Strategic Win for NATO: Sweden Joins the Ranks

Hello from Bison Peak in Colorado. By the time you see this, the knot should be tied on Sweden joining NATO. There’s still a little arm-twisting that will go on behind the scenes, but most of the heavy lifting is done (and Turkey got the bribe they wanted, sooo everyone’s happy).

From a strategic POV, this is a huge win for NATO. Sweden is, bar none, the most capable country to join the alliance in the last 50 years, not just another security consumer mooching off everyone else. In addition, Sweden’s capabilities are also hyperfocused on one goal in particular…keeping Russia in its place.

Sure, the Swedes have been relatively neutral in the past, but they’re still armed to the teeth with shiny new toys. And from the perspective of the Americans, getting Sweden on board was the best possible outcome.

For the alliance as a whole, Sweden is more than just another name on the list; it’s a country that could reshape NATO’s entire outlook on the war in Ukraine.

Prefer to read the transcript of the video? 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.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

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TRANSCIPT

Hello from Bison Peak in Colorado. I’m at about 12,000 feet right now. Probably won’t be staying here for the night anyway. By the time you get this message, everything should be pretty official. It looks like the Swedes are going to be joining Naito at the Vilnius summit. The Turks, after making a couple of outlandish demands, they basically indicated that they were looking for a bribe.

Apparently behind the scenes got the bribe that they were after and have given a preliminary approval. Now, this is not done until it’s done. You still have to have the Turkish parliament sign off on ratification. And after that there is one more obstacle with the Hungarian parliament. Hungarian Prime Minister Viktor Orban has actually been acting as a advanced force for the Russians in Nieto in the EU.

So there are some complications could could arise. But the heavy lifting has been done now and that’s just to require a little bit of light arm twisting to probably make it happen. I have no idea what the bribe is that the Turks demanded and received, but everyone seems pretty pathetic. Things like this happen in Europe all the time anyway.

So on to the strategic issue. First and foremost, Sweden is the most capable country to join NATO’s since its formation back in the 1950s 1952. I believe you had your initial batch of Atlantic countries, which included, say, Britain and the Netherlands and Canada, the United States, obviously, those were very capable countries. And then in 1955, West Germany was admitted almost as a subject state.

The Germans were not allowed or issued opinions on strategic issues, and so they basically just served as a bulwark within the to the allied system until we had reunification in the 1980s. And since then, the countries that have joined, whether it’s during the seventies and the eighties, with countries like Greece or Spain or Portugal or in the post-Cold War era, such as Latvia or Romania or Poland, they have definitely fall into the category of what they like to call security consumers, countries that don’t have militaries that are right size to their needs and or have extreme geographic vulnerability to potential hostiles.

Sweden is the first country of note that has does not achieve that pattern. Sweden has been a major industrial military power over a half a millennia. And the reason we don’t think of Sweden as a major player is because for the last 300 years it’s been neutral in a conflict called the Great Northern War. Three centuries ago, Sweden was the preeminent military power of the entirety of Europe and almost ended up ruling it all.

And it took a coalition of everybody else, including the Russians and the people that we now think of as the Germans, to break Swedish power in Northern Europe. Since then, they have enforced a degree of neutrality on themselves, literally going back centuries. But they are not a normal, neutral country. They are armed to the freakin teeth. They are a maritime power.

But unlike the United States that has maritime interests in every ocean basin, theirs is entirely focused on the Baltic Sea. They have arguably the best amphibious military capability outside of the United States and the United Kingdom. And again, it’s very, very focused on a very specific geography. And that means that with the Swedes within the NATO’s firmly, you get that sort of defense competence with a cooperation that is very, very focused on one thing and one thing only.

And that is Russia. The Swedes have been quietly advocating for positions that will box in the Russians and that will encourage independence and development in places like the Baltic republics ever since 1992. Now they’re not doing it as a neutral. Now they’re doing it hand in glove, and it’s only going to be a matter of time, I would say, weeks to months, not years to decades before Sweden emerges as one of the leading voices within the alliance itself on pretty much everything that matters as regards the Ukraine war.

That means defense cooperation, that means military procurement, that means pushing for democracy in all of the fringe states. That means hemming in the Russians. That means taking a relatively forthright position vis a vis the Chinese. It is basically you’re looking from an American point of view, is it the best country in the world? Just joined the network. And unlike countries like, say, France or Turkey or even the United Kingdom that have their fingers in a lot of pots.

And so there’s always conflicting interests in the Swedish military. Every day, you wake up, you prepare for one thing, the war with the Russians. And there is a war with the Russians right now. All right. That’s it for me, everyone. Take care.

Ukraine’s Waiting Game: Zelensky’s Quest for NATO Membership

Note: This video was recorded back in June, but it helps paint a picture of what is going down at the NATO summit.

As the NATO summit in Vilnius wraps up, we’re left with a result that was more or less expected. Ukraine won’t be getting called up to the big leagues anytime soon, but it’s not all bad news for Zelensky…

Now you’re probably thinking that the main reason NATO was formed was to keep Russia (formerly the Soviet Union) at bay. While that may be true, NATO has no interest in getting into a direct conflict with Russia.

On top of that, Ukraine doesn’t quite cross off all the requirements on the list. So even if everything went perfectly at the summit, the accession process still requires unanimity…so don’t hold your breath.

Despite NATO leaving Ukraine out of the party, that doesn’t mean they won’t try to tip the scales in Ukraine’s favor; many NATO countries have already offered aid, supplies and support and that won’t be stopping anytime soon. A new wave of aid will be headed Ukraine’s way, so at least Zelensky wasn’t left completely high and dry.

