Can High Birth Rates Solve Demographic Problems for Young Countries?

I often talk about the importance of demographics for countries, but do high birth rates always equate to population growth?

In countries like Yemen and Nigeria, high birth rates can look promising, but we need to consider other factors before we start celebrating. The two big ones are infant mortality and life expectancy. As countries begin to industrialize, they start to reap the benefits of improved healthcare, driving up survival rates for children and adults alike. The story is all rainbows and butterflies so far.

However, if these advances in healthcare are heavily reliant on imported technologies, any disruption to international trade could prove devastating. The bottom line is that high and growing birth rates are great, but sustainable population growth requires a bit more work than just popping out some kids.

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Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

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TranscripT

Hey everyone. Peter Zeihan here. Coming to you from Colorado. We’re taking a and from lost a limb in the story. Anyway, we’re taking the entry from the Ask Peter Forum. It lets demographics. The question is I talk a lot about declining demographics and the impact that’s going to have. But what about countries that have sky high birthrates? Is this a good is this a bad? 

Is this another thing? The two that come to mind are Yemen and Nigeria, both of which have birth rates that are just ridiculously high. How sustainable is this? What’s the impact? Good question. I generally look at birth rates when I’m looking at more advanced economies where the industrial technologies have been in place for decades. When you’re talking about the younger economies were industrial is Asian is more recent. 

There’s a couple other statistics you need to look at. The first is infant mortality, and especially child mortality under five years of age. See, how likely is it that a child that who’s bored is going to make it to five? And then second is life expectancy overall. You see what happens when a country starts to industrialize is they don’t just get concrete and pavement and buildings and rebar and electricity. 

They also get vaccines and medical care. And this drastically decreases the death rate among the young and drastically increases the average age of mortality among the older folks. So what we’re seeing in Yemen and especially in Nigeria is a steady inroads of these new technologies into the population. So it’s not just that the birth rate is high. Oftentimes for these countries that are early in the early industrializing period, the growth rate is very high. 

The question is whether or not the children survive. And then the question is whether the adults survive. So take the example of China. From roughly 1985 until roughly 2015, the population doubled. But almost all of that population increase wasn’t from organic birth rate. It was because people lived longer. The lifespan basically doubled in that same period. Now, these gains are real. 

These people are more productive. But you only get those sorts of gains once. And now that China has basically wrested all of the gains along Djibouti, it can’t out of the system because they’re coming against the upper level what humans are capable of today. There’s no one to replace them. So even if nothing goes wrong in the system, no financial crisis, no war, no agricultural crisis. 

You’re still looking at a population collapse because people can’t live any longer than they are. And for the last 50 years, people have not been having children. So that inverted funnel, the bottom just goes up and sucks away the entire population. Yemen and Nigeria at a much earlier stage of this process, there’s nothing to say that they’re condemned to the the Chinese end result. 

But keep in mind that in the case of these two countries in particular, most notably Yemen. But all of the technologies that allow them to live longer come from a different continent. And so if anything happens to international trade, you should expect infant mortality to shoot up and life expectancy to collapse. And then they just get sandwiched in between. 

It’s not merely as dark of a story as what we’ve got going on in China, but it’s not exactly a great one. If you’re going to have life expectancy and if you’re going to have infant mortality, be pause, have aspects of your society. You need to be able to be sure that you can produce the technologies that allow it to happen in the first place. 

Otherwise, you’re just as dependent on the rest of the world as if you imported 100% of your oil.

NGLs: Ohio’s Plastics Industry’s Juicy Secret

Since I’m here in Ohio, why not talk about what makes this region so unique. Today, we’ll be discussing how shale in Ohio has propelled economic growth in an unfamiliar way.

For most of America, the shale sector looks fairly similar – traditional oil production produces natural gas as a byproduct, which is flared off until infrastructure is put in place to harness it. However, the Marcellus and Utica fields in Ohio primarily produce natural gas that is used for fuel across the central and eastern US. This is a bigger deal than it seems. If the tri-state area of Ohio, West Virginia and Pennsylvania were a country, it would produce more natural gas than any countries save Russia and the United States itself.

But what truly sets the region apart isn’t simply the abundance of natural gas, but of natural gas liquids such as ethane, propane and butane. The local prevalence of these materials has enabled Ohio to become a world leader in high-end plastics manufacturing. Thanks to this, Ohio has seen boosts in industrial activity and the establishment of chemical facilities throughout the state.

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Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

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TranscripT

Hey, everybody. Peter Zeihan here. Coming to you from just outside historic Harbor Village, just across the river from Marietta, Ohio. And that is the Ohio River behind me. Today, we’re going to be talking about something that is an exception from the exception. So the big exception is the American shale sector, because it has a different economic structure and uses different technologies for most oil production in the rest of the world and as a result has very low production costs and produces a lot of natural gas as a byproduct of oil production. 

