I recently saw this author speak on Fareed Zakaria's GPS and downloaded this superb read. He spends the first chapters discussing the accretion of power. The key is access to water that allows the movement of material, whether wheat or weapons, from point A to point B without reliance on human or animal effort. He emphasizes the role of the Nile in the rise of Egypt, the Mediterranean for Rome and the Ottomans, and then the deepwater navigation that materially changed matters for the Dutch, Spanish, and English. And of course, the one country with plenty of rivers and access to deepwater possibilities and vast oceans protecting it from enemies is the good ole USA. Blessed by geography is an understatement. As the victor in WW2, the US chose to not occupy, colonize or otherwise usurp power around the globe. Rather, we opened our markets and protected the sea lanes in order to promote free trade. The author posits that the 'Bretton Woods System' is slipping and the costs of maintaining it are wearing thin in the US. In the next few decades, the tsunami of retirements around the world will lead to the draw-down of capital, the scarcity of financing and a turn from the almost continuous good times of the last 70 years. It is this shrinking of available capital that will end the Bretton Woods System of US sponsored free trade and return the world to one more closely resembling a hundred years ago. Only one country is reproducing fast enough that it can survive the pressures of the next few decades and that country also has the good fortune to being very close to energy independence - once again, you know who. In this new era, our friends and allies will be countries that can also benefit us - no more being a generous, free-spending protector of others. He suggests the first rank are the UK, Denmark, Netherlands, much of Southeast Asia, Australia and New Zealand. In the rest of the world, he sees an aged Japan with enough wealth to access resources from North America and Russia. He sees us leaving the Middle East to its own devices - after all we won't need its oil and we'll no longer wish to provide the security system that assured where its oil went. He is very pessimistic about Europe and thinks the euro and the EU are on the way out. The Germans will tire of carrying the rest of them. Russia is in such demographic decline that he fears it striking out in any direction to try and maintain some worldly status; he believes it is back into Europe that they will roll. On this side of the Atlantic, he sees Canada splintering and at least some of it becoming part of the US. He argues that one of the greatest threats to America is the Mexican drug wars migrating north of the border. He contends that China's geography, demographics and poor government "are enough for it to return it the fractured, self-containing mess that it has been for most of its history." He points out that by allying with China in WW2, we eliminated all of its problems (the intrusive Japanese and European predators) and allowed it to unify and now prosper. If, for example, we pull the plug on protecting the sea lanes, every country that China's oil must pass on the way from the Persian Gulf ( India, Myanmar, Thailand, Indonesia, Singapore, and Vietnam) is an enemy. Our walking away from 'Bretton' destroys China. According to this author, China's Rise will be short-lived and no threat to us.
In many ways this is one of the more fascinating 'current affairs' books I've ever read. That said, it is a genre I seldom delve into. I have been asking myself the question for years why is it that we (the US) need to spend so much on our military to keep the world safe for others. Why do we have twelve carrier groups and no one else has one? Shouldn't the Chinese and Japanese pay to keep the sea lanes open to the Persian Gulf? He certainly believes we will no longer do that because it will become too expensive. That's music to my ears. The whole premise of the book is that we walk away from the 'Bretton' system. He focuses on it becoming too expensive, but does not make the case. It's a one or two sentence assertion. Is it possible? As a retired financial person, I think it is possible. But, for all of the reasons he believes we are immune from the world's problems, it is entirely possible that our financial system could and will continue to generate capital and continue to fund the system. There is certainly no whiff of our walking away that one can discern from either party's foreign policy in Washington. Both want to increase military spending. The other point that he skips over is that bad actors don't often go down quietly. Countries like Russia and Pakistan will not slip into oblivion. They'll cause a ruckus. That said, this is easy to read, fun, thought-provoking and highly recommended.
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