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Multipolarity: Episode 11

Special Edition: Samo Burja

[00:02:00] Andrew Collingwood: Samo Burja is a big thinker in every way. Samo is the founder of Bismark analysis, which helps companies, governments, investors, and philanthropists. In their role of maintaining and advancing civilization. The public and private briefs of Bismark analysis have looked at issues as varied as the real power players within the Saudi Sovereign Wealth Fund.

[00:02:20] How the design of NVIDIA chips makes the company well placed for a world in which AI and data management take an increasingly central role and the venture capitalist and startup culture in India. Yamo has also been one of the most original and penetrating think. On the grand issues facing humanity and the mega trends we're experiencing today, his great founder theory, which originated the concept of live and dead players, and his ideas of intellectual, dark matter, and social technology have entered the vernacular for investors in public intellectuals.

[00:02:54] Most importantly though, Sam's contributions to thinking about the rise and fall of civilizations have important lessons for the modern world and our fears of Western. It should be obvious then why a podcast devoted to examining the economic and geopolitical consequences of the shift to a multipolar world order would ask Samo to be our first ever guest.

[00:03:16] Samo welcome. Uh, thank 

[00:03:18] Samo Burja: you for having me on the 

[00:03:18] Andrew Collingwood: show. The Cold War dominated international relations and geopolitics and economics as well. Between 1945 and 1990, after the Cold War ended, we entered a unipolar world order in which the United States dominated. When the neoconservatives, or as some people say, they're liberal universalists, Took over US foreign policy.

[00:03:42] Their ideology seemed to drive diplomacy, international relations, and the geopolitical trends, events in order that we've experienced in the last 20 or 30 years, but, Within your idea of great founder theory, how have live and dead players influenced the world that we find ourselves in today, and how are they influencing the trends that we're experiencing 

[00:04:08] Samo Burja: today?

[00:04:09] First, it's important to explain what are live and dead players. A live player is an active adaptive individual or small group of people that are closely coordinated with each other that can respond dynamically and creatively. They don't just win at. Whatever the existing game is, sometimes they transform the constraints of the game.

[00:04:32] An interesting example of a live player in foreign policy during the Cold War, uh, would actually be Henry Kissinger as much of a stereotype as it is the maneuver, Of empowering China precisely to create a greater rift in the communist block, thereby solidifying the geopolitical consequences of what until then had been mostly an ideological split between the Soviet Union and China was a tool through which live players in US foreign policy broke bipolarity.

[00:05:06] So temporarily. You introduce Multipolarity, the Soviet Union, the United States, and China makes immediately a deter between the Soviet Union and the United States. Something that is possible, something that's achievable because it escapes the zero sum logic, and likewise, there can be significant gains then from empowering China as a counter block to the Soviet Union, China.

[00:05:34] Russia historically and today as well have latent geopolitical, uh, conflicts of interest at the time they even had technological and economic conflicts of interest. However, in this very creation of unipolarity where perhaps the collapse of the Soviet Union would have never happened without the pressuring, through a much more developed China were the seeds that undid the unipolar.

[00:06:02] Today we, I think, have a space for live players to decide whether the world will be bipolar or multipolar. But the course away from Unipolarity is over-determined in many ways. We could see the new conservative project as being a project to indefinitely prolong American hegemony in part. And Western hegemony in general.

[00:06:30] The view being that there could be a stronger unilateral interventionism that perpetuates basically the international liberal order. As sort of the best way to achieve various goals such as economic growth, or if you go more esoterically into the thinking that shaped the new conservatives, such as the, uh, writings and works of Leo Strauss are perhaps a prerequisite for making republics functional at all.

[00:07:00] There is a deeper strain of argument here that almost goes all the way back to Play-Doh that suggests that perhaps. The police always has to have enemies, and the police always has to have a reason to have the CI citizens, uh, you know. Strain themselves in service of a of a greater goal. These kind of relatively esoteric, relatively unknown ideological assumptions are often first intellectually influential, but more importantly, Provide a moral justification to the live players themselves for their actions.

[00:07:37] When it comes to live players. They need to have a sense that they are in some way entitled to reshape the world. That's often a prerequisite for being willing to change these systems and mess with them one way or another. The vast majority of people, I think, are surprisingly pro-social. Out of both.

