Immigration at the End of the World

My fourth book, The End of the World Is Just the Beginning: Mapping the Collapse of Globalization is scheduled for release NEXT WEEK (!) on June 14. Immigrants and in-migration are always touchy topics. Allow me to present an excerpt from my upcoming book that is certain to make all Americans – and Mexicans – wince at least once.

In-migration to the United States hit a relative historical low in the 1970s—the decade in which America’s Boomers came of age. For Boomers—an overwhelmingly white demographic—their primary experience with interracial politics was the civil rights movement, a movement that involved people who were already here at a time when the Boomers were young and politically liberal.

In-migration then rose steadily until reaching a near-historical high (again, in relative terms) in the 2010s, at which point the Boomers were nearing retirement and in doing so becoming politically . . . stodgy. In each and every decade as the Boomers aged, the largest single immigrant group was always Mexican. In the minds of many Boomers, Mexicans have long been not simply the “other,” but the “other” that has arrived in ever-larger numbers. A big reason why so many Boomers have been so supportive of nativist politicians such as Donald Trump is that their feelings of shock at the pace of change in American society is not a collective hallucination. It is firmly backed up by reality. This is one piece of the kaleidoscope of why American politics has turned so sharply insular in the 2010s and early 2020s.

But regardless of what you think about Boomers or Mexicans or race or trade or assimilation or borders, there are a couple of thoughts to keep in mind:

First, Mexicans are already in the United States. Whether you’re concerned with what American culture feels like or what the labor market looks like, the great Mexican wave has not only come, it is over. Net migration of Mexicans to the United States peaked in the early 2000s and it has been negative for twelve of the thirteen years since 2008. Just as industrialization and urbanization pushed down birth rates in the developed world, the same process has begun in Mexico, just a few decades later. Today’s Mexican demographic structure suggests it will never again be a net large-scale contributor to American migration. Most of the big migrant flows into the United States since 2014 have instead been from the near-failed Central American states of Honduras, El Salvador, and Guatemala.

Second, even among the most nativist strains of American political thinking, room has been found for Mexicans. In just two years, none other than Donald Trump went from openly condemning Mexican migrants as rapists and “bad hombres” to embracing Mexico in trade and security deals that took bilateral relations to their friendliest and most productive in the history of both republics. Part and parcel of Trump’s renegotiation of the NAFTA accords were clauses that expressly aim to bring manufacturing back to North America. Not to the United States specifically, but to any signatory of the accords. Team Trump added those clauses with Mexico expressly in mind.

On the other side of the equation, Mexican-Americans are turning nativist. The demographic in the United States that consistently polls the most anti-migration is not white Americans, but instead (non-first-generation) Mexican-Americans. They want family reunification, but only for their own families. Never forget that anti-migrant, build-the-wall Donald Trump carried nearly every county on the southern border when running for reelection in 2020.

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.
 
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The Federal Reserve Plans its Next Move

The United States Federal Reserve is preparing to raise interest rates in 2022. The question is not longer one of “if” or “when,” but how frequently and by how much. The implications will reverberate throughout American society and the economy.  

It won’t just be new homebuyers scrambling to lock in low interest rates before the hike, or investors–jumping from tech stocks to crypto to GameStop to NFTs–who are likely to feel the pinch. Federal spending (and by extension, policy), investments in the manufacturing space, and global trade will all be impacted. And in the backdrop of a major global demographic shift, and countless opportunities and pitfalls abound. 

If you enjoy our free newsletters, the team at Zeihan on Geopolitics asks you to consider donating to Feeding America.

The economic lockdowns in the wake of COVID-19 left many without jobs and additional tens of millions of people, including children, without reliable food. Feeding America works with food manufacturers and suppliers to provide meals for those in need and provides direct support to America’s food banks.

Food pantries are facing declining donations from grocery stores with stretched supply chains. At the same time, they are doing what they can to quickly scale their operations to meet demand. But they need donations – they need cash – to do so now.

Feeding America is a great way to help in difficult times.

The team at Zeihan on Geopolitics thanks you and hopes you continue to enjoy our work.

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Where in the World: Skútustaðahreppur, Pfizer

Greetings from Iceland! With the FDA giving Pfizer’s Comirnaty (the two-shot regimen formerly known as the Pfizer-BioNTech COVID-19 Vaccine), it’s important to note what this does and does not mean for the average American. 

Most important: it does not mean that the Pfizer vaccine is not an experimental drug. That ended largely a year ago following the largest human trials in human history. What we should expect is a rise in vaccine mandates across federal agencies, schools, and private businesses. 

If you enjoy our free newsletters, the team at Zeihan on Geopolitics asks you to consider donating to Feeding America.

The economic lockdowns in the wake of COVID-19 left many without jobs and additional tens of millions of people, including children, without reliable food. Feeding America works with food manufacturers and suppliers to provide meals for those in need and provides direct support to America’s food banks.

Food pantries are facing declining donations from grocery stores with stretched supply chains. At the same time, they are doing what they can to quickly scale their operations to meet demand. But they need donations – they need cash – to do so now.

Feeding America is a great way to help in difficult times.

The team at Zeihan on Geopolitics thanks you and hopes you continue to enjoy our work.

DONATE TO FEEDING AMERICA

Video Dispatch: Economic Update

The United States is likely to experience economic growth even as the Delta variant of the coronavirus continues its spread through unvaccinated populations. We should not overlook that qualifier; the vast majority of serious illness, hospitalizations and deaths from COVID-19 in the US are among unvaccinated populations. 

Expect the US Federal response to continue to focus on encouraging Americans to get vaccinated, while local governments and businesses work through an awkward and hotly contested series of local mask mandates, vaccine requirements and political posturing as the majority of US students get ready to head back to school.

If you enjoy our free newsletters, the team at Zeihan on Geopolitics asks you to consider donating to Feeding America.

The economic lockdowns in the wake of COVID-19 left many without jobs and additional tens of millions of people, including children, without reliable food. Feeding America works with food manufacturers and suppliers to provide meals for those in need and provides direct support to America’s food banks.

Food pantries are facing declining donations from grocery stores with stretched supply chains. At the same time, they are doing what they can to quickly scale their operations to meet demand. But they need donations – they need cash – to do so now.

Feeding America is a great way to help in difficult times.

The team at Zeihan on Geopolitics thanks you and hopes you continue to enjoy our work.

DONATE TO FEEDING AMERICA

The Return of American Narcissism

On New Years Eve, just minutes before the dawn of 1992, the Soviet flag was lowered from the Kremlin for the last time.

Arguably the Cold War had been over for a few years already. Glasnost and perestroika had defanged the thorny grip of the KGB and made Soviet citizens less afraid of their own government. Summits – first with Ronald Reagan and later with George HW Bush – started both the Soviet Union and the United States down the path to massive nuclear disarmament. The Soviets started pulling troops out of Central Europe in 1989. In 1990 Soviet premier Mikhail Gorbachev blessed the American military effort to eject Soviet-backed Iraq from Kuwait. In 1991 constituent members of the USSR seceded – peacefully – from the Union.  

But flags matter. And the real date it was all over – truly over – was December 31, 1991.

In America the Cold War’s end was met with a bit of a jubilant shrug. We went on with our day.

From a long-view perspective, the inward turn was a return to the norm. Americans have always been a bit self-absorbed. Having the richest part of a rich continent, far removed from the hustle, bustle, war and pain of the Eastern Hemisphere, does that to you. We settled things with our only two neighbors – Canada and Mexico – well before our first centennial and immediately got down to the more serious business of arguing amongst ourselves. More Americans died in the Civil War than in all our military conflicts with all our adversaries throughout all our history, combined.  

With the Cold War relegated to the past, Americans quickly moved on. We started caring about things that during the Cold War were simply too minor and esoteric to blip on our collective radar while we were staring down the threat of nuclear Armageddon: Haiti, Palestine, Panama, Kosovo, Bill Clinton’s cigar habits. By the late-1990s the rest of the world was so out-of-mind that 60% of Americans couldn’t even locate the United States on a world map. American narcissism was again the norm…

…until the events of September 11, 2001, shocked us out of our naval-gazing and thrust us back into the world against a new foe.

America’s original goal in Afghanistan was to hunt down al Qaeda. America’s original goal in Iraq was to terrify Iraq’s neighbors – Syria, Iran and Saudi Arabia – into hunting down al Qaeda affiliates for us in order to deter an American invasion of Damascus, Tehran and Riyadh. Both missions were successful, and wildly so. At first. But after al Qaeda was gone, the reality of the region set in. The concern – the reasonable concern – became will the local government we’re establishing survive an American exit? Can we prevent the entire region reverting to old habits? Can we establish institutions that will outlive the American presence? Can we make it look like Wisconsin?

The answer to all those questions ended up being “no, we cannot”.

In was only July 9 when Biden announced that the U.S. military mission in Afghanistan would end on August 31. Nearly immediately, U.S. forces stopped spearheading Afghan military efforts against the Taliban, and stopped carrying out airstrikes to support those U.S.-led missions. The Afghans didn’t launch their own. In nearly every case, when Afghan forces met the Taliban in battle, they did not crumple, they simply dissolved – in many cases handing over their American-made and -supplied weaponry directly to their adversaries.

In just two weeks, cities that had stood as independent bastions for not so much years, but centuries, fell to Taliban control: Kunduz, Mazar-i-Sharif, Herat, Jalalabad.

Many have criticized the Biden administration for “losing” Afghanistan. To them I have four responses:

  1. If after twenty years of effort and literally trillions of dollars of assistance the Afghan military cannot hold its country together for two weeks, then another year, another decade, another 10,000 American combat deaths, will achieve nothing.
  2. The goal of the American presence was to prevent the return of hostile militant groups like al Qaeda, the radical Sunni terror group that carried out the September 11, 2001 attacks. Good. Fine. But al Qaeda has inspired more capable copy-cats in Pakistan, India, Saudi Arabia, the United Arab Emirates, Bahrain, Kuwait, Iraq, Syria, Palestine, Egypt, Algeria, Morocco, Yemen, Sudan, Libya, Niger, Nigeria, Mauritania, Mali, Somalia, the Philippines, Indonesia, France, Belgium, Russia, and I probably missed a few. So we are going to, what, occupy them all??
  3. Our greatest allies in the Afghan operations fell into two camps. The first are the Hazaras, an Afghan tribe in the central highlands. They’re badass. Love those guys. Wish we could bring them all to the United States for settlement. Unfortunately, they stayed in their central highlands and only fought the Taliban defensively. The other camp – the ones willing to take the fight to the Taliban in the lowlands which wrap around Hazara territory like a giant U – is comprised of a dark web of opium smugglers and serial child abusers. If that’s the best ally we could find, you’ve gotta wonder if it’s all worth it.
  4. It isn’t worth it. It was never worth it. When I look at Afghanistan, I think similar thoughts to when I think of Syria or China’s Belt-and-Road program: at the end of the day, what does the winner get? Afghanistan is landlocked and oil-free. It is among the poorest countries on the planet and has been for most of recorded history. It is on a path to nowhere. Getting in and out requires deals with either Pakistan (wildly untrustworthy), Iran (problematic to say the least), China (heh, no), or Russia (stupid stupid stupid STUPID).

This was never going to last. I even have a hard time criticizing the Biden administration for its bungling of the withdrawal. I’ve been saying for the better part of three years than whenever U.S. left Afghanistan, the Afghan government would fall, but I was thinking in terms of seven to twelve months. Not fifteen days. The evacuation authorities think they can have everyone associated with Western governments out of the capital of Kabul within another fifteen days. They will need to work faster. As of the time of this writing August 15, the Taliban already has entered Kabul from all points of the compass. The only thing preventing a bloodbath is the Taliban’s desire to capture Kabul, not raze it. With the Afghan president’s decision to send all government workers home, the rump Afghan government has already been functionally dissolved. The flag wasn’t so much lowered as the flagpole fell over.

Rivals of the United States – and no small number of critics within the United States – seem to be getting worked up at the prospect of the blow to American credibility. As the line of thinking goes, if the United States is abandoning its Afghan ally, then they are likely to abandon other allies as well.

People are worrying about the wrong thing.

First of all, Afghanistan was not an ally. It was an occupation. Anyone who is anyone in the field of international relations saw Afghanistan as a drain on American attention and resources – not a springboard to greater things. The Americans being out frees up the possibility of more action, not less. For rivals of America, that’s a problem. For allies of America, that’s an opportunity.

Second and far more importantly, fixating on Afghanistan and its aftereffects is focusing on absolutely the wrong thing. It isn’t so much that the United States is pulling completely out of Afghanistan, but instead it is pulling completely out of the world.

America’s rivals want the Americans to make the world safe for Iranian and Russian oil shipments and for Chinese merchandise trade, but for the Americans to not muck about in their neighborhoods. Sorry, but that’s not what full withdrawal looks like. The Americans are leaving everywhere which will free up the entire American military to do whatever the hell the Americans decide to do, whenever they decide to do it. In the meantime, say goodbye to the primary economic pillars which support all the countries that dislike America. So, yeah, America is leaving, and America’s rivals are about to get what they wanted. Good and hard. The idea that Iran and Russia and China can survive without American-guaranteed international trade is statistically hilarious.

As for the Americans, bereft of significant international threats and presences, they will do the same thing they did in the 1990s and turn back to their internecine arguments.

The internal American reality is a bit uglier compared to 1992. Social media has made us hate one another. The reliably destructive bile of absolute morons like Marjorie Taylor Greene, Cory Bush, Laura Ingraham and Rachel Maddow have become daily fare, poisoning our capacity to think rationally about anything. And the fact that we’re arguing over whether masks inhibit the spread of a respiratory disease suggests to me that perhaps we’ve gotten a head start on this particular chapter of the culture war.

As an American, this…thrills me. Not the cultural war part. That’s equal parts petty and embarrassing. But instead the fact that the world is shifting in a direction that doesn’t really involve the United States. A global system that is simultaneously distant, dissolving and consumed with local grievance is one in which the United States has the luxury of narcissism. It enables the United States to absorb the lessons of the Forever Wars, retool its national security agencies and military and start looking at the horizon again. Narcissism can be unsightly, but it also enables one to focus on different things more relevant to the population.

It won’t last forever. Narcissism ends two ways.

Option one is at some point a decade or three from now the Americans decide to once again venture out and (re)discover their world. They’ve done this before, with the period after Reconstruction probably being the best example.

Option two is some idiot decides to poke the Americans when they’re not paying attention: the Lusitania, Pearl Harbor, September 11. In those examples the full power of the United States – unfettered by any meaningful international commitments – slams into said poker and removes it from history.

If you enjoy our free newsletters, the team at Zeihan on Geopolitics asks you to consider donating to Feeding America.

The economic lockdowns in the wake of COVID-19 left many without jobs and additional tens of millions of people, including children, without reliable food. Feeding America works with food manufacturers and suppliers to provide meals for those in need and provides direct support to America’s food banks.

Food pantries are facing declining donations from grocery stores with stretched supply chains. At the same time, they are doing what they can to quickly scale their operations to meet demand. But they need donations – they need cash – to do so now.

Feeding America is a great way to help in difficult times.

The team at Zeihan on Geopolitics thanks you and hopes you continue to enjoy our work.

DONATE TO FEEDING AMERICA

Video Dispatch: COVID Strikes Back

The United States is seeing a second summer of rising COVID cases, though this year’s surge–and accompanying COVID-related deaths and hospitalizations–are largely avoidable. The US is in a near unheard of position compared to its global peers. Americans have an abundance of safe and highly effective vaccines available on an on-demand basis (and free of cost!). But there remains a significantly large, entrenched portion of the population that is refusing to get vaccinated. 

As I laid out in early June, the result is resurgence of disease across the country. COVID’s Delta variant is ripping through America’s unvaccinated population, albeit unequally. America’s larger cities and West and East coasts–the country’s most economically dynamic regions–boast higher vaccination rates. The more rural, conservative portions of the country (vaccination refusal bears a strong correlation with political identification) face a more uphill slog this summer. The result? America is likely to experience a parallel COVID crisis and economic recovery.

If you enjoy our free newsletters, the team at Zeihan on Geopolitics asks you to consider donating to Feeding America.

The economic lockdowns in the wake of COVID-19 left many without jobs and additional tens of millions of people, including children, without reliable food. Feeding America works with food manufacturers and suppliers to provide meals for those in need and provides direct support to America’s food banks.

Food pantries are facing declining donations from grocery stores with stretched supply chains. At the same time, they are doing what they can to quickly scale their operations to meet demand. But they need donations – they need cash – to do so now.

Feeding America is a great way to help in difficult times.

The team at Zeihan on Geopolitics thanks you and hopes you continue to enjoy our work.

DONATE TO FEEDING AMERICA

Video Dispatch: The End of More

The world that we’re entering is fundamentally different than where we’ve been. The modern period we live in began with Columbus. It has been one of “more:”–near unending growth (population, capital, consumption)–all accelerated by post-Bretton Woods Order. Modern Monetary Theory is probably not the answer to address a future of shrinking populations, consumption, and growth but I am comforted by the fact that folks are looking into heterodox solutions to address an unprecedented future. 

The Age of Constant Growth is over. What comes next?

If you enjoy our free newsletters, the team at Zeihan on Geopolitics asks you to consider donating to Feeding America.

The economic lockdowns in the wake of COVID-19 left many without jobs and additional tens of millions of people, including children, without reliable food. Feeding America works with food manufacturers and suppliers to provide meals for those in need and provides direct support to America’s food banks.

Food pantries are facing declining donations from grocery stores with stretched supply chains. At the same time, they are doing what they can to quickly scale their operations to meet demand. But they need donations – they need cash – to do so now.

Feeding America is a great way to help in difficult times.

The team at Zeihan on Geopolitics thanks you and hopes you continue to enjoy our work.

DONATE TO FEEDING AMERICA

Video Dispatch: The US Labor Market

A combination of factors have workers feeling more confident in looking for better-paying jobs (or at least, less willing to work ones they don’t like for at-or-near minimum wage). While things may seem bleak now between fewer restaurant worker shifts and meme-able signs on fast food drive-thrus, the post-COVID labor recovery in coming years will see a combination of factors restructure how labor and wages work: increased automation of low-end jobs, a move up the value chain of American workers, and the relative scarcity of Gen Z workers compared to Millennials.

If you enjoy our free newsletters, the team at Zeihan on Geopolitics asks you to consider donating to Feeding America.

The economic lockdowns in the wake of COVID-19 left many without jobs and additional tens of millions of people, including children, without reliable food. Feeding America works with food manufacturers and suppliers to provide meals for those in need and provides direct support to America’s food banks.

Food pantries are facing declining donations from grocery stores with stretched supply chains. At the same time, they are doing what they can to quickly scale their operations to meet demand. But they need donations – they need cash – to do so now.

Feeding America is a great way to help in difficult times.

The team at Zeihan on Geopolitics thanks you and hopes you continue to enjoy our work.

DONATE TO FEEDING AMERICA

Video Dispatch: COVID’s Last Stand?

The United States has made remarkable progress in vaccinating large swathes of its population since the beginning of the year. Despite near walk-in availability of vaccines across the country, however, a significant portion of the population–nearly 30%–has not receive any dose of available vaccines. 

Infection and mortality rates are dropping precipitously and steadily across all vaccinated groups in the United States. This good news belies the fact that COVID remains as pernicious and deadly (if not more so, thanks to these pesky variants) among unvaccinated Americans. Summertime temperatures, and indoor congregating and shared A/C, will likely see a final surge among unvaccinated Americans in the sunbelt states stretching from California through Georgia before the end of the year. If you have not yet received your vaccine, we here at Zeihan at Geopolitics urge you to do so.

Heck, you might even get a free beer!

If you enjoy our free newsletters, the team at Zeihan on Geopolitics asks you to consider donating to Feeding America.

The economic lockdowns in the wake of COVID-19 left many without jobs and additional tens of millions of people, including children, without reliable food. Feeding America works with food manufacturers and suppliers to provide meals for those in need and provides direct support to America’s food banks.

Food pantries are facing declining donations from grocery stores with stretched supply chains. At the same time, they are doing what they can to quickly scale their operations to meet demand. But they need donations – they need cash – to do so now.

Feeding America is a great way to help in difficult times.

The team at Zeihan on Geopolitics thanks you and hopes you continue to enjoy our work.

DONATE TO FEEDING AMERICA

The Inflating of Fears

I’m going to attempt the impossible with this one: making economics not necessarily fun, but painfully relevant to someone who cannot work an Excel document.
 
Here goes:
 
The United States is experiencing the fastest increase in prices since at least the peak of the subprime boom back in 2008 – in April inflation was already up 4.2% from a year earlier – generating waves of criticism for the Biden administration, whose spending plans are credited with artificially spiking demand. (Normally, the government aims to keep annual increases below 2.0%). At first blush, I really don’t see the April data as a big deal. Everyone remember what was going on a year ago? Coronavirus-induced lockdowns cratered demand, which meant that prices were falling quite a bit. This 4.2% increase from a year earlier is really just a reversion to the mean.
 
But that said, yeah, it is going to get much, much worse over the next year or so.
 
Arguably the single biggest reason for the price increases is that Americans are getting out. The country is now majority vaccinated and since COVID is a respiratory pathogen, it has more difficulty spreading when people are outdoors. Aside from the most introverted of agoraphobes who have loved COVID lockdowns, everyone is jonesing to get out of their home this summer and to some version of “normal”.
 
Market tightness will become particularly noticeable in food. Traditionally, half the food consumed (by value) is eaten outside of the home. A year ago when the lockdowns began, there was simply too much steak and cheese and bacon and not enough flour and chicken and milk. Agricultural production and processing systems contorted to make the adjustment. Now everything is going the opposite direction. There isn’t enough steak and cheese and bacon to support rapidly-shifting demand patterns.
 
Energy is rapidly evolving to match, for reasons typical, atypical, and downright weird. There’s a normal seasonal increase in demand as farmers start planting in March, and as spring breakers hit their “hold my beer” parties. That increase doesn’t typically stop until autumn. So cyclically, we’re on the “normal” early part of the demand ramp up. And it is happening as Americans are starting to get back to their lives and so are driving more. And we have summer car vacation season just around the corner that pretty much everyone is looking forward to. Hell, I am planning a road trip. I hate road trips and yet I. Cannot. Wait!
 
On top of that we’ve had a few hiccups across the energy sphere. A container ship clogged the Suez Canal for a week, blocking about 10% of global energy flows. Texas had a freak freeze that took some 3 million barrels of crude production – over 20% of US output – offline for a couple weeks, along with all the downstream refining and petrochemical work that actually brings us usable products like plastics and diapers and tires and cosmetics and…face masks. Russian hacker group DarkSide took down the Colonial Pipeline for nearly as long, interrupting gasoline flows to half the Eastern Seaboard. A new, horrific COVID wave in India is threatening port operations, potentially impacting half the country’s oil supply. Individually, each is an event of global significance. Together? Damn.
 
Nor are Americans staying put. The Boomers, America’s largest-ever generation, are moving to warmer locales as they retire en masse. The Millennials, America’s second-largest-ever generation, are moving away from the major coastal cities to places where they can afford single-family homes so they can raise their new families. No one wants to be in a bus or subway everyday where they might be exposed to COVID. Collectively, mass relocations are adding huge demand pressures to any and all suburban locations, particularly those in the South, Southwest, and Mountain West.
 
In the world of manufacturing, the pressure is even greater. On the demand side we’ve seen a lot of sloshing around this past year as people in waves decide they all need new computers or phones or home additions or furniture. We’ve not seen this level of erratic consumer behavior in the modern era. The world of global manufactures simply cannot keep up, and retooling to meet demand in one area almost by definition means insufficient supply for another. The issue of the current quarter is surging demand for electronics has meant there are not enough semiconductors available for automobile manufacture. 
 
The broader supply side is a more national issue. American firms, rightly spooked by disruptions physical, political and medical are relocating many of their supply systems to North America to insulate themselves from global disruptions. The shale revolution has made energy costs locally lower than they are globally, while the U.S. workforce’s high productivity has made most manufacturing processes cheaper to operate in North America than East Asia. Of course, the industrial plant first needs to be built, and that absorbs just as many material inputs as expanding the housing stock.
 
There’s also a big risk on the near horizon. If the Biden administration’s signaling bears out, the United States will be boycotting the 2022 Winter Olympics in Beijing. That will turn what is an ongoing trade cold war into a full collapse of economic relations. Every American firm operating in China will need to decamp, either because the Chinese confiscate everything as punishment or because their competitors start slapping them with the label of “sponsors of the Genocide Olympics”. We probably are only seeing the tip of the proverbial iceberg in terms of relocation-driven manufacturing price pressures.
 
So far, Americans don’t care about the price increases, and they aren’t likely to soon. If you fear the subway, you will pay a premium to not have to use it. If you do not want to shovel snow, you will pay a premium to not have to do it. If your home improvement project is already three-quarters finished, you will pay a premium to complete it. If your new home office has demonstrated to you that you need a better set of headphones and a newer computer, you will pay a premium to get them. If you have not eaten out in a year, that first time out – the first twenty times out – you are going to have yourself a damn steak. Personally, I find myself in four of these five categories. Add in my shiny new snow blower and I’m in four and a half.

In the remainder of 2021 and throughout 2022 the United States will experience the highest levels of inflation since at least the 1970s. And if relations with the Chinese really do tank, the United States will be looking at World War II levels of price increases.
 
American citizens can afford it. Multiple federal bailout programs by two presidents have put cash in pockets; Americans now have record cash on hand. One often-missed aspect of the most recent COVID mitigation plan is to nearly double the child tax credit, and make half of it pre-paid in monthly installments. Those checks start reaching Americans July 15.
 
American companies can afford it. Those bailout programs benefit American firms just as much as they benefit the American people. Arguably more in some cases. Without them the airlines would have had to ground over half their fleets, and we wouldn’t be nearly half as far along on retooling our industrial plant. Even small firms like ours have benefited. State support not only helped us maintain the staff we’ve spent 15 years building, but even expand a bit. (Incidentally, we hope to have our disaster assistance loan paid back this calendar year. But regardless, everyone say hi to our new researcher!)
 
Collectively, this government spending expansion is the largest since World War II, and it is not the story’s end. The Federal Reserve has expanded the money supply to purchase government debt to pay for all the new spending as well as to purchase bonds on private markets to backstop everything from city spending to corporate spending to the mortgage market to student debt to credit cards.
 
(For those of you who obsess about Fed actions as harbingers of the American Apocalypse or vanguards of the imminent dominance of Bitcoin, curb your enthusiasm. Yes, the Fed has expanded M2 by roughly one-fifth since COVID began to just shy of $20 trillion, and yes that is clearly inflationary. BUT… First, over half that increase was in the first month of COVID. That was over a year ago now, and…no Apocalypse. Second, the U.S. economy is bigger than $20 trillion and the USD is the world’s primary method of exchange and primary store of value, so a moderate monetary expansion just doesn’t get my motor running. Third and most importantly, the Chinese have expanded their money supply to $35 trillion despite their economy being smaller than America’s and very little of the yuan supply being traded internationally. Please obsess about the right thing and adjust your forecasts and plans accordingly.)
 
Between the breaking of a year-long claustrophobic containment and government actions, Americans are gobbling up a whole lot of everything. Rising prices reflect all this.
 
This does not mean the price increases don’t matter, and I’m not limiting the things-that-matter to the normal bugaboos of inflation as regards spending capacity, wealth generation, debt levels, income stress, and mid-term economic growth trajectories. The country – the world – is changing, and inflation is hitting us all a bit differently than before.
 
First, a lot of jobs that existed pre-COVID are simply gone. COVID gave many firms no option but to automate away as many manhours as possible. McDonalds and Pizza Hut have practically turned into Sonic. Now that the recovery is underway, but income support has not stopped, folks who used to earn less than $16 an hour are either waiting for benefits to run out or looking for jobs with better compensation. That’s nudging employers with lower-pay positions to automate more. Most of what few of those jobs might have survived COVID will not survive the recovery.
 
