:43.600 vested interests with a lot of money do everything they can to provide lip service but not actually

00:21:49.580 move policy so far and so fast so i guess i am saying that i think that the broad dynamics that peter

00:21:57.000 identifies as to this tipping point from unfettered globalization to something that feels a lot more

00:22:03.300 challenging i agree with that but i would i'm much less sharp on globalization to deglobalization i

00:22:11.140 think it's more nuanced um i think the transition is is going to it's going to take longer and it's also

00:22:18.280 going to have different effects in different parts of the world i finally i would point out that i i am

00:22:24.220 less i don't believe that we are in a cold war with the chinese i'm not saying peter does he doesn't

00:22:29.160 say that in the book i also don't believe we're heading for one in the same way that between the

00:22:34.680 americans and the soviets we had this mutually assured destruction that prevented us from getting

00:22:40.060 into a hot war i think the incredible amount of integration between the u.s and the chinese

00:22:45.980 economies never mind the chinese economy and every other economy and the american economy and every other

00:22:49.980 economy actually provides very strong guardrails that really does limit our capacity to get into a cold

00:22:57.700 war between the u.s and china and ultimately that makes me more optimistic that the fact that the

00:23:02.540 americans and the chinese have very different political systems and economic systems that have

00:23:06.820 incompatibilities and they have military strategies on some issues that are clearly zero-sum that

00:23:12.620 ultimately their economic shared interests as well as their coming climate shared interests and even their

00:23:18.720 proliferation of dangerous technologies coming shared interests make me less pessimistic about the next 10-20

00:23:25.860 years geopolitically than peter is from a global perspective though not so much for the u.s in his

00:23:31.640 book right well just before i hand it back to you peter more or less everything you just said about

00:23:36.840 china and and there not being a risk of a cold war is obviated by peter's thesis if he's correct because

00:23:44.220 china is more or less going to cease to exist as we know it in fairly short order but we'll get to the

00:23:50.240 the specific claims about china in a moment peter what what are what is your response to ian i would

00:23:56.480 say when i first met what was that nine years ago eight years ago yeah what he just laid out was one of

00:24:02.540 my scenarios that uh this could happen quickly this could happen over a long period of time there could be a

00:24:08.040 transition period events of the last eight years however have changed my mind on that i've seen

00:24:14.220 significant short-sightedness in foreign policy making in the united states in europe but most of

00:24:19.140 all in china i've seen a collapse of china's institutional capacity to process information

00:24:24.760 leading to ever and ever worse problems and now we've got a little bit better demographic data that

00:24:29.820 has come out of china which is truly horrific uh it's actually it's come out since the book published

00:24:34.600 just a month ago and we're now looking at a chinese population that's less than half of what it is

00:24:39.320 today as early as 2050 and in that sort of environment china's just not competitive in

00:24:44.120 anything and that assumes there are no interruptions to the flows of stuff into china so i have lost track

00:24:52.400 of the number of clients that have come to me in a panic and wondering when things are going to go back

00:24:56.120 to 2019 whether it's because of trump or because of china and i really don't have a lot of good news for

00:25:00.900 them anymore and just in the last 48 hours i am very concerned about germany's role now that nordstrom

00:25:09.820 is offline we don't know if it's going back online the blast of the four pillars that support german

00:25:16.520 industrialization manufacturer in the process of crumbling we have become so vulnerable in the last

00:25:23.240 eight years and everything has become so exposed and just the bedrock that allows globalization to

00:25:30.060 function the idea that materials energy food and manufactured products intermediate products in

00:25:35.840 particular can just flow effortlessly that's all stopped and when i look at a country with a terminal

00:25:42.980 demography who has no control over its energy or its machine inputs it does not take much of a

00:25:50.220 breath knock that over and i think we're going to see in very real time in just the next three months

00:25:55.880 just how bad this can get for germany very quickly and if we've got germany and china in a degree of

00:26:02.020 economic duress at more or less the same time but for different reasons i don't see how we pull out

00:26:08.320 of this i would love to be wrong i would love for there be a transition period where we have a chance