[00:07:58] Sometimes laziness, complacency, but at other times also genuine moral conviction won't change things that. They could change right Systems that they could pressure. It takes an astounding amount of almost megalomania to decide one day, well, you know, our country's foreign policy needs changing and, uh, I'm the person, or my little clique of people are the people who are going to do it.

[00:08:21] So you 

[00:08:22] Philip Pilkington: phrased it there that the, that the move away from Unipolarity is over determined, and yet the path that this will take is open to live flares, taking actions. Do you view the move to Multipolarity, as always, having been over determined? Do, do you think that there were actually choices made by life players as it were to put us on this course?

[00:08:44] Or is this just a kind of in the nature of, of, of the way things 

[00:08:49] Samo Burja: had to shake out? I think that fundamentally we could have had a much longer period of uni. Um, we could have had, you know, actual centuries of a particular hegemony had different decisions been made in the immediate aftermath of the Cold War.

[00:09:05] So as soon as the policy of economically allowing China to develop. Was set that should have been adapted and changed no later than say, let's say 1999. Right. Let's, let's take about the time when Hong Kong is handed back to China. That's the point where actually all of these sort of trade war like policies that are undertaken right now, they should have been undertaken immediately then and 20 years of differential compounding growth might have seen.

[00:09:38] In this alternative world, a Chinese economy that's 50% the size of the current Chinese economy, I think it would've been much smaller, which would've been worse for standards of living. But China could have no pretensions at being a superpower, which now it clearly is. There are also other. Troubling side effects of this particular route we chose.

[00:10:02] The Unipolarity of 1991 was a unipolarity where both European economies and the United States and Japan collectively held this, uh, much more decentralized system. The unipolarity of this moment is mostly that of the United States itself, so it is. Of always tempted, I think, the United States to take decisions that prolong its relative power, even if they weaken the Western block as a whole.

[00:10:34] Let's consider say the destruction of the North Stream pipeline, which I will just directly attribute to, uh, the United States and its allies since that's the only thing that makes sense. That is a attempt to set a unitary and possibly justified policy versus Russia. By eliminating an energy alternative, however causes real material damage to the German economy.

[00:10:59] And then when we are talking about the US trade war on China, there has been an undeclared trade war as well versus say the European Union. There is a long-term trend towards a growing American economy and a stagnant European economy. You talked about the trade wars 

[00:11:18] Philip Pilkington: there between China and America, and also possibly between, uh, a silent trade war between the EU and America.

[00:11:25] We've, we've addressed the trade wars in a number of times on this show, and we found ourselves wondering whether they'd actually work. There seems to be a lot of reason to think that these kind of blowback effects on the US economy, especially given its. Dependence on China and so on. So, you know, just to take a simple example, trade war against certain types of capital goods, for example, could throw a lot of sand in the gears of the American economy and stop its capital based developing.

[00:11:52] So have you given any thought to the, to the unforeseen. Consequences of this trade war, do you think that these will definitely work or, or do you see a, uh, it potentially 

[00:12:01] Samo Burja: failing in the future? I think sanctions have to be always understood in a continuum with various trade policies that we see in the trade war.

[00:12:11] These are essentially tools of war. I think the United States, of course, is taking economic hit in absolute terms with the hope. Preserving or gaining a relative advantage over China in a political context. We are of course pursuing relative, uh, you know, dominance for various, you know, desirable ends such as security and so on, and economics.

[00:12:35] Often people prefer to focus on the absolute measure, right? Like whether the planet as a whole is getting richer or whether, you know, the. Is experiencing a benefit or, or, or a cost? I think the trade war could be analyzed. In the perspective of, okay, is it bad for for the American consumer or the American taxpayer?

[00:13:00] But it's much more notable that I think it is not going to succeed even at the goal of a relative differential in favor of the United States. It might be possible that the US with some technical innovation, Manages to say maintain high-end C P U and G P U production, uh, with the help of some of the measures of the trade war.

[00:13:26] But generally speaking, the key advantage of relative American dynamism and innovation, uh, seems to be. The actual source of that advantage, right? It's not the case that China can figure out how to build CPUs or GPUs as they, you know, as they were built 10 years ago or five years ago. It's just that what was built five years ago, by the time you re you reverse engineer it, they're already new, you know, better chips available on the market, and you don't actually get to capture any of that benefit.