So when you’re in Texas, most notably, say, the Permian people are after the crude oil and then natural gas comes up as a byproduct and they have to flare that natural gas until the infrastructure can be built out to absorb it and bring it into, say, the chemical sector here in Ohio and moving into Pittsburgh, big area in Pennsylvania, you’ve got a different problem. 

The natural gas field is the Marcellus and the Utica, and they are dry gas fields where people are after the natural gas rather than the liquids, because they’re using it for fuel in every place from Chicago to Boston to Washington, D.C. And so they need it for electricity. But there are still liquids here, especially in the western parts of the play, which move into, say, Ohio. 

They’re you’re getting a fair percentage of something called natural gas liquids, which in layman’s terms means things like propane and butane. That means that in this part of the country, it’s not just that the natural gas is cheap because the production costs in the Marcellus are very low. But so many end girls come out of places like the Utica play that Ohio has become a world leader in things like high end plastics, because for them, it’s not the oil that’s the waste product, it’s the propane and such. 

That is a primary feedstock into chemicals specifically for things like plastics. And so we’re seeing dozens of chemical facilities that do secondary processing popping up in the more populated parts of Ohio, taking advantage of what is basically below global cost inputs of things like ethylene, propane, butane and the rest. So here we are in the middle of the continent and we’re suddenly seeing an explosion in industrial activity for something that we normally associate with the Chinese coast, the Persian Gulf or the Texas coast. 

Very different situation, very different geology, very different outcomes. 

Geopolitics of Terror Groups: ISIS and ISIS Khorasan

With the recent attack on Moscow, I received some requests to do a breakdown on the geopolitics of ISIS. First things first, there are two largely unaffiliated groups at play here – ISIS-Khorasan and the more widely known, ISIS.

The original ISIS (aka the Islamic State of Iraq and Syria) primarily operates in the middle Fertile Crescent region. In recent years ISIS has not done well, losing control over all the territory it once controlled, being reduced to little more than a strategic nuisance.

ISIS-Khorasan has no specific region in which it operates, but rather targets Shia populations and engages in violent activities against secular governments it perceives as oppressing Muslims, such as Russia.

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Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

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TranscripT

Hey everybody. Peter Zeihan here coming to you from Frigid Colorado. We’re taking a entry from the Ask Peter System today in the aftermath of attacks by the Islamic State of Khorasan on Iran and more recently on Russia. I was requested to do a geopolitics of ISIS video. So here we go. Couple of things to keep in mind. First of all, ISIS’s and ISIS Khorasan are two very different groups. 

So I can do a geopolitics of ISIS. ISIS’s core power is in the middle Fertile Crescent between western Syria and central Iraq. So basically, you’ve got the Euphrates Valley that goes from the Persian Gulf up through central Iraq into western Iraq. Northern Iraq then comes back down to the cities of harm, Hama and Aleppo or Aleppo, excuse me. 

Well, that is the zone that technology and people and ideas and trade are percolated back and forth through a lot of human history, especially the earlier days. And in that zone, the thing to remember is that the crescent is very, very, very thin. While you do have Mesopotamia in the east, where the Tigris comes into play, in the zone between the rivers, it is a major agricultural zone. 

And while you do have more rainfall in extreme western Syria, when the Lebanon mountains merge with the the highlands that eventually become Anatolia in the middle, you only have the Euphrates. And even in modern days with industrial level technology, in many cases, the green belt where you can grow food in the central Euphrates region is only a few miles from north to south. 

And because of that, they’ve never been able to develop kind of the dense population centers because there’s never enough food production. And the zones that you can do something with are very, very skinny and very, very worn, which makes it very difficult to patrol it. So think about this this way. If your city was a half a mile wide but 20 miles long and the proportions are much worse for Iraq, if you were of your police station is getting all the way down and all the way back would be difficult. 

You want something that’s spread out from a central point like, you know, say, a Chicago or Houston or Dallas or most of our cities. It just makes a civilizational penetration much more difficult and eventually hit hard. Does it do anything? So this is the zone that ISIS’s from water is limited. There’s only one source aside from the oases, and either you control it or you don’t. 

And so geopolitics, that region tend to be very visceral and very desperate. And this is part of the reason why ISIS is so violent, because it is a battle for survival among groups every single day. Now, it also means that groups like ISIS are not long for this world. If you look at the region from a broader perspective, if you go further west, you hit the Levant, which has powers like Israel and the core of Syria to go north. 