00:26:13.780 to plan but everything has gone so far with no mitigation that i think we're well past the point

00:26:19.320 okay that's one i definitely feel more optimistic about and look i i accept the point that there are

00:26:26.740 a lot of corporates out there that are a little unmoored and a little untethered by things that

00:26:32.860 have happened geopolitically in the world that they were not thinking about were not expecting

00:26:36.940 i also think that you're going to get more of them coming to you peter saying went where i'm in a

00:26:42.380 panic we're not coming back to 2019 precisely because you are yourself moving towards more dire

00:26:48.940 scenarios and so there's going to be some self-selection there in terms of the people

00:26:52.960 who they're asking you right so but let's let's talk about nordstrom because i think that my

00:26:59.460 understanding from the german government and from talking to a lot of people sort of inside this issue

00:27:05.320 and our energy practice is that worst case scenario if the russians were to completely cut off nordstrom

00:27:12.380 so nothing more after these 10 days are are over i guess that's july 21st it is that the germans would

00:27:21.280 be in a mild but not severe recession you're probably talking about a two to three percent gdp contraction

00:27:28.400 for one year compared to what they are presently expecting there would be a significant amount of

00:27:35.080 consumer uh stress that would require the germans to pass on significant subsidies to the corporations

00:27:43.380 and or benefits to the population that breaks their existing fiscal rule they have plans for how they would

00:27:51.260 do that the amount i have been stunned peter with how quickly the germans in totality

00:27:59.080 have been willing to move on every single issue that they can to get a diversification away from

00:28:08.160 russian fossil fuels whether i mean they're gonna they've got mobile lng terminals that should be

00:28:15.020 ready by winter end of the year early next year absolute max that a lot of efficiency measures they're

00:28:21.340 taking there's you know a diversification from the united states from cutter from other countries

00:28:27.220 there i mean it's it's been shocking to me how quickly and depending on who you talk to they

00:28:32.780 think that either by the end of this coming year or maximum by the end of the following

00:28:39.840 that they will no longer need any exposure to russian fossil fuels and no one in germany would

00:28:46.600 have said that on february 24th after the russians invaded now i'm not suggesting this isn't a big

00:28:52.220 problem but the scale of the problem even in the worst case scenario where the russians cut everything

00:28:57.520 off i think is manageable secondly i don't think the russians are going to cut everything off i think

00:29:04.220 it's interesting that so far the russians when they have been you know sort of hitting the germans and

00:29:10.780 hitting the poles and hitting others it's been percentages and it's been also like they do with so many

00:29:16.460 things with fake arguments for why they have to do it because they're missing you know sort of a

00:29:22.220 they're having technical problems and of course we know they're not really having technical problems

00:29:25.560 but why the need to lie about it why they need to obfuscate and of course it's because they recognize

00:29:30.100 that they do want to come back to the markets over time and they still believe i think that they will

00:29:35.840 have that opportunity they still think that you know after they take the donbass and the ukrainians

00:29:40.540 who have gotten much more pessimistic over the past weeks get stuck with something that feels like a

00:29:45.400 frozen conflict then the germans and the italians and others are going to feel differently about

00:29:51.280 russia than they do now and furthermore that the united states in 2024 with trump running might feel

00:29:59.080 very differently towards russia than they do now and so putin sees that he still has opportunities in

00:30:04.480 a long game that make him not want to throw the energy baby out with the ukrainian bathwater and so

00:30:11.380 i'm just again i'm not saying that you're directionally wrong i think you're directionally

00:30:16.140 identifying a lot of stuff that for me goes along with geopolitical recession goes along with a

00:30:21.040 g0 global order which none of us like but i'm i'm less dire i'm closer to your more i wouldn't say

00:30:28.460 it's an upbeat scenario but it's certainly much more of a muddle through scenario than what you're

00:30:33.860 painting or is it just a longer time horizon it's a longer time horizon but also the fact that we

00:30:39.360 respond to crises my last book was all about these crises also are precisely the kick in the ass that

00:30:46.440 many institutions governmental leaders at the nation level and at the non-nation level need

