And the Winner is…Us (The U.S.)

“There seems to be no sign of intelligent life anywhere.” — Buzz Lightyear

Last week we looked at countries that are likely to suffer the most as America abandons its role as world cop. This week let’s take a look at countries which are likely to fare best.

Previously in this series: China’s Future Problems
But remember that everything is relative. The fact is that no country will be as well off in the new world as it would have been if the old world had continued – every country will face slower or even negative growth and a significant decline in its quality of life.

That said, the countries that will fare the best looking forward are those that followed the opposite strategies from the ones we looked at last week. In other words, instead of focusing almost exclusively on exporting whatever their competitive advantage was, these countries focused on producing as much of their own needs as possible within their own borders.

Some of the winners (and losers) might be surprising. Consider France, the Rodney Dangerfield of countries. Despite the country’s “galactic volume of self-regard” (Peter Zeihan), France has barely registered on the world stage since World War I. Even in Europe, for 200 years (since Napoleon’s defeat in 1815) France has played second or third fiddle behind Germany and the UK.

But all this is likely to change going forward. Germany, far more than any large developed country, hitched its fate to exports (50% of GDP) and for many years prospered mightily, at one point even challenging the US for global economic supremacy.

But once the US stops protecting Germany’s trade routes much of that export capacity will go poof. China is by far Germany’s largest trading partner and, as noted earlier, the two countries are 12,000 miles apart. And neither Germany nor China has a navy capable of protecting those trade routes.

France, meanwhile, boasts an economy that is 70% domestic and, more important, the country is 100% self-sufficient in food and energy, thanks to nuclear power and vast subsidies for French agriculture. France will take a hit, for sure, but not nearly the hit Germany will take. In the new world order France’s galactic self-regard might actually be justified.

But of all the countries of the world the one that will fare best is the United States of America. Cribbing again from Zeihan’s book, The End of the World Is Just the Beginning, here are a few of America’s competitive advantages in a world where we’re all thrown back on our own resources:

America is completely self-sufficient in food. The US Midwest boasts the world’s most fertile farmland, larger than the entire country of Spain and larger by far than the usable farmland in any other country.

America is self-sufficient in energy. The first oil wells in the world were drilled in the US – in Pennsylvania and Texas – and today, counting shale, the US is the world’s largest oil producer.

Although the absolute volume of US exports is huge, exports make up only 12% of American GDP – an almost trivial percentage compared to other developed countries. The average percent of GDP accounted for by exports for all the countries of the world is 47%.

The US hosts the world’s best navigable rivers – better in fact than “the combined total of the rest of the world.” (Zeihan) And shipping goods by water is by far the most efficient way to go – one-twelfth the cost of shipping on land.

The American coast has “more natural port potential than all the world’s other continents combined” (Zeihan) and the US Navy, “is ten times as powerful as the combined navies of the rest of the world.” (Zeihan) On top of that, as Zeihan reminds us, the world’s next largest navies – those of Japan and the UK – are allies.

America sits thousands of miles from trouble – across two oceans – and very close to friendly places like Canada and Mexico. In other words, America’s second and third largest trade partners (after the EU and ahead of China) are right next door. The three NAFTA countries present a remarkable combination of natural resources (Canada), world-beating companies and technology (the US), and relatively cheap labor (Mexico). Zeihan anticipates that in the new world era the UK will join NAFTA.

While most other large countries – China and Europe especially – are in rapid demographic decline, the US is still growing, thanks to its being a magnet for migrants. And while many countries are overcrowded, the US has enough usable land “to support a population double its current 330 million before feeling crowded.” (Zeihan) As an example, China’s population density is 386 people per square mile, compared to 95 in the US.

Zeihan points out that the end of America’s world cop role will produce “not the sort of heavy American involvement that most countries find distasteful, but instead large-scale American disengagement that most countries will find terrifying.” Export-oriented economies – that is, almost all economies – will face anything from slow decline to utter collapse, with the result that “the gap between North America and the bulk of the world will be, if anything, starker [than it was during the American Century].”

In the long and inglorious history of human civilizations we have never witnessed a situation in which the society that dominated one era also dominated the next era. Instead, civilizations rose, dominated, declined and fell, and then another society took over. Zeihan puts it like this: “Never before in human history has the premier power from the previous era emerged so unassailably dominant at the beginning of the next.”

After World War II America became the most dominant power in the history of the world, and as America retreats from its role as world cop America will become even more dominant than it was before: To greatness – and beyond!

Next up: How Not to Be the College Guide