Peter Zeihan: The Biggest Global Risks Facing Investors Now
Host Dan Ferris and geopolitical analyst Peter Zeihan discuss the Iran conflict, global oil markets, the drone-warfare revolution in Ukraine, China’s demographic crisis, Africa’s structural problems, U.S. manufacturing, and the state of American politics.
Timeline
0:00 – Why Geopolitics Matters More Than Ever
1:20 – The Iran Conflict & Global Oil Markets
11:00 – How Drones Are Changing Warfare Forever
22:45 – Is Ukraine Winning the Technology Race?
23:10 – Is China Really Collapsing?
34:10 – Why Birth Rates Matter for Investors
35:25 – Can Africa Become the Next Economic Power?
39:15 – Which Countries Will Thrive Over the Next Decade?
41:45 – Why U.S. Manufacturing Has Stalled
46:00 – The Coming Diesel & Energy Crunch
49:00 – Peter’s Final Message for Investors
Transcript
Why Geopolitics Matters More Than Ever
Host: Peter, welcome back to the show. It’s good to see you again.
Zeihan: Hey, how are things?
Host: Good. How are things with you?
Zeihan: It’s been a weird year, to say the least.
Host: That’s hence your presence here. I was telling Marco Papic — a fellow you know — recently on the show that geopolitical topics have become very important this year, and when they come up now I always say, “hang on, I know a guy.” I’ll talk to them and get back to you, because our normal dippy opinions aren’t cutting it anymore. There are experts, there are people who know about this — let’s talk with them.
So of course the thing everybody wants to talk about right now — and I love talking to guys like you about what everybody wants to talk about, because the view is always completely different — is the Iran war and the Strait of Hormuz. I saw on your YouTube channel, Zeihan on Geopolitics, that you talked about why the market wasn’t reacting to Iran. I’m dying to hear your take.
The Iran Conflict and Global Oil Markets
Zeihan: When it comes to the market, I try to keep my mouth shut — Lord knows what everybody there is thinking. But I can give you an idea of why we’re trapped in this holding pattern, and why nothing is getting better.
Three things. First, go back to the start of this: when Israeli Prime Minister Benjamin Netanyahu visited Trump on February 11th to make the pitch for the conflict, the U.S. supercarriers sailed later that same day. There was no planning whatsoever on the American side — they absorbed the Israeli intelligence and analysis wholesale and did none of their own. The idea was that this would be over in 96 hours: kill the top handful of people in Iran, everyone else falls in line, there’s a revolution, and Iran is suddenly ready to join the United States as the 52nd state after Canada. That was literally the plan. It clearly hasn’t gone that way.
Host: Is anything ever over in 96 hours? I feel like I’ve heard this before.
Zeihan: Second issue: Trump is, in many ways, the other side of the coin from Barack Obama. They both believe they’re the smartest person ever born, and they both believe everyone should do what they say. But while Obama was secure enough in his arrogance that he didn’t mind being alone in the West Wing for eight years, Trump insists that anyone in the room with him reinforce that belief.
From Trump’s point of view, his first term wasn’t a lot of fun, because policy experts would come in who knew more than he did about, say, Kyrgyzstan — and he didn’t like that. So his solution in the second term was to fire everyone who knows anything. In the opening days of this term he fired roughly the top 6,000 civil servants and has replaced very few of them. Even today, more than half of our ambassadorial seats are empty, and Trump has no intention of filling them — we don’t have an ambassador to Russia, for example. Which means there’s no one with access to the president who knows how the world actually works. That goes for the negotiating teams too: the head of the American negotiating team on Iran is Field Marshal Munir of Pakistan. There isn’t a single American in the talks. Aside from the very first meeting — JD Vance, Jared Kushner, and Steve Witkoff — there hasn’t been an American in the room since. We haven’t even begun step one.
