Peter Zeihan – The Future of Geopolitics

**SPEAKER_1** (0:24)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (0:47)
My guest this week is Peter Zeihan. Peter is a geopolitical strategist who combines expertise in demography, economics, energy, politics, technology, and security to assess an uncertain future. Before founding his own strategy firm, Peter helped develop the analytical models for Stratfor, one of the world's premier private intelligence companies.
I came across Peter via his great books, The Accidental Superpower and The Absent Superpower. We discuss America's changing place in the world and four additional countries poised to do well in the future. Spoiler alert, he believes the US is particularly well positioned. While we don't discuss equity markets per se, all of what we talk about will obviously impact companies across the world for the remainder of our careers. Please enjoy our conversation.
So Peter, this is a totally unorthodox conversation for me, given I'm normally talking about business and investing, but we're going to talk about sort of history, politics, geography, demographics, all sorts of interesting topics.

**Peter Zeihan** (1:44)
My world.

**Patrick O'Shaughnessy** (1:45)
And your world. And I think a great place to start would be sort of the way the lenses through which you view history and think about the future. So I've mentioned some of these ideas, demographics and geography, but if you could sort of create for us your model of the world, and then we'll take that model and apply it both to history and what might be happening now and in the future.

**Peter Zeihan** (2:04)
You can really break the entire global structure, all of human history into four neat chunks. Chunk one is the imperial age, when you basically had a few countries based in some really good geographies with good capital generation and internal trade capabilities, large populations, that sort of thing, that were able to not so much dominate their neighbors, but to then reach out and dominate large chunks of the planet. And the imperial age brought us most of the technological advancement that we're familiar with but it also led to a series of catastrophic wars that ultimately ended in World War II. Phase two, the Americans pick up the pieces. Americans are the last ones standing after the war and they say, let's try something a little bit different. So, instead of these imperial corps dominating large chunks, we told everybody, whether they were an imperial corps or a colony, that everyone's independent now, everyone can trade with everyone else and we'll use our navy to protect everyone. All you have to do is side with us against the Soviets. And in this global order, we fought and won the Cold War and it worked.
And then what? So, phase three was the Americans just kind of letting the system run on autopilot where there's no foe. And this brought us the biggest boom in capital generation in world history, which led to a series of economic outperforming countries and a lot of technological development. And this is the time of the brick boom, for example. We're ending the third age now because the Americans have realized that this global order structure is no longer appropriate for their needs of the day. They're not quite sure what their needs of the day are, but they're pretty sure that it doesn't require the rest of the world.
They're probably right. Which means that every country that has reworked its political system, its economic system, its financial network, in order to take full advantage of all the geopolitical goodies that are out there right now, all of a sudden have to figure out how to do without. And we are entering the fourth age of human history. We are entering the disorder.
And whether you're the Chinese Communist Party or the European Union, everything that has made your system work for the last two generations is about to end.

**Patrick O'Shaughnessy** (4:12)
Let's set the stage at the maybe very early in history with the types of qualities that make for a competitive or strategically advantaged country. I've heard you mention that maybe there's like 10 to 12 different countries that sort of have this natural collection of strategic advantage points or resources that make them in a better position, I guess, than the rest of the world to compete in a world maybe that is more disorderly. Maybe highlight what those things are as down to the very simple like arable land, you know.