Delivering a PPT in the PNT

Was approached by a group at the Joint Staff a while back to present to a working group focused on a particular operational theater.  The group regularly hosts speakers for an audience of about 75 flags, officers and senior civilians, with VTC to a large number of overseas commands.  Audience also had a number of foreign senior officers.  

The sponsor had asked to discuss near- and mid-term issues that could prove disruptive to security issues under their purview.  Because my current brief is more long term, I saw this as a chance to brief a number of Wikistrat sims.  So the bulk of the brief was on four sims we've done over the past couple of years now.

Little bit nervous going in, because it was a significant audience in terms of hierarchy, so a good test of the product line - as it were.  Unlike a pitch where you talk about the methodology and the company, this was a pure product presentation.  Not a demo, but actual product that had to stand on its own - as in, nowhere to hide behind hand-waving.

Joel Zamel was there as well to answer questions on the company and methodology.

I did 28 slides at a podium.  Couldn't move around due to the VTC cameras.  Also had to finger a screen to advance the slides (tap, tap, tap).  All in all, a terrible set-up for somebody like me, and I often feel like I underperform in those situations (I don't get complaints; it just doesn't feel as gloriously un-self-conscious as the perfect set-ups - for me - do).  But for whatever reason, it worked great and I got my head around the delivery and banged out about 30 mins of presentation, followed by another 30 or so of Q&A that felt even better.  Audience was really great.  Really interesting questions and super engaged.  What you expect from that level of crowd.  So you give what you get (e.g., my humor was above average), as the best audiences always get the best briefs.  It's just how it works.

Still, you just never know going in.  I tend to be pretty quiet right up to the point, because it takes a lot of energy. And yes, some nerves on the product. But the material was received very well, which was very gratifying. Big league audience in the bowels of the Pentagon and Wikistrat - at only three years old - comes off as top flight. We fielded a lot of powerfully positive comments and feedback. Extremely validating.

Follow-on lunch inside the Building with a crew of USA younger officers who are all elite something or other in some prestigious fellows program.  Most had seen me give my current standard globalization brief at Belvoir during my regular lectures there.  That was a really nice discussion.  Decent bisque, too.

Only really hard part was getting up at 0400 to fly there and back on same day, but nice to be back home for a movie with the kids at the end of their school week.

All in all, it felt like a genuine milestone.

You know, we run a lot of training simulations at Wikistrat.  Really pretty much nonstop.  And one of the things I'm always preaching throughout the community is that everything needs to be of high-enough caliber that, if I'm standing in front of a senior audience of serious operators and policy types at the Pentagon or some COCOM, I sound like the real deal from stem to stern. That's really the first threshold. Everybody knows we can do it fast and far less expensively, so the only remaining question is, Is the quality as good as anybody else's out there?

And that test was passed today (actually yesterday) - with flying colors.

And that is no small achievement. 

So the community should feel very proud of itself and what it is accomplishing.

Because the quality is only going to keep improving.  I'm seeing that elevate with each sim.  Less correcting work for me as Chief Analyst, and more time to really work the synergizing write-up, so elevation across the board, as well as product I can stand in front of - inside the Pentagon and with a senior audience - and deliver without a hitch.

Growing vegetables in the future

WSJ story about vertical farming vision from Sweden.

Goal is to make food happen while farmland disappears (to urbanization and harsh climate change) and to be able to do so year-round in a northern clime. Then there's the local food angle (less transpo, etc.).

Critics say the economics won't work at this time, especially on the energy, but advocates say this is a long-term solution that will become economical as climate change raises the price of doing business in many parts of the world, triggering global shifts in food production and - presumably - migration.

Interesting stuff.

Interesting idea.  I think the notion may make some sense regarding vegetables, but I don't see either fruits (maintenance of trees too tricky) or grains (just can't get the volume).

On vegetables, they (and fruits) account for only 3% of US farmland use, which is overwhelmingly given over to wheat, corn and soybeans (and a few others).  So, given that reality, vertical farming for major urban areas may make economic sense on a major scale sometime later this century.

The coming global progressive era will focus on healthcare

WSJ story on Kremlin ordered crackdown on smoking rates, right after China "plans 'harsh' anti-smoking rules.

This is the reality:  with globalization and development comes heightened smoking rates, which in turn triggers massive healthcare costs.

Then there's the secondary reality that Old Core North America, sick of smoking a while ago, sent Big Tobacco packing (globally) and that led to those companies going heavy into emerging markets, spreading their . . . whatever.  So Big Tobacco is going to be given its second great historical "boot," which will push it into even more emerging markets and the merry chase continues - much like with anti-globalization terror networks (another great purveyor of death).