You get into Anatolia and the Turkish territories, and if you go east, you get into Mesopotamia, which is have been a cradle of civilization for quite some time. This zone in the middle can’t do anything. And the zone in the middle has never been powerful enough to penetrate into any of those other three zones. So the only time this zone in the middle matters at all is when all three of those major areas are off light at the same time. 

And if you go back to ISIS’s heyday ten, 15 years ago, that’s exactly where we were. Syria was in a civil war that the central government had almost lost. Iraq was reeling from the effects of the American occupation, was not able to patrol its own territory, much less things on its fringes. And the Turks had not yet reemerged from their century long self-imposed geopolitical sleep. 

It was a very different situation. And so ISIS was able to form, recruit, expand, dominate groups and basically go on a series of small genocides. It was pretty nasty. Now, that’s not our situation. The Syrian government has, for the most part, stabilized. Even if the civil war is not quite over. The Turks are back in the game and are crossing the border regularly. 

And Iraq is a power worthy of its name again. And so ISIS is basically fallen from controlling territory to just a few outposts that move around and a general insurgency in some of the least valuable property in the Middle East. So that’s icis. ISIS Khorasan is different. ISIS chorus on things that ISIS’s a bunch of wimps because they don’t kill enough people, specifically Shia, ISIS’s primarily Sunni. 

I Scorsone as well. And they see Shia as the worst apostates of all and so they are not interested in holding territory. They are interested in taking the battle wherever it may go and wherever there’s a secular government. And so that has taken them against the Taliban, which they think are a bunch of horses. Let’s take it up against the Iranians who are Shia. 

And that’s taken them against the Russians, who they see as oppressing their fellow Sunni followers. Because of this, you can’t do a geopolitics of ISIS Khorasan because they’re not interested in territory. They don’t have a home territory. They’re actually fairly egalitarian as to who they take into their ranks as long as you’re not a Shia. And in the case of the Russian space, there are a lot of subjugated Muslim populations with probably the Uzbeks being the most important that are willing to join violent groups. 

And so one of the things that it appears to be with ISIS course on is they’ve been recruiting pretty aggressively from within the former Soviet sphere. Uzbeks, Tajiks, some Kyrgyz, maybe some to some Turkmen, and hopefully not, but most likely. So Dagestan is Chechens about Kurds and Tatars. Those are all people who live within the Russian Federation today. 

So the danger here for the Russians is very, very real from a security point of view, an analogy, a logical point of view. But you can’t do a geopolitics of ISIS’s or ICE’s Kurdistan because they don’t have a core territory. They’re a splinter group that’s based entirely on ideology. So ISIS is not the sort of group that can expand much beyond its current footprint and certainly not beyond that part of the Middle Euphrates, where from time to time they can kind of expand its course on as a different sort of category. 

They are not constrained and it could very well be coming to a place near you. That was way more inflammatory than he deserved. While there have been certainly plots interrupted by ISIS because American interest, there’s no sign that the uproar in the United States for that yet.

Things I (Do) Worry About: A Post-Germany Europe

Germany has had a streak hotter than the ’96 Chicago Bulls. The German economic model has contributed to European political, economic, and industrial success, but problems are on the horizon.

Germany’s industrial success can be attributed to three trends: a high value-added economy focusing on skilled labor, access to cheap energy and inputs from Russia, and a global trade system facilitated by the US. Now take away all three of those things, mix in an aging population, workforce shortages, and swath of geopolitical challenges, and you’re left with a very scary picture for the Germans (and Europe).

Germany’s role as the hub of multinational manufacturing means that collapse could send ripple effects across Central Europe, with political, economic and strategic implications.

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Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

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TranscripT

Hey everybody. Peter Zeihan here, coming to you from the Pacific. Today we’re adding another entry into things that I do and do not worry about, and this one is one that I mostly do worry about, and that’s what happens to Europe, is the German economic model fails. Well, for those of you who don’t live and breathe things German, you basically have three reinforcing trends that have made Germany an industrial superpower, especially for the last 30 years. 

The first one is an extraordinarily high value added economy that is focused on the ultra skilled labor and precision. The problem with that is the German population is aging out and over the next decade they’re going to lose the bulk of that workforce and the retirees are going to start drawing in pensions in health care, instead of paying taxes and providing the capital that’s necessary to keep that high end manufacturing base working. 

So the entire base within the German system is breaking. In addition, number two, relatively cheap, relatively bottomless supplies of energies and inputs from the Russian system, not only those obviously been constrained by sanctions in the Ukraine war, but it was the Germans who did a whole lot of the work in places like Siberia and keeping that production flowing. 

And since the Germans stopped doing that because of the war, we now know that there’s going to be maintenance issues in the Russian system, even if there’s no war damage, even if the sanctions allow the stuff to flow. Now, that’s a little bit loosey goosey. We don’t know how long it’s going to take for this up to go off line, but we know it’s coming. 