[00:14:02] In some narrow domains, the trade war could work in preserving key American high tech industries as basically dominated by either the United States or its very close Allies like Taiwan, though Taiwan's long-term securities in question. But overall, this is too little, too late if you wanted to prevent China.

[00:14:26] From becoming a superpower or if you wanted to maintain significant US advantage over China with trade policy, this again should have been done in 1999 or 2009. Of course the cost would've been a few extra, a hundred million Chinese in poverty and probably, I don't know, half a percent or 1% of US economic growth.

[00:14:50] But that would've achieved the political goal. And I think right now these are basically cosmetic measures that are building a political will and a political coalition. Eventually ramp up competition with China in a military and political domain. Say if it is difficult for Western elites, say, uh, American elites, be it Washington or New York or San Francisco, to have vested economic interests in China, then these elites will not be in opposition to a later harsher farm policy against China.

[00:15:29] Andrew Collingwood: What do you think the chances are samo? In the event that the United States fails to prevent the rise of China, and by the rise of China, I mean the So Paso, as it's sometimes called, the point at which the Chinese economy is clearly and obviously larger and more powerful than that of the United States.

[00:15:53] What do you think the chances are that in the event that this happens, the. Fails to take the British path or decides against taking the British path of managed decline and decides instead to try to solve the issue as they see it through military 

[00:16:12] Samo Burja: means. I think the United States has a. You know, a very strong track record, all things considered when it comes to limiting the spread of geopolitical influence as soon as it becomes a kinetic war, right?

[00:16:30] So the United States. Has been historically pretty good at arming and training their side of a civil war, proxy war, like say the one you might have seen in Afghanistan in the 1980s, or similar to some aspects of the current Russian invasion of Ukraine and the war. The Ukrainians with Western backing are, uh, waging there.

[00:16:54] The key problem. Setting up reliable client states. So I think the United States, for example, could have very strong military means at its disposal to basically destabilize relevant governments in Southeast Asia, in Central Asia, in Africa, the Middle East, uh, even Europe, that side with China. But it doesn't necessarily.

[00:17:19] A good track record when it comes to building up its client states, I think that's not happened as much. So the core advantage of the US isn't so much its ability to prevent China's rise. It is perhaps in whether it can undertake the institutional reforms necessary to maintain its growth in the near future.

[00:17:42] Right now we're having serious questions as to what will happen to. Financial ecosystems surrounding Silicon Valley problems such as the Silicon Valley Bank and so on, but also just lackluster returns in a time when capital has become. Basically much more expensive, right? The, the market's no longer flooded in cheap money.

[00:18:05] Uh, I think these put a question mark on the next 10 years of tech driven economic growth of the United States to change tech 

[00:18:14] Philip Pilkington: very slightly. Obviously you mentioned, uh, the war in Ukraine, which to my mind has been one of the biggest events in my lifetime at least. What do you see as the. Events that have been set in motion by the war that maybe the, the war hasn't caused them perhaps, or maybe it has, but that it's accelerated or catalyzed 

[00:18:35] Samo Burja: them?

[00:18:35] I think the most important one is the reorientation of Russia from economic integration with Europe, which had always considered a geopolitical asset towards a, just out of necessity integration. The Chinese economy, the important consequences here is that in the long run, I expect many Russian energy exports will go directly to China rather than going to Europe and Chinese demand for these will remain high.

[00:19:05] I also think importantly, the western world has basically failed when it comes to sanctions, right? The original plan for the sanctions against Russia were to cripple the Russian economy, possibly cause political destabilization that overthrows Putin. This did not happen. The actual economic damage and consequences that Russia itself endured.

[00:19:30] Not just lower than what Western experts expected. They were lower than what Russian experts expected. So I think there's just something we really don't properly understand about the economics of sanctions. There's some phenomena here that we're all kind of miscalibrated on. So that's number one. There was a loss, a failure to use sanctions to, uh, you know, enforce geopolitical will.

[00:19:55] But on the other hand, there was a surprising success when it came to arming and training whoever is fighting a defensive war. The Ukrainians, again, the Ukrainian forces outperformed. Not just Western expectations, not just Russian expectations. I think they outperformed their own expectations. The first month of the war, Ukrainians themselves were rather pessimistic about their odds.

[00:20:20] So this suggests a world where everyone has. Sees more value in arming factions that annoy your geopolitical rivals and sees less value in straightforward sanctions. It's a world that is more economically segmented. I would not be surprised if you know the, of course, the Chinese and Russian economy are extremely different.