What does NorthAm Core turn to now as its own progressive era kicks in?  Bloomberg has already given you the clue with the mega soda pop ban.  It's obesity. 

We'll see that crusade shift to New Core in about a decade.

Wikistrat starting a new internal sim: Who Smuggles What in 2050?

See below for slick fire-them-up video for the community.

Idea began when I read NYT front-pager on how big a criminal network has arisen around banned refrigeration/air-conditioning coolants (what we used to call freon for the most part).  Goes back a couple of decades to a global enviro treaty (remember the ozone layer flap?), and I remember thinking back then, "Wow, someday this stuff is going to be smuggled just like pot!"  Well, it certainly is today.

So that got me thinking: if we jump ahead to 2050, what surprising things might be smuggle-able in that time frame?  You know, besides Soylent Green.

Should be a fun one, and if this sort of thing intrigues, you should consider joining the community.  

2012 has been the big train-up for 2013, when the client load is going to bulge in a big, big way.  So it's a good time to get in on the ground floor. That way you can say you joined before the thing went crazy big.

It's fun to be part of a revolution.

China's future captured in perfect lead paragraph/sentence

Here it is from a WSJ piece:

China's latest evidence of sputtering growth underlnes a dilemma for its incoming leaders: They can shore up the economy by doubling down on an exhausted growth model, or take a risky political bet on reforms that could worsen the slowdown in the short term.

That not only captures where China is today (as in, this quarter), it basically captures where China is for the next decade or so.  I mean, what happens to a "communist" party when the progressive era necessarily arrives?

Well, the first instinct is to try and run it yourself, maintaining single-party rule, but that's basically impossible. The pain meted out will create blowbacks, no matter whether you direct it at the "gilded age" elite or the increasingly demanding middle class or the decidedly put-upon working class.  Worse, in the end, you'll need to disappoint them all on some level, which is where that throw-the-bums-out dynamic comes in handy:  a party wins and does what is necessary, outlives its welcome, and then gets tossed.  But in a sustainable progressive era, the opposition party that then comes in also does its bit, just tackling a different segment until its welcome is worn out.  And so on.

That's how the US did it 1890 onward.  When the Dems or GOP won, they won big and ruled big and changed big, and we got a much better country for it. 

China lacks that ability due to the stultifying nature of single-party rule, which, contrary to our green-eyed fantasies, is NOT more agile or adept or bold or visionary in its leadership.  Instead, it is self-preserving in the extreme.  It's bread-and-circuses.  It rules by fear and in fear of its own public.  

The WSJ piece is all about giving more money to consumers and the "dangers" inherent to that process.  It's a proxy description of the coming democratization of China, because giving money to consumers is giving decision-making power to the average citizen, versus hoarding it within the elite.  It's the economic prelude to the democratic denouement.

China has already reached the democratizing point.  I still believe it will muddle along with years before taking the plunge, in part because of that stultifying nature of single-party rule.  If we're lucky, Xi Jinping will be a real leader, but even if he is, we'll most likely have to wait a good 5-7 years to see that turn out.  That's how long it will take him to consolidate power as the evidence for the needed change piles up all around him.

And yes, those two dynamics are deeply intertwinned.

America's job?  Don't provide any stupid excuses for Beijing to avoid facing their own realities.

The "strategic pivot" is just such an excuse, which tells me Obama and Co. don't really understand China.

Sad to say, Romney's answers are beyond stupid and have no chance of being implemented (thank God).

Is it just me or ....?

Are a lot of people spreading nasty rumors about me on Twitter?

And do I really look that bad in the video?

Funny thing is, people are always saying bad things about me on the Internet, and I could always use more back-of-the-head hair on my videos (and less midriff in the winter), so damnit!  This constant stream of messages IS hurtful!

(sniff)

Seriously, is it just me?

Where I would expect Chinese to be right now - and reasonably so

 

WSJ story on snapshot of Chinese attitudes about things and their own lives by Chinese polling firm:

The vast majority of Chinese people believe their country is heading in the right direction, according to a Pew Research Center survey, although there is rising discontent over issues from corruption to food safety—and a growing fondness for U.S.-style democracy.

One of the more surprising findings of the survey of Chinese attitudes by Washington-based Pew is that as public confidence in Chinese institutions— from government bureaucracies to the health-care system—deteriorates, appreciation for other systems of government is building.

Some 52% expressed a positive view of American-style democracy, with approval levels highest among the urban educated elite. However, affection for U.S. policy-making and President Barack Obama has cooled since he took office.

Overall, domestic confidence is higher in China than anywhere except Brazil, according to the poll conducted by Beijing firm Horizon Research Consultancy Group. In all, 82% of those surveyed said they are satisfied with the way things are going, and 83% said China's economic situation is good or very good, while 70% said their family's lot has improved financially over the past five years.

