Hey everybody. Peter Zeihan here coming to you from Savannah, one of my favorite cities in North America. And one of the reasons is the bars, and one of the reasons are the restaurants and the other one, it is home to the largest container port in the continental United States, been operating for a few years now. They keep expanding it.

You’re looking at here one of the Merce medium size ships. The supers do come through here. They just have a problem getting through that bridge there. All right, It’s raining. We’re gonna do the rest of this inside. All right. Got some shelter. The Savannah super container port is definitely the newest in North America, and it’s the only one that was really designed for the the post-June TechEd world that we’ve got.

So the Jones Act restricts shipping within the United States, saying that no foreign vessel, no matter what kind, can dock at two consecutive ports. If they come in, then they have to leave the country to come back. And that’s made it really hard to have a domestic waterborne manufacturing system in the country. But it wasn’t until the Savannah port came on operation in the last decade that we actually had a place in the United States could really handle the very, very large container ships.

I mean, yes, you got Long Beach, California, such a special case in so many ways. Usually what happens is they dock in a place like Kingston, Jamaica, and then the cargo is broken up into smaller vessels who can just do a single run because the idea of doing a circuit where you go to New York and Boston and more Fulgham and Savannah and Miami, a foreign ship can’t do that.

It can come in, dump its cargo and leave, has it in the country before it comes back. So those shuttle tankers take most of the traffic except for, again, at the mega port of Long Beach. Oh, the question is, moving forward as the United States re industrialized is because we have to of which sorts of ports are actually going to be able to continue operation.

Now, in the case of Savannah, it probably is looks pretty good because you’re not going to build a huge amount of manufacturing in Atlanta or in Miami. And so you can still have the super container ships coming in and docking and disgorging to serve a huge area because Savannah has excellent rail connections, which is how most of this stuff is shipped about.

But when you’re talking about areas where manufacturing can move back, eastern Virginia, for example, or Texas, then all of a sudden the ability to take really, really large cargo ships really doesn’t matter. And so it’s only going to be the small stuff that can continue to go. I’m particularly concerned about places like Long Beach because despite all of the negative things that everyone always says about California, most of that stuff is coming from China.

If the Chinese face stability issues, they’re going to have to find a different business model. Other ports, like say Tacoma, are a little bit different because they handle so many commodities exports, but places that specialize in containers really haven’t put in the infrastructure to adapt to the changing world. And I really don’t see it happening on the time scale that is necessary for this transformation the U.S. is going to be going through in the next 5 to 7 years.

Savannah seems to be in the sweet spot. It’s all keepers. I think.

Hey everybody. Peter Zeihan here. Coming to you from Milwaukee, where I’m doing a little street hiking along the Kinnickinnic river, which is, you know, say that five times fast. This used to be one of the great industrial heartlands of the United States. Big into steel. Big into heavy manufacturing. And the reason was because of what’s right here next to me.

Moving things on water is about 1/12. The cost of moving them by land and courtesy of in the Air and the nearby Lake Michigan. Milwaukee, just like Chicago, just like Oshkosh and Green Bay, were part of a broader transport network that included the entirety of the Upper Midwest, of the United States and the New England States and the Mid Atlantic states.

Basically from here in Chicago. You can take your local rivers and canals out to the Great Lakes, go through the Great Lakes until you get to Erie, and then you’ve got two choices. You can either take the Mohawk River, Erie Canal and Hudson to New York direct, or you can go the long way, which goes through Quebec and Ontario in order to reach the Atlantic Ocean.

That’ll loop back around. From New York, you go south through the barrier islands system all the way to Miami from Miami. You can go through the barrier island systems all the way to Matamoros or you can hit New Orleans and go up the Mississippi River and go all the way back up to Chicago via canal that links into the Illinois River.

It’s the great circle of North America and it has long been one of the great manufacturing zones of the world until about 1920. And then in 1920 as part of it, discretionary, protectionist system, the United States put in place a law called the Jones Act, which says that any cargo transported on any vessel that goes between any two American ports has to be on a vessel that is American owned, captain, crewed and built.

And over the course of the next century, we saw cargo transport on America’s waterways drop by 97, 98%, something like that. Anyway, so we basically taken what has been the world’s most beneficial old natural geographic feature from an economic point of view and crushed it into irrelevance. Now that we are entering an environment where the United States wants to double the size of its industrial plant in the aftermath or the soon to be aftermath of the European and especially Chinese failures, we need to start thinking a little bit differently, and that means we need to start looking for things that are very, very, very low hanging fruit.

