Recently I came across a Youtube video of Peter Zeihan dated 11/24/2014 telling Americans not to worry about their country. I find it childishly entertaining. The following is my response:
Zeihan’s magic tricks:
* Select a few pieces of convenient data (maps, the US geographic endowments and age distribution) then draw broad and misguided conclusions about the future of an increasingly complex world.
* When failing to explain, Zeihan says something funny. This distracts the audience from questioning his arguments.
* Zeihan has a fossil fuel agenda as he trumpets eagerly for shale oil. He also belittles “cloudy” Germany’s leadership in solar energy.
* Zeihan’s shallow perspectives allow him to entertain but not to illuminate.
Flaws in the arguments:
History is mostly about people and cultures, and how they succeed or fail in managing their talents and physical resources. The human story is 80% management and 20% endowment (The Pareto Principle applies here too). This explains why resource-poor Japan and Singapore achieve First World status, and why resource-rich Indonesia, Brazil and many others continue to wrestle with their own development. The age distribution graphs used in Zeihan’s arguments are not valid because it says nothing about the resourcefulness of the people, who can overcome their dwindling young numbers with increasing efficiency, productivity and innovation.
A Chinese saying goes like this — If you just sit there and eat, pretty soon you will eat away your mountain of wealth. No country experiences more ups and downs than China during its long tortuous history. The good times never lasted long enough before complacency set in and corruption took over, and the country plunged back down again. The US became a superpower only after WWII. Seven decades of relatively good times are never long enough to guarantee the future, which has to be forged, not inherited. Therefore, I would never accept a monkey suggested by Zeihan to manage the country, not even my backyard.
In trying to project the future, one must consider the effects of rapid technological change and how the people embrace it as a fundamental driving force. Zeihan completely ignores this point. His simplistic worldview assumes that the future is guaranteed. That’s why he says not to worry about anything, which is a very dangerous proposition.
Plenty of things to worry about:
1. Middle class squeeze (more than two decades in the making and getting worse):
*Wage stagnation, globalization’s blessing and curse.
*Jobs lost due to foreign competition. Can we bring them back? Do we really want to? *Can’t we create new industries and new jobs?
*Health care inflation, one major illness away from bankruptcy.
*Reduced health coverage and increased deductibles.
*Health insurers are digging their own graves if allowed to cherry-pick customers. Why?
*College tuition for the young and their mounting debts, which already exceed all consumer loans combined.
*Most families need two incomes to get by.
*Expensive childcare for married working couples.
*Almost zero household savings.
*Future cuts in Social Security and Medicare.
2. Financial meltdowns:
*Will the banks invent another gimmick after the subprime mortgage?
*Do you entrust your assets to the stock funds which always blame the market they control for your loss?
*If the system is rigged, the stock market is one of them due to its non-transparency and control by big players.
*How big an influence the finance elites (most of the top 1%) exert on the government?
3. Corruption and cronyism:
*Money politics, large campaign contributions are made legal by the Supreme Court.
*Increased corruption in both private and public sectors.
*Government gridlock due to conflicting self-interests.
*How much talents are wasted in a corrupt society?
*A wealthier country can afford a higher degree of corruption. The question is, how much corruption will generate a vicious circle leading to a downward spiral?
4. Racial and religious tensions:
*Race has brought us slavery, the Civil War, segregation in the South, the Chinese Exclusion Act, and mass incarceration of blacks in modern days. What’s next?
*The 9/11 attack has brought religious tensions to the fore. The problems are: The terrorists are non-state actors from within and without; they can hit the homeland at any time; and we would be foolish to retaliate with an aircraft carrier that Zeihan proudly brought up. What to do? The smart way is not to inflame religious tensions, use drones and special forces to minimize our footprints. Do not give the terrorists a reason to recruit more young people.
*Do we need immigrants? Do they add values?
*If yes, how to integrate them and manage an orderly flow?
*If no, build the wall on four sides because we attract them. On the contrary, if our economy is going down, they don’t want to come anymore.
6. Foreign misadventures (wars of choice):
*Afghanistan since 2001 although officially ended.
*Iraq since 2003 although officially ended.
*Next one: Iran, ISIS, North Korea or somewhere else?
*The entire US defense industry is in private hands. They just want to maximize their profits. They lobby the government to make wars in the name of freedom. So we repeat the same disasters again and again.
*The US has won only three land wars — WWI, WWII, and the Gulf War where we led an Arab coalition which paid the bulk of the costs. All the other wars have proven to be quagmires. The Korean war ended luckily in a no-win armistice.
*One may argue that the US was fighting with one hand tied. That is not true judging from the money spent and the high technology involved. The US dropped more bombs in Vietnam than in WWII. It is obvious that we lost when we deliberately chose to fight a stupid war.
7. How can government afford to spend?
*Mounting deficits, borrowing and national debt.
*US national debt amounts to $19.8 trillion in 2016, about 106% of annual GDP (normal among developed countries).
*Major foreign owners of US debt in trillion dollars: China 1.25, Japan 1.15 , Ireland 0.27, Brazil 0.26, and Hong Kong, Taiwan and India, each holding less than 0.24. Those countries are competitors which buy US debts to keep the dollar afloat so that they can export more. This means the US finds itself in a vicious circle of more imports and more debts.
8. Mother Nature objections and revenge:
*Climate change and environmental pollution. What to do?
*What if coastal cities got flooded as ocean level rises?
*What if multiple years of massive crop failures?
*Can we just ignore climate change confirmed by science?
*Why do we have to choose between creating jobs and protecting the environment? Can’t we achieve both?
*Do we want to cede leadership of the renewable energy revolution in the making to other countries? This will turn out to be the next big thing.
*Francis Bacon says, “Nature to be commanded must be obeyed”. It means we must obey the laws of nature to build a sustainable economy of the future.
999. At the end of this long list, the least I worry about is Mexican drug cartels killing their American counterparts. Zeihan says this is the thing Americans should worry about. However, he contradicts himself by saying that this is the reason why our crime rates are falling. What kind of logic is that?