But attitudes in key areas have soured since Pew asked many of the same questions in 2008. Half of those polled said official malfeasance is a very big problem, worse than the 39% who said so in 2008, while another 35% termed it a moderately big problem.

Chinese this year categorized as very big problems many issues they described as only moderately bad in 2008, such as food safety, air pollution, education, worker rights, income inequality and the health-care system. While 13% said quality issues related to manufactured goods were a very big problem in 2008, for example, that figure shot to 33% this year.

Rising prices registered as a problem for 92% of respondents. 

That, my friends, is a nation poised on the edge of a progressive era/democratization. 

I'm not predicting it for tomorrow.  My favorite window for the big push is 2025-2030, but I am guessing I am being too pessimistic.

Global inequality: before America ruled and when America ruled

No question we're heading for a globalized "progressive era" to match what America experienced at the end/turn of the 19th/20th centuries.  Been talking that one for about five years now, and it was THE major theme of "Great Powers" back in 2009.  Now the Economist joins in.

But this historical chart is interesting.  Note the rising inequality across Europe's long colonial age (let's say 1800 to 1950) and then look at what happens when US-style globalization kicks in (1950-now):  It slows, despite the ginormous wealth creation globally, and even flattens out and peaks across the period of its truest expression (1990-now).

To be sure, the 1% are slicing off too much wealth - just like during America's Gilded Age, thus my long-standing prediction of a necessary progressive era on a global scale led by coastal megacities (like NYC led ours and re-attempts to do so today with Bloomberg). But an interesting difference between how Europe ran the world and how we've managed to do it.

Chart of the day: US-China economic ties deepen across Great Recession

Click smaller image for larger version.

Go here for interactive one you can peruse in depth.

BusinessWeek post by way of Craig Nordin.

Some basics:

• Both imports from, and exports to, China grow since 2008.
• Chinese investment creates 8,000 US jobs in 2007 and now 27,000 in 2012.  "If investment from China remains on track, Chinese businesses will employ 200,000 to 400,000 Americans by 2020."
• Applications for enterpreneur visas to US:  About 500 Chinese in 2008 equals about 40% of total, and almost 3,000 Chinese applications in 2011 = about 80%.
• Chinese students in US up 135% since 2008 (84,000 --> 197,000).
• Chinese holdings of US Treasuries up 158% since 2008.
• Patent applications: 4-5,000 Chinese applications in US in 2008 and 10-11,000 in 2011; and US applications in China 24-25,000 in 2008 and 28-29,000 in 2011.
• Top 10 US exports to China are power generation equipment, oil seeds and fruits, electrical machinery/equipment, vehicles, aircraft and spacecraft, optics and med equipment, plastics, pulp and paperboard, copper, organic chems.
• Top 10 US imports from China are electrical machinery/equipment, power generation equipment, toys-games-sports equipment, furniture, footwear, apparel, plastics, iron and steel, vehicles.

It is dismaying to listen to the crude level of discourse in this presidential election regarding China.  Something to remember when we blame domestic Chinese politics on similarly crude behavior/talk from the Beijing.

Yes, the clever wags will point out that we've outsourced more jobs to China than they've created over here.  But the interesting point is that China is already creating jobs over here and that that number is growing rapidly. That tells you how quickly that worm has already begun turning. Moreover, while some of those jobs will invariably return as China's wages rise, most will simply continue their long-term global migration to the next great sources of cheap labor - as they should (unless you believe America should, for example, attempt to become the most expensive manufacturer of low-cost, low-tech items in the world).

Expensive oil as trigger for less exhausting ag land practices

Special WSJ report on agriculture, with interesting article on "fertile land is under strain."

Ag takes up about 1/5th of energy consumption in the US, so higher oil encourages, over the long run, abandoning certain energy-intensive practices, such as tilling:

The most popular fuel-reduction strategy involves a radically new way of planting seeds. Instead of breaking up the ground with a plow to plant seeds, no-till farming leaves the remains of last year's crop on the surface.  Drills punch through this mat of vegetation and insert seeds into the ground.  Ditching the plow can cut fuel consumption by as much as half . . . It also reduces the need for expensive fertilizer.

A major enviro drawback, according to an accompanying article?  No-till requires more herbicides.

Another reason why farmers like to plow: you can dry out a wet spring field and thus plant earlier.  You see that hear in Indiana with its super-wet springs.  But with climate change making for more droughts, ag experts expect more and more farmers to adopt the no-till method (or one of its many variants) over time, thus reducing the ag sector's energy draw.  Fields that aren't plowed typically hold up much better in July and August when rain gets much more rare.  Indiana has suffered super-dry summers, with this year's summer reducing the crop haul by a large amount, as just my eyeballs can attest.

