← Tom Bilyeu's Impact Theory
Tom Bilyeu's Impact Theory
"China Is A Generation Away From Collapse" The Truth Behind America's Greatest Rival! | Impact Theory With Tom Bilyeu & Peter Zeihan
00:47:50
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- [00:00]
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- [00:32]
Host
Welcome back to part two of this incredible conversation. Without further ado, here we go. Okay, talk to me about why I. Well, one, tell people what Thucydides trap is, and then explain to me why I should not be concerned about that.
- [00:45]
Peter Zeihan
Okay, so Thucydides trap is the idea that eventually you've got a system that is run by a major power, and then a new major power rises up and displaces the first one. Graham Allison is the guy who came up with the idea. And a lot of people have pointed to the rise of China eventually triggering the trap that causes a fight between the two that China emerges from. What most people miss, and what Graham Allison himself would underline that everyone has forgotten, is that in over half of the global or of the case studies that he looked at going back 3,000 years, the challenging power was destroyed. So, yes, it's an interesting metric, but Americans always being a little bit paranoid, have always only read half of the argument. And while eventually there may well be a power that displaces the United States, it absolutely will not be the Chinese.
- [01:39]
Host
Okay, and so is this a demographic argument? Is this a Xi purge, isolating himself argument? What makes that such an impossibility?
- [01:47]
Peter Zeihan
Well, let me give you three reasons, and there are more. First is the politics. Xi has basically become what Trump is attempting to do in the United States, and that's got all levers of power that are not him. And it means that policymaking has frozen and the ability of the leadership to make informed decision is gone. So, for example, just what was it? Was it in February, last week of January, he gutted the Central Military Commission. So it's just him and now an inquisitor, and that's it. There's no one with any military experience on it at all. So they're equivalent of the Joint Chiefs, has no one who knows how to fire a gun or sail a ship. So the idea that the Chinese military is functional I find hilarious. Let's look at this from a geographic point of view. The United States basically occupies the best part of the best continent has ocean moats protecting it from everyone else. And when we talk about invasion, we're talking about migrants who want to work here. The Chinese system has a line of islands off the coast from Japan to Taiwan to the Philippines. That's called the first island chain that has boxed, boxed them in for the last 3,000 years. And there is only one example in all of Chinese history of a fleet ever pushing past it. And it basically sailed into Southeast and South Asia to do one trading one once, and that's it. In 3,000 years. You combine that with the fact that most of their navy can't even reach the first island chain. And then of course, the United States has the world's largest expeditionary navy and Japan has the world's second largest. So the idea that there's a military solution here for the Chinese, for anything, is also hilarious. And then you've got the demographic issue. Two things. Number one, this is one of the countries that industrialized most quickly. So they went from the farm to the city most quickly, which means that half of the population now live in high rise condos and their birth rate is effectively zero. And then you have the one child policy on top of that, where for 40 years people were penalized from having kids. So China, according to the official statistics, now has the 10th lowest birth rate in the world world and according to the official statistics, has had a lower birth rate than the United States since 1991. Unofficially, demographics. Folks in China are debating now publicly how many hundreds of millions of people they have overcounted their population and they're settling on something between 100 million and 300 million at the moment. If that is true, if we're closer to the 300 million, there are more people that are aged 54 and older than 54 and under in China. And we are in the final decade of the existence of the People's Republic of China and in the final 50 years of the existence of the Han ethnicity. So no, if the US is going to be displaced, it won't be by the Han Chinese.
- [04:47]
Host
It's really interesting. It's hard to internalize. But that doesn't mean that I'm not just chock full of a bunch of base assumptions that I'll topple one by one. Okay, so hey, like I said, you need think of me in no other way than I have realized that actually understanding what's going on has huge utility. And so being right has emotional utility. It feels good, but is very low utility in the real world. So yeah, I focus on actually understanding what's going on. So, okay, you've got the destruction of the Chinese civilization. So what do you mean by that? It will tear itself apart. Yeah. What does that actually look like? Mechanistically, believe it or not, X does
- [05:30]
Peter Zeihan
not equal one in this situation. Does not equal one in this situation. There have been 29 civilizational collapses in Chinese history to this point, most of which would have been severe enough that if there was anyone smaller than China, they would have just vanished from the earth altogether. What about half of them have in common is the central state collapses. Warlords rise up as regional powers and start fighting one another. The agricultural system collapses because a lot of it is based on water management. And you have a population loss of somewhere between 25 and 65% of the population over a few years. And then eventually it pulls back together in some form. There are only three centuries out of the 3,000 years of Han history where China has actually been unified in a meaningful way. Half of that is under a Mongol occupation. The other half is under the globalized structure established by the United states. Because since 1945, we told the Europeans and the Japanese they couldn't have colonies anymore. And so for the first time in Chinese history, they didn't have to worry about their coast. And once Nixon came along, they were able to integrate into global economic structures and grow in a way they never had before in their history. China today is only possible because of the US Navy. So if the US Navy ever stops doing that, we don't even have to go to war with them for them to die. This would not be hard. What happens the next day could be a little awkward for us, but I'm really not concerned about Chinese survival or, I'm sorry, Chinese penetration or power as to what it would look like. Again, there's 29 examples. But a mass depopulation event is almost guaranteed at this point for demographic reasons alone. Own. And if China loses access to the wider world, it's not just about energy and food, it's about the stuff that they need to grow their own. They are the most import dependent country on the planet when it comes to maintaining their own internal agricultural output. And if that goes away, for whatever reason, you're looking at people with an average age in the mid-50s having to go back to subsistence farming. That'll kill half the population of what's left right there. Wow.