While missiles, artillery, rockets, and an air force are all part of a combined arms warfare system, there’s simply no substitute for ground forces. The Russians are finding that even Ukraine, a country they dwarf militarily and economically, can have a shot at the title if they have the numbers and the right equipment.

Prefer to read the transcript of the video? 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.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

TRANSCIPT

Hey everybody. Peter Zeihan here coming to you from the Monterey Airport. Thunderstorms in Denver have delayed my departure, which means I’m stuck here for an extra 4 hours and I’m going to get to know the bartender very well. But I figured I might as well record some thoughts since I had the time on the topic of waiting in the wings for other people to make a damn decision.

But it was a good time to talk about NATO membership and the case of Ukraine. And now the NATO alliance is built by a series of countries that have unanimously agreed to look out for one another’s security. And that is something that has never happened in a multilateral environment before. Most security agreements that exist on the planet today and throughout human history have been at most bilateral pacts where countries are willing to back away. Its only article five of the NATO alliance that actually legally binds countries to look out for one another. Obviously, that’s the theory, and practice can be somewhat different. But the issue is this has always been the best security guarantee among countries at any point in human history. And Ukraine wants in. And there was a great joke going on last year when the Ukrainians were doing a great job against the Russians. Like, you know, that Nito is seeking membership in Ukraine rather the other way around. The conversation has again started up about what might be necessary for the Ukrainians to actually join NATO.

Let me start with the punch line. Not this year, not next year, not the year after. Not the year after that. For Ukraine to join NATO. One of the core issues, it has to be that you don’t have a border dispute with any of your neighbors and that eliminates Ukraine or right off the bat, even if the war were to end tomorrow, the Russians are certainly going to have some quibbles with the Ukrainians when it comes to where the international border is. And until that is resolved, one way or another, this is completely off the table. That was true for the Italians back in the immediate post-world War two environment. That has been true for the Croatians in the post Yugoslav war scenarios, and that is true for the Ukrainians today. There’s the second issue that while NATO’s was formed to keep the Russians at arm’s length, NATO’s is not like giddy about the possibility of getting into a slugfest with a nuclear power. And so as long, again, as we have these hostilities going on between Ukraine and Russia, it’s not that NATO countries are going to put their finger on the scale and try to adjust the outcome. That’s not what I’m saying at all. But they don’t want to get directly involved. And an Article five guarantee would guarantee that NATO’s immediately goes into a state of general war. So if you’re Ukraine, I’m afraid you have to take what you can get and do what you can do on your own. NATO is there. NATO’s helping, but the Article five guarantee that is years ahead. And even if Russia were to be defeated completely tomorrow and its fangs were moved so it could never launch another war again. Only then could NATO’s begin the process of its 30 odd members actually going through the accession process.

And that all by itself is another five years. Alright. I’ll see you in, I don’t know, like 20 minutes or something.

Ask Peter: Will Hypersonics Replace the Need for an Army?

We appreciate the interest and engagement from our followers, but with Peter’s travel schedule and sheer volume of requests, we are unable to answer non-business-related questions via e-mail. If you’d like to join in on the conversation, head over to the community tab on our YouTube Channel

With weapon systems moving toward hypersonics, what’s the point of holding geographic positions anymore? Theoretically, this works…at the push of a button, you can deliver a precise payload across huge distances…but the Russians have shown us this isn’t quite reality.

As the Russians descended into demographic decay, plugging these geographic access points NOW was their only way to prevent a future invasion. Sure, hypersonics are an excellent deterrent, but they’re expensive, can’t carry that large of a payload, and defense systems like the Patriot have proven rather effective.

Oh, and the Russians can’t even make the semiconductors necessary for more advanced targeting and strikes…so unless their enemies never moved, they’re probably looking at a surplus of really expensive paperweights.

While missiles, artillery, rockets, and an air force are all part of a combined arms warfare system, there’s simply no substitute for ground forces. The Russians are finding that even Ukraine, a country they dwarf militarily and economically, can have a shot at the title if they have the numbers and the right equipment.

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.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

Ask Peter: Has the US Overcommitted Itself to the Ukraine War?

More than a few countries out there couldn’t walk and chew gum at the same time…but the US isn’t one of them. Today’s question in the ‘Ask Peter Series’ looks at whether or not the US has stretched itself too thin in Ukraine to deal with another major conflict.

Yes, the US has given the Ukrainians a couple of shiny new toys, but most of the stuff has been obsolete hand-me-downs. And how often do you get to test your new weapon systems in a real-world setting? So the only thing in the mix that throws up any red flags for me is the cluster munitions (and those were going to be retired soon anyways).

This war hasn’t impacted US military preparedness, and if China wanted to try its luck, they’d get an ass-whoopin’ compliments of Uncle Sam. The big piece here is that the people doing the walking and chewing the gum are entirely different. If anything, our involvement in Ukraine has been a proof of concept for how the US will fight the wars of the future.

Prefer to read the transcript of the video? 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.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

TRANSCIPT

Hey everyone. Peter Zeihan here coming to you from an incredibly green Colorado. We’ve gotten double our annual precipitation before we even hit April, but hasn’t stopped yet. Today, as part of the ask period to your series, we’re going to talk about chewing gum and walking at the same time. The concern is that in supplying weapons to the Ukrainians, the United States might be stretching its bandwidth to be able to deal with a major conflict like, say, with China.

The punch line is, no, this is not something I’m worried about at all. For the simple reason that the people would be doing the gum chewing and the walking or different people, any sort of military conflict that the Americans are going to get involved with, with the Russians are going to be primarily on land first and foremost in Ukraine itself.