Interesting pair of articles.

The map and chart below came with the first cited piece.  Note all the stable soil in the "New North."

Click the smaller image for a more readable version.

Interview at Casey Research conference

Thomas Barnett: American-Style Globalization Will Win the Day

caseyresearch.com / October 10, 2012

During a break in the recently concluded Casey Research/Sprott, Inc. Navigating the Politicized Economy Summit, Alex Daley sat down with acclaimed military analyst Thomas Barnett to discuss how his consulting firm, Wikistrat, assesses global events.

Dr. Thomas P.M. Barnett is the author of a New York Times best-seller, The Pentagon's New Map: War and Peace in the 21^st Century. He was one of 28 presenters at the recent Casey Research/Sprott, Inc. Navigating the Politicized Economy Summit, which featured a plethora of investment strategies from some of the most successful speculators in the world. You can hear every word of their actionable investment advice, as well as all of the recorded conference presentations, with the Summit Audio Collection, available in CD or MP3 format.

TRANSCRIPT:

Interviewed by Alex Daley

Alex: Hello, I'm Alex Daley. Welcome to another edition of Conversations with Casey. Today our guest is Dr. Thomas Barnett, a famed author and chief analyst at Wikistrat, a massively multiplayer online consulting firm that specializes in bringing war games to public and private clients alike. Thank you, Tom. Can you tell us a little more about your work?

Thomas: Well, Wikistrat is a startup out of Australia by way of Israel. The fact that it comes through Israel is indicative of its focus on taking a product – a service line – and globalizing it rather quickly, early in the process. If you know anything about the startup culture in Israel, it immediately embraces that sort of globalizing ambition.

It's an attempt to create a global community of strategists from around the world and give clients the opportunity – the option – to crowdsource their strategy, rather than have that really tiny group within the organization – and you see this throughout the national security establishment in the United States. If you're in a globalized world, do you want to have two or three white guys sitting in a room, trying to think through China's perspective, India's perspective, Iran's perspective?

[Think of] All the complexity, all the iatrogenic unintended consequences that come from decisions you make in national security or as the head of a corporation. Would you rather have some of your ideas, your strategies, vetted through a much broader lens, a much wider global perspective?

We find that this is a huge cost saver. In many ways, we put together in the Hollywood model temporary teams of analysts from around the world. We war-game in two or three weeks online, 24/7: global community, or whatever strategic concept you want to look at. So we can do it cheaply compared to the classic "butts in seats" model of the consulting firms – the big ones like Booz Allen Hamilton and whatnot – but we can do it fairly rapidly.

If you have an idea, we can put it out, jury-rig it on top of the Wiki; and then we have analysts creating dozens, hundreds, thousands of scenarios if you let it run long enough and have a big enough crowd. You'll get ideas that you just hadn't thought about or considered. So it's fast, it's cheap, and it gets beyond the notion of relying on two or three great minds within your organization to somehow figure out all the complexity on the planet.

Alex: With a network like that, you must get a really interesting perspective on global politics and power and the problems the world is concerned with today. Will you give us some of the examples, some of the insights that you guys have gleaned through your work?

Thomas: Well, we did a war game – or a planning exercise, if you will – on Israel attacking Iran this summer. We came up with a lot of counterintuitive concepts. The further the war goes, for example, the more likely it is that you're really looking at a strategic pivot from that whole dynamic which has dominated American foreign policy the last five, six years, to Turkey sort of running the show in the Middle East. That's because you see an Arab Spring empowering Sunnis throughout the region. You see Iran being threatened by that, acting out more and more, using the whipping boy of Israel to justify its reach for the bomb, when it's really concerned about American regime-change ambitions, rightly or wrongly.

Well, that dynamic can play itself out. We can pitch it all in terms of nuclear proliferation and Shia versus Sunni, or Iran versus Saudi Arabia, or Iran versus Israel and Israel's right to exist, the Palestinian question and all that. That whole thing can blow out in a fairly substantial war. You [end up] looking at, to the surprise of many people, a Middle East once again dominated by an Islamist but yet secular democracy in Turkey. You have Iraq turning in that direction, very possibly Syria falling under Turkey's purview and influence... same with the Muslim brotherhood in Egypt.

We are looking at a very tectonic shift amidst all these things. Our fascination now is on "Is Iran going to get the bomb or not?" We are probably looking at something that's going to take that dynamic, and its centrality in American foreign policy, and just push it off the table. You'll be looking at a Middle East really led by an Islamist Turkey, and that will be a huge shift in the way we view things. That wasn't what we were looking for going into the war game. We weren't naturally assuming we were looking at a strategic shift of players and key influences in the region from what we were used to in terms of Saudi Arabia, Iran, Israel, to Turkey, Iraq, Egypt, Syria. That was something that came out because we didn't structure the war game in such a way that we only had one or two outcomes planned. We really threw it out to a global community of several hundred analysts. As you often find with crowdsourcing, people surprise you with the ideas and the creativity and the ingenuity they display.