- [07:50]
Host
Okay. That is a very distressing outlook. Is, is there something geographically based or culturally based about China that makes their civilization so prone to that collapse? And I asked that in the context of when I think about Mao, I'm so mortified by how many people he starved to death. But there's this cultural sense of better to have an iron fist ruling over you than to have the chaos. But what you're talking about is like that that chaos is very real. And that chaos may actually just from a death toll perspective, actually be worse than somebody like Mao. So what uniquely puts them in that position?
- [08:33]
Peter Zeihan
Oh, we've got the external and the internal. So external, of course, is that first island chain that I mentioned earlier. So China can never integrate with the outside world on any terms that it sets itself. So it will always be vulnerable to the str structures of whoever controls the first island chain, which in the modern day is a combination of Japan and the United States. Right now, this is the friendliest China has ever been with the powers that control the chain, believe it or not, you remove that, all the trade options that make China, China go away, and then they have to deal with their own internally. You've got the North China Plain, which is an area from maybe 200 miles north of Shanghai up to Beijing and beyond. That's where over half the population, closer to two thirds probably lives. It's a big, wide, flat area. And when the Chinese talk about unity, they talk about that area all being under the same political authority. But what they ignore and what their history tells us over and over and over again is that unity just means one dude saying, this is mine, and if I don't get my way, that is how we define chaos. And so Mao was the most recent one to do that. She, of course, is his successor. And the idea that you can't have successful parts of China when they're all not all on the same political authority is pure propaganda fiction. There's plenty of examples in Chinese history of pockets that have done very well for themselves when Beijing has been in chaos. Which brings us to the other parts. You basically have three ultra dense population clusters. The first one is Beijing Taijin or, excuse me, Tianjin in the north, which is the big cluster that has over 150 million people in total. Second one is Greater Shanghai at the mouth of the Yang Sea. And there are mountains and various geographic barriers that separate Shanghai from northern China. And so while northern China has been an area of warlords where anyone can basically do whatever they want unless it's ruled by an iron fist, Shanghai has always been more cosmopolitan or urban, more willing to deal with the outside world. And courtesy of the Yangtze, it can integrate with a number of cities inland by water. But there's no way to march an army along that corridor because it's gorges in a lot of areas. So all of these cities integrate economically. They have their own identity and they've never really fought one another. So you can get all the way to Sichuan and Siju in the interior, a thousand miles from the shore, and you have an urban population that is very sophisticated compared to northern China that trades with Shanghai and the outside world. And it doesn't matter to them what happens in the north at all. All they're separated. You go further south and you get into the Pearl River Valley in Guangzhou and Hong Kong, and that's the third big, dense conglomeration. And it's only in this most recent version of China, where that area has been tightly integrated into the rest of the Chinese whole for the almost the entirety of the rest of Chinese history. It's been its own place, and it has integrated with the outside world quite willingly. In fact, if you look at all of the cities from Shanghai down to Guangzhou, that entire belt, for the majority of the last 1500 years, they've gotten more food from outside China than from the rest of China. And the moment that we're in right now, where all of China is under one political authority, this really is the historical oddity by Chinese definitions. That's just not a convenient narrative for Beijing.
- [12:18]
Host
Yeah, to say the least. So taking a short break. But there's more impact theory after. Stay tuned.
- [12:26]
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- [12:57]
Host
Thanks for staying tuned. Now, let's get back to it. If you're America and you want to maximize American prosperity, but we are where we are in terms of the changing world order, what would the right play be for China? It sounds like we could choke them out, make things very difficult relatively easily, especially if we're operating in a coordinated way with Japan. Is that the play? Or do we want to try to thaw whatever ice is forming there and continue the globalization party?