That’s an army job. And any conflict that soon involved the Chinese is going to be on the high seas. That’s the Navy’s and to a lesser degree, Marines job. So the United States is perfectly capable of fighting two wars if they’re very different sorts of wars. So I’m not worried there. Number one. Number two, nothing has happened with the Ukraine war yet that has really hit American military preparedness.

So let’s get this first. From the weapons point of view, it’s already been given most of the weapons system, almost all the weapons systems that the United States has provided to the Ukrainians are things that the United States you know, most of the stuff that the American right it to the Ukrainians are things that the U.S. military hasn’t used itself since at least the 1990s and in most cases further back.

This is Army surplus that has to technologically be high the military uses. And so really, the Ukrainians are just going through our hand-me-downs now. We would have given these things to the allies. That’s what we did at the end of the Cold War, for example. But most of the military’s in Europe have been downsizing or skipping a generation.

What we’ll do is left all this stuff like Hummers going around and warehouses. So with a couple of notable exceptions, these are not things that the U.S. uses at all, the notable exceptions. There are currently two Patriot batteries operate in Ukraine that is very close to the top of an aircraft that the United States has right now. I would argue that even though taking those out of American service might be at the strategic issue for the U.S. a little bit.

It’s worth it because we’re getting real time experience with U.S. technology and third party hands against top of the line Russian equipment, most notably the Kinzel cruise missiles. And we now know for certain that even without American personnel operating them, the Patriots don’t done that. The Russians have that was a great bit of information that we didn’t have before.

The other thing is, are three shells. Now, the United States has not been engaged in a massive war to Vietnam. Even when you look at the Gulf Wars, they were very short little events. And so we haven’t had to use artillery in volume for a very long period of time in the United States, which means that our production of artillery shells has been pared to the bone and we are going through we the Ukraine is going through more artillery shells in a month and the United States can produce in a year.

And Europe is even further behind when it comes to munitions. So that has prompted the United States to get Canadians weapons systems that we are in the process of phasing out. And most notably, that is the cluster munitions that you may have seen in the news recently. Now, a cluster munition is one single piece of explosive. There are dozens or hundreds of little but spread over an area.

The Ukrainians have been on the receiving end of these weapons since the beginning of the war. Russians have preferred to use the cluster munitions whenever they’re targeting a city. They’ll use them when they go in and get things like tanks and so there’s already hundreds of thousands, if not tens of millions of these little bomblets, some of which haven’t exploded, scattered across all of eastern and southern Ukraine, aren’t brought up.

The kids aren’t thrilled. But from the Ukraine interview, gimme, gimme, gimme, gimme, gimme. Because anywhere they can get and I believe they’re going to use cluster munitions on their population centers. That’s the job for the Russians anyway. These are weapons that are for is it’s a little distasteful. And the United States Army was in the process of them out anyway.

So again, this kind of falls into the category of surplus stuff, even if it’s not quite kind of there anyway. Bottom line, U.S. military preparedness really hasn’t been affected by this war to this point. If anything, it’s proving to be a useful proof of concept for how the U.S. is likely to fight wars in the future. In the aftermath of the war on terror in Iraq and Afghanistan.

There is no political support in the United States for a mass deployment for anything except for top level national defense. That’s not seen as an issue right now. No one’s dumb enough to attack the United States directly. At least I don’t think that’s going to happen. Which means that U.S. strategic policy is going to be operating through third parties and or using special forces.

And so with Ukraine, where we have a motivated third party who was very willing to be an ally except in equipment, and we’re finding out how well that works and getting some expertize and figuring out what to do better the next time around. So all in all, in a weird sort of way, you can kind of thank the Russians for getting the United States to where it needs to go, both getting rid of its what and learning how to fight for the next century.

Alright. That’s it. Bye..

The Greatest Reindustrialization Process in US History

Today’s windy video comes to you from just below the Continental Divide.

You know those little ‘Made in China’ stickers on everything you can buy in the US? Well, don’t be surprised when those all say ‘Made in America’ in a few years as the US carries out the greatest reindustrialization process ever…and if you thought the United States’ industrial buildout during WWII was wild…buckle up.

There’s a lot at play here, but we’ll touch on the legacy factors first. The US arguably has the world’s most highly skilled labor force, but we’re hyper-focused on the value-added stuff and outsource the rest. This arrangement can’t last much longer, but the shale revolution and petrochemical production have primed us for all the reshoring coming down the line.

Recently, COVID showed the US (and the world) that our supply chains weren’t as great as we thought. Now we’re having to reshore everything and turn over the power system, driving construction levels and spending through the roof. And the Inflation Reduction Act has helped provide the funding and regulatory structure to make it all happen.

Although inflation will be up there for a while (surprise, you can’t double your industrial plant without that happening), we’re on a solid trajectory to establish a fully regionalized supply chain. And if the US wants to have any sense of security down the line, we’ll just have to suck it up for a bit.

Prefer to read the transcript of the video? 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.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

TRANSCIPT

Hey, everyone. Peter Zeihan here. Coming to you from Heart Lake, above Boulder, Colorado. Just below the continental divide, which is where I’ll be for the next few days. I suppose some day. Then, before I left, I could do a few videos and this first one is going to be on construction spending in the United States. I know some of you like and I get it.

But remember that we are in the midst of the greatest industrialization process in the United States history, building an industrial infrastructure and factories and refineries and pipelines and roads and all that faster than we did during World War Two. There’s a lot of things in play here, so let me start with kind of the legacy factors, and then we will go into the more the issues of the now.