Alex: It sounds like it's a Middle East based less on religious fundamentals and more on economic power, if Turkey's going to lead. Does that have any implications on American foreign policy? Are we making the wrong decisions out there? Should the Pentagon be changing its direction, or is the Pentagon well ahead of us and your work?

Thomas: Well, I like my private sector smarter than my public sector. In the public sector I like my politicians smarter than my military. In the national-security community, I like my military smarter than my intelligence. So counterintuitively, I like my intelligence – my spies – kind of dumber compared to everybody else, because if the spies are smarter than the military, it looks like Pakistan. If the military is smarter than the politicians, it looks like the Soviet Union, 1985. If politicians are smarter than the private sector, God help you. It looks more like Europe in terms of its creativity. The situation that they've got there now with the fight over the federal project, as opposed to an America that's led by its private sector…

So, I would say, if I'm looking at the planet, I'm looking at globalization. I'm much more comfortable with the view from America's private sector, for example, on how they view China. I would cite GM's relationship with Shanghai Automotive Industrial Group, SAIC, as probably the model that the US government should be following in its relationship with China. They partnered up with SAIC fifteen years ago. They're trying to grow it in such a way that it becomes a shared partnership. As a result, GM is the biggest seller of cars in Asia. But lo and behold, SAIC wants to grow kind of bigger and out of that partnership. That's a great analogy for the United States and China at this point in history.

Are we getting that from the Pentagon? Absolutely not. We're getting a search for a budgetary floor for the big war force, maybe, and air force, in this new "air-sea battle concept." That's basically taking an old Cold War construct: the Fulda Gap (in Germany) air-land battle. We were going to take on Russian tanks in Germany, and now they have us taking on Chinese submarines and missiles in the South China Sea. Underlying all that is really a seabed contest. If you talk to businessmen, they'll tell you they're going to have to split the difference – they're all going to have to invest. It's going to be massively capital intensive. If you want Shell or anybody to go in there and actually get the hydrocarbons at the bottom of the ocean, even CNOOC or Sinopec (Chinese companies), you can't have people shooting off missiles at each other, arresting fishermen, and having spy trawlers bumping into submarines, and stuff like that.

I think we're at a point in history where the complexity and the spread of American-style globalization – which I think is very much modeled on these United States… We went from a sectional to a continental economy in the late 19^th century. I think we are seeing a repeat of a lot of that history, right down to the populism, the angry populism we see around the world today, [which was] very much evident in the United States of the 1880s and 1890s. I think business has a more comfortable, comprehensive, systematic take on what's going on in all that complexity than the politicians or the military types do.

Alex: Is this driven by the fact that businesses really don't care about national borders – they're going to go wherever they can find growth, wherever they can find revenue?

Thomas: It is a function of that, because businesses are more interested in getting transactions, customers, getting the investment in. They like security. They're more willing to split the difference. You layer that spreading reality of all the economic activity and financial flows with what happens to traditional societies when globalization comes in. This is a major theme in my books and in my work throughout my career.

You know, we're seeing traditional societies [facing a] very liberating construct. Basically: "Hey, women should go to school, women should go to the workplace. Maybe you should expect more divorces and less control over women in society if you want to develop and rise as an emerging power." We've seen that time and time again; it's all about liberating women, educating them, putting them into the workforce, delaying sex and pregnancy and marriage, getting a "demographic dividend." There's your economic miracle, repeated time and time again. China's just the latest to do it.

When that comes in, it creates social tumult. When men no longer control women in society, man, you get blowback. You get insurgencies, you get fundamentalists of all stripes rejecting that. That's what’s going on. That's what the politicians see, that's what the military sees and that's what we saw with 9/11. But underlying all that is the transaction growth and the network growth being propagated by the business types. When they come to the South China Sea, they look at it and say, "You know what? This is not a fight about where we draw the line. This is: 'Who's got the money? Can we get enough security? Can we get the investment? Can we access the resources? Will you get a proper profit-sharing model here?'" Well, if it's China rising, Japan's sort of fearful of that. All sorts of social and economic tumult going on. The politicians – it becomes very Manichean in their worldview.

So we have a disjuncture between a business network connectivity that is vast – that really defines globalization – and a time lag in understanding between that universe and what's happening in the political and military realm. There, we're still talking in 20^th-century nationalism, "this is my border" kind of stuff. We're still seeing a lot of, I would say, earlier than 20^th-century responses in the form of Al Qaeda and other types of fundamentalists who fear the essential liberating mode that is globalization, when it comes to traditional societies.