Third problem: how oil actually works. For a conventional oil field, once it’s shut down, turning it back on takes one to three years. You can set fields up for rapid recovery — that’s what the Saudis and Emiratis do to comply with OPEC quotas — but even in that best case, turning fields on and off takes 90 to 180 days. Done right, three to six months. Done wrong, one to three years. When Iraq last did this, it took 20 years. Kuwait has never had to do it at all — probably three to five years for them. In Qatar, where a lot of the physical infrastructure has been destroyed, you’re looking at a five-to-ten-year rebuild before production returns.
Iran itself is something of a black box on oil — estimates range from 9 to 13 million barrels a day of capacity, and none of it comes back this year even with a perfect peace treaty today. The market is pretending that isn’t a problem because it’s become used to U.S. shale, where the geology and technology are completely different and a new well can come online in six weeks. We haven’t had the real shock yet. It’s probably coming in July, because in late June or early July a lot of refineries in the Eastern Hemisphere hit minimum operating thresholds. I don’t see how the market keeps pretending that isn’t happening.
Host: This is one of my issues right now looking at the oil futures strip — am I wrong not to respect the market’s verdict here? The drills stop turning, but the chemistry and geology don’t stop. Those layered reservoirs are pumped with water and gas, and when you cut the pressure, what happens?
Zeihan: It migrates. It settles — like stopping a blender mid-emulsion when you’re making salad dressing: the paraffins and asphaltenes start separating out. That depends on the field, but it’s a very real problem in some places, not everywhere.
Host: I’m not saying every well, just that there are myriad problems that might seem niggling right now to people who know about them, but I think they’re serious. Are we looking at a permanent destruction of some low-single-digit percentage — 1 or 2% — of global production capacity?
Zeihan: Two things. First, on the geological and chemistry side: if the security situation in the Persian Gulf magically resolved itself tomorrow, we’d need assessments to check for reservoir damage, but there’s so much large, cheap, easy-to-lift crude there that they could eventually recover everything lost. This isn’t U.S. shale, where you can add a million barrels a day every year — it took 40 years for the Gulf to reach this point.
Compare it to Venezuela: if that government were fixed, we might see a fresh million barrels a day by the end of next year, and another million by the end of 2027 — but I wouldn’t bet on companies rushing to spend that money.
Second problem: the security situation in the Persian Gulf isn’t getting fixed, even in a best-case political scenario. The U.S. naval force posture of the 1980s doesn’t exist anymore — we made a deliberate choice across seven administrations, including Trump’s first, to concentrate power in supercarriers and phase out frigates and destroyers. Shuttling civilian tankers in and out of the Gulf under convoy requires dozens of ships just for that task. We have 60 destroyers globally, and half of those are protecting carriers at any given time. We don’t have the hardware for a 1980s-style convoy system, and neither does anyone else.
How Drones Are Changing Warfare Forever
Zeihan: And the Iranian military of today isn’t the military of the 1980s, as we’ve seen with drones. They’ve had trouble hitting moving vessels so far — the older drones follow dumb coordinate-based routes rather than actual targets — but we’re seeing early exceptions. The Ukrainians are pushing the boundary of independent drone targeting, and if Ukraine were in Iran’s position, I have no doubt they’d already be hitting tankers. It’s only a matter of time before Iran’s declared control of the strait becomes reality. Iran already has Shahed drones with 600-mile range that could hit essentially every energy asset in Kuwait, Qatar, the UAE, and Saudi Arabia — including the bypass pipeline systems to the Red Sea and the Gulf of Oman — and they’ve demonstrated that capability during this war. The Persian Gulf isn’t coming back as a secure shipping lane until someone develops defensive technology that can protect roughly 150 ships a day passing through. That’s not happening this year, next year, or maybe even next decade.
Host: I love when someone who knows a lot more than me validates one of my stock picks — I made an argument about defense technology going back to the 14th century.
You’ve put out a lot of drone-tech videos in the last six days. This is clearly on your mind.