And then the third issue is the United States. The Americans have provided warble cover to the world. So that anyone can ship anything anywhere. And the Germans use this before 1990 to ship product primarily to the United States. And more recently, they’ve been using it to ship to China. Well, that’s another country that is facing demographic issues. And there’s a competition between Joe Biden and Donald Trump over who can be more economically protectionist. 

So the entire model is in danger. But the real reason I worry about this is not for Germany per say, but Germany is the hub of a multinational manufacturing system, of which it may be the central and most important part, but it’s hardly the only one. German technology, German training, German infrastructure in German manufacturing supply chains are not contained within Germany. 

They are arguably the single biggest piece of the manufacturing systems in Belgium, in Austria, in Poland, the Czech Republic, Slovakia, Hungary and Romania, and probably a close second in places like the Netherlands and Denmark. So as the German system fails, even if everyone else demographically is okay and they are not, you’re still looking at the broad scale failure for the entirety of the Central European manufacturing system, and that is going to have any number of rattle on effects politically, economically and strategic. 

Will Venezuela Invade Guyana for Oil?

I’ve gotten a handful of questions regarding Venezuela invading the South American state of Guyana due to economic challenges and oil discoveries. The short answer is that I’m not worried about this, but here’s three reasons why.

This would be a difficult trek for the Venezuelans given the lack of infrastructure connecting the two countries. Venezuela also lacks a functional military that would be able to carry out this invasion. Lastly, the oil production in Guyana is predominantly offshore, so a land-based invasion is just impractical if the goal is to seize someone else’s oil projects. This one’s a nonstarter.

So, unless Venezuela magically fixes all of their military shortcomings, there’s no real concern of an invasion of Guyana. And that means the US can forget about this area and focus on the bigger fish for now.

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Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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TranscripT

Hey everybody. Peter Zeihan here coming to you from Colorado, taking one from the Ask Peter List today. And is it do I worry about Venezuela invading the South American state of Guiana? For those of you unfamiliar with the backstory of Venezuela, until roughly 2000 was one of the world’s major oil producers kick it out somewhere between two and a half and four and a half million barrels a day based on the environment. 

Since then, a guy by the name of Hugo Chavez, who is a populist who is completely incapable of doing math, took over and ran the place for about 15 years before he died. And his successor, who was a poor quality bus driver, took over. No joke. And they’ve run the place into the ground. So total production now is no more than a million barrels per day. 

And even that’s a little touchy. And in fact, we’re probably going to see a new round of American sanctions go on it in a couple of weeks here, in which case even that low level is probably going to fall. And I can see a situation before the end of the decade where Venezuela actually becomes a net oil importer because of their inability to operate their own fields. 

So that’s the back story. Guyana is a another former colony or recent colony just to the east of the country with has a population of like three, even 3 million, just three. Anyway, they found oil offshore a few years ago. And so the American company, Exxon has been operating there ever since. And I think they’re supposed to add a million barrels per day this year. 

I’ll be back to you on that one. But it’s definitely over half a million barrels a day. It’s been the most promising new oil play in the world that is not in the U.S. shale patch. So the idea would be that Venezuela, to avoid a state collapse, which is a very real danger now, would pick up and move over to Guyana to take the oil and the income. 

No is the short version. I don’t worry about this. Three reasons. Number one, there is no infrastructure linking the two countries. The corner of northeastern Venezuela that abuts Guyana is full on jungle and there’s not even a single road of note. So the Venezuelans would have to use their Navy or the Air Force, and they don’t have either of those things. 

Which brings us to factor number two. They don’t really have an army either. When Chavez took over, the military was broadly opposed to him in the ongoing power struggle. And the way he solved that was by bribing the generals with the money that would have gone for equipment and training. Well, you asked for that over 20 years. You now have way too many generals in order to run the military and no functional military. 

So if the Venezuelan army was able to go get into one place, they would just kind of walk as a mob into the jungle and die. And any that did manage to cross over into Guyana could easily be defeated by the Marines at the U.S. embassy, all six of them. There’s just there’s not a military question here. And then the third issue is that I don’t think it’s going to happen because all of the oil production is offshore and Venezuela is in its heyday, even when it was well run, didn’t operate a single offshore project. 

So they would have to what, take over the country and rowboat out to the facilities, take them over, and then kindly ask Exxon to keep operating them, but to send all the income to Caracas. Yeah. No, not going to happen. So there’s no need for the U.S. to get involved here because there’s no danger whatsoever. Although I got to admit, it’d be hilarious to watch Venezuela try.

Apparently A Cessna and Elbow Grease Is All Ukraine Needs

The Ukrainians are getting creative and finding ways to launch longer-range attacks on Russian infrastructure. We’ve already seen strikes on pipeline nexuses and chemical complexes as deep as Samara and Tatarstan.