- [13:29]
Peter Zeihan
I would argue that China is no longer capable of negotiating a meaningful deal in good faith. Their system has been more gutted than Trump is doing here, so they're basically locked into whatever it is that Xi thinks at the moment when he wakes him for the day. He may be more internally consistent than Donald Trump, but he actually has fewer levers to control his system through because he's basically killed so many people or gutted them or intimidated them into just being toadies. So I don't think there is a grand bargain that could happen. Ten years ago, maybe there could have been, but not now. Which means that for the United States, if you're taking an open, honest look at this and you know that the Chinese really are in borrowed time and are going to vanish before long, you've got to prepare for that day. And you have to look at the things that China produces that we don't and figure out how you want to source that from somewhere else. Processing is part of that. Assembly is part of that. And the sooner you do that, the sooner you prepare, then the less China matters to us. And if someone else in the world decides to go the other direction and double down on the relationship with China, you know, that long run, you can start to write them off, too. But that requires a significant change in mindset, and it requires something that we're not very comfortable with doing here in the United States. An industrial policy that isn't very capitalistic. But like I said, the economic model is going to fail anyway. The sooner we get started on this, the more options we have for however we define ourselves in the future.
- [14:59]
Host
All right? And it's not capitalistic because you're saying there are going to be industries you have to transfer back from China to US Soil. You're going to have to incentivize it, put federal dollars towards it, and not just let the market decide.
- [15:12]
Peter Zeihan
Yeah. One of the reasons that I think Biden gets a little bit of a bad rap, I mean, he deserves a lot of the bad rap. But when I look at the CHIPS act or the Inflation Reduction act, and I looked at the things he was investing in, I. I thought 80% of them were stupid. But we roughly need to double the size of the industrial plant in the United States. And even if we're building the wrong thing in the wrong place, we can always retool it. And if we get the concrete and the steel in the ground, great. Because it's always better to do it the day before you need it.
- [15:44]
Host
Okay, so the smart play re industrialize America, carrying over something you said earlier, trying to build alliances with nafta, ish, whatever that looks like, and moving forward with that assumption, accelerate China's decline or Just leave it alone.
- [16:03]
Peter Zeihan
You know, that's a strategy play. There's a lot of ways you could do this. Granted, with every day that goes by, our options narrow. But making sure that China is not essential for anything that we need is really the bottom line. That's a domestic play, that's an industrial play, that's an ally play. If you decide you want to accelerate the decline, you do need to be careful because once this breaks, it's not going to slide, it's going to collapse. The government is one system. They don't have a consumption base. And once the agricultural or the energy system snaps, you're not just looking at a recession or a depression. You're looking at a de industrialization event that will build its own speed very, very quickly.
- [16:46]
Host
When this in China or you're worried that it spreads.
- [16:49]
Peter Zeihan
Yeah, got it. Oh, well, you know, if China, when China collapses, based on how countries have or have not prepared, we will have an expansion of the problem. I doubt we're going to have the decivilizational event for most of these other trading partners. Just pick one. Australia, their largest trading partner is now China. They primarily send raw materials there that they purchase. If China were to disappear tomorrow, they're obviously going to go through a horrific depression as everything is priced differently. But then the world will start to adjust and other countries will step into that gap. And a lot of those countries are in Southeast Asia, which the Australians have pretty good relations with. So you'll see those markets readjust over time. But over time is not a day.
- [17:34]
Host
Okay, so you're painting a very clear picture. You're certainly, you have an internal consistency to your logic. A lot of making this work would require America to have its act together, to be able to act in a thoughtful manner.
- [17:51]
Peter Zeihan
It's a lovely thought.
- [17:53]
Host
I'll set Trump aside simply because one barring something that I can't foresee, he's not running for a third term. So maybe we've got three years of let's just see how much damage full ID can do. Maybe we have my more optimistic view of there's at least some strategy there. But either way, I want to look at a world where we understand what's causing America's internal turmoil that isn't Trump. So removing Trump, what are the friction points that are still left? What do we have to contend with here before we can move forward?
- [18:35]
Peter Zeihan
Well, well, we've already dealt with the manufacturing system, so let's not revisit that. On the demographic front, the baby boomers are almost entirely Retired. Now they've taken their capital and put it into relatively low velocity investments. So the cost of capital has risen and it's going to continue to rise for at least the next decade. On the younger side, the zoomers are the new generation. They're the smallest generation we've ever had. So we know the labor force is going to shrink every year for at least the next 12. So we know labor costs have to go up even before you consider the demands of re industrialization. And that's going to remake the economic model and generate all kinds of economic and political stress at every level just
- [19:15]
Host
because of that, because things are just going to get more expensive to entice workers.