So first legacies. The United States has the most highly skilled labor force in the world by a significant margin. There are a few countries like Singapore where the overall educational level might be higher. But, you know, Singapore is a country of 5 million people. The US is a country of 330 million. If I didn’t say the German to the French, which might have a little bit more productivity per hour than the United States, you know, we’re talking about the labor force in the United States four or five, six times as much.

And that means there’s not a lot that the United States can’t do far puts its mind to it. Now, historically, since 1945 and especially since 1991, what the U.S. has done is focus on the really, really, really high value added. We basically shipped all of our underwear manufacturing overseas, first to Mexico and then to China and India and instead we designed computers, we designed space station, designed microchips.

Not a lot of the manufacturing happens here because to be perfectly blunt, that’s not sufficiently high value added for the skill set of the American workforce. So that’s always been in the background. Second, the shale revolution courtesy of the shale revolution, the United States is glutted with natural gas, which is not merely a power fuel. It’s also used as an input for chemical components, which then go into all other types of manufacturing, whether or not you’re looking to do electrical work or diapers or anything in between.

The shale revolution made us net independent of natural gas roughly ten years ago. Net oil independent a little bit after we had a few hiccups because of COVID, but we’re back to being that independent in all the factors that matter again. And one of the first things that the shale revolution encouraged the United States to do in terms of industrial build out what we’re fighting, the chemicals and so we now are the world’s largest producer of all the precursor materials that go into all petrochemicals everywhere in the world.

And now we’re using those materials to do the next stage of heavy manufacturing. So this kind of the first big phase of this industrial spending issue isn’t necessarily for building power lines. It’s for building the stuff that allows us to build the stuff. Now on to the more current issues, too big things. First, COVID. We discovered that our international supply chains perhaps weren’t as reliable as we thought they were.

And between China’s centrality and all things manufacturing and China’s own COVID lockdown, we found out that if we wanted stuff, we had to build it ourselves. So we did. And during COVID, we saw total industrial construction spending double above the 50 year average. More recently, in the last two years, we had the Inflation Reduction Act passed by the Biden administration, which has nothing to do with inflation.

There’s more going on here than just aspects of a Green New Deal. It’s turning over the power system and reshoring the production line for everything in the power system. It includes everything that we did with NAFTA and after to you know, I should say a third thing, because after two is a big piece of this, too. But anyway, the I.R.A. put roughly $1,000,000,000 into the system to build out what we need in order to meet the requirements.

And that has doubled the construction spending again. So we were already at record levels three years ago. We’ve now doubled the record and this is going on from there. Now, this does mean we’re going to have some more inflation in the short in the mid-term, because there’s no way you double the size of the industrial plant without that.

But once we get to the back side of this a few years from now, we will have a supply chain system that is local, that is employed by locals, that serves local customers and uses less energy and less water, and has fewer steps and is largely immune to international shocks. This is a really good story. At every step.

We just have to suck up a little bit more inflation while we’re doing the work. Alright. That’s it. I’m going to go put on some gloves, but.

China Bans Greentech Metal Exports to the US

We’re continuing our conversation on China’s inability to govern itself, and this is the cherry on top of it all…China restricting the export of metals used in greentech and semiconductor tech to the United States.

If you’ve followed along for a while, you know that the US doesn’t have to worry about rare earths, but Germanium and Gallium don’t fall into that category. Spoiler alert – I’m not too worried about these either.

While the Chinese may dominate the production of these metals, it can be attributed to subsidies and no one else wanting to do the ‘dirty’ work. There’s nothing uber challenging about the process; it just requires someone that’s willing to get their hands dirty.

As the bilateral relationship with China grows more hostile by the day, knee-jerk reactions like this material export ban will do nothing but encourage Americans of all political stripes to cut ties. Ironically, China has become the biggest promoter of the US moving as fast and far away from Chinese dependency as possible.

If the Chinese really want to start a material input war, they might as well start the countdown sequence because they would be f****d.

Prefer to read the transcript of the video? 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.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

TRANSCIPT

Hey, everybody. Peter Zaillian here. Coming to you from extremely foggy, Colorado. We are continuing kind of a two part one here and something that’s going on with the Chinese and their inability to govern or enter in negotiations. So the new news from the 5th of July is that the Chinese are restricting exports of a couple of materials to the United States, materials that are used in green technologies and semiconductor industry, specifically germanium and gallium.

Now, for those of you who’ve been following me for a while, you know that when it comes to things like rare earths, I’m really not concerned because all we have to do is kind of turn on the processing, the capacity that we’ve already built. And then within a few months, the Chinese suppliers don’t matter at all. This doesn’t fall into that category. Gallium and germanium are not rare earths. They’re co-produced with other or so. It’s not that the extraction is particularly difficult, but this is something where we would have to build up the processing capacity first before we can get around this being a problem. I still don’t think it’s a major problem for two reasons. Number one, for people who are willing to admit something that’s becoming increasingly obvious, the bilateral relationship between the United States and China is hostile.

It’s becoming more hostile by the second and the incapacity of the Chinese system to even enter into meaningful negotiations means it’s only going to get worse. You know, part of the issue is that Chairman Ji has so purged the system that China is not even capable any longer having good faith negotiations. And even if it was capable of good faith, it couldn’t handle the technical details because Chairman, she would have to do it personally and they would have to implement it personally because he’s purged the system throughout China of anyone who is even marginally competent. So the capacity of China to even act as an actor, much less a good faith actor, is pretty much fallen away. Which leaves us with things like this germanium and gallium band, because this is like knee jerk grade D-minus, not even freshman level economic coercion. The Chinese said flat out that this was a hostile move designed to punish the United States and that more was coming.