Attacks like these hold significant economic implications for the Russians, as any disruptions to these oil facilities could be devastating. The issue isn’t so much that Ukraine is poking holes in Russian air defense, but perhaps exposing that there…Isn’t any.

Attacks like these will likely prove to be a growing challenge for Russian security and economic stability as the conflict continues.

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Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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TranscripT

Hey everyone. Peter Zeihan here, coming to you from Colorado, got a fresh dusting overnight because, you know, April, it’s April 2nd in the news in the last 3 or 4 days is that the Ukrainians have demonstrated a significantly longer range for weapons systems launched from Ukraine proper. specifically, the Ukrainians have been able to hit targets with their new drones that are in the, locations of Samara and Tartus stand.

now, these are more important than a lot of these in pieces of infrastructure that Ukrainians have been hitting with their drone campaign recently. Samara is a major pipeline nexus where a lot of the crude that comes in from southwestern, Siberia gets processed or redirected to European or Black Sea markets. And Tatarstan is even deeper within the Russian Federation, in Siberia proper.

and it is also a major chemicals and refining complex. So the significance here is pretty, pretty strong. the issue is throughput. The Russians don’t have a lot of storage. The country’s really big, and the most of these systems were built in the imperial age under the Soviets. So they were designed to supply the empire. Well, now that, the empire has gone its own way, and most of the former Soviet republics and, former Soviet satellite states are getting their crude and natural gas from somewhere else.

The Russians are completely dependent now for income on getting this crude out to the wider world. That means getting to the black on the Baltic Sea, because they can’t really use the pipes to go into Germany anymore. So when you think of that, and then you look at notes like some are in tartar, stand, we have a problem.

Because if these are interrupted, especially Samara, which is a nexus, then the crude has nowhere to go. There’s not a backup system when these clusters get taken offline, for whatever reason, pressure builds up in the pipe. Back to the wellhead. Now, this could be worse. the facilities that are in southwestern Siberia, especially places like Tarter stand in Bucharest on it, doesn’t get so cold there in the winter that the well heads freeze.

But now that the Ukrainians have demonstrated the ability to strike over 1000km from their border, it’s only a matter of time before they start aiming for targets that are north of Moscow instead of south of Moscow. And if those pipeline accesses go offline, then you’re talking about the well heads in northwestern Siberia actually freezing shut. And a lot of the stuff just goes offline forever because if the wellhead freezes shut, you have to drill it.

And you can only re drill in the Arctic summer. And that only lasts for about 3 or 4 months a year. So, that’s kind of piece one. Piece two is what’s going on in Totters on Thomaston because it is a combination of producing zone and chemical zone. A lot of these chemicals are what allows the Russian agricultural system to work.

 

And a lot of this stuff is exported to China. So what the Ukrainians are demonstrating is the capacity to identify targets that move up the value added chain, not just going after raw crude, not just going after refined product, but even downstream products, like chemicals manufacture. so the economic hit to the Russians from this continues to climb.

And now it’s really just an issue of whether or not the Russians have the capacity of getting meaningful air defense of the hundreds of facilities that they have across European and Western Siberia and Russia in order to stymie these attacks in the first place, because they’re clearly not moving fast enough on the front in order to disrupt these drones launching.

And this is a very, very cheap way to do it. These things cost more than, say, the Iranian Shi’ite drones. But you’re still talking about well, well, well, well under $1 million a pop. Whereas a refinery that handles 100,000 barrels a day is going to run, you know, $1 billion on a good day. So the disruption here is real.

It is getting bigger. And we’re getting to the point where it’s time to start thinking about what happens when Russian crude and materials processing goes offline in some form, because we’re only in the early days of this Ukrainian campaign. And now that they found a soft spot, you can guarantee they’re going to hit it over and over and over and over.

Quick addendum, there is very clear footage coming out of toddler son of a small passenger plane. Think of something like the size of a Cessna, maybe a little bit bigger, flying and ramming into, a munitions factory that builds drones for the Russian military. specifically the Shaheed type that have been causing the Ukrainians so many problems.

Now, it’s not so much the significance of this attack as attacking a factory floor with a 50 to 100 pound bomb. You know, let’s let’s call it huge, say 300 pounds, isn’t going to cause enough damage to really take anything off line. The issue is that it got there. It flew over 1000km through Russian airspace. that means one of two things.

Either number one, the Ukrainians now have kits that they can smuggle into Russia, modify a plane at an airfield within Russia and launch like that, which would be from an internal security point of view and a technical point of view, just a disaster for the Russians or the Russians have absolutely no anti-aircraft coverage in the core of the country, where most of the infrastructure is and most of the people live, no matter what the outcome here is, this is a disaster for the Russians, because there’s no doubt that the Ukrainians will be now be doing it at scale, because it’s clear the Russians can’t stop them.