00:30:52.300 to start changing and reforming their institutions in ways that will be more sustainable for the 21st

00:30:57.640 century right so peter i'd love you to respond to that but i guess i'll add another piece here

00:31:02.860 which is you know obviously there are things that have happened recently that have put a lot of pressure

00:31:08.580 on the global order you know covid and and the war in ukraine being i guess the two major examples

00:31:17.280 and on your account all of that's just accelerating what was going to happen anyway again we're going

00:31:23.480 to jump into the the demographic piece in a moment but just on this point of a runaway trend

00:31:29.360 toward deglobalization why do you think it is actually happening is it is it inextricable from the

00:31:36.280 demographics or is it is its own variable i think it's its own variable but demographics are perfectly

00:31:42.420 capable of killing it all by itself either of these issues from my point of view are death blows and

00:31:47.700 having them both in roughly the same time frame is just really bad luck i'd like to go back to something

00:31:53.000 that ian said about the russians i am not convinced that they're going to turn nordstrom back on or not

00:32:01.280 i don't know that's an internal russian political move that it's entirely possible they haven't made

00:32:06.960 the decision on i am far more convinced that even if you put nordstrom to the side for the moment

00:32:13.160 all of the pipes that traverse belarus and ukraine are ones that are probably not long for this world

00:32:18.320 it's difficult for me to see a ukraine that believes it's losing the war to allow those to continue to

00:32:25.060 operate and i think one way or another we're going to be seeing russian energy fall off the market for a

00:32:29.520 significant period of time and by significant i mean decades the last time the russians for whatever

00:32:36.320 reason had to shut in their oil it was 1992 because their exports their raw production was fine

00:32:42.800 but their internal market collapsed so industrial demand went away and that meant you had wells shut

00:32:48.740 in the permafrost and when that happened the wells become damaged and you get frost and water expansion

00:32:54.920 damage up and down the pipes and in the well heads themselves and eventually you have to rebuild most

00:32:59.400 of the system that took them 30 years last time so nordstrom is like the issue of the moment like

00:33:06.860 literally right now this moment but there is a half of other than other things that are semi-related

00:33:12.460 behind the scenes that are perfectly capable of making any german hope for getting back to some sort

00:33:18.420 of old normal or transitioning to a new normal on a time frame they can't control and in that sort of

00:33:24.620 environment i am very concerned about what happens with german manufacturing and i'm even more

00:33:29.620 concerned about what that means for germany's position within the western world because it feels

00:33:34.180 to me like the russians are presenting the germans with a simple choice we can keep the lights on for

00:33:40.760 you but that means you're out of the coalition that is supporting ukraine and that means the logistics

00:33:46.180 that you have that is supporting ukraine are no longer in play or you can do this without us

00:33:51.480 and good luck with that i so i think that there's no chance that the germans would be prepared to

00:33:58.020 accept that kind of a russian deal i hope you're right but that doesn't mean that the germans have

00:34:03.840 a hard time keeping everything running i look i get it and i also i mean i've seen how fast some of

00:34:09.740 them are moving from gas to oil in terms of electricity needs and again they i'm not suggesting they don't

00:34:16.360 have problems here double negative they have huge problems here but they're aware of them they've

00:34:21.100 taken that step they understand that they made themselves far too vulnerable for far too long

00:34:26.460 it was a strategic error and the olav schultz government which is quite stable and its coalition

00:34:31.840 which is quite stable is moving smartly in that direction and so i i also think that it was the germans

00:34:39.000 against french opposition that made all the calls to ensure that ukraine was given candidate member

00:34:45.980 status to the eu and part of the reason for that was because the europeans as a consequence are going

00:34:54.560 to be committed to rebuilding the ukrainian economy and no they're not going to get into the eu for 10 or

00:35:00.560 15 years but that also means that it gives them the leverage to ensure that the ukrainians aren't going

00:35:06.080 to actually shut down or blow up pipelines that they they are reliant on europe going forward for

00:35:11.460 their own rebuilding irrespective of how much of the donbass and the land bridge to crimea the