Alex: So the tumult we're seeing across the Middle East and Asia these days is really just a symptom of these countries following America down the path to prosperity and a growing middle class?

Thomas: It's a symptom of globalization coming to parts of the world that have been off-grid for a long time. Our transactional relationship with the Middle East for the last thirty years has been really pretty bare bones. We give you cash, you give us oil, and we really don't interact a whole lot beyond that.

[Think of it as being like] an American south, pre-Civil War, that dominates cotton markets like the Persian gulf dominates oil markets. The more you come in and allow that connectivity – and it comes in all sorts of networking forums, Facebook, the Internet and all that stuff that we've seen drive a lot of the Arab Spring dynamics to a stunning degree. I mean, no one's in charge – who's making these things happen? We're not quite sure. It's just unfolding. We're seeing a lot of young people move into a kind of strongly oppositional mode against what has been the traditional hierarchies in that part of the world. But at the same time it's frightening to us, because those traditional hierarchies have been maintained largely by suppressing religion and identity. And the conundrum for us is realizing as globalization comes into a traditional place like the Middle East, you're going to see more religion, more nationalism, people are going to want to hold on to identity. Why? Because Facebook and the Internet and social networks and globalization and foreign direct investment and all these things are coming in and transforming societies that have been pretty stable in their social structures for hundreds and hundreds of years.

Alex: Big implications for the world. How can America stay on top in a world like this? Do you think it's realistic that we can continue to maintain our position in the global economy with huge populations now coming into these sort of American-style markets?

Thomas: I think you've got to remember that even though we are a young country, we are the world's oldest and most successful and thus most experienced multinational union. What's going on, on a global scale, we practiced and pioneered on a continental scale in the United States in the latter half of nineteenth century. We went from a Civil War package to an America that dominated the whole continent and had 48 states, roughly, or 45 by the end of the century. That process, all the things that went in to it – the railroad building, the insurgencies, the private security firms, doing stuff on the frontier, the religious revivals – that whole package that we see in America in the latter decades of the nineteenth century, we're watching that experiment writ large on the globe. [That's] primarily because we spent the last seven decades trying to make that economic international liberal trade order come about, defending it and encouraging it. But what that does to us now – in Thomas Friedman's language – is create a level playing field. That means our privileged position [is going to be challenged.] The notion of the American dream in the 1950s came off the weird situation where America was still strong and powerful, and the rest of the world was either underdeveloped or decimated by World War II. We got into this mindset that said, "high school degree, blue-collar, middle-class existence."

Well, that dream started disappearing within twenty years of its formation in our minds. It is really gone now, to the point where we've experienced an economic boom over the last ten to fifteen years that really didn't, for the first time in history, include income growth for the middle class. If you look at American history, we are democratic, open, and tolerant whenever middle-class incomes are rising. We are intolerant, nondemocratic, and pretty nasty to ourselves and others whenever middle-class incomes stagnate.

India is rising despite a massive Maoist insurgency across the interior. China is booming on the coast, but stagnating in many ways, not developing, still kind of holding to a collectivist mindset in the interior. What's going on between red states, blue states, Tea Party, all that kind of populist anger in America. We're seeing a lot of these same dynamics that we saw in the late 19^th century in America. The rise of the global middle class, much like the rise of the American middle class at that time frame – it's a tumultuous process. It's a democratizing process. But anybody who expects that the spread of globalization to bring immediate peace, stability, tranquility – everybody's getting along in a Kumbaya kind of fashion… I mean, that's why I called my first book The Pentagon's New Map. There's going to be tumult and violence, most of it subnational, transnational. Globalization, American-style globalization, is pure social economic revolution.

Alex: That's an incredible change for the world. Does that mean that the next few years are probably going to look a lot more like the last few years then they are the earlier days of American history where we were the one growing economy around the world?

Thomas: Well, we were the China of the late 19^th century. And we scared people like China scares people now, and we were kind of a rough, rowdy, corrupt, jingoistic democracy, pretty warlike. And we still have that warlike image in a lot of people's minds, because we've played leviathan to the global system for quite some time. We've been very successful in that. We haven't seen any great power in war across the system for close to 70 years. Part of that's nukes, part of that's America basically saying, "I'm not going to allow that." Well, that role that we've played in the last six, seven decades has given us kind of a privileged sense that we run the world. The problem is, our strategy – our open-door strategy, if you will, of encouraging trade and investment to lead to connectivity, to hopefully, over time, lead to democracy – our success in doing that has created so many rising great powers out there that we're no longer able to boss people around. That creates a certain crisis of confidence in our ability to manipulate the world around us. It forces us to kind of look inward and recognize that there are some big parts of our society and economy that don't work particularly well: health care, education that's still structured in an industrial-era model – that really needs to be revamped if we are going to compete with not just the other players out there in the West but a global middle class that is ravenous in its demands. I mean, changing the resource-utilization models across the planet, but giving us a chance to sell to massively larger numbers of consumers than we've ever had in this world.

