7 Key Ideas from The Accidental Superpower by Peter Zeihan

Geography has given the Americans almost everything they could ever need. -Peter Zeihan, The Accidental Superpower

To prepare for my interview with Peter Zeihan I studied his first book, The Accidental Superpower in detail. The book is full of surprising insights about the country I live in and the world around it. Peter’s thoughtful analysis hinges on the influence of geography. Because of the enormous implications of Peter’s ideas, the book was included in the U.S. Navy Reading Program.

If you want to take a hard look at where the word is headed, check out these 7 Key Ideas from The Accidental Superpower by Peter Zeihan.

1. The Bretton Woods Agreement. The Bretton woods system came about right after world war II when all of the major world leaders met in Bretton Woods, New Hampshire and hammered out a deal. The plan is simple, the U.S. keeps the Seas safe for the movement of goods and people. The U.S. Navy spread across the world to enforce order as necessary. This immediately changed the way that countries interacted and changed the global market. Because so much of how the world works happens on the water, we now have a world where the U.S. is controlling trade on the seas and shaping the entire world’s policies, maritime function, and economy.

2. Geography still matters in a world with the internet. The idea behind the title of this book is that U.S. has become a superpower because of our amazing geography. Geography has been an enormous force in forming the world as we know it, especially in the U.S. In particular, Peter points out advantages in “balance of transport,” meaning that we have an incredible system for transporting goods in the country across highways and rivers with no trouble, yet we are protected by the oceans and mountains that make our borders tough to cross. Internal movement combined with strong borders is just the beginning of what makes an accidental superpower.

3. Demographics matter too. Countries are aging. Look at our enormous Baby Boomer population stepping into retirement. They’re not spending big money on houses and cars, taking debt, having babies and generally moving the economy. Instead, they’re drawing down their capital in huge numbers that ripple through the economy. The younger Generation X is too small to balance the influence of the Baby Boomers. This is happening in many countries and it’s actually worse in most other places. The result is a tax on the younger generation to offset the changes in the older generation. Taxes may then reduce the younger generations spending capacity and drive the economy in a downward spiral. Amazingly, in the U.S. we’re projected to recover because the size of the larger Millennial generation will offset changes in Generation X. However, other countries will be crushed and never recover.

4. The Alberta Question. Peter projects (through persuasive demographic charts) that Canada will be burdened by their aging demographics and poor balance of transport, resulting in extremely high taxes. There is a chance that Alberta, the wealthiest province, would benefit from seceding from Canada to stop shouldering the load of other provinces. There’s a strong case for making Alberta the 51st State.

5. The American Drug War. The Mexican Drug War will spread North to the United States, it already has. Mexican cartels understand the economics of the movement of drugs and will seek to dominate the supply chain. This means spreading up the supply chain to countries that are making drugs like cocaine and spreading down the supply chain to hubs, like major U.S. cities, where the drugs are sold. Covering the supply chain creates opportunities for economic efficiencies that could make the cartels stronger.

6. Forget oil. The U.S. is becoming less dependent on the world’s oil and better at finding its own. Through 3-D printing we also reduce the need for oil to ship goods around the world. On page 139 Peter points out that 3-D printing cuts out the Arab shipping company, the assembly facility in Vietnam, the component manufacturer in Korea, the steel foundry in Russia, and Mexican truck company. Peter suggests that when we co-locate manufacturing and consumption we reduce global oil consumption by 50,000 barrels per day, and become independent of the oil in other parts of the world. This ties closely with key idea #7

7. Stop the Bretton Woods System. If the U.S. doesn’t need oil to pass through the Straits of Hormuz, then it doesn’t need to protect it. Other countries that depend on the U.S. to keep oil moving through the Straits are in a precarious position, especially in light of key idea #1, The Bretton Woods Agreement. Do we need to keep extending ourselves for the sake of a global system or will we pull back to save resources in the next recession? The U.S. is strong on its own and may step back, becoming more nationalized, and more focused on internal, rather than global, order.

Peter Zeihan’s ideas are fascinating and the implications are massive. You can listen to my interview with Peter here.