00:35:16.180 russians actually control so what i see after this russian invasion of ukraine is a very large number of

00:35:22.680 stabilizing measures that have been taken in a very difficult environment by the europeans by the

00:35:29.580 germans by the americans and even by the ukrainians that helped me feel like this transition if the

00:35:34.980 russians decide that they that they want to go to a very bad place here they'll be okay and also i would

00:35:41.900 just suggest that remember that putin said that if finland and sweden were to join nato that they

00:35:48.680 would be held to pay diplomatic hell economic hell military hell they've gone through they're joining

00:35:55.340 and the russians haven't done boo because they can't handle an additional fight with nato on top of

00:36:03.680 having 20 to 30 percent of their land forces getting chewed up in the first five months of

00:36:10.580 this war russia just doesn't i don't believe russia has anywhere close to the actual leverage

00:36:15.240 that would be implied by an argument that says they can really shut the germans down i really hope you're

00:36:20.480 correct i think many people listening to this might be mystified as to why russia and germany granted

00:36:29.640 these are the conflict in ukraine and its knock-on effects to countries like germany are are important

00:36:36.480 topics but why all of this has global implications why are we past the point of no return with respect

00:36:43.780 to deglobalization and why is any of what we're focused on in the last few minutes relevant to that

00:36:51.460 question well ian you want to split that in half i can take the uh the economic side if you want to

00:36:56.420 take the political and strategic sure okay so economically russia is the source of largest

00:37:02.540 world's largest source of fertilizer and the components that are necessary to make fertilizer

00:37:06.440 specifically 40 of potash russia is the world's second largest energy exporter in terms of oil number

00:37:13.220 one with natural gas which is not just used for fuel especially in germany it is used as an industrial

00:37:18.500 input it's the base of german heavy industry it is arguably one of the top three items that the

00:37:24.640 germans have in terms of making their industry globally competitive and so if something happens

00:37:29.140 to that you're talking about a loss of the world's third largest manufacturing base the energy that the

00:37:34.860 russians export in oil form that's about five to eight percent based on who's doing the math in terms

00:37:40.240 of global energy supply and oil supply and demand mechanics are inelastic so if you take off five

00:37:48.200 percent of global energy you can count on prices roughly doubling there's no way we can have

00:37:53.780 globally available fossil fuels without the russians as part of the system on the flip side they are also

00:37:59.860 major players in things like platinum and palladium and lithium and rhodium and nickel and copper you

00:38:06.880 also can't have the green transition without the russians so the russians and germans time and time

00:38:14.020 again generation on generation have had this weird dance where they have to be each other's largest

00:38:19.880 economic partner but they are also each other's largest strategic rival so they move together to try

00:38:25.920 to avoid a war a conflict happens anyway they hive apart there's economic dislocation as a result which

00:38:31.280 the rest of the world knows as a recession or depression and then they repeat it they've been doing this

00:38:35.980 for centuries and this is probably the last time they do it in my opinion because of demographic

00:38:40.640 restrictions so who quote wins unquote this time around really matters so that's i i i'm very happy

00:38:49.480 with that economic uh explanation and on the geopolitical side the russians for reasons that i think are very

00:38:56.820 explicable nonetheless made an incredible misjudgment strategically when they decided to full-on invade

00:39:05.020 ukraine i mean they saw after 2008 in georgia after 2014 in ukraine that they didn't they didn't have

00:39:13.020 a strong and united western response against them after 2014 the sanctions were pretty limited you had

00:39:20.120 european heads of state all coming to visit putin when they hosted the world cup a couple years later

00:39:24.700 like it wasn't such a big deal and then when biden meets with putin a year ago in switzerland

00:39:31.060 and it's biden's agenda he doesn't even bring up ukraine all he talks about is uh the um uh the

00:39:38.820 pipeline attack on the colonial pipeline the cyber attack and said that russia if you guys don't work

00:39:43.520 on that and cut that out there's going to be hell to pay and you know what putin actually rolls those

00:39:49.820 guys up and not only does he tell them to stop engaging in cyber attacks against american critical