How Tariffs and Drones Saved Ukrainian Agriculture

Ukrainian agricultural exports are finally having the boot lifted from their throats thanks to new tariffs on certain goods in the EU and Ukraine’s adoption of water based drones.

Exporting Ukrainian agricultural products has been no easy feat; between Russian bombardment, infrastructure attacks, and European interdictions on Ukrainian goods, there wasn’t much movement early on in the conflict. Between the proposed tariffs by the French and some recent success with water-based drones, Ukraine might finally be able to get some product out.

These new tarrifs will free up the markets for Ukraine’s primary revenue generating products, wheat and sunflower. The recent water-based drone attacks on Russian vessels have helped to reestablish the grain corridor through NATO territories, easing pressure further.

Although this is just a small victory for the Ukrainians, restoring their ability to earn through agricultural exports could help ease tensions across the board.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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TranscripT

Hey, everyone. Peter Zeihan here coming to you from Colorado. quick update on the trade and war situation in Europe, specifically Ukraine. it appears we have or they have solved the problem of getting Ukrainian agricultural goods to market. So the quick backdrop is that because of the Russian war, the Russians were bombing places like Odessa and interdicting ships on the Black Sea.

And by water is how the Ukrainians ship out. Well over 80% of their agricultural output, or at least before the war, it was, but nobody wanted to get hit by a Russian missile. So basically everyone got locked up in port and we had backlogs, throughout the entire system. the Ukrainians started to ship things by rail west into the European Union.

they couldn’t get nearly as much out at most one third of what they could do, based on product and some products, less than 10%. But every kilometer that the, Ukrainian stuff was in a rail car, was a kilometer of ton rails that the Europeans could not use. So the Romanians, the Hungarians, the Slovaks and the poles, the border states in particular, were getting cheesed off because their farmers were having a hard time getting their crops to market.

And so they would say, you could transit, but you can’t actually sell that here. Well, if you have to go all the way to Germany, that’s a lot of ton miles that were suddenly not available for everything else. So it wasn’t a very tenable such solution. So these countries may on the whole be very pro Ukraine, but they don’t want to destroy their own agricultural sectors to do it.

So two things have changed. First, the French, the French have gotten involved. Though the French are arguably among the most agriculturally protectionist countries in the world. and none of this stuff was coming to France, but, the French economy is roughly as large as all of the border states put together. And so when the French did decide to get involved, it had an impact at the European level very quickly.

And they were looking at some of the secondary products that were coming in, things like poultry and eggs and honey and corn and oats, and they’re like, okay, we produce all of these things, and now all these things aren’t necessarily making it to France. They are making it to Central Europe, which is depressing. Prices within the European Union.

So how about we do this? We do it. We give everyone in Europe the ability, put tariffs on the products that we care about. And in doing that, we then open up the ability for everything else, most notably wheat and sunflower, which are, the Ukrainians, big money makers. now everyone in the border states grows wheat, but by freeing up some categories, then things could go elsewhere and things could basically be shuffled around.

The French got happy, and it took some of the pressure off of everything else. That was part one. Part two is a Ukrainian military strategy using drones. they basically been refitting small jet boats and jet skis and going in force after Russian vessels, especially Russian landing vessels. well, in the last few days, they’ve taken out another two or at least heavily damaged another two, as long as as well as a spy ship that allows the Russians to identify where launch sites and radar sites are.

And what this has had the net effect of doing is clearing the entire western half of the Black Sea of Russian vessels, and forcing the Russians to fall all the way back to an over a cease, and maybe even even to offshore on the eastern side of the Black Sea, which ports most of the western half of the Black Sea, out of range of even Russian missiles.

So this is opened up a grain export corridor going down the western side of the Black Sea through NATO territory, specifically Romania and Bulgaria, Turkey, to the Turkish Straits and out to the Aegean and the wider world. You do that, you take pressure off those bulk commodities like sunflower and wheat. So I don’t mean to suggest that this is solved, and I don’t mean to suggest that everyone has gotten everything that they want.

But a lot of the pressures that we were seeing that were locking up the cargo shipments are now gone, or at least severely ameliorated. And all of a sudden, Ukraine again has its single largest line item export earner back. and that will help everyone, because the more that the Ukrainians can put their own money into the war, the less pressure there will be politically on everyone else.