It's a great time for us to reinvent ourselves. I look to a future that's in my mind logically, say, 2030 and beyond, dominated by a China, India, and America. I call it my "CIA model of the future," kind of three great superpowers. We are more likely to get to 2030 in great shape, compared to a China that has to democratize and create an environmental movement to really deal with the way it's raping its own ecosystem and using up its water tables. Same for an India that has to deal with all sorts of tumult and a caste system that still residually exists throughout.

We've processed populist anger in America three or four times throughout our history. As much as we like to demean our own democracy, we're actually pretty good at dealing with this kind of change. I give us much better odds than India or China, especially when you realize that compared to them we are chock full of cheap energy.

The fracking revolution reminds us and gives us that possibility again. And then we are, frankly, the OPEC of food, which is an unknown in most people's minds here in America. We are the source – North America writ large – of 70% of the world's moveable feast in terms of poultry, pork, the major grains, beef as well. We are an immense player in that realm; and when you layer on climate change, which is mostly going to be an equatorially centric phenomenon – massive droughts, much more difficulty with water shortages – we have a fairly long-term bright future. We're going to be able to grow food. We're going to have cheap energy. We've got an innovative economy. We've just a couple small things to fix, relative to India and China: health care and education.

We get some serious political leaders willing to do that – which to me probably involves the boomers retiring from politics, because they've proven to be just about the worst political generation we've had in a century – and I think most of these things are quite fixable. We're looking at a major industrial renaissance in America. We're looking at a rebound that will put us back up on top, to the point where I think you can legitimately argue a second American century, very likely. Not the same package we had in the second half of the twentieth century. We won't get to rule by default, but I think there are attributes to this system that put us in a great leadership potential situation for the next five or six decades, easy.

Alex: That's a fascinating insight on the way the world is working, and quite an interesting picture for America, which I think is different than many people paint today. I want to thank you for giving us your unique perspective on the world.

Thomas: Thank you.

Find this whole package at http://www.caseyresearch.com/cdd/thomas-barnett-american-style-globalization-will-win-day

Too few immigrants = an absolute ag industry loss

WSJ story on how 1/4 of second-biggest crop ever of Washington State apples is going to rot on the tree/ground due to a severe shortage of immigrant labor.  Compounding the insult, the apple crops elsewhere in the nation are dramatically down this year due to drought conditions, so the nation's is really screwing itself on an agricultural bright spot this year thanks to our inspired national crackdown on illegal immigration.

Apples are Washington's top ag produce earner: $7B supporting 60k permannent jobs in the ag sector.

But it doesn't work without the access to seasonal farm workers....

Yes, they have tried with prison labor in the past.  Turns out prisoners don't work very hard - go figure.

Damn (lack of) illegal immigrants are ruining this country!

Building RRs in Afghanistan

Interesting WSJ piece on USG report saying that it'll cost about $50B to build a sufficiently pervasive RR network across Afghanistn for the country to exploit it estimated $1T in mineral resources.  Various routes are examined and, pretty much in each case, the argument is that the benefits won't recoup the costs involved.

We are told the Chinese are making their own calculations regarding their pledge to invest $3.5B to develop the Aynak copper project outside Kabul.

Every RR map of South Asia shows a dead spot that is Afghanistan.  The long-term reality there has been: not even reason locally (opportunities, markets, population, resources, security, etc.) to trigger the infrastructure development that shifts the country from extremely disconnected to connected enough for overall economic development to be triggered.

The Afghans had hoped they had found a critical mass for jump-starting this process in minerals.  But, when priced by the West, this seems unlikely.

It'll be interesting to see, over time, if Indian and China calculations work better.  Then again, both countries are likely to place different prices on many of the same items (including labor they themselves may export to accomplish the tasks) because it's their neighborhood, instead of distant geo-pol burden.  China's and India's fears about reliable access to resources as they rise also leads to different pricing, something we've seen in spades with the Chinese over time (as they've paid above-market prices tp secure access).

Still, you have to credit the DoD for encouraging Afghanistan down this path. There are simply some hugely difficult realities to be overcome, realities that have kept Afghanistan Afghanistan for all these centuries.

Charts of the day: Saudi Arabia's options

Nice full-page analysis at FT on how the Saudis have worked hard to give themselves a response option if Iran attempts to close Hormuz (far harder than imagined).

