Pax Americana on steroids

Is there still anyone who is not in awe of what the shale revolution has done to the planet? Whatever one might think of the environmental suitability of fracturing rock deep in the earth to extract oil and gas, one cannot deny that the world has changed beyond recognition.

For the first time in many decades, a significant part of the so-called developed world is on the brink of energy independence, and at the same time, the environment in this part of the world is taking strong strides for the better. Whatever one thinks of methane as a primary energy carrier for the 21st century, it’s a far cry from coal and most oil-derived fuels. It’s cleaner, it’s cooler, its – oh boy, you should know the drill by now.

Plus it offers the prospect of a real zero-emissions economy that does not bankrupt us and is feasible with today’s technology. Why all this banter on greenery? Any 21st-century society that does not do its best to preserve the environment and even tries to reverse engineer its pristine state will lose any claim to belong in the “Leitkultur” slot.

But the absolute success of America as a country and a society is not only due to cheap and clean energy. It’s also the breathtaking inventiveness of American entrepreneurs that is pushing the world into a new age. Digitalization is the buzzword but I would rather give it the more encompassing term Integrated Technologies.

Let’s take a look around. For decades we were misled to believe that exploiting natural resources is a recipe for eternal bliss. Countries like Saudi Arabia grew filthy rich in oil. Russia made it back to the world stage after the collapse of communism with oil, gas, and other natural resources in its armory, and what a comeback it was. And countries like China dazzled the world with cheap labor. They simply exploited their ubiquitous masses of people to build massive export industries and climb the ladder in the process.

Looking back at apparently ailing America in the first decade of this century, one could only conclude that mature, free, and liberal democracy was a failing model and that some stricter organization of a countries and a society’s fabric was the recipe for success at everything.

How wrong this all is – and always was.

If one looks at the business models of those exploiter economies, one always stumbles upon one fact. They cannot survive without those supposedly weak, free, liberal societies as customers. In the end, it’s those free markets that suck in those resources at huge rates and they pay a price for it. This also means that they can afford to pay the price regardless of how high prices go. In a sense, the exploiter economies live at the mercy of the consumer states as once consumption goes down for whatever reason, they are in bad shape.

Look at Russia as an example. Oil and gas plus some other stuff they scraped out of the earth’s crust gave them easy clippings for a long while. It enabled them to keep the population sweet by bribing them with subsidies, the military happy with new weapons programs, and the oligarchs sweet with waves of fresh cash from consuming countries gushing in. Moscow got back its sparkle. But easy money also held urgently necessary reforms back so the country grew ever more dependent on this money for Natural Resources.

Look at China – it became the manufacturing base of the world exploiting hundreds of millions of cheap and docile workers in shantytown conditions. Slaves provided the basis for the so-called Chinese miracle and now as China is not the cheapest sweatshop on the block anymore, they run into trouble. But with all the economic reform there was – the country is still a pretty unreformed autocratic state stifling whatever real entrepreneurial zest the population has with a thick layer of regulation and iron first.

This could be done for pretty much any resource export-dependent country no matter what the resource is. Exploiter countries need to understand one thing.

Every resource can be replaced – everything that they can provide cheaper eventually has its alternative. Alternatives always get better and cheaper in time leading to the demise of the old, stiff, exploitative model.

When cheap labor is your business model – rapid digitalization that takes vast swathes of humans as workers out of the process will be a mortal threat to you. If resources from the earth are your business model, then a couple of renegade shale drillers in the US might shake the foundations of your trillion-dollar business.

North America has it all now. Shale gives it cheap and clean energy pulling businesses away from the Gulf States with their monstrous petrochemical complexes and digitalization takes the expensive worker out of the picture bringing labor back from China. It has the all-important consumer market and that’s all that matters. This means that investment comes back gushing into the US at Trillion dollar levels creating huge new opportunities and innovation from Silicon Valley and its countless US peers to make sure that those investments are state of the art.

This gives America new economic muscle to not only defend its position as the sole superpower of the planet but to even expand the lead it has now. America might be loathed by those clamoring for more state control but its attractiveness is undisputed making sure that a huge US-educated foreign population continues to spread to every country expanding their view of the world as well as their spirit.

Real entrepreneurs need the freedom to function. This cannot be forced with government-induced and funded programs or in schools. It’s a flame that burns in every one of us and just waits for an opportunity to grow. And incidentally, it needs a breeding ground to grow. This breeding ground is the economic pain from having to run for your shirt and at the same time having the opportunity to have it and keep it all if one wins the price.

It’s not education, it’s not intelligent design. It’s just a wild, uncharted, unbending will to grab some of the limelight for oneself and to be free to do so. That’s what America is good at and that’s why they always come out on top. Something to think about here in Europe when we are asking ourselves who we want to come after next time.