[00:20:44] Chinese policy makers weren't observing and perhaps correctly or incorrectly reaching conclusions as to what it would mean for. To be sanctioned in hypothetical invasion of Taiwan. 

[00:20:57] Andrew Collingwood: To follow up on that, I'd like to ask a two part question. The first one is the integration between the Chinese and the Russian economies.

[00:21:07] Seems to me to suggest quite a lot of synergy between the two. The Russians have a tremendous amount of raw materials, not just oil and gas as often as is often assumed, but metals like, uh, nickel and uh, aluminum. Russia's huge producers. Also things like timber. Russia's now, uh, net food exporter as well.

[00:21:29] And obviously as you know, the Chinese have a huge and growing demand for meat consumption, for example. Whereas the Chinese, of course, are the global superpower in manufactured goods, and increasingly they're moving up the value added ladder in terms of manufacturing goods. So I wonder whether pushing Russia to some extent into the Chinese camp, if you like, SAMO has given China far more strategic depth than.

[00:21:59] Gaining, just gaining an ally wood, perhaps that alliance might be greater than the sum of their parts. And perhaps I'll ask you the second question after you've answered that. Cause it's quite a long one. Well, 

[00:22:10] Samo Burja: We shouldn't forget just how economically necessary. The interdependence between Russia and the European Union actually were on the eve of the war.

[00:22:21] Russia supplied 40% of the EU natural gas imports, 46% of the EU coal imports, 27% of its oil imports. It was, you know, also Russia was the world's largest wheat exporter, a leading producer fertilizer. Not to mention it's, you know, vast mineral reserves on the Russian end of the dependency. They were actually a key customer of German firms and Dutch firms.

[00:22:49] There's a lot of stuff like machine tools, um, a lot of advanced technology that's necessary for Russia to build its weapons. That was, uh, Exported to Russia. For many of these, they are now picking slightly technologically inferior Chinese alternatives. So yes, this partnership between Russia and China, if it could endure and if it can overcome political problems, is economically extremely potent.

[00:23:18] The infrastructure will lag. So I think there is a 10 to 20 year window where, you know, things like new ports, new rail connections, new oil pipelines, new gas pipelines will be built. Where if the political fundamentals fall apart, the full strength of this economic and, and geo-economic synergy won't be realized.

[00:23:42] But once it's realized, it'll be locked. Great degree, and if you have economic interdependence between Russia and China, that it would be an extremely formidable counter block to the Western world. It would be very natural then to have the countries that arguably the Belt and Road is a failed attempt to integrate into China's orbit.

[00:24:06] So the countries of Central Asia, the Middle East, I think those countries would very naturally fall into that. And that at that point becomes a Chinese led block of immense power. Hmm. 

[00:24:20] Andrew Collingwood: The second question I wanted to ask about that was, you mentioned military affairs and, uh, the ability of the United States and the West in general to, um, the.

[00:24:31] Client states or allies for defensive war. And I remember on the eve of the Russian invasion of Ukraine, Bismarck analysis wrote, uh, a brief, uh, concerning the makeup of the Russian army and the difference between the Russian armed forces compared with the, the Western armed forces and how they. Make war, and I had wondered whether the, the Russia, Ukraine war might suggest a shift in military affairs, a paradigm shift, if you like, similar to that, which we had in 1914, where the advantage suddenly moved towards the defender versus the aggressor and the aggressors or the attackers maneuver.

[00:25:17] We. The, the advent of trenches and machine guns, which really facilitated that. Now equally we have the, the, the advent of advanced surveillance and reconnaissance. We have the advent of drones, loitering, munitions, the mass produced missiles, very inexpensive drone technology. And whether again, we're seeing, uh, military affairs trending towards deadlock and defense.

[00:25:44] And how that might affect the ability of countries to fight proxy wars in the future, how it might affect the ability of countries to impose their will on weaker nations by military means. 

[00:25:58] Samo Burja: I think that we've seen wars that drag on for much longer than people assume they would drag on. Let's consider that in a very real sense.

[00:26:09] The Syrian civil War, which started over 10 years ago, is still not include. Assad's government did not fall yet. No other government, be it ISIS or or moderate rebels, really took reigns in Syria. The cost for the country was absolutely immense, right? Something like 30% of the population left the economy was absolutely ruined.