- [19:20]
Peter Zeihan
Well, we need to double the industrial plant in an environment of a shrinking labor force and a shrinking capital base, even before you consider immigration policy changes. So all of that is inflationary. There's no way around that. If we do it right, it's still high growth seeing that today, but it should, should be. But we are losing access to the inputs that are necessary to make this change work. And with every day that we wait, everything gets more expensive. Because if you have to do it, you can do it fast or you can do it cheap. And by delaying we're forcing ourselves to do it fast. And that's going to just be pricier. Third, we have a first past the post single member district electoral system, which is a really over complicated way of saying you vote for one one person who will represent a specific number of people in a specific geography. And that will always lead to two big tent parties because you have to get one nominal vote more than the other guy. If you have nine parties, eventually they're going to consolidate. That works until it doesn't. When you have big changes in demographic patterns, which we've had, in economic patterns, which we've had, in international relations or strategic relations, which we've had. The factions that are under those tents move around and sometimes they jump ship and eventually enough of them move that you get a new party system. But figuring out what that new party system takes one to four electoral cycles. And in that time, in that interregnum things are really chaotic. And that's where we are today. The Republican Party has lost national security conservatives, business conservatives, law and order conservatives and fiscal conservatives. It has now been constrained down to religious conservatives, whether they're Protestant or Catholic, and a smattering of age based issues for older folks. The Democrats are actually in a worse position. They've lost the youth vote, they've lost the labor vote, they've lost the Hispanic vote. Neither of them can win an election anymore. It's just a question of who loses when more. And until this changes and these factions move around into a new, more stable environment for our current situation, we're going to be in a situation where the Republicans in their current form are a one man show and the Democrats are a circus and these are not governing structures. So we have to wait for the American people to form a new political alignment, whatever that looks like. I really doubt we're going to get that in three years. So we're looking at a period of extended political chaos in this country until that happens. And unfortunately it's happening at the moment that the world is going through the greatest shift in at least the last 80 years and arguably the last 500.
- [22:16]
Host
Wow. Okay. So I look at this through an economic lens when I try to figure out what that has driven this kind of populism historically. You just see economics over and over and over. So I attribute a lot of this turmoil that we see in the US to a K shaped economy and the long march to the institutions where you have a growing belief in say, open borders, Social Security, not the exact right word, but entitlements for all. You've got the rise of concepts like nobody is trespassing on stolen land or you know, whatever the recent statement was by Billie Eilish that's caused so much backlash. But you put all of that together and you've got some people that believe that immigration is causing problems, other people that believe that the doors should be wide open. It's what I call some people need to be chased by a lion. I believe that part of what's happening is things have been so good for so long. People think prosperity and growth are just natural, that they just happen and that you don't have to fight hard for it. You don't have to position yourself on a global stage. You don't have to have strong borders, you don't have to have means testing before you give somebody a handout. That's a pejorative word and I don't mean it like that. It's just the first thing that comes to mind. So getting, I think getting people to understand how difficult it is to generate taxable income as but one for instance is very important. And the fact that people have lost touch with that is a big part of the chaos that we see here. Do you see a different underlying driver? Do you think that's completely crazy?
- [23:56]
Peter Zeihan
I don't think it's crazy. I think most of Those though, are symptoms of the moment that we're in rather than the cause. If you think about what's happened in the last 30 years, the baby boomers were our dominant producing and consuming class. Now they're all retired changes, the financial incentives. We were at the height of globalization or now we're going through de globalization. We had the economics and security system of the Cold War. Now we're clearly in a different space. It used to be that we had broadcast media, now we have social media. Of course we're going to manage our political systems differently with all these changes. And what you just described were a lot of these things that are inconsistent with how we used to be or people who for various reasons see the old system as no longer working in this era. This is what causes a political reshuffle and that's where we are.
- [24:48]
Host
Okay, so the big breakdown of my theory is that there are more underlying causes. I'm sort of stepping into the game at level six.
- [24:57]
Peter Zeihan
You're looking at it from a very tactical point of view and I agree with everything that you said. It's just that we're dealing with a much broader shift here and what you're seeing is the manifestation of that shift in real time.
- [25:07]
Host
Okay, so the shift for you isn't necessarily the, the right starting point is not looking at the K shaped economy. The right starting point for what has really shifted is demographics, deglobalization and basically a change in media and the way that we interface with who has a
- [25:27]
Peter Zeihan
voice and how far it can carry.