Zeihan: When the Ukraine war started and we saw Turkish Bayraktar drones obliterating Russian armor, that was a big deal — though not a surprise, since the Azerbaijanis had done the same to Armenia two years earlier. We knew the technology existed and was being refined. But the real turning point came after JD Vance repeatedly insulted Zelensky in the White House. The Europeans turned a page. They’d already been providing more aid to Ukraine than the U.S. had for two years — that wasn’t new. What was new was that U.S. aid went functionally to zero, and American officials started directly threatening American allies.
Host: Wait, say that again?
Zeihan: The Trump administration has directly and repeatedly militarily threatened allies like Canada and Denmark. Relations with the U.K. are the worst they’ve been since the Civil War. A recent poll found only 11% of Europeans consider the U.S. an ally. Whether this is a Trump negotiating tactic or something that outlives his administration, the bottom line is Europeans now believe they’re on their own — and that the U.S. is part of the problem rather than the solution. For the first time in post–World War II history, the U.S. didn’t even alert its allies to a major military operation, let alone consult them, even though most of the economic fallout lands on those allies.
American military strategy since 1945 has been to ensure allies don’t have independent power-projection capacity outside their own region — we control the global system, they get local influence. So even if the Europeans wanted to respond with fighter jets, tanks, and artillery, it’s too slow — building the industrial base and training people takes too long. That leaves two options: nuclear weapons and drones.
On nukes: Finland, Romania, Sweden, Germany, and Poland are all actively discussing not if but how they go nuclear. France is signing bilateral deals aimed at some kind of joint decision-making mechanism, though I’m not sure that goes anywhere — Poland, notably, could build a weapon within a year if it wanted to.
On drones: European money and Ukrainian urgency have made Ukraine both the development lab and the live testing range. From the point JD Vance attacked Zelensky through this past June, we’ve seen dozens of new weapons systems fielded — many with independent targeting and range approaching a thousand miles. Populated Russia is now under regular threat of attack whenever Ukraine chooses. Production has been roughly doubling every month; we’re already at roughly eight times May’s output. And the Iran war kicked this into overdrive, because the Saudis, Emiratis, and others are now desperate for interceptor systems the U.S. can’t produce fast enough — there are now more Ukrainian counter-drone munitions in the Persian Gulf than American ones.
Host: What do you make of how the Ukraine war turns out?
Zeihan: Caveat: I was one of the few people who correctly called that this war would happen and roughly when — proud of that. I was also probably the most optimistic about Ukraine’s chances, and even I thought it would be over within a year. The Americans and Europeans stepped up more than I expected, the Ukrainians stiffened more than I expected, and the Russians have underperformed. But we’ve now had multiple technological revolutions since 2022 — a second revolution in military affairs, following the one in the ’80s and ’90s that gave us satellite comms, cruise missiles, and smart bombs. Now those technologies are democratized: people are building advanced, AI-assisted drones in their garages and getting them to the front within a month.
Old drones — think Predator, think Shahed — carry a bit of flash memory, get programmed with a route and target coordinates, and need an external signal (typically GPS) for guidance. Jam the signal, and you jam the drone. The newer generation carries more onboard memory and a decision tree: once it reaches the target area — regardless of how it got there, whether via satellite-guided first-person control or GPS route — it loads that decision tree. Told to prioritize anti-aircraft defenses first, power plants second, refineries third, tanks fourth, it looks around and picks whatever’s actually present. Once it makes that call, there’s no signal left to jam.
Host: So it’s a line-of-sight thing, not radar-based?
Zeihan: Exactly. Older drones either had no optics and just followed GPS breadcrumbs, or were controlled in real time via fiber-optic wire, cellular, or satellite link — all jammable. The newest systems, which appeared just in the first week of June, will identify a road, switch to autonomous mode, and simply follow it until they spot a truck, then engage — hands-off the whole time. The result is that Russia’s entire logistics network, more than a hundred miles from the front, is now contested space. Russia’s strategy has been to push small two- or three-man teams forward to grab positions, repeated across a thousand points, and eventually bring up reinforcements and equipment once things stabilize. But the reinforcements and equipment can no longer reach the front at all. We’re seeing the Russian position disintegrate along a thousand miles of front line.