[00:26:34] I would not be surprised if the war in Ukraine rather than grand mobile warfare or something more similar to positional warfare actually devolves into a persistent simmering conflict where the country is constantly bled for, you know, and, and Russia itself of course is sort of bled for manpower. And you know, there's this constant economic cost I think.

[00:27:02] The ability of governments to receive training and receive weapons and effectively deploy them in a defensive, uh, In a defensive way. I think that varies immensely country to country. I think Ukraine actually reformed itself, admirably after the disarray of 2014 when they lost Crimea and when in fact they still had many Russian sympathizers in the government that much preferred working or even defected to the Russian.

[00:27:38] The Russian side of that conflict, right? The annexation of Crimea could only happen with partial cooperation of local Ukrainian elites and authorities. Now, after 2014, the government is purged. You know, it's very much the anti-Russian faction is dominant. Uh, the West does a lot of training and arming and you know, the Ukrainian forces.

[00:28:02] Effective and effective united strategy. That was obviously not the case when the West tried to arm the government in Kabul, right? The official government of Afghanistan. That fell in a matter of days, the ability to drag out an ongoing civil war indefinitely, making it a quagmire that I think, The strongest sort of deterrence against future invasions, the ability to preemptively make a client state a credible threat that's not yet been demonstrated.

[00:28:38] It's very much an open question if Taiwan is invaded. Is it a paper tiger? Will it be much more like, will it be much more similar to Afghanistan and the government in Kabul, or will it be much more like the government in Kiev? I think these. Comparisons are not predetermined. Uh, when you look at the local level of Taiwanese politics, most mayors are actually oriented more towards China.

[00:29:06] Most of Taiwan's business elites do, uh, most of their work in China. The armed forces actually are intention with the elected. Pro-Independence government of Taiwan, and at the end of the day, an actual declaration of independence from Taiwan might just be a prelude to an actual necessary military response from China.

[00:29:28] So it's not even clear that. Pro formal independence results is the best way to, uh, pursue actual independence of Taiwan. I think that the specifics of the countries matter immensely. The willingness of the west to arm. And fund and train. I think that increases as a result of the recent war. Trust and sanctions should decrease, but I don't think policy establishments learn very much from past experience.

[00:30:01] When it comes to sanctions, there's a large established body of literature that seems to be basically always ignored on sanctions. They seem to. Political necessity driven more by domestic factors than real international plans. Sanctions are undertaken so as to make it seem as if you are doing something without needing to escalate to military action.

[00:30:24] They're not judged on their effect on the enemy. They're only judged by, well, this is what we did. In response to aggression. 

[00:30:32] Philip Pilkington: So you mentioned Taiwan, and you mentioned something that, that's not widely discussed in other media. We, we often, we've discussed it on here that uh, a large part of Taiwanese society is actually in favor of closer relations with China from the business lead to people in local government and so on.

[00:30:47] And of course, the um, The elections there Recently, the local elections were, uh, held as a sort of a referendum on China and the Qang, the, the ProE party won. There's obviously been a lot of planning, and you mentioned it a moment ago about a potential invasion of Taiwan, but I've always thought that this suggests that the ti that, that the best Chinese strategy will be to wait until this geograph.

[00:31:12] Close, relatively culturally similar island just naturally gravitated toward the Chinese fear of influence. Do you think that's likely to happen? And what do you think a, a United States 

[00:31:22] Samo Burja: response will be to that? You know, when it comes to an invasion of Taiwan, I think the likeliest result isn't an extended terrible ground war.

[00:31:34] The like list result is. And the luckiest war is a, a naval and an air war where the government of Taiwan to the best of its ability tries to concede the war and conclude it. Since the economic consequences are so devastating for them, the Taiwanese elites will also wish to avoid being appropriated of Essent.

[00:31:58] The majority of their wealth, which is tied up in investments on the mainland. So there's, you know, in a way there's a democratic pressure, there's a plutocratic pressure, uh, to concede and, and almost lose such a war. Right? The US calculus here would be to try to win such a war before that pressure becomes overwhelming and essentially humiliate China, right?

