Executive Summary

• The Sole Superpower
• The Importance of factoring in External Costs
• The Biggest Loser
• Which nations to keep your investments in

If you have not yet read Which Countries Will Be Tomorrow's Winners & Losers?, available free to all readers, please click here to read it first.

In Part 1, we examined the thesis that geography and demographics largely define a nation’s destiny. In Part 2, we add other potentially game-changing factors that don’t necessarily fit neatly into either category.

Oh, No: America, The Sole Superpower?

Many of those who disagree with America’s military-interventionist foreign policy of the past 15 years will naturally be appalled by any analysis that suggests America’s preeminence is only going to become even more dominant as the rest of the world is destabilized by the inter-connected dynamics driving global disorder.

The good news is Zeihan sees America becoming much less interventionist as it withdraws into greater self-sufficiency—a topic I’ve discussed in previous essays on autarky. (What If Nations Were Less Dependent on One Another? The Case for Autarky (January 2014))

In Zeihan’s view, America’s preeminence is based on its unparalleled assets of geography and more favorable demographics than its competitors. Zeihan sees the U.S.A’s energy resources, dual-ocean buffers, lack of contiguous-border competitors/enemies, culture of innovation and impressive pool of domestic and foreign capital as an unbeatable combination that no other aspirant to superpower status can match.

In his analysis, the intrinsic weaknesses of other nations and alliances such as the Eurozone have been papered over by the flood of capital that has saturated the global economy for the past 20 years.  The source of this ocean of capital: the global generation of Baby Boomers, who reached their peak earning/capital accumulation years in the post-Cold War boom years of the 1990s and 2000s.

(Strangely, at least in my view, Zeihan never mentions the flood of free money unleashed post-2009 by central banks—a major weakness in his analysis of capital flows.)

Now that the Boomers are retiring, this gigantic pool of savings is being drawn down: retirees are selling their stocks and bonds and using the money to fund their retirement.