The open question is what Ukraine does next. The traditional approach — advancing under some air cover, demining as you go — is slow, but might actually work now, since Russia can’t move forces forward. That assumes Ukraine doesn’t have something else in reserve for ground warfare, and I wouldn’t bet against that. We’ve seen reports of automated tracked warfare systems being effective enough that Russian troops have surrendered to them. It’s early days, and I think when Ukraine does launch a major ground offensive, there will be some interesting surprises. Guessing Ukraine’s week-to-week moves is a losing game, and I’ve stopped playing it.
Host: When you say “tracked,” do you mean literal vehicle tracks, or Terminator 3?
Zeihan: It basically looks like an early Terminator model — tracked base, guns mounted up high, a sensor sweep that looks like a head.
Host: The future is now.
Zeihan: This is first-generation ground robotics. I don’t have enough detail on the specs to know exactly how they’re controlled — I’d guess first-person operation, but I don’t know that for certain.
Is China Really Collapsing?
Host: I want to jump topics. One of your videos from two years ago is titled “Don’t Be Fooled, China Is Collapsing.” Is that still the thesis?
Zeihan: Two things. First, Chairman Xi achieved years ago what Trump is doing now: gutting the bureaucracy’s capacity for meaningful data collection, so he’s never presented with news he’s not ready for — they simply stopped collecting it. When COVID ended, because China’s vaccine was largely ineffective, people were dying by the hundreds of thousands in major cities — you could see the lines of bodies outside crematoria from space. China simply stopped collecting cause-of-death data. How many have died since? No idea — you can’t hack a system for data it never collected. That’s now true across the economy at every level. We genuinely don’t know China’s condition.
Second: one of the few Chinese institutions still functioning, the Shanghai Academy of Sciences, has said publicly it doesn’t trust China’s own demographic data. Privately, they’re now admitting the population has been overcounted by at least 100 million people, and internally the estimate is circling 300 million — with some members even citing 500 million in hushed tones. All of the missing people are under age 45 — meaning they were never actually born; they were fabricated in official statistics, generally for fraud-related reasons. This system can’t survive the decade — there simply aren’t enough people. The government’s aggressive push for automation in manufacturing reflects the understanding that they don’t have workers. That only works as long as globalization and open trade continue, and I don’t think that survives this year, especially once the Persian Gulf-driven energy crisis hits China too.
Host: When you say 300 to 500 million people, does that mean China’s actual population is very different from official figures?
Zeihan: Official statistics put it at 1.2–1.3 billion, making it the second-most populous country in the world — officially. But we now know China’s birth rate has been lower than the American birth rate since at least 1991. Play that forward 35 years: we’re running out of people under age five, which means we’re starting to run out of people under 40. China’s actual population has been lower than India’s for at least 15 years, and probably worse by other measures.
The biggest data gaps come from two sources. First: in the U.S., U.K., Germany, and other developed countries, there are hundreds of touchpoints across a person’s life that confirm their existence to the government — neonatal visits, vaccinations, school enrollment, driver’s licenses, and so on, a couple hundred before you even turn 18. In China, before age 18, there are essentially two, because until recently most Chinese weren’t born in hospitals, so there’s no record there either.
The first touchpoint is a set of vaccinations at six months old — but doctors were paid per shot, so they inflated the numbers. The second is enrollment in the equivalent of kindergarten, where local governments received subsidies based on enrollment numbers — so those were inflated too. The third stage is when someone first pays taxes.
After Tiananmen Square — like Occupy Wall Street protesters self-segregating by class, but with blue-collar versus white-collar Chinese workers — the government discovered that white-collar workers who confronted a tank with wrenches could disable it, while workers who approached passively could simply be run over. So for various reasons, roughly 30 years ago, Beijing decided to build a white-collar economy, restructuring education accordingly. That pushed the age of first tax payment from 18 to 21. The first big cohort to turn 21 did so in 2019 — the same year COVID hit — and China didn’t recover from COVID until after everyone else. So 2024 was the first “real” post-COVID tax data, and tax receipts fell. That generation, in large numbers, was simply never born, and it’s too late now.