00:39:55.360 infrastructure but literally in the weeks before the invasion of ukraine he actually has a bunch of

00:40:02.240 the people that were leading the cyber group that was in charge of the colonial attack has them

00:40:08.320 arrested which i mean people nobody talks about this anymore but the fact is that from my perspective

00:40:14.600 that was putin telling the americans okay we're going to take care of the issue that you care about the

00:40:19.200 issue we care about that you don't care about is ukraine and meanwhile he's got you know merkel's gone

00:40:24.220 who was the strong you know sort of advocate engaged with ukraine through the minsk accords um he's got

00:40:30.460 macron saying that nato is brain dead and he's talking about his own way of strategic autonomy he's got

00:40:36.560 the americans with this disastrous afghanistan withdrawal the americans kind of did unilaterally

00:40:41.240 and that the allies are very unhappy about he's got xi jinping saying he's his best buddy on the global

00:40:46.520 stage now by the way i think that if putin had decided just to do the second phase of what he

00:40:54.840 calls the special military operation if he had just taken the donbass and the land bridge i i think he

00:41:00.420 might well have gotten away with it that you wouldn't have had the expansion of nato and the

00:41:05.120 olaf schultz two percent of gdp and the europeans cutting everything off he could have gotten it right

00:41:10.740 but he thought that he had the big kahuna right there that if he took ukraine and took out zelensky

00:41:18.260 that he would be able to recreate a russian empire that he would be a new peter the great that he would

00:41:24.920 have achieved what solzhenitsyn was talking about and and and redressed the greatest humiliation

00:41:31.220 of of his lifetime which was the collapse of the soviet union by having belarus ukraine and russia

00:41:37.740 together under one russian empire and that was a bridge way too far the ukrainians fought way too

00:41:47.060 capably and the west united and responded extremely strongly so geopolitically you now have a situation

00:41:54.520 where not only have the russians been decoupled from the west but they even the asians even japan

00:42:02.760 and south korea feel very strongly about this and and and frankly the fact that the that the united

00:42:10.400 states and allies even you'll remember froze russia's assets outside that were in their

00:42:16.360 jurisdictions no one thought that was even a remote possibility they were talking about maybe you cut

00:42:21.580 them off from swift and you went you ended up seeing the west doing far more to punish the russians so

00:42:26.800 i mean you take what peter just said about the economic side and add to that the fact that

00:42:31.960 geopolitically and geo strategically the russians have been cut off from the west effectively permanently

00:42:37.980 that i and law as long as this regime is there i don't see that changing and of course they're also

00:42:44.160 in a vastly worse strategic position security position than they would have been if they hadn't invaded

00:42:50.560 ukraine back in february so you want to that's why you add all of that up you have this significant

00:42:58.760 component of deglobalization where for the first time in history a g20 economy has been basically

00:43:05.720 severed from the g7 we've never done that before okay well i think it's now time to bring in the

00:43:11.500 variable of demography because um it relates to even some of what you just said there ian because on

00:43:18.040 peter's account part of what's in the back of putin's mind in his expansionist mood is the

00:43:24.600 the demographic collapse that is that russia is is suffering and the implications of that for

00:43:30.760 purposes of security so um first let me just confess at the outset that after reading peter's book i was

00:43:39.120 somewhat alarmed and and chagrined at how little time i have spent thinking about the significance of

00:43:46.340 demographics i mean it's just is not something that i have spent any time on and to hear peter tell it

00:43:53.280 demography is if not entirely destiny it's pretty close so uh peter i'm wondering if you could just

00:44:00.500 give us a a primer on the significance of demography for a few minutes and and talk about the relationship

00:44:07.240 between population and labor and consumption and investment and urbanization and just how all of that

00:44:14.320 diabolical machinery works and why things are so dire in so many places at the moment

00:44:20.980 well it's just math and math is diabolical so i understand why most people don't follow it

00:44:25.860 it also takes a long time changes that are made to demographic factors today are not going to fully

00:44:31.740 manifest uh for a generation or two it's just that the cause the root cause of all of this is the