[00:32:22] Shoot down a bunch of Chinese planes, sink a bunch of Chinese ships. The escalation from here would be if China attempted to defeat the US when it comes to air. And sea power. I don't think they're that ambitious. I don't think they have necessarily the capacity to do so. But this is a space where the much discussed surprise of every single war, right, every single war is, uh, you know, can't really be forecasted very well because the technology.

[00:32:53] For waging war changes so much. It might easily be the case that the discussed problem of, let's say masked missiles or drones just make a classic surface navy obsolete, that it's actually impossible to protect aircraft carriers or cruisers, and that even piloted planes. Are perhaps a thing of the past, right?

[00:33:16] You might not need a fighter like the F 22, let alone more recent and questionable fighter designs. So I think it would be possible in that scenario for. China to, through a technological surprise, through an investment in a very structurally different Navy and air Force, even defeat the US in a small local war.

[00:33:38] I do think overall interests would be such that almost everyone would want to keep this a small and local war. So perhaps the US would even go as far as to, uh, pretend that it's not actually fighting a war with China, that it's the Taiwanese themselves and that the US is just, you know, providing jet aircraft.

[00:33:56] Or providing missiles to them. 

[00:33:59] Andrew Collingwood: Samuel, there's been of course a lot of talk about the rise of China and so far in this discussion we've discussed China a great deal because the China US conflict or the Chinese US rivalry, shall we say, rather than conflict as yet really dominates the international relations and diplomatic and new stream, especially at the moment.

[00:34:22] But do. That this discussion of China Rising has reached a a a point of inflection where it's really past a point where anything can change. And if so, where do you think we will go? Ultimately, we spoke about the potential for a military solution, but where do you see it going? Because I sensed a new answer to the last question.

[00:34:45] You believe there's really a great deal of incentive within. Theater of conflict in a way that perhaps wasn't in the Eastern European Theater of conflict to avoid any kind of military encounter or full-blown 

[00:35:01] Samo Burja: war. I think the key difference, the key difference is first off, geographic, the island of Taiwan is in fact a difficult island to invade through a naval invasion.

[00:35:13] There's something like five good landing sites all relatively easily fort. So that's a disincentive for China to attempt a full on amphibious invasion rather than some military intervention. Short of that, the second incentive is the difference in what local elites think. 2014, local elites in Ukraine had a reason to defect to Russia in 2022.

[00:35:39] They did not in 2023. Taiwanese elites, if a war were to happen, have a reason to, uh, pressure their own government to concede to China. Right? And this, this pressure is basically the economic interest and ties on the mainland. In a way. The US is not even a straightforward economic ally of Taiwan anymore.

[00:36:01] US pressure for T S M C to build chip fabs in the United States is basically pressure to, hey, give up your competitive advantage and give it to. Right, like we shouldn't, we shouldn't forget that even that economic interest no longer works in Taiwan's favor. Meanwhile, you could easily imagine China. At least in theory proposing, well, you know, we're one country.

[00:36:24] There's no reason T S M C, you know, couldn't be China's greatest chip fab, and there's no reason it couldn't be still based in Taiwan 20 or 30 or 40 years from now. You're just an island and province of China at the end of the day, aren't you? That's in our national interest. The US on the other hand, Well, we're not sure if we're gonna keep you independent much longer, so please move these chip fabs over to the us.

[00:36:47] So it's, you know, I'm being a little bit provocative here, but I think, I think in the west we, we don't like really thinking about what, uh, Countries local incentives or elite interests are, we would just want to see things from the big picture because the big picture is where our interests are playing out.

[00:37:05] I think the local interests often matter a lot, and they constrain what are viable interventions. Now. To answer your greater question though, to not just zoom into Taiwan, but to think about this in the big picture, China has some serious long-term internal problems. I strongly disagree with. You know, um, the thinkers such as, uh, Peter Zhan who proposed China's on the verge of collapse, I think that's wish casting right.

[00:37:33] There's this, uh, belief and desire and demand for a sudden big catastrophic failure in China. I don't think that will happen. But what could happen is a future of relative Chinese stagnation. Of economic growth no greater than three or 4%, possibly no greater than 2%. Once the demographics become bad enough, right?

[00:37:56] Once the age, average age of the population rises beyond possibly even the kind of old populations we are seeing right now in Japan. You might see a country that's older than Japan. To give an example from a recent country that is well on the way to having demographics that are even worse than Japan, uh, let's consider South Korea with its total fertility rate of 0.7 children per woman.