- [25:29]
Host
Interesting. I'll say it another way, just a gut check to see your reaction to this. I think the, the biggest problem with social media isn't that there are no gatekeepers, which is wonderful and certainly has consequences. It is that without gatekeepers we don't realize that there it is very difficult to ascertain what is objectively true. And so we suddenly come face to face with the reality that has always been true. But broadcast media masked it, which is that the truth is very hard to come by. It's really perception. And so now a couple.
- [26:06]
Peter Zeihan
Yeah, please. A couple thoughts on that. Number one, this isn't the first time that we have had a new method of media or information transmission that has been disruptive. The last really, really big one was the telegraph. And if you go into the world before reconstruction, basically each political party at the local level had their own newspaper where about 80% of the print was just them lying about the other.
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Host
Ah, fun.
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Peter Zeihan
And that didn't matter because it was all local. Even New York magazines and newspapers didn't have a big circulation because we didn't have a railroad telegraph comes along, and all of a sudden, everyone's lies could be transmitted wherever. And that got us into the Spanish American War. And in the aftermath of the Spanish American War, we had a series of court cases that made it illegal to deliberately lie, which we now call libel laws. That carried forward and eventually brought in all print and all mass media, including television and radio. But if you Fast forward to 1996, when the Internet was starting to boil up, the decision was made by Congress that we can't regulate speech, mostly because we don't know how. And so we got something called the, let's see, the Telecommunications act of 1996, which said that anything that was put on this new medium, this digital medium, the people who said it weren't liable, and the people who transmitted it were not liable. And so we set up the kind of the perfect storm for the growth and expansion of digital services on the Internet, at the cost of codifying that anyone can say anything without risk to their income, to their personality, to their relevance. And that's given us where we are now. So in the United States, we are very behind the ball in regulating this space and trying to come up with a more intelligent way of managing it. And that's not new. Remember that if you go back to the telegraph, it wasn't Congress that did that, it was the courts, because so much had gone so wrong for so long and the damage was so extreme that eventually the court stepped in. If we wait for the courts this time, it's going to be at least another decade, I'm sure. But if you look at the rest of the world, which has a different legal tradition, they're now starting to come to grips with it, and we can argue whether they're doing it right or wrong. The point is, they're trying. And so we have a country like Brazil that is now establishing a formal, to use a very loaded term, Ministry of Truth, where it's their job to decide if what out there is the truth or a lie. And if you have lied, and you know you have lied, you are now criminally liable. In other.
- [28:47]
Host
Do you like that, or does that scare you?
- [28:51]
Peter Zeihan
Some version of this has to happen. I'm glad they're experimenting with it instead of us. I don't have a solution. But then you look at Australia or Spain or now Greece and Slovenia, just as of today, and they're just saying if you're under a certain age, you can't access it because it's no longer safe, because we don't know how to make it safe. That strikes me as a reasonable mid step. But we will, as a country, as a species, eventually figure this out. But the idea that we're going to do it in the first 10 years of the existence of the technology is a bit rich. And the idea that anyone's going to get it on their first try is also a bit rich.
- [29:32]
Host
We're hitting pause for a moment, but there's plenty more ahead, so don't go anywhere. Thanks for sticking around. Let's get right back into the action. It's very interesting. Okay, where do you think immigration, mass immigration, very specifically, ranks on our list of things that we have to contend with or it's going to tear us apart.
- [29:53]
Peter Zeihan
United States has not had meaningful immigration reform since 1985. And the idea that the US should be able to decide who comes in and how is obviously true. But unless until we get immigration reform, we have on both sides of the political aisle deliberately made that impossible. So I don't like what's going on with ice. I really don't like what's happening on the border. And when I look at the demographic situation for the United States, like immigration has been part of our success going back 150 years, deliberately reducing that to zero is incredibly stupid from an economic point of view, from a cultural point of view, I kind of get it. But that requires Congress to do something.
- [30:35]
Host
Can you elaborate on the cultural side? Why do you kind of get it?
- [30:38]
Peter Zeihan
Sure. Well, I mean, if you have an unrestricted immigration system where people are not registered, and you create a permanent underclass of people who are not assimilated, then American culture by definition is going to be competing in its own front yard. In addition, if people can't get assimilated, if they can't begin legal status, they can't get things like a bank account, which means they're operating in the cash economy and they won't go to the police if there's a problem. So all of a sudden they're not just being preyed upon. We have deliberately then created an underbelly that undermines rule of law at every level. None of that is good. But if everyone has legal status, then all of a sudden they can go to the cops and organized crime can't get grips and the cartels can't spread across the border nearly as easily. So this netherworld we're in, in the moment where we prosecute migrants but also deny them regularization options, we've created the perfect storm to increase the crime rate, to make sure organized crime can spread, to make sure that drugs can get into every community very, very easily. At the same time, we're gutting the labor market. And at a time when we're already in demographic decline, there's nothing about this moment on either side that makes any sense to me.