But when you look at what’s going on, you’ll see that it’s not something to be all that worried about. Now, Germany and gallium, the Chinese, based on whose numbers you’re using, produce between 50 and 80% of those two materials. And yes, the United States does have a weakness in terms of processing and access, but a few things to keep in mind. First of all, germanium is a byproduct of zinc mining and zinc refining, and zinc production globally is pretty robust. Yes, the Chinese are the biggest player, but they’re also the biggest user. So if you were simply to add some processing capacity at a half a dozen places around the world, maybe a couple of the United States would be nice. That would solve itself. Gallium is a byproduct of aluminum production, specifically the first stop of aluminum production where you turn bauxite into alumina. That is also done in a number of places. The reason that the Chinese dominate the production of these two micro materials is that it’s a little dirty. And so the Chinese have to subsidize the production about specific sets. There’s nothing expensive or technologically competent or even particularly time consuming about building replacement capacity. And so we might have some pressure for a few weeks to a few months as people kind of sink in how serious the Chinese are or not about these bans. But replacing those materials is not particularly hard. Second, I would argue that this is a good thing that the Chinese are using a complete lowball flunky, incompetent measure of intimidation because, you know, Americans are going to blow this out of proportion. Things like the IRA and the CHIPS Act were rare. And for a third one that is specifically about strategic materials production, and this plays right into that political drama. You’ll have Democrats and Republicans falling over each other in order to put the money forward and put in regulations to encourage these productions within the North American system of the Chinese have really proven to be very helpful in that. And third, and most importantly, if the Chinese really are serious about an input war, oh my God, they are fucked because 90% of the world’s semiconductor sector capable silicon comes from North freakin Carolina. And so if we’re really talking about a materials war as part of the struggle for the digital age, they’re not going to have computers because they can’t get access to the raw materials that are necessary in mass to make the most basic technologies that make air run, and that’s semiconductors.

So this is not something where the Chinese have any more than a passing advantage on a couple of micro materials that are easily to produce in other places. And by doing this in this way, in this in-your-face wolf warrior way for something that ultimately is easily replaceable, is probably the most effective way that I can think of, of getting the United States past dependency on the Chinese in general and honestly destroying the tech sector in its entirety.

Now, there’s some political decisions that have to be made in the United States on both sides of the aisle, on Capitol Hill, in the White House, and on and on and on. But the United States is in the mood for this, the competence discussion now that we’re entering political season for the next election cycle, is who can be most anti-Chinese? It’s just a question of whether or not you’re going for hopefully or were derisking or reinforcing. I mean, everyone has their own preferred term, but the bottom line for almost everyone is how to end the dependency. And the Chinese are really being very helpful in encouraging us to move that forward.

Alright. That’s it. Take care.

China Cancels Summit with EU’s Foreign Affairs Minister Borrell

The news of the day is that the Chinese have canceled their upcoming summit with EU foreign minister Borrell. You all know I’m less than pessimistic about China’s leadership as of late, and this is just icing on the cake…we’ll talk about the cherry on top tomorrow.

As most countries have discovered over the past few years, reading China is incredibly difficult from the outside. The US got a pulse check on Xi and his government when Secretary Blinken visited a few weeks back. Unfortunately, the EU won’t be getting a behind-the-scenes look.

This summit was an attempt by the Europeans to rework their relationship with the Chinese, but Xi’s cult of personality makes navigating that conversation nearly impossible…especially with how many layers make up the European bureaucratic system.

Regardless of the EU’s goal with this summit, no meaningful conversation would be had. So given a choice between a wall of hostility or canceling the meeting…cancelation was probably the best option.

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TRANSCIPT

Hey, everybody. Peter Zeihan here. Coming to you from a place in Colorado that it doesn’t really matter where I am because you can’t see the damn thing anyway. Today is the 5th of July, and within the last few hours the Chinese have flat out canceled the upcoming summit with the EU Foreign Minister Borrell. For those of you who have been following me for a while, you know that I’m not very impressed by the quality of China’s leadership of late Chairman Xi Jinping has established such a cult of personality that no one will bring him any information.

He’s shot the messenger so many times and purged the system so thoroughly that anyone across the entire country who is capable of independent thought and is willing to share independent thoughts is dead, imprisoned, exiled or worse. And as a result, the government has become a one man show. If she doesn’t say that it’s going to happen, it doesn’t happen.

And that means whenever there’s any sort of adjustment that is necessary for the ship of state at any level, everything gets frozen, either in a cult of personality where it just becomes this apologetic, scream of blind, idiotic Chinese nationalism or things just don’t happen at all. And that’s exactly what’s happening with the EU summit. And I think the best way to compare this is to what happened to the Blinken summit.

Now Tony Blinken is the American secretary of state and a couple of weeks back he went to China and it was the first meeting of anyone of substance in the United States with anyone of substance in the Chinese system. Since before COVID, the Chinese have been in lockdown for most of that time. And during that time, he completed his cult of personality and his purges and removed everyone who’s capable within the entire system.

So it was really hard for the United States to get any sort of read on what was actually going on in the country, because no one in China would say anything, because no one in China knew anything or had any instructions. So it was worth Blinken going to China just to kind of take the temperature of the regime and reading the tea leaves.

And from what I’ve heard from folks in Washington, what happened was just there’s a complete stall in government policymaking right up to and including the foreign minister. And knowing that is really useful for the United States if China is completely incapable of governance, then you should expect to see a mounting series of ever more serious foreign policy and internal policy disruptions, mistakes and collapses.