[00:38:24] That takes what? 40 years maybe to result in demographics even worse than those of Japan. And Japan of course, has long had proverbially a very old population and old populations slow down economic growth. There's no way around it. The dependency ratio shoots up. Through the roof. That's the ratio between, uh, those in a population who are supported versus those who are still actively contributing to an economy.

[00:38:50] Very young countries, such as some of those in Africa, can have a high dependency ratio where there are lots and lots of children and relatively few adults, lots of young people, relatively few adults has countries have a drop in fertility. They have a window called a demographic dividend, where most of the population is.

[00:39:08] And this is a great time to, uh, pursue economic growth. And as you leave your demographic window, your dependency ratio, uh, ratio, you know, it goes up again. Except this time it's a much less promising future. It's a future where in a century or two your population is half of what it currently is. There's an argument to be made that China is actually, you know, radically overpopulated.

[00:39:33] There's an argument to be made that actually, you know, if, uh, a China of 600 million people might be just as powerful as a country, as a China of a billion people, or one and a half billion people, because those 600 million people and the economy they support actually have. Everything they need within the borders of China, thereby giving it, you know, sort of more policy freedom.

[00:39:57] But that's, you know, that's a strained and I think overstated argument. Even today, China is very close to feeding itself and it hasn't even fully, you know, automated its agriculture. I think they have something, you know, ridiculous. Something like 20% of the population still work as subsistence or near subsistence farmers.

[00:40:18] Like that's crazy. Like, No country using modern industrial agriculture really needs more than a few percentage points of people working to feed the country. Yet here it is, China has basically archaic agriculture. That's ironically maintained, I think at least partially as a means of social stability.

[00:40:38] The Chinese Communist Party actually wanted to slow down urbanization until very recently. They wanted people to stay in the villages. They didn't want the villages to empty out. Villages emptying out results in higher agricultural productivity because you consolidate small farms into larger farms, and because labor becomes more expensive, you're incentivized to, you know, use, uh, machinery, uh, use, you know, not basic things like combine harvesters, let alone more advanced things like, uh, drones for crop surveillance and so on.

[00:41:13] These are all things that require economies of scale. And require consolidation of land ownership, something the CCP was ideologically opposed against because classic malice theory suggests essentially that peasants need to remain a big structural part. Of the society, for the society to remain a socialist or a communist dominated society.

[00:41:37] That's, I think, part of the reason for the inefficient agricultural policies of the country. So even when we talk about something like food supply, China basically can feed itself. But you know, to wrap this tangent on Chinese, you know, self-sufficiency back into the limits of China's rise, I think the limits are just the limits.

[00:41:59] Future economic growth. I don't think China can do much more than ketchup growth. That puts it squarely as a key competitor of the West. And then the only way to sort of stop China's rise, it's not really stopping its economic growth. It's not really even in, uh, militarily containing it, though both of these can help.

[00:42:22] It's really a challenge of will the western world in the rest of the 21st century. Experience, economic and possibly again, even demographic growth or will it shrink first demographically and eventually also economically. I think that sort of almost domestic institutional challenge is the more important one.

[00:42:46] It's not a question of whether China will. Or will not converge to our current economic standard or technological standard. It's a question of, well, how much further can we advance this? And, uh, I suspect actually that we're much more stagnant than we would like to admit, which means that if we are much more stagnant than we would like to admit, the world is on a long term.

[00:43:11] On a century long course towards Multipolarity as China will not be the last great country to, uh, reap the benefits or the last great block to reap the benefits of catch up. Growth 

[00:43:23] Philip Pilkington: listeners, uh, to multipolarity are very interested in mega trends. So what do you think are the. Uh, biggest mega trends to watch over the next 25 years, and, uh, how do you think we should watch them in terms of statistics or signs or anything that you could say in that direction?

[00:43:39] Samo Burja: Well, uh, a lot of our conversation has been about how the larger trends in the world are sometimes affected by, uh, these sort of boundary conditions, right? Either, you know, economically economic boundaries or geographic boundaries. I think the greatest. Macro trend, the most important one in the world right now is that of an actually grain planet.

[00:44:05] Until quite recently, it seemed plausible. And this is still, uh, the, the still the consensus though I think an outdated consensus among demographers that as countries become richer, they become. Well in 2023, we have to deal with a world where some very poor countries, not just China, which is, you know, it's solidly rich now by global standards, are actually having much lower fertility.