Host: I hear two competing narratives about China from investors — one, that it’s totally uninvestable, and two, that in some ways it’s freer-market than the U.S., with stocks at steep discounts, strong entrepreneurs, and so on.
Zeihan: The best example I can give is Ray Dalio — he was the quintessential voice of the second camp until two years ago, and now he’s the quintessential voice of the first.
Host: I’ve spoken with people from Bridgewater. One story: they were meeting with Chinese contacts and were worried about reports of people being “carried away in the night” — worried about investing in a totalitarian regime. They gently raised it with someone from the finance ministry, who responded, “Oh, that’s not my department.”
Zeihan: That tells you it’s never stopped happening. Anyone who thinks this is new is mistaken — it’s the same dynamic as in the Soviet era. China can still be both things at once — reformed and entrepreneurial and fundamentally authoritarian — for a while. It lasts until it doesn’t. The best framework right now is subprime mortgages in 2005–2006: everyone kind of knew the fundamentals didn’t add up, but it kept growing and booming, so people assumed maybe the old rules of economics didn’t apply. We were right — we just had to wait a few years.
Host: I have a libertarian bias that wants China’s authoritarian, command-control system to fail on principle — and then they produce billionaires and huge companies that undercut that narrative.
Zeihan: There’s more than one viable economic system — communism, corporatist fascism, capitalism, European social democracy — they’re all just different ways of balancing supply, demand, labor, and capital, with different things emphasized or suppressed. China isn’t failing because it’s totalitarian. It’s failing because it’s running out of people, because it lacks the military capacity to secure its supply lines, and because it depends on consumption in other hemispheres — among other reasons. If you want to argue it’s failing because it’s totalitarian, history suggests you’re probably looking in the wrong place. Is capitalism more efficient long-run, all else equal? Yes. But a thousand other factors matter too — “the economy” isn’t one thing, it’s an unfathomable web of interactions among millions of individuals with millions of incentives.
If you’re looking for something to worry about: we haven’t yet invented an economic “ism” — capitalism, fascism, whatever — that works in a world going through the kind of population inversion we’re now seeing globally. The U.S. has had the highest birth rate in the rich world for 60 years; even if ours never recovers and we take in no more immigrants, we have at least half a century before we’re in Germany, Japan, or China’s position. So American-style capitalism keeps working for us a while longer — but everyone else has to invent something new. And historically, whenever major countries have shifted economic models, that’s come with major conflict, civil or interstate. We’re due.
Why Birth Rates Matter for Investors
Host: Why don’t people in developed countries want kids anymore? Is it just cost?
Zeihan: Partly it’s mechanical. In an agrarian system, kids on a farm are free labor, so you have a lot of them. Move to a city, and kids become an expense, so you have fewer. Play that forward 80 years and that’s where we are. It’s that simple. The countries that have best stabilized or even raised birth rates are the ones with free childcare — because if you force young parents to choose between having kids and having a career, enough will choose career that birth rates fall. You have to remove that trade-off. Not many countries have figured that out — mostly Scandinavia, plus France.
Can Africa Become the Next Economic Power?
Host: I want something to feel hopeful about, and Africa is the one continent I’ve never been to — I still have this notion that it’s wild and untamed enough that somewhere, someone could figure out a system that avoids widespread corruption and conflict.
Zeihan: Two big problems, neither easily fixed. First, African borders were largely kept as-is from the colonial era in the 1960s and ’70s, and most don’t reflect actual geography or ethnic distribution. Until that’s resolved — either through prolonged war or negotiated territorial exchange — nearly every African state, especially in sub-Saharan Africa, will face internal conflict, because people on opposite sides of a mountain range with different interests end up in the same country. You also get interstate conflict when an ethnic group is split by a border with no physical barrier separating them. Until that’s resolved, African states can’t really complete the process of forming modern nation-states — hence the repeated wars over the last 30 years, including current ones.