Why I Don’t Care About the Fallen Bridge in Baltimore

At this point, we’ve all heard about the Francis Scott Key Bridge Collapsing in Baltimore on March 26. While it may seem like this should drastically impact American shipping, I’m really not worried about it…

Before this catastrophe, I was convinced that the Jones Act hadn’t done anything good for America. However, I can now say that the Jones Act has one redeeming quality – since cargo transport on American waterways has drastically fallen since the Jones Act was introduced, the fallout of this bridge collapse won’t be as bad as it could have been. That’s a positive, right?

In a world without the Jones Act, natural port systems like the Chesapeake Bay would be teeming with manufacturing and short-haul shipping. I’m not convinced the prevention of some immediate disruptions is worth utterly stifling economic growth, but hey, I’ll let the policymakers come to their own conclusions.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
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TranscripT

Hey, everybody. Peter Zeihan here, coming to you from Colorado. several of you have written into the Ask Peter forum asking why I haven’t had anything to say about the falling of the Francis Scott Key Bridge in Baltimore back on the 26th of March. the idea is, you know, this is controlling the mouth of the Chesapeake. And shouldn’t this be a big issue, considering how gung ho I am about water transport?

It’s about 1/12 the cost to move things by water that it takes to move them by truck. And so you would think that seeing an interruption in one of America’s greatest ports would be a problem. it should. It really should, but it’s not. So let me give you the backstory. first of all, the Chesapeake is the world’s greatest natural port system.

It has more miles of frontage that can be used for ports than any other part of the world, with the possible exception of the Texas coast. And even that’s a tight race. It’s in the Mid-Atlantic, so it’s the midpoint going north south on the American East coast. For the parts that are densely populated from roughly Atlanta all the way up to Boston.

And it has access to what used to be the national road through the Cumberland Gap, getting into the Ohio River Valley. So it should, should, should be a crossroads of the greatest manufacturing zone on the planet. it is not because of something called the Jones Act, which was a program passed in 1920 that was designed to keep jobs within the American system.

that says that any maritime vehicle, any ship, the transport, any goods, between any two American ports must be American built, owned, captained and crewed. And as a result of having that restriction on maritime transport, but not on truck transport or air transport or rail transport, people stopped using the river ways completely. And we’ve seen cargo on America’s waterways dropped by over 99% in the century since.

And so we’ve taken what is honestly the greatest natural gift that God could have possibly given to any culture and destroyed it. the United States has roughly 3000 miles of naturally navigable, interconnected waterways, and we hardly use them at all anymore. We certainly don’t use them with small ships. we should, should, should, should, should have thousands of tiny ships carrying a handful of containers here and there throughout the system, making our own multimodal manufacturing system that is the world’s most efficient.

Instead, we move half of our cargo by truck, which is the most expensive way to do it, which it shouldn’t work because we removed the cheapest way of doing it and then other stuff by rail. Well, because of this, our waterway networks, including the Chesapeake Bay, are barely used, and places like the Ohio River Valley and the Great Lakes system, which should be the busiest zones in the world, are barely used.

So we should have this rough pentagon of territory going from roughly Buffalo, New York, to Duluth, Minnesota, to Saint Louis, Missouri to Pittsburgh, and then with an arc going down to Baltimore that is the busiest section of waterways and the biggest manufacturing zone in the world. Instead, it’s the Rust Belt. there are many things that have caused the steel belt to become the Rust Belt, but I would argue that the Jones Act is the single biggest factor, because it raised the cost of transport among these systems and basically drove the business somewhere else.

So this should, the downing of the Francis Scott Key Bridge. This should be a really big deal. Instead, the only thing it does is interrupt a few cargo shipments coming in, container shipments, which can easily be rerouted to places like new Jersey or Savannah, as well as some internal, petroleum fuel distribution systems within the Chesapeake Bay itself so that these are non-issues.

But these are like minor rounding errors, considering how catastrophic of an event this should have been. if we had gone the other direction, we’d have an extra $10 trillion on the U.S. economy right now. Most of that in manufacturing, most of it in this zone. And then it would have been a very big deal. So I guess from a certain point of view, the Jones Act has saved us from problems by gutting our economic growth.

For the last century, the part of the United States that has suffered the most of those countries in the Midwest that border both the Great Lakes and the Ohio River Valley, so specifically Ohio and Indiana and Illinois, because these are the ones that should be at the heart of all of this, and they can’t participate in almost any of it.

Things I (Do) Worry About: Higher Education in the US

If mommy and daddy told you to go college and then you’d be set for life…you’re not alone. With traditional models pushing everyone towards white-collar jobs and university degrees, we’ve created a massive oversupply of finance bros and marketers, but left those blue-collar industries begging for some fresh meat.

As the US faces a demographic shift and shrinking population, the educational system is struggling to adapt to the changing demands. With a need for more blue-collar workers, higher education in the US is dropping the ball.