- [31:54]
Host
Me what? When you look at Europe and because I feel like you can look at Europe and see, call it a decade into the future of what it looks like when you don't. When you have a large immigrant population that is not assimilating. And I certainly look at Europe and go, I get it, you guys have terrible birth rates. You know, take Germany for instance. So I get why they're using an immigrant population to try to bolster those numbers. But at the same time, what happens to Germany when there's no such thing as a German identity?
- [32:30]
Peter Zeihan
Okay, I hope this doesn't piss you off, but most of the numbers just don't support that at all. Europe has some of the strictest anti migration policies on the continent. After Japan, I'm sorry, on the, in the world after Japan and Korea, with the exception of Spain, specific exception of Spain and Portugal, most of the rest of Europe is very hard to migrate to. And when you look at countries like Germany, there have been, for lack of a better phrase, asylum offense. So under Merkel, we had one, one year where they let in about 800,000 people. And in the years since, it's been like 15% of that number. Europe's demographic issue is that they urbanize to such an extreme that their birth rate is so low. And you play that for decades forward, you get a demographic crisis. It's not an immigration, it's not a racial crisis almost anywhere. Again, exception being Spain and Portugal, where they have deliberately gone out and attracted people from their former colonies to kind of flesh out their numbers. And in the case of Spain specifically, case I'm very familiar with, it's actually worked really well because they're all Spanish speakers, they're all descendants of Hispanics that came from Iberia. And the integration has been pretty, pretty straightforward.
- [33:45]
Host
Okay. So when you look at some of the pushback in those countries, whether it is Germany or the UK or take the Netherlands or even Brussels, where certainly there is a. Unless you tell me that I am just not seeing true numbers. You're seeing a dramatic surge in the ratio of either native, call it UK people from the UK or you might not have just come, but you're the first generation born to an immigrant family and obviously seeing a lot of turmoil in these countries from where I'm sitting, because you have a values clash where you have a new country coming in or new population coming in that does not share the values of the people that have been raised for generations in that place. So as an outsider looking at that stuff, it feels like that's escalatory. Am I misreading the situation falling from propaganda?
- [34:42]
Peter Zeihan
I think you're falling for the propaganda. It's not that there's not an anti migration sentiment in Europe. I'm saying that the anti migration sentiment in Europe is so centrist that this is arguably the most racist part of the planet after again, Japan and Korea. And so you're listening to a few voices on the extreme edge that manipulate the numbers and the narratives to carry that story, however they carry it. But even the centrists, even the leftists in Europe are deeply racist about outside cultures. It's one of the reasons why there's been so much pushback to the European project all along multi decades. There just isn't that sort of deep surge of immigration that we in the United States think exists over there. Until you got to this year, the United States has always had a greater percentage of the population imported from foreign sources than the Europeans have. Again, with some very specific exceptions. So like you put at Brussels, for example, Brussels is a horrible, horrible place, but it is not Europe. It's not even Belgium's, not even a country. The northern half is Dutch, the southern half is French, and Brussels itself is independently a city state. So what you're saying might be true in, in Brussels, but that's because nobody else in Belgium wants to go there.
- [36:01]
Host
Okay, very interesting. So this is a radically different perspective than certainly the worldview that I have formed. So you're saying demographically, by the numbers, the immigration rates in these countries is relatively small. I thought I had even heard you speak to Germany being in a position where over the next, whatever 20, 30 years, Germans would be a minority in their own country.
- [36:24]
Peter Zeihan
Okay, that was a. But purely hypothetical, if you want to use immigration to address your demographic crisis, and you have not used immigration historically like the Germans in the German situation, specifically, in order to hold where they are right now, to not have the average age increase, they need to bring in 2 million people a year, every year from now on. And all of those people have to be under age 25. If you do that 20 years from now, Germans would absolutely be a minority in their own country. Plurality at best. It's just that example is to give you a scale of how far down the path most countries are, Germany specifically in this example.