Second, without that stability and capital base, African states haven’t been able to build out physical infrastructure in the traditional way. What they can do is use old colonial-era infrastructure to export raw materials, generating cash for whoever controls the political system, who then use it to buy manufactured goods they can’t produce domestically. The technical term for these economies isn’t “undeveloped” — it’s “underdeveloped”: they have access to the advanced world’s goods without the ability to produce them locally. That only works as long as globalization holds. Their populations have also grown substantially due to imported healthcare, medicine, food, and fertilizer — cut that off, and there’s no local replacement, which means a fairly severe population correction.
Which Countries Will Thrive Over the Next Decade?
Host: Are there places you’re optimistic about over the next 10 to 20 years?
Zeihan: Until a couple of years ago, most of my work was about preparing companies for a dislocation I expected between 2025 and 2035 — the window when global demographics would flip and old models would stop working. Which country hits that transition first matters, and what they’ve done to prepare matters. Most of my work focused on the countries likely to emerge as the new global powers on the other side: the ones with the right mix of demographics, physical infrastructure, geography, and energy and food access — the U.S., Argentina, France, Turkey, and Japan were the big ones.
But since January of last year, we’ve had roughly 7,500 tariff changes. We now have the most hostile business environment in the U.S. in my lifetime, we’re heading into the biggest energy crisis since at least World War II, and the federal government’s top level is largely gutted and non-functional. The transition window has compressed and moved forward — we’re now at the start of the churn, and the U.S. isn’t going to be able to build the physical plant and power grid needed to prepare. We have to work with what exists now, and so does everyone else. That makes the transition more painful, longer, and likely to produce more failed states along the way. The countries that eventually emerge will just take an extra decade or two longer to get there. We’re now living through the transition itself, and historically speaking it should be short — probably no more than four or five years.
Host: Just to make sure listeners follow: the transition from U.S. global hegemony to a multipolar world — really just deglobalization — was always going to happen this decade, layered on top of the demographic transition. Both were always coming, just not necessarily this year.
Zeihan: But here we are.
Why U.S. Manufacturing Has Stalled
Host: You said something interesting — the most hostile business environment even compared to the Obama years, which get cited for heavy regulation.
Zeihan: Most of those regulations, plus the Biden-era ones, are still on the books. Trump has simply told companies not to comply with them, without appointing anyone to actually change the rules — because that would require him being in a room with someone who knows more than he does. So companies now face full legal liability for knowingly violating laws that simply aren’t being enforced. If you’re a company, what do you do? Nothing. Industrial construction spending — the one number that matters most right now, measuring money going toward building the things that build things — has dropped by nearly a third since the start of last year, and about half of what’s left is data centers. We’re going through the most rapid de-industrialization of my lifetime at exactly the moment we need to double our industrial base.
Host: I remember a video of yours a few years back about the need to reindustrialize — you even did a piece on that bridge between Michigan and Canada — where you argued reindustrialization would require capital and would push up interest rates and inflation. Now it sounds like a different problem entirely: the regulatory chaos means corporations are simply doing nothing.
Zeihan: It’s worse than that, because we genuinely need to double the industrial plant and we’re not doing it. Under Biden, industrial construction spending roughly doubled — maybe a fifth of that was direct government action, the rest was private enterprise responding to actual, if imperfect, rules. Now nobody knows what the rules are, what will be enforced, or what tariffs will look like tomorrow, because they’ve changed daily for over a year. Nobody can plan, so everyone defers — including deferring maintenance, which leads to closures of aging, less-profitable infrastructure like older refineries.
Host: You’re talking about the refinery closures in California and Texas?
Zeihan: California’s a special case. Overall, U.S. refining capacity is almost double what it was 30 years ago — just on a more concentrated footprint. I’d argue the industry has largely given up on building new capacity, but to be fair, we’re currently exporting 5 million barrels a day of refined product, not crude — so on that front, we have what we need.