00:44:37.260 mass urbanization and the mass industrialization that happened in the aftermath of world war ii and then

00:44:41.960 really got intense in the post cold war system so think of a demographic structure like a pyramid

00:44:47.460 with all of the babies down at the bottom followed by the toddlers followed by the children followed

00:44:52.440 by the teenagers and as you go up that pyramid it gets narrower and narrower because of simple mortality

00:44:58.140 now until we get to roughly 1800 the whole world was a pyramid lots of children very few retirees

00:45:06.440 everyone else stacked up in the middle with industrialization and urbanization however we got

00:45:11.820 better health systems and that meant infant mortality went down but we also got urbanization which means

00:45:19.400 people had fewer kids so that very bottom tier the children it got narrower in terms of fewer children

00:45:28.340 but then everybody lived like an extra two or three years so the rest of the pyramid lifted straight up

00:45:34.180 you repeat that a half a dozen times as the technologies of urbanization percolate out we

00:45:39.700 get hospitals we get ambulances we get electricity in the countryside and both of those trends continue

00:45:44.600 so you get narrower and narrower at the bottom but the pyramid gets taller and taller and taller

00:45:49.240 and so your birth rate drops because you're urban now but your your life expectancy has extended

00:45:56.300 and china's probably the best example here from the point that they started their industrialization

00:46:02.460 process in the late 70s the birth rate has steadily ticked down as life expectancy has steadily ticked up

00:46:09.700 and from roughly 1980 until roughly 2020 their population doubled but with fewer and fewer children every year

00:46:17.400 as your population lifts up that age bracket you get bulges and at first it's all good because when

00:46:25.300 you have a lot of people in your 20s and your 30s when that's where your bulge is those are the people

00:46:30.300 who do the consumption those are the people who do most of the low and mid value added labor and this

00:46:35.580 is the story of the chinese industrial boom that we know but if you keep aging that bulge moves from

00:46:40.660 the 20s and the 30s into the 40s and 50s at the same time that group at the bottom of the children

00:46:45.000 continues to get narrower and narrower and narrower and as that narrow section starts to lift up itself

00:46:51.960 you're now not just running out of children you're adding up out of people in their 20s and their 30s

00:46:56.240 and this is where china was roughly 15 years ago and in that environment your advanced worker cadre

00:47:03.280 people's in their 40s and their 50s it's super saturated their high value add work relative to

00:47:09.020 their economic skill set for the economy as a lot as a whole does really well and they start to

00:47:14.260 outcompete everyone and as you start edging into the early 60s they become capital rich as well because

00:47:19.900 they have a whole lifetime of expertise behind them and their kids have left home so most of their big

00:47:24.740 expenses are gone but what is happening now is we're just going to the next step that bottom part

00:47:31.640 the children has been narrowing now for 60 years that middle part with the adults has been narrowing

00:47:37.260 for 40 years and we're about to have a big bulge throughout the advanced world and just behind them

00:47:42.320 in china now moving into mass retirement and so what was good for consumption and then was good for

00:47:49.140 investment in production is now good for nothing because retirees don't add value they liquidate

00:47:56.340 their savings they go into very low velocity investments which really aren't used for industrial

00:48:01.640 development at all and you're left with an economy that we don't even know how to put a name to

00:48:06.520 and we're going to see the majority of the world's of the rich world move into that environment in just

00:48:12.300 the next few years and china if you believe the new data that seems to be leaking out of their census as

00:48:18.180 of just a couple of weeks ago it looks like they are far further along than we've ever thought

00:48:23.020 and they are absolutely going to age out this decade as well assuming nothing else goes wrong

00:48:27.400 and in that sort of environment globalization at its core becomes impossible because globalization is

00:48:35.160 ultimately built on consumption the european union has worked for the last 25 years even though it

00:48:40.620 has a terminal demography because they can sell to the wider world but when too many countries pass

00:48:46.460 that threshold that's no longer possible and so the the developing world has not developed enough

00:48:53.300 and is aging even faster than what we've seen go on in the rest of the world for the last 60 years

00:49:00.020 so every piece of the value chain and of the trade system that we've become used to in globalization