- [37:10]
Host
So why though? My base assumption is that if you bring in immigrants from a country where there isn't a ton of overlap in terms of value system, and part of the reason I feel like America's been able to assimilate Hispanics is that they're largely Catholic. And so from a value system standpoint, it's just not a huge leap. And so that has made sense to me. But when you look at, if you have a values collision where let's say you're not pulling from two religions that share a lot of core values, that you can end up having trouble there, one, do you agree with that assessment? And then two, if we do agree with that assessment, what's the strategy like? Is this just. Nope. This is just how the world goes and it's been happening like this forever. Or is there a rational response for a government to take?
- [38:07]
Peter Zeihan
The difference is how your culture can assimilate versus not so historically speaking. The settler states that that's Canada, the United States, New Zealand, Australia and Argentina. None of us are from here. And so it's a lot easier for these melting pot countries to bring in immigration. And if it happens in a relatively regular timeframe, year after year after year after year, the assimilative power of the home culture holds just fine. And it certainly has here because you're never bringing in more than 1 or 2% of your population and new people in a year and then they integrate. So for, for example, in the United States here might blow your mind. Spanish is the most rapidly disappearing language in America today. It is very rare for second generation Mexican Americans speak to speak more than a few phrases. That is the power that the United States has when it brings in other people. That's not as true in Canada. Canada follows an almost ghettoization approach to integration, where there are large portions of the major cities where specific ethnicity has created a cell. And for all practical purposes, the ethics of their home country still exists there. It generates more numbers, it keeps their tax revenue higher, it stabilizes their labor force because they're bringing in more people. But it's also causing a real problem up there from a cultural assimilation point of view, which is something that will manifest over the next several decades. We don't have that here in Europe because they didn't start immigration in any meaningful way until relatively recently. The assimilative characteristic that we have just doesn't exist. And so you're getting kind of a Canadian style concentration and that is blowing the minds of people in say the Netherlands or Germany or Italy because it's just such a new experience from them or from their point of view. Nguyen. Their lifetimes. If you go back before, say 1880, pre industrial, this was normal for Europe, but they fought about it a lot.
- [40:11]
Host
They fought about getting people to assimilate or they fought against just.
- [40:15]
Peter Zeihan
They just went to war with one another. The only difference between the Nazi area and the pre Nazi era is that the Nazis had industrial technologies to carry out the genocides as opposed to doing it door to door.
- [40:25]
Host
Europe is the most.
- [40:26]
Peter Zeihan
Europe is the most blood drenched place in the world, historically speaking. And post 1945, Europe is as much an aberration in their history as post Nixon China is.
- [40:41]
Host
Okay, at the beginning of this, you were saying that this is largely a function of racism or that's certainly how I took it. But when Europe was fighting Europe, it's a bunch of white people fighting a bunch of white people. So that to me speaks to. Because my thesis is you're implanting American
- [40:58]
Peter Zeihan
views of race on European views of race.
- [41:00]
Host
Oh, say more.
- [41:01]
Peter Zeihan
In the United States, we see Germans and Italians and French and Brits as all white people. And that's all okay. And so we only have a problem if the color of your skin is different. They have a problem if the food is different, if the dress is different. And they see the French and the Germans and the Poles and the rest as very, very, very distinct people.
- [41:19]
Host
Interesting. So to me, that distinction matters a lot, certainly in an American context, because we obsess over skin color. And when I look at this, what I'm trying to get people to understand. And man, if you've got an argument against this, please shoot it down. But the way I see it is worry exactly 0% about skin color and worry 100% about value system. And so what I hear is, well, is it accurate though? So I'm trying to get to the architecture of the human mind and maybe you're saying you need to play out the architecture of the human mind in a specific national context and maybe that's more accurate. But when I look at Europe, what I see is you now telling me, yeah, this whole idea of values played out long before we had to worry about skin color. People are going to fight about food, about national origin. You don't even need to get to skin color. Which tells me that the problem is exactly sort of as foundational as I thought it was, which is, yeah, your skin doesn't matter. Your value system matters a lot.
- [42:19]
Peter Zeihan
In the United States, we overplay that in different levels, but there are very few places. Let me phrase that differently. There are very few places in Europe where both of those don't exist. So I think the best example there would be France, because France had an overseas empire, and like the Spanish and to a lesser degree the English, they have brought in people over the last couple of generations from their empire, made it easier for them to immigrate. But France has this weird little duality. So France is the country that invented multicultural integration after the Terror and the Revolution. And they basically agreed that everyone who lived within the boundaries of France, whether you were French or Norman or Basque or anything else, you were now all French Egalitae fraternity. But anyone who's come in since doesn't qualify unless their cultural identity is perfect. So, for example, in the former French colonies, you've got Quebecois from Quebec. They're okay. You've got black French speakers from sub Saharan Africa who are Christian. They're okay. And then you've got Algerians who are the richest of the group. The most educated of the group, speaks the best French of the group, but they're Muslim and they are not okay. But it's France, and we're all equal legally. So you can't even carry out a reasonable census. It's unconstitutional. So officially, legally, everyone's the same. We're all one big happy family. Unofficially, they don't even even know what the racial breakdown is of their country because it's unconstitutional to ask.