Employers are already seeing these worker shortages play out and are struggling to find a solution. As more and more graduates enter the workforce and struggle to land that ‘dream job’, those lucrative and accessible blue-collar fields might start poking holes in the higher education system in America.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts

TranscripT

Hey everybody. Peter Zeihan here. Coming to you from a beach. A love, a good beach. Today we’re going to dip into one of the ask Peter questions and I’m going to drop that into our open ended series on things that I worry or don’t worry about. This is definitely something I do worry about. The question is, in this demographic shift that we’re experiencing as populations age and shrink, what do I think is the future of higher education in the United States? 

And the short version is it doesn’t look very good and things are going to have to change. So let me give you a little bit of backdrop and then we’ll talk about the concerns. When the baby boomers started entering the workforce in the late sixties. They discovered that their numbers were so many that they pushed down the cost of labor. 

This is one of the reasons why the baby boomers have a reputation for being very mobile, because they would move wherever there’s a job, they could get better pay. This is also one of the reasons why women tend to enter the workforce in this period, because they had to do so to make ends meet. But that only put more pressure on the labor market, which is why the baby boomers have the record for the highest divorce rate in our country’s history. 

Anyway, point is that from a financial point of view, life was kind of rough. So the belief back in the sixties, seventies, and especially early eighties was that if you wanted to get ahead, you didn’t want a blue collar job because that’s where all the baby boomers were. You wanted a white collar job where you didn’t have to be in a factory, you didn’t have to be in construction or farming where you could work in an office, being a doctor, be a lawyer or whatnot. 

And so the baby boomers ruthlessly pushed their children, the millennials, to go to university, get a four year degree, get a white collar job. And so now we have the opposite problem. We have an oversupply of white collar workers and not enough blue collar workers. So that’s the baseline. Now, we’ve got three things going on in the labor market, in the educational system right now, with China approaching its end, we need to massively expand the size of the industrial plant in this country, even if you ignore all the national security concerns. 

That means we need to expand industrial construction spending and do a lot more manufacturing. And almost all of those jobs are blue collar and we haven’t been training up enough people to fill them. So we’re already in a situation where you can get a six week welding or excuse me, electrical degree and earn more money in your first month than a white collar worker can after four years of college and five years in the workforce. 

That’s just where we are. Until such time as the educational system transforms to adjust to this new reality, and it’s only going to get more intense as we go. And so if you’re looking at a four year university that’s doing traditional things, especially in the liberal arts, we already have an oversupply of labor in that space. We are just desperate for blue collar workers. 

So that’s number one. Your traditional liberal arts colleges, especially the smaller ones, are not going to have nearly the level of demand that they used to. Two year universities that focus on white collar jobs, same thing to your universities that work on more technical skills. They’re going to be in very high demand. And in between you’ve got the legacy universities. 

You know, your Harvard’s, your University of Texas is who either have a very large endowment or a lot of notoriety or both and will always be able to attract folks. So that’s number one. Number two is numbers. The incoming generation is no longer the millennials. The older millennials turned 45 this year. They’re way out of college age now. 

The new kids on the BLOCK are Generation Z or the ZOOMERS, and they are the smallest generation we’ve ever had. So the number of potential students that university systems can attract is simply lower than it’s been at any time in recent American history. And that means we probably have about 15% fewer students that can potentially enroll than we had before. 

So the competition among universities is going to be fierce for them. And a lot of universities are simply not geared for the jobs of the next 15 years. That’s number two. Number three is candidate quality. The Zoomers are loners. They don’t like to be around other people. The idea of the social experience of university is not something like, Ooh, I can’t wait to do that. 

They want to code in a closet. And that’s a different sort of job experience and a different sort of educational experience. Now, it usually takes about five years for universities to meaningfully change their curriculum because, you know, students are going through a four year process right there. And if you’re talking about a state school, it can be as much as ten years because you first have to get it through a review. 

And oftentimes the state legislature likes to weigh in. And certainly tenured faculty does. So by the time we have retooled our educational system to deal with the influx of blue collar job demand that we’re now already seeing, we’re are going to be most of the way through this transition. And it’ll be time to switch again. So if you are an employer, you’re basically going to have to raise your own, bring in kids who are younger than you normally would train that up within the system in order to convince them that there is a job with a good paycheck doing interesting things that they want to do. 

And the more successful companies that I have seen have been engaging in that process aren’t starting in college or even high school, but middle school, to make sure that their community is part of their success story. 

A Conversation with The Times

Here’s my Frontline interview with Times Radio from last week. We discussed the war in Ukraine and global security, specifically looking at what could unfold in Russia due to this conflict.

“Putin is running out of time and allies as the west doubles down on shutting Russia out of the global economy and corruption erodes his military gains in Ukraine.”

You can find the full interview below…

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts