Friday 16 April 2021

Extrapolating Peter Zeihan's geopolitical thesis regarding the USA-Mexico synergy to Australia-Indonesia

I recently came across several youtube videos of Peter Zeihan presenting his view regarding the future of global trade if/when the USA stops enforcing global free trade, and various countries attempt to transition from domestic consumption to export as their demographics age. All his presentations are quite similar (whether to an Indian economic Conclave or to the Association of Ohio dairy farmers), so you only need to watch one presentation to get the gist of his data and conclusions.

Anyhow, I thought it would be interesting to compare the USA demographics with that of Australia, and found that they are quite similar (despite Peter frequently mentioning New Zealand, because he went to uni there, he tends to ignore Australia). He also paints a rosy picture of the economic prospects for the USA due to the neighbouring consumer market and cheap labour manufacturing resource that is Mexico. So I thought I'd also look into the demographics of Australia's close neighbour - Indonesia.

The comparison shows that the Australia-Indonesia situation is very similar to that of the USA-Mexico, with the proviso that Australia is only 1/12th the population of the USA, while Indonesia has roughly 2x the population of Mexico. Not sure if this makes Australia's future economic situation better or worse than that of the USA.

But in any case, we should do relatively well, compared to the EU, and especially Russia or China.

Whether the details of Peter's prognostications are correct will likely depend on whether or not the USA does or does not continue to act as the 'world policeman' when push comes to shove. The current tensions regarding China-Taiwan and Russia-Ukraine may answer the question one way or the other in the next few years.

At the moment the USA is making all the right noises about supporting Ukraine/Taiwan against any military action by Russia/China, but that could turn out to be all talk if the USA doesn't want to expend any more 'blood and gold' on other people's wars. We'll see,

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