The Coming Diesel and Energy Crunch
Host: Chevron’s Mike Wirth recently talked about running down diesel and jet fuel inventories to roughly 20-day levels by July or August, per Goldman. Not a problem?
Zeihan: It’s a problem. It’s a chemistry issue — different crude grades suit different refined products. Broadly, heavier, lower-quality crude grades are better suited to middle distillates like jet fuel, kerosene, diesel, and gasoline, and a lot of that heavier crude came from the Persian Gulf. U.S. shale production is light and sweet — not ideal for those products. Historically we’ve imported heavy crude from Canada and Venezuela to fill that gap. Canadian supply is still flowing; Venezuelan supply is now a trickle. Without Gulf crude, much of East Asia and Europe have lost the ability to produce those middle distillates, and Russian crude remains constrained too. The only way light-crude refiners can produce more distillates is by cutting output of something else and accepting refining losses — so we’re really choosing what shortage we want. We’ve already seen roughly three million passenger seats’ worth of flights canceled, including three of my own trips this summer, and entire routes disappearing across Europe and East Asia because of jet fuel constraints. Diesel is probably next — and for the U.S., that matters enormously since about half of domestic freight, by ton-mile, moves by truck.
Host: I recommended refinery stocks before the war started, based on some of these same dynamics — the war just made the trade more profitable, unfortunately.
Zeihan: I won’t comment on where any particular trade goes — that’s your department.
Peter’s Final Message for Investors
Host: Same closing question I ask every guest, financial topic or not: what’s the single takeaway you’d want listeners to leave with today?
Zeihan: There’s some backstory here. Every generation or two, the American political system goes through a transition moment. Our first-past-the-post, single-member-district system forces the existence of two big-tent parties, since you need to win one more marginal vote than the other side — so you get broad coalitions that vote as a bloc. The Republican coalition, for most of the last two generations, has combined business voters, fiscal conservatives, law-and-order conservatives, national-security conservatives, social conservatives, and populists. They don’t have a lot in common, but they agree that on the issues that matter to each faction, nobody else much cares, so they vote together reliably.
But every generation or two, the underlying factors shift — technology, information, culture, globalization, demographics. We’ve gone from Baby Boomers being the largest working generation ever to now being the largest retired generation ever; from the height of the Cold War to the height of globalization and now deglobalization; and we’ve seen the rise of social media. Naturally, the political system reorganizes.
Right now, Trump has actively campaigned against — and ejected — nearly all the business conservatives, national-security conservatives, law-and-order conservatives, and fiscal conservatives who were in Congress. What’s left of the Republican Party isn’t really a party anymore — it’s a person, and one who hasn’t built any pipeline for a successor. He may be the last Republican, if that term even still applies. It will take an election cycle or two for conservatism to reform into something new, and I don’t think that can happen while he’s still active in politics. The Democrats are in a comparable mess for different reasons.
So we’re at a moment where the normal two-party structure has shattered and isn’t coming back as it was — and in that environment, only one person really matters, and that person believes he’s the only one who should. You will not see reasonable, thoughtful, long-term federal policy out of the United States until this reshuffles — and the soonest that’s likely to happen is 2030, at the earliest. We’ll recover — we’ve been through this five times before, and we’ll get through it again — but in the meantime, anything coherent, anything laying out a real path forward, has to come from the state, local, or corporate level. The federal government is functionally non-operational for that purpose.
Host: That’s a hell of an answer. When you started talking about “the party versus the person,” I thought you were going to say “cult of personality.”
Zeihan: That’s a perfectly viable term for where we are. The Republican National Committee’s research and recruitment arms are gone — when Trump took it over, he gutted them. It’s just a campaign operation now, and just for him.
Host: Peter, I love talking with you — I’m always content just to let you run, because I always learn so much. I hope you can make time for us again soon.
Zeihan: We’ll see what we can do.