In this case, that means getting the waterways back up and running again. Because when you think about the sort of manufacturing that the United States traditionally is not good at things like electronics, it’s largely because you have different price points for different types of work. The person who does injection molding is not the same as the person who does the coding for the wires and not the same who does the software work.

You need multiple skill sets in different places, and if you can drop the transport costs for getting those intermediate products among those places, well then you’re looking at something pretty special. And we actually have that built into the American heartland itself just requires changing one law, not abolishing change. Part of the Jones Act, the Interstate Commerce Act, if you will, is about regulating commerce among the states on the water.

And some of that we still need we clearly need a national regulator. But the rest of it really, honestly can go away. And if you think that this is a nationalist issue, that, you know, we should have this all in American hands, consider that we don’t do that for truck and we don’t do that for rail and we don’t do that for air only for water, only for the thing where we have a massive geographic advantage.

So if you’re looking for a quick and easy way to stimulate economic growth in Wisconsin, in Illinois, in New York, anywhere in New England, anywhere in the South, anywhere in the Midwest, this is the low hanging fruit. All we have to do is get out of our own way.

Hey everybody. Peter Zeihan here coming to you from above Spanish Square in New Orleans. And it is the 13th of September. And the big news that is not a 747. Well, that’s kind of fun. The big news is when you see this tomorrow, we will be within hours of a potential autoworkers strike, the first one of significance in decades and potentially a very economically and especially politically consequential one.

Let’s start with the economics. Manufacturing is not one of the huge sectors. The United States, we’re much more of a services country, but manufacturing of automobiles is the single largest subcomponent. So the autoworkers are threatening to strike if they don’t get their way, which could take the largest section of manufacturing offline, which would have massive economic ramifications if they were to strike for as little as three weeks.

It would be more than enough to throw the United States into a recession from the quarter and considering that this quarter, we’re probably going to see economic growth north of 5%, which is almost unheard of for an advanced country. The economic impact obviously would be huge. The impact on specific types of automotive could be particularly bad. A lot of American automakers are attempting to launch new EV lines, and this was supposed to be the year that all of it hit the market and this would just stop it in its tracks.

So I can’t tell you whether the strike is going to happen. They’re asking for more than a one third increase in pay, but the damage they could do, the economy would be immense. So kind of even odds there. But in terms of, well, it’s there’s some sort of party going over there because, of course, it’s New Orleans. And it doesn’t matter that it’s only Wednesday.

Anyway, let’s talk politics now. For the last several decades, unions have been part of the Democratic coalition, and they’ve kind of been the economic core of that coalition. The people within the coalition who can do math, if that’s an easier way to think of it. However, they feel fairly put upon under Clinton, the Democrats shifted to the right on economic issues, especially especially on issues such as globalization, which led to a steady decline in union membership.

And as NAFTA took hold, a lot of union jobs vanished into Mexico and as manufacturing then expanded in value added terms in the United States. Most of the new jobs in manufacturing and auto went to places that were not union states, most notably Kentucky, Tennessee, Alabama and especially Texas. So when you’re looking at what’s been happening with trade and with the reshoring of trade, unions really haven’t benefited from about at all.

And that’s part of the reason why unions are no longer really functionally part of the Democratic coalition. Donald Trump was very effective at bringing them over to his side during his term. Joe Biden has been partially successful in bringing them back, but it’s best to think of them as swing voters right now. And this is something we’re just going to have to get used to.

The fact that the unions are becoming more of a linchpin in the American political process and not just because they’re in the wind right now, but it’s a lot of votes in the world were evolving into in the country. The United States is evolving into. There are not enough workers. The boomers are the largest generation we’ve ever had.

The extras that are replacing them at the top of the pyramid of worker skills have a lower worker participation rate, and the new generation coming in are the zoomers, and they’re the smallest generation we’ve ever had. So we’re looking at a significant reduction in the availability of labor writ large in the system. And in that sort of environment, you would expect organized labor or just labor in general to have more and more pricing power and more and more political power.

And that’s before you consider that the problems in East Asia and the problems in Western Europe suggest that if the Americans still want stuff, autos or otherwise, we’re going have to double the size of the industrial plant. That’s going to take a lot of workers. That’s going to take a lot of blue collar workers. Exactly the sort of workers that are more likely to unionize than not.

So what we’re going through today, what we’re likely to be going through through the next few weeks as these negotiations drag on. Don’t think of it as aberration. This is now part and parcel of the American economic and political experience, and whichever party the unions ultimately fall in are going to have a significant increase in their overall fall.

But in American life, the end.