[00:44:33] India is far away from any kind of true catch up growth. It's far away from anything like China. Yet this year, their fertility fell below replacement. This was sort of the last major region outside of a few fragment countries like Afghanistan and outside of Sub-Saharan Africa to have above replacement fertility.

[00:44:57] I think for the rest of the 21st century, the cost of human labor will go up. Because in almost, you know, all countries around the world, even the poor ones, fertility seems on a course to just go down and down and down. I can't think of a single country in the world that has higher T FFR now than it did 20 years ago, and that's very much important.

[00:45:23] Sub-Saharan Africa might stay an outlier for the rest of this century, or it might, to everyone's surprise, converge over the next 20 years either. The global human labor force will be much diminished. That's the first macro trend. The second macro trend is the fact that a shrinking or stagnant population means relatively stagnant energy demands.

[00:45:47] This means that there are limited reasons to develop new technologies such as fusion or even truly scale up fission. I think this actually ironically means. Since our energy demand is stagnant, uh, rich countries will substitute relatively inefficient green measures and poor countries will keep on burning coal.

[00:46:09] So that's actually kind of bad for the environment. Ironically, if our energy demands were a hunger times what they are currently, we perhaps would have no choice but to go for. Carbon neutral energy sources, such as fission power, but since they're not, we're always tempted with windmills, solar, hydro, various energy mixes that might or might not work out.

[00:46:31] Even Germany with the recent sanctions has been forced to bring back online despite all their green rhetoric, basically coal plants. It's shocking, but today coal still seems to be the most economic way to produce energy. So we can't really expect poor countries with modest energy demands to not essentially burn coal for most of the century.

[00:46:52] So the second one then is energy demand stagnation. The third macro trend, I would say is the open question of artificial intelligence driven automation. It seems more and more plausible that AI will end the near future. Provide an abundant source of automation. I think this will. In office work. I think the first effect of this will be actually increasing the economic productivity of a typical worker.

[00:47:21] So you might have one office worker, uh, that could easily, you know, handle the paper shuffling and even research that previously would've taken 20 uh, workers. To give a concrete example, it's possible that, you know, g p T eight or g p T nine is so, That you just don't need a legal assistant anymore. You just don't need a paralegal and the office.

[00:47:46] A law firm might only need three to four people, uh, which previously might have required 30 or 40 people. When it comes to robotics, I think progress is much more modest, though a sufficiently large breakthrough in artificial intelligence, a breakthrough that would say allow AI designed, uh, AI engineering, essentially, right?

[00:48:08] That one could jumpstart robotics progress. So the, those would be the three big trends, a graying world, a world of stagnant demand for energy and a world. The possibility, but not certainty of automation making the remaining human workers much, much, much more productive. 

[00:48:28] Andrew Collingwood: I think that's a very interesting way to end, because I yesterday read a article from the Chinese press saying that they claimed anyway that AI had.

[00:48:40] Designed all of the electrical wiring needed to, uh, make their latest aircraft carrier work. And this would usually take electrical engineers months. But the AI had designed the whole electrical wiring system in 30 minutes. So perhaps the sort of automation that you are talking about is with us now. And it's the sort of thing that an observant viewer could, you know, pick up in the press as a a, as they read about things like.

[00:49:11] Anyway. Thank you very much for joining us, sir. Before we go, is there anywhere. People can get more information about you, read about your thoughts, your ideas. Uh, 

[00:49:22] Samo Burja: yes. Uh, those interested in my writing or my team's work can follow me on Twitter at samma bia, so that's S A M O B U R J A on Twitter. You can also follow the Bismarck brief.

[00:49:37] We occasionally do free reports, but it's mostly a subscription based service. You, there is a weekly in-depth research report on a live player, an industry, or a key institution. Previous briefs have included a look at Nvidia, uh, T S M C, uh, the philanthropic strategy of Bill Gates and other fascinating topics like that.

[00:50:01] You can find it. Brief Bismarck, so Bismarck with the ck 

[00:50:08] Andrew Collingwood: Well, Samia, thank you very much for your time, sir. Thank you for 

[00:50:12] Samo Burja: having me on the show.

[00:50:18] Andrew Collingwood: You've been listening to Multipolarity subscriber Follow for Fresh episodes every week.

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