We’re seeing some of that. We’ll talk about another one of those with the next video as regards to economic issues. But back to the Europeans, the Europeans are in the process of trying to rejigger the relationship with China and they’re trying to find a third way. The first way is what they’ve been doing so far, where they just kind of roll over, let the Chinese do whatever they want.

The second one is the more American style, which is a little bit more in-your-face and more direct and confrontational, but trying to find something in the middle and it’s not clear that there is a path there. But, you know, the European thing is to try for a third way on everything anyway. Now Borrell, like the European Foreign Minister, doesn’t go anywhere alone.

There is a number of representatives of the Commission, there’s representatives of the national government. There’s a small fleet of bureaucrats. One of the things that most foreign powers find really problematic and frustrated about the Europeans is everything is about the EU bureaucracy and going through layers of approval that involves the French and the Germans and everybody else, and that’s before independent countries put intelligence agents as part of the delegation, especially in the case of Germany and France and Sweden and the Netherlands and Denmark and Romania and Belgium.

And I’m sure forgetting a few of the high points that Europeans are pretty good at this. But mostly you’re talking about a small army of bureaucrats there to renegotiate every possible bit of minutia that makes up the relationship. This is what makes Europe go, the bureaucratic minutia that allows them to kind of act as a sovereign country, like a single country, but mostly is about creating a web work of relationships and inter linking bureaucratic regulations in order to stabilize the relationship.

If you’re not European, this is frustrating as hell. If you are European, this is how we make the system work. And there is nothing about that system that works with a cult of personality where only one person can make the decisions. So regardless of what the goal of the Europeans was here, there was no way that the Chinese system was capable of engaging with Europe competently, because there’s no way that one person could manage this sort of interaction.

And in the case of the Europeans, they were going to bring everything into. The case of the Chinese, they could negotiate nothing, too. So the Chinese were left with a very simple choice face. The Europeans with an American style wall of just hostility or cancel the meeting. And so they canceled the meeting, and that’s probably never going to have another one again, because for the Europeans, this is how they normally operate.

And for the Chinese, they are now completely capable of carrying out complex negotiations of any sort. And as long as that is the case, there’s no point in meeting in the first place. So we’ll be up to the Europeans, either talking with the Americans or other foreign powers or among themselves to figure out what happens to the bilateral relationship with the Chinese when the Chinese are not capable of engaging at all.

That’s going to be a topic for another day. But anyway, next topic we’ll talk about some of the economic things that the Chinese are doing in this mood of a cult of personality. All right. But.

Real Estate: The Three-Headed Dragon Plaguing NYC

New York is a service-based economy, and anytime you have a system like that, cost of living becomes an issue. While the finance bros working 80-hour weeks might be able to afford NYC prices, there’s a three-headed dragon wreaking havoc on everyone else…real estate.

The first head is the demographic problem, which comes naturally with being part of the fastest-aging region in the US. Many of these lifelong New Yorkers are aging into retirement, and it doesn’t make sense to stay there anymore. So we are amid a mass exodus of lifelong NYC service workers.

The second head was/is COVID. Once people realized they could work remotely and live a more spacious life outside the city, many didn’t want to crawl back into their studio apartments. Yes, NYC has made a more robust recovery than San Francisco, but it’s still not quite back to how it was. The government is taking quite a hit for each person that never returned to the city.

This dragon’s third and worst head is international fear and its impact on rent prices. As economies across the globe enter a state of flux, there’s nothing quite like parking your assets in a 50th-floor penthouse apartment in NYC (even better if you never step foot in it). For people who actually want to live in the city (like my social media manager), that means crazy rent prices and low inventory.

Does this mean that NYC is done? Of course not. For many, this probably sounds like the status quo for the world’s financial capital. However, the business models for the private sector and the government will have to change if NYC wants to thrive for years to come.

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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.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

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TRANSCIPT

Everybody. Peter Zion here coming to you from New York’s Central Park. New York is a city, obviously, where there’s not a lot of manufacturing or agriculture because there hasn’t been greenfield potential here in over a century. It’s a services economy with finance, of course, being the biggest and baddest. But in any system that is based on services, cost of living becomes a critical issue because these are all very highly value added jobs, but people still have to live there. And the people who serve the services economy and serve the people who serve the services economy still need a place to live as well. So living costs are a big issue with real estate probably being at the top of the list. And in that, New York is facing a triple challenge.

The first is demographics. The American Northeast is the oldest and fastest aging part of the country. And as more people move into retirement, a lot of folks who have lived here all their lives to serve the services are discovering it’s kind of out of their pay grade. So we’re seeing a significant amount of relocation of older folks to warmer climes. Of course not everyone can afford to up and leave a rental apartment in New York for a condo in Boca. So it’s disproportionately hitting people who are on the wealthier end of that scale. Well, the second big issue is COVID and more importantly, technology. When COVID hit and everything shut down and the office went away temporarily, New Yorkers in many cases decided to decamp to other places. Some moved to upstate. Some moved to the south. Some moved to Florida. Because if you could just wire in for work, then you didn’t need to be paying a new York rent or New York taxes in many cases. And now that COVID is over, those technologies have only improved. And a lot of people are resisting coming back. Now, New York has not had as much of a problem getting people to move back to, say, San Francisco. But it’s still had a disproportionate hit on the economy overall, specifically. You’re talking about people moving into places like Jackson Hole or Charleston and maybe commuting in once or twice a month. And that’s a very different real estate picture on this side of the equation, because any money that you can use to buy a condo in New York, you’re going to be able to get, you know, a mansion in South Carolina. And since roughly 8% of the population of New York pays 90% of the taxes, every person who relocates is a real fiscal hit to the government here. But the third one is probably the most important because even with people moving out, we’re still seeing rental costs here in New York be stable to positive. The third big factor is international fear. The more problems we see in Europe and especially in China, the more people who try to get their money out and get it into a place with rule of law where you might actually be able to buy a physical asset with real estate being the number one for most consumers. And so you get these these ridiculous needle buildings in New York that not a lot of New Yorkers live in. Most of these have been bought out by foreigners who may not even have an intention of ever looking at the floor, much less moving in simply as a way to park their assets. And so we’re getting these huge distortions in a lot of property markets around the country, with New York being at the top of that list where foreigners have come in and bought up property, especially at the higher end, just to park on it. And that’s made it more difficult for everyone else to find a place or even find someone to build a place because the hot money is going to something like this that is not really of use to solving the real estate or the living cost problems of the city.

Alright. Does this mean that New York’s done? Of course not. It’s still the world financial capital, but it does mean that the business model for both the private sector and the government is going to have to change in order for the city to thrive in the future.

Alright. That’s it for me. You all take care.

Ask Peter: Why Is Scottish Independence a Suicide Pact?

As the roman-candle-carrying-beer-drinkin’-red-white-and-blue-bald-eagles soar across the US in honor of American Independence, I figured we should talk about a country that will never experience that feeling…Scotland.

Beyond the cultural conversation (which I’ll leave for the Scots to duke out), Scottish independence is another situation where the math just doesn’t math. The financial transfers from London have been vital to Scotland over the past 30 years, and the importance of financial support is ever-growing based on Scotland’s demographics.

Secession means Scotland loses the diaspora, remittances, population, financial transfers and a stable currency…I don’t know who’s running the cost-benefit analysis, but is losing all that worth keeping the fog to yourself?

If that’s not convincing enough, an independent Scotland would have ZERO chance of entering the EU, which economically and geopolitically makes Scottish secession a suicide pact.

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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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TRANSCIPT

Hey everyone. Peter Zeihan here coming to you from just above Doorman Valley, an area that is almost never foggy. But here we are considering the weather and the mood. I thought that it would be a great time to take the next in the Ask Peter series, this time specifically about Scottish independence. What are my thoughts, especially in the context of Brexit?

Well, you know how I accuse people of not being very good at math. Every once in a while this is one of those situations and really on all sides. So Scotland has benefited hugely from union in financial terms, you know, culture. Let’s put that to the side. That’s a political question. No one can say that except for the Scots themselves.

But from a financial point of view, the financial transfer from London to Scotland over the last century have been massive, especially in the last 30 years. And it’s going to become more and more important to their survival as a province of the United Kingdom, moving forward for simple demographic reasons. Now, for those of you who have traveled extensively in the United Kingdom, this is not going to be a surprise to you.

But as you move north from London, the people you see become whiter, poorer, older, fatter and unhealthier. In fact, if Scotland were to secede and become its own thing, it would be the demographically, the oldest country in Europe would have the worst finances because of health care and pension costs, and it would be the least healthy. And that alone means that the European will.

Let me say this very clearly. Never let Scotland in, ever. And that blows a hole in any of the arguments for Scottish independence, in my mind, because they would lose the transfer payments and they would be completely on their own in a country that has to import almost all of their food and increasingly a substantial portion of their energy unless they want to go back to soft coal.

The oil money from the North Sea is largely gone. So, you know, maybe it made some sense for Scotland to break away in the 1980s when the oil money was flowing and the population was younger. But now you’re left with a country that has very little in the way of manufacturing. Most of the major banks are headquartered in London.

Even the you know, the Royal Bank of Scotland has not had a great couple of decades. And if we did have secession, the question then of course, even if you could join the European Union, is whether it would work out. There is talk, of course, in Scotland of what happens with currencies and the current plan of the secessionists would be to continue to use the British pound until such time as they can make the full adoption of the euro.

Now, it’s not so much that the Brits can stop someone from using their pound. They just won’t make policy with Scotland in mind in that scenario. It also means that this is fully a negotiated divorce, kind of like the Czech Republic in the Slovak Republic seceding, or the theoretical Quebec succeeding, which means they would have to take their portion of things like the national debt.

And if they’re doing that in an environment of a fixed currency that they can’t control and they don’t have the oil money and there’s no manufacturing money. Yikes. And you are assuming here that which means that they’re going to benefit financial situation that you won’t touch anyway. So even if they did get the EU, they would get into the euro, they wouldn’t be able to qualify.

And then there’s the issue, of course, whether or not the Brits decide to punish them for some of these decisions. It doesn’t have to be anything strikingly overt. It could be just what say the Brits did when all these protests in Hong Kong started a couple of years ago, telling all the people in Hong Kong that if you want to apply for citizenship, we’ll push you to the front of the line.

300,000 people left. 300,000 people leave Scotland, young people. That would be enough to destroy what’s left of the economy almost overnight and between economic likely destitution in the north and whatever’s going on in London, the south. If you’re under 30 in Scotland and you have an education, there’s really no decision to make. You’ve probably been living in London already.

So you lose the diaspora, you lose basically what would be remittance is you lose population, you lose the financial transfers, you lose a stable currency and all that. So you can have fog by yourself, economic, quickly speaking, geopolitically speaking, Scottish independence is a suicide pact. Does that mean it won’t happen? Of course not. People do dumb things all the time.

I’m going to go down there now.

Ask Peter: My Thoughts on Environmental Social Governance (ESG)?