00:49:06.260 most of it just doesn't work anymore you can have some smaller regional systems where the local

00:49:11.940 geography and the local demographics interact in a constructive manner but a global system that is

00:49:17.420 not okay so let's i'd like to compare the cases of china and america here with respect to demography and

00:49:24.500 and its implications most people listening to this who have not like me have not thought much about

00:49:30.640 demographics will have been thinking that china has been rightly touted for their economic growth

00:49:38.160 low these several decades and also for their their authoritarian ability to just get things done

00:49:45.100 in a way that we can't right so you know they can build a bridge in a matter of weeks that would take us

00:49:50.400 10 years to permit and another 10 years to build or to fail to build and yet that picture of

00:49:57.420 kind of like an endless labor force and a friction-free environment where ideas can just translate into

00:50:05.600 execution in a matter of minutes that is all going away by virtue of this demographic collapse

00:50:13.080 and america has a very different fate with respect to demography ian feel free to jump in if you if

00:50:20.740 you see the china picture in a fundamentally different way but then i want to just compare

00:50:25.060 china and america i will certainly tell you that i was very deeply disturbed when i saw the report came

00:50:32.280 out recently from i guess it was the shanghai academy of social sciences that thought that there would be

00:50:38.720 a decline in chinese population starting now and they expect that in by the end of the century you're

00:50:47.180 looking at a chinese population at under 600 million that is utterly startling it if true it is

00:50:55.420 dramatically worse than the worst case scenarios of where the un and others to have expected that china's

00:51:03.060 population would be even just a year ago you were talking about peaking out at 2027 and there would be a much

00:51:09.680 more gradual decline so yeah this is a huge problem don't get me wrong well let's before before let's just take

00:51:15.440 this one piece because again i think this is counterintuitive to most people most people

00:51:19.280 believe they know that china had a massive overpopulation problem and that was why you

00:51:25.380 would have a one child policy in the first place so that the goal had to be at least to stabilize the

00:51:31.500 population if not shrink it and so why is it a disaster to shrink the population give me some

00:51:38.400 color to what must be true if a population is shrinking that much that fast well there's the question of who's

00:51:45.340 working and there's also the question of who's buying and therefore what happens to china's economy

00:51:49.680 what happens to its influence globally what happens to its ability to project power now one way to

00:51:55.260 resolve that is you you know bring in you have an immigration policy that would allow massive numbers

00:52:00.960 of people that can engage in that workforce younger people and the rest into china historically china's

00:52:06.340 been very unenthused about that kind of a policy right i mean this is not it's also a very big boulder

00:52:12.100 yeah that's you'd need hundreds of millions no i know but i mean having said that uh you know the

00:52:17.300 chinese have exported an enormous amount of surplus labor to in you know in decades past to countries

00:52:24.460 where when they had didn't had people didn't have anything to do they made sure they had they got them

00:52:29.580 something to do and it used to be that a big challenge that a lot of the backlash the chinese had

00:52:34.400 wasn't that their their loans you know became equity but rather because they were taking jobs away

00:52:39.460 from local africans or bahamanians and others well no one's talking about that anymore so what do you

00:52:44.660 peter what do you again to just to linger on this point they kind of the bridge to depopulation

00:52:49.180 why is the passage across that bridge so harrowing in i guess in the even in the generic case but

00:52:56.960 let's take the specific case of china what let's just say this is true and the population is going

00:53:01.500 to shrink the way you expect based on just the you know looking at the demographic pyramid barring

00:53:09.420 the magical invention of an army of super intelligent robots that can see to the needs of everyone

00:53:16.820 as they start buying adult diapers i've seen that movie uh what are you expecting to be true at the

00:53:24.720 level of day-to-day existence in china if the new data is correct there are more chinese over age 45

00:53:30.940 than under at this point and that means just maintaining the base productive capacity of

00:53:35.680 the countries already past them if you'd like to continue listening to this conversation you'll

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00:54:05.500 you

Making Sense - Sam Harris - July 14, 2022

#288 — The End of Global Order

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