The relevant bit:

Earlier this year, Riyadh and Abu Dhabi opened new pipelines that will increase the ability of countries to bypass the strait. Fully operational, 6.5m barrels per day, or about 40 per cent of total flows, will now be able to take alternative routes. “The Middle East is much better prepared now than a year ago to cushion the impact of a disruption in the Strait of Hormuz,” says Edward Morse, head of commodities research at Citigroup and former US deputy assistant secretary of state for international energy policy.

The key number is the Saudi one.  The kingdom has managed to siphon off half their exports to other vectors.

Then look at who's at risk.  US imports only 42% of its oil, and only 16% of that comes through straits, so only about 7% of US imported oil comes through straits, or roughly 3% of total US oil usage comes through straits. Of total US energy usage, that's just under 1.5%.

So no, the US won't be crippled when Hormuz gets shut down - as unlikely as that feat would be for Iran.

Smart argument on handling America's water advantage

Smart op-ed in WSJ.

America is sending over huge amounts of alfalfa to China.  Alfalfa is a VERY water-intensive crop.  China uses it to feed their cattle which produce beef and dairy products.

Point of the article:  why not send beef and dairy to China instead and reap the better profit margin for our valuable water?

That's how New Zealand does it.  Its highest-value export is powdered milk, notes the authors of the piece.

The culprit?  America's antiquated and byzantine water-regulation practices - especially in the West.

Wikistrat briefing on China slowdown (part 1 of 4)

In March of 2012, Wikistrat ran a multi-week simulation that explored the possible future pathways for China as its encounters various developmental "walls" surrounding its attempted shift from extensive growth (more inputs) to intensive growth (more productivity) and thus avoid the so-called middle-income trap (i.e., it's far harder to shift from medium to high income than it is from low to medium). 

Dr. Thomas P.M. Barnett Discusses the results and take-away insights from the simulation.

Part 1 of 4

Wikistrat report on "democratic peace theory" simulation

This report, compiled by Dr. Thomas P.M. Barnett, Wikistrat's Chief Analyst, presents the top insights from Wikistrat's latest simulation. The simulation featured over 90 experts from around the world.

Immanuel Kant’s theory of a democratic peace imagines a world without war and—as a precondition—without dictators. In contrast to the Hobbesian requirement of a dominant, system-taming Leviathan, Kant’s vision relied on the self-restraint of societies that rule themselves. In humanity’s historical journey from Thomas Hobbes’ realism to Kant’s idealism, historians have noted that mature democracies fight with one another far less frequently than authoritarian governments fight with other states but that immature democracies tend to be the most warlike of all.

Stipulating that historical record, the massively multiplayer online consultancy Wikistrat recently conducted a week long crowd-sourced brainstorming exercise to plot out a plausible range of caveats to the conventional wisdom that is the democratic peace theory. In this summary, we propose six categories of conflict dynamics that can elicit democracy-on-democracy war—to include pluralistic systems both mature and immature/transitional . . .

Go here for this de facto executive summary.

Culprit #2 for U.S. coal industry: China's economic slowdown

From a WSJ front-page story.

The U.S. coal industry wants you to believe its slowdown is caused by Washington's "meddlesome regulations," but as I noted earlier, the big killer is the cheap price of U.S. natural gas, which is displacing domestic use of coal for electricity generation big-time (25% down in a recent quarter).

Culprit #2 is the Chinese economic slowdown, which is really the culprit, along with Europe's problems, for the slowdown in general global economic activity.

Pretty amazing times, when you think about it.  Remember when the U.S. economy was all you needed for a global expansion?

Charts of the day: the US "oil recovery"

Alas, our inevitable "Mad Max" future a bit . . . modified.

From a WSJ interview with Daniel Yergin.

Production up (25% since 2008), drilling way up (didn't Obama and the Dems sabotage all that?), and imports falling.  US demand relatively flat - like Europe's, so the rising production means a substantial drop in import share.  Was 60% in 2005, now 42%, and expected to be roughly a third by 2035 (though I think it happens MUCH earlier).

Of course, now we'll never have to fight a war overseas . . .

Chart of the day: globalization - that great reducer of fertility

From great Gerald Seib WSJ column.

Islam, hugely fertile throughout history (a sign of high infant/child mortality), starts losing fertility big-time once globalization kicks in.

You know my Core-Gap map.  You're looking at the Gap highlighted there and numbers are dropping rapidly as globalization creeps in.

Discard the Nordic and US references.  Those are tiny numbers in absolute terms.

Point is, Islam responds to global connectivity/globalization/ modernity like everybody else: fertility drops.

Remember that when somebody tells you that Muslims are going to take over the world because of their incredible fertility.