The day after Globalisation

In 1983, at the height of the Cold War, the world was exposed to a new movie. The Day After. Not a very good movie, no outstanding screenplay, and no imaginative plot. Even the pictures were rather – dull. But it was still memorable for many of us. Especially the teenager I was who grew up feeling that the world could end at any moment because of nuclear war.

All was about to end in one single moment, one event that would divide history into a before and an after. Neat.

Few Earth-shattering events are that defined, that crisp, that undeniable in their existence.

We are currently undergoing a series of events that will change the world beyond anything anyone alive has seen. Not as drastic and as earth-shattering as global thermonuclear war. But to us alive today it will nevertheless divide history into a before and an after. I would argue that the after is upon us.

Globalization which has defined the lives of a massive part of the world’s population is going away and giving way to something else.

Very few people alive today have been born before the end of WW2. And those who were like my mother are not only very old, but they have been too young to remember the world as it was before WW2. Depending on where you live on this lump of space-rock, this was the only mantra you ever grew up with.

So, this will feel new, unusual, weird, even dangerous. Change always does. Your ancestors from 100+ years ago would feel right at home in such a world though. Not so alien after all.

In part one of this series, we have looked at why globalization goes down the drain. Let’s come to the consequences this will have for the different parts of the world. I won’t look at every inch of the global surface or even every country but at some regions or countries that have or should have an undeniable impact on the global order.

The most perceptible change is that relying on production for anything in faraway places and global supply chains will increasingly become either unsustainable or outright impossible. Global trader supposes that there is some sort of authority that is willing and able to keep order on the seas. You don’t want your vessels to be stolen by pirates or be blocked by nasty players.

This has been the US Navy so far. Its absolute dominance of the high seas gives it credibility in most of the watery real estate. Only very small corners of the seas were unsafe to go through in the past. this has already changed. We have been dealing with increasing piracy around the Horn of Africa and the Gulf of Guinea. Lately, the waters around some Southeast Asian nations have become more than iffy to use.

What’s new is the threat by state actors or state-like actors such as the Houthi in Yemen. Clearly, the US Navy is more interested in keeping the waters closer to its shores safe than faraway places where they have all the cost and risk but very little actual upside. securing sea lanes in the Red Sea and the Indian Ocean benefits those who cross those waters for trade. Thats Asian nations such as China and Japan way more than the US which crosses the two large bodies of water flanking the Americas.

Ever since the elder Bush occupied the White House more than 30 years ago, successive administrations have been on the more US-centric, more protective side. Thats true for the Clinton administration as it is for Bush junior, Obama, of course Trump but even Biden who has implemented all the protective measures Trump introduced way harder than his predecessor could have. This is an open-ended process with no end in sight.

Refocusing on the American homeland also means for the US to reindustrialize and develop its own resources from energy to mining and consumer goods. This process also became necessary because of the mayhem COVID caused. Countries found out that depending on China for even wipes and detergent was a bad thing.

But COVID was just pouring gasoline on an already strong trend. North America features some of the most stable and most economic energy supply chains courtesy of shale oil and gas. 20 years ago, the notion of American energy independence would have invited giggles from all over the world. Today it’s a mantra that hardly anyone dares to contest.

This new focus is not so new in fact. Most of us remember history class and the Monroe Doctrine in which a US president described the Americas as the natural sphere of influence for the US. Different times of course and the young nation had to contend with other powers that even surpassed its own military and economic might. Thats different today.

The US is peerless and even if there are many who believe China would one day surpass the US in power no matter which way one looks at it, so far this has produced less than stellar results for America’s detractors.

To be fair, the US has its own batch of nasty problems to deal with. Pretty much all of them are homegrown and are the result of policies driven by idiots in power just like in so many other countries on Earth. What sets the US apart is that the very structure that produces such disunity is also the secret sauce to overcome those issues.

Federalism is one of the core defining qualities of the USA. I happen to live in a federal country myself but while in most so-called federations this is a byword for some form of decentralization by a very top-heavy government or even some form of theatrical devolution, in the US and Switzerland Federalism has true substance. The US is the sum of its parts. Every single state is a nation that is in itself way more independent than the single member nations of the European Union.

This entails that while there are states that go along with DC’s self-destructive policies, there are always states on the opposing side. Those dissenting states drive solutions that eventually will provide a blueprint for the rest of the United States. Which in itself ensures that no central government can completely destroy American dynamism. Some corner of the US always thrives.

This also makes the US very attractive to people from all over the world. High-value immigrants likely want to go to the US to build better lives there. Low-value immigrants will rather seek to go to European nations with their cushy social benefits and free money. This high-value immigration together with lots of recently immigrated who still have children still gives the US a growing populous while much of the rest of the world already dwindles away.

But not enough with cheap and reliable energy and still healthy demographics. Current developments in US-based spaceflight are on the verge of creating a new orbital economy based on US carriers. Sure, other countries such as China and Russia have space-faring sectors as well, but none can match the volume and the price efficiency that US-based players offer. First of all, it is naturally SpaceX. If the SpaceX Starship becomes the heavy lift system that it is supposed to become at the price point it is supposed to offer, transporting stuff into orbit will become more than affordable.

Current space-based technology is expensive first of all because of the transport price but even more so because the transport price tag makes sophisticated packaging and very sturdy tech necessary pushing the price tag even more. If transport costs are low, bigger, bulkier, less sophisticated stuff that’s way more durable will make it up there. Also, maintenance in situ won’t be impossible anymore so multiple levels of redundancy won’t be necessary anymore further cheapening things.

Because the US will keep the two big oceans rather safe even in the future, any country in the Americas down to Argentina will benefit from the same advantages. Not everyone will appreciate that but that won’t change the bigger picture. The US will keep the space safe for its own sake, the others are free-riders just like the rest of the world was so far for the rest of the globe.

But what does that mean for the non-Americas part of the world?

Countries that depend on import-export for its revenues such as Russia in terms of commodities and China in terms of commodities imports and consumer goods exports will find the going a lot harder in the future. Add to that the homegrown problems in both countries and those last two colonial empires might face strong reversals to their current positions in the international order.

Where the US Navy is peerless, the Chinese Navy is not. India holds sway over large parts of the Indian Ocean and China has little to prevent India from doing whatever it pleases in those waters. Same for Japan. Both countries have powerful navies that cannot project power to the other end of the world, but they can dominate their own theatres very neatly. What would hold India back from disturbing the vital supply line between China and the Middle East for example?

It is exactly the relative aggressiveness of both Russia and China that will ensure a group of scattered nations that seek the umbrella of the United States. Those nations will enter often very juicy agreements with DC just in order to be sure the umbrella is not withdrawn. Chinese intrusiveness will also ensure that certain countries will seek to have US bases on their soil just to be sure China does not dare anything stupid. When in the past it was hard for the US to find appropriate partners, in the future, they will have the choice.

The post-globalized world won’t mean old factionalism for most of the world. Countries and regions will trade, they will exchange and move but it won’t be automatic, there will have to be an investment in risk assessment and mitigation and access to North American markets will have a price tag.

The US was often perceived as the sole superpower over the last 30 years. They never really fulfilled the role as they voluntarily clipped their own wings. That won’t happen anymore, and it will be in the future, what it was supposed to be in the past.

The American age is just going into a higher gear. Buckle in.