- [44:03]
Host
That's interesting. I didn't know that.
- [44:05]
Peter Zeihan
France is wild. I love it.
- [44:07]
Host
Yeah, that. That is very fascinating. Okay, well, the final card in the immigration thing is you look at Japan. Be very curious to hear if this is your read of the situation. But it seems to me like they're playing the technology card and they're saying, listen, Japan is for Japanese robots. AI. That's how we're going to solve this problem. Is that plausible, or does the AI robotics thing just have a limitation that we're going to smack into?
- [44:34]
Peter Zeihan
Well, they've had a robot Strategy since the 80s, and technology has come a long way, especially with actuaries or. Sorry, actuators. Not actuaries. That's not a tax thing. Actuators to make it more accessible. And when you have the world's oldest demographic, things that are very similar, simple, like changing a bedpan, if you can automate that, all of a sudden a lot of things open up for you. So their hospitals are becoming more and more automated. For example, their manufacturing is becoming More and more automated. I'm not saying it's going to solve their problem, but every little innovation buys them some more time. And really a lot of the world right now is in a race against time. It's do you age faster than you can compensate with the technology? Japan has also encouraged young people to have have kids in a way that has been more successful than in most countries. Still not getting them up to replacement rate, but it's changed the numbers enough that they're no longer the world's fastest aging society. So Germany, Italy, the Netherlands, India, Thailand, Taiwan, and of course China are now all aging faster than Japan. Japan just had a big head start as to whether it will work. The technology question is of course questionable because I can't tell you what's going to look like in five years. Right now we are in a moment with AI where everything, everything, everything is locked up in large language models. And the building boom we have in the United States with data centers is all based around that one subset of AI technologies. It's not that the rest aren't having interesting things happen, but it's 100th the pace. And so it's LLM, LLM, which means you need lots of GPUs of lots in a single place where you can cool them, and you need lots of power for that. And you need data center after data center after data center. That is a no use in dealing with demographic decline. That's a very specific type of AI, which I would argue doesn't have much more Runway ahead of it, but I'm getting ahead of myself. You need machine learning and you need to interface AI with physical manipulation of the real world. That's a manufacturing issue, that's a human management issue, that is a healthcare issue. Those are where those breakthroughs need to come and we're not seeing them happen very quickly. Right now. That could change in two years. If you go back just nine years, no one was talking about LLMs in any meaningful way. It didn't make the top five list of the AI things people were investing in. And then all of a sudden there was one breakthrough in around 2016, and the world changed. Now we got ChatGPT and Claude and Anthropic and all the rest. And it's really interesting and it's productive and it's changing some of the economic models, but it's just one little sliver and it's making a bet on hardware that we know we are not going to be able to produce in the not too distant future. So it's probably just a moment. It's certainly a bubble.
- [47:37]
Host
Well, Peter, this has been extraordinary. You have touched on so many of my base assumptions and given me so many new things to integrate think through.
- [47:46]
Peter Zeihan
I'm so sorry.
- [47:47]
Host
No man, this has been incredible. Really. I mean this. Thank you so much for taking the time. Where can people engage with you?
- [47:54]
Peter Zeihan
Zion.com Z-E-I-H-A-N.com is where you can sign up for the free newsletter. There's also a paid version that gets you a lot more bells and whistles. The most recent book is the End of the World is Just the Beginning, and I've recently been contracted to write my first fiction and that's going to be at least three books and those come out about a year from now because publishing takes forever.
- [48:15]
Host
That's exciting. So you've already finished the first one? Have you started the second and third?
- [48:18]
Peter Zeihan
I am 90% of the way through book two at this point.
- [48:21]
Host
Damn. All right, man. Well, that's exciting.
- [48:24]
Peter Zeihan
It basically takes all of these demographic and geographic and structural changes that we've talked about today, these globalization, depopulation, aging and sets a fictional story against those factors and how the world remakes from a personal point of view.
- [48:39]
Host
I can't wait to read it. That. That is very exciting.
- [48:41]
Peter Zeihan
It was a lot of fun.
- [48:43]
Host
All right, everybody there. Make sure you check it out, guys. If you haven't already, be sure to subscribe. And until next time, my friends, be legendary. Take care.
- [48:50]
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