What are my thoughts on Environmental, Social, and Governance (ESG)? It is the idea that business has a role in pushing society towards certain norms and positive outcomes regarding environmental and social issues. We must look at what ESG should be, what it is, and what it is not.

What ESG should be…Until now, American business has played a minimal role in the political system. With the American political system in flux, it is only natural that companies would reevaluate their place in society and create policies that align with the ESG mission.

What ESG is today…The new policies businesses implement can be equated to attempting to climb Mt. Everest before ever learning to walk. Without benchmarks or industry standards, these companies can’t even make it Everest base camp; this process will be long and iterative.

What ESG is not…It isn’t a global conspiracy to destroy the US economy. When Elton John gets invited to a week-long confab in the Alps, you know the WEF isn’t plotting with the Illuminati…they’re just partying.

To this point, most ESG has been influenced by activists pushing policy from the outside OR activist investors making policy from within. The international stage doesn’t have much say, making ESG a domestic conversation of politics and culture.

Prefer to read the transcript of the video? 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.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

TRANSCIPT

Hey everybody. Peter Zieihan here. The clouds have become a little bit more serious. Well, on the upside, it means that all the mountain bikers have bugged out. So I’ve got to turn to myself. But my ears bailout points five miles. So who? Who? This is the latest in our Ask Peter series. And today, the question is about ESG. What do I think about it in general?

Do I think it has a future? Is it a conspiracy to destroy us all? ESG, at least nominally, is called, is short for environmental and social governance. And the idea is that business has a responsibility to play a role in society and push it towards certain norms or positive outcomes. As regards things such as environmental issues or racial inclusion.

And so each corporation should have a series of ESG policies that help them achieve those goals. So let’s talk about what it is or what it should be, then what it actually is and then what it’s not. So first, what it should be and why we probably should consider some form of ESG. For the longest time, American business has really only been involved in the political system when it comes to, say, developmental policy, civic expansion, contracting or regulatory discussions.

They’ve tried to stay out of all the social issues, the get loud especially thing regarding the culture war, because it’s not something that they have the aptitude for. And they have a wide array of shareholders and investors and managers and employees and customers who are all going to have radically different opinions on really anything that matters. So why get involved in it?

Well, for those of you who’ve been following me for a while, you know that our political system is currently in flux and all the factions that make up the parties are in motion specifically for the business community. The Trump administration kicked them out of the Republican coalition. So they’re swing voters right now. So if you look at where the business community is in the concept of ESG, the idea that now when they’re not part of the political process, when we’re going through all of these changes, when our political system looks like a washing machine, it makes sense for them to reevaluate their place in society.

And coming up with policies as they struggle with that fits very nicely with the very concept of ESG. Now we can argue about whether they want to or whether they’re adopting the right policies. And that’s when we get to what ESG actually is today, because this is something that’s done at the corporate level on an ad hoc basis, company by company.

There is no overarching structure. There’s no regulatory guidelines for this. It’s just what individual companies have decided to do. And as you know from your personal life, there are things that you’re good at and there are things that you’re not good at. And if you have spent the last century assiduously not paying attention to cultural or environmental issues, and then all of a sudden you want to redefine your personal life based on those, you’re not going to get it right on the first try.

And I would argue that no company in the United States that had gone down that route has really put together even remotely productive or coherent set of policies to implement the supposed goals. The environmental ones are probably the ones that have been the worst because they equate things like adopting electronic vehicles with being a good but based on who you are and what you’re doing and where you are.

That may be one of the most environmentally damaging things you can do. So like if you get an electric truck and you’re running around the northeast, which is mostly fossil fuel powered, and this is a vehicle that has a huge carbon footprint to build in the first place. You’ve actually made the situation significantly worse, but by your scheme that works, you’re right on the path.

What we need is a little bit more coherence and intelligence and regularity for these sorts of regulations, for them to make any sort of sense. And we’re not going to get that on the first try. And it’s difficult to see us getting that within a decade without some sort of benchmark. And since by its very definition, this is not a government initiative, it’s hard to see us getting that benchmark.

So ESG may be a great idea, at least in concept. It may fit the times for business community. That doesn’t mean it is or will be done very well. Now what ESG is not, it is absolutely not some global conspiracy to destroy the United States. I’ve heard that a lot of late kind of pisses me off because, I mean, think about this.

Most people point towards like the world economic Forum and the build back better and all that good stuff. No. Okay. So the World Economic Forum is not a shadowy cabal of international Illuminati who are seeking to push their will on the United States. A majority of the people there who are matter are American, for one from all political stripes.

In addition, whenever you see Elton John going to a week long confab on international affairs, you know it is not a week long confab on international affairs. It’s a party. Klaus Schwab, the guys who are in charge of the World Economic Forum, I know he’s got the great hair that makes him look like a villain. But really, just think of him as a deejay for the rich and everyone getting together in Davos, Switzerland, for a week of body shots or their equivalent for rich people.

It’s not that WEF is pointless, it’s that it’s entertainment. And to think that there’s any sort of policy coming out of that is kind of funny. Most ESG to this point is a product of one of two things. Number one, the activist culture in the United States that protests and tries to get impose policies on the business community from the outside.

And then secondly, activist investors who are within the company probably have minority stakes who are trying to get the company to shift its policies from within. That’s almost every little bit of it. The international pressure has almost no impact. And you can tell that because the international companies generally have less aggressive ESG policies than American national ones. This is a domestic, political and cultural evolution.

If it was really strong internationally, you would expect the international companies to be the ones that are leading the way and they most certainly are not. Okay. Ooh, that was lightning. Well, the next one might be really exciting.