COVID also encouraged online shopping to a degree and for a duration which suggests most retail locations will simply not recover. The jobs lost in the retail sector are among people on the low-end of the income spectrum, disproportionately impacting women, Blacks and Hispanics. The most impacted individuals are those who have the lowest education levels and the most difficulty adapting to changed circumstances. They are also the people least able to function in a higher-inflation environment. America’s inequality issues are on the cusp of becoming far, far worse. We can look forward to that being reflected in American politics throughout this next political cycle. More Trumps. More Sanders.
 
Second, the inequality issue isn’t simply within the United States, but between the United States and the rest of the world. The United States will largely be finished with its vaccination program in about a month, enabling it to experience the fastest economic growth of its history. We’re talking in excess of 10% annually. That’s China-doping-statistics sort of growth. The United Kingdom and Israel are finishing their vaccinations on a similar timeframe. Vaccine diplomacyfrom Washington will soon flood Canada and Mexico with more than enough doses to enable them to join the party by the end of August. Europe is unlikely to join in until at least the fourth quarter. More likely year’s end.

And…that’s about it for now. The vaccine formulas that work and that the U.S. will soon have an excess of – Pfizer and Moderna – require two shots and primarily freezer storage, making both broadly unsuitable for the developing world. For most of the world’s population, mass vaccination cannot begin until 2022 and it will be at a much slower rate than what we have seen in America.
 
The timing of all this is beyond unfortunate. Most of the world’s investment capital comes from people who are on the cusp of retirement. They’re shoving every spare dollar, euro, pound or yen they have into their retirement savings. Once they flip into retirement, they never add to their nest egg again. Collectively the Boomer generation of the world is the largest generation our species has ever generated, and they, on average, retire next year. Capital has never been as easy to access or on cheaper terms as it will be in this calendar year.
 
America, and a few other lucky countries, are experiencing this capital surge and record growth at the same time. Such a happy confluence of events is the sort of thing that enables firms and governments to lay down development efforts that will last for decades. I may have a boatload of reservations about all the new spending the Biden administration wants to launch, but I have to admit, if it is going to happen, the time is absolutely now.
 
For the rest of the world, they are missing the last global capital boom of our lives. Most of the global Boomer cadre did not have kids. Which means that as they age they will instead absorb capital from their respective systems in the form of higher health care and pensions costs, while never again paying into those systems. Those costs of capital won’t simply increase by end-2022, they’ll skyrocket. For those of you who don’t understand what “skyrocket” means, increasing the interest rate on your mortgage loan by just 1% means increasing your monthly payment by 20%. Now apply that to everything. Car loans. Credit card debt. Municipal bonds. The federal debt. Everything. By the time the rest of the world emerges from under the pall of coronavirus, it’ll be too late.

The United States, France and New Zealand are the only exceptions to these patterns in the advanced world. The Boomers in those three countries had kids. They’re the people that we know as the Millennials, the oldest of which are now 42. Their consumption is keeping these three systems ticking on, and in about a decade American, French and Kiwi Millennials will become major savers and investors and they will bit by bit regenerate the capital stock in their respective countries. But there are not appreciable numbers of Millennials in any other advanced nation. Add in that the vast bulk of the developing world has experienced baby busts more traumatic than anything that’s happened in the developing world these past five decades and this is pretty much it for capital supplies globally.

Folks, this is it. Globalization is over. Even if the Americans decided that they wanted to continue to patrol the world, even if the Americans could keep making the world safe for international trade, global demographics and global capital tell us the page has already turned. Global aging meant that global consumption and investment was always going to collapse this decade, and then coronavirus moved the end forward. Most countries will never recover economically to where they were at the beginning of 2020 when the health crisis struck. And now countries must deal with the intertwined nightmares of a collapse in global consumption, rising economic nationalism in the small handful of countries that retain decent demographic structures, and a high inflation environment triggered by the American recovery.
 
For me, at least, this simplifies the math. My next book project, scheduled to publish in 2022, was originally going to thread the needle of how various economic sectors will function in the transition from a globalized world to a deglobalized world. History, apparently, has other ideas. It has now sped up. We’ve retooled to focus on ‘life after the end of the world’. Which, now that I’m reading it aloud, might make a pretty good title.

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