Keynote Speaker: Peter Zeihan- America at the Edge

everyone I'm here to let you know that all this talk of doom and gloom in the international system is overblown and everything's gonna be just fine okay that's a flat-out lie it's all it's all going to hell but before we talk about the end of the world let's talk about me a little bit so you know where I'm coming from I'm originally from Iowa I've lived in Texas for the last 18 years and about a dozen places in between I've got solar panels on my house I Drive one of those plastic Prix I but I can actually do math so I'm not welcome at any of the parties that any of the greens have it's a pretty eclectic background with security and energy studies and demography and manufacturing I see a lot of things from a lot of angles and I get in a lot of trouble in a lot of places one of the things I'm going to do today is to put Kern County into context and California into context and compared to places like Texas of the United States and the rest of the world the point of this is not to piss off all you Californians that's just a side bonus the point is to make sure that you understand what is in motion so at least you're not blindsided by what's coming so with that I promised the end of the world this is how we used to trade in Egypt with each other we traded ammunition if you saw something that you thought you needed you didn't trade for it you went out and you took it you colonized it you expand it into Empire and those empires clashed over everything those clashes ultimately turn into World War two which brought the entire Imperial system crashing down it was then left to the last men standing the Americans to figure out what's next we imposed a new global system on our allies where we did it trade you can export whatever you want to our market the only would have survived the war you will be protected by our military you will have access to the global oceans which we will do it with that we will patrol so you can go out buy any product ship it home metabolize it into a finished good and then re export it safely in exchange we just ask that you be on our side against the Soviets we bribed up an alliance to fight and win the coal or and it gave us this map the deep blue that's the core Alliance system or excuse me that's our front yard and backyard before World War two the medium blue that was the new alliance in this new global order orange those are the other guys and light blue was the field of competition and then one idle Tuesday the Germans had a party talk about pent up demand that changed the way we looked at the world because all of a sudden this global order that we had been maintaining since 1946 kind of went out the window it was a security program nothing more and the security conditions had changed and so the map changed to this a lot of gray up there a lot of places the Americans just don't have a strong opinion about all right all clear cool all right this is the guy who was in charge that the day the Germans had that party this is a guy who as president had by far the best steeping in international affairs of any leader we have ever had he was the right person in the right time in the right job and so of course we voted him out of office and we started on what like what I like to call the parade of morons Bill Clinton is arguably the smartest president we have had since Thomas Jefferson but he saw himself first and foremost as a domestic president and so when a big summit would come up he'd get in the huddle with the CIA and the State Department kind of crammed for the tests like he was a college student he'd knock it out of the park but then there'd be no follow-up so for eight years we really only had about two months of foreign policy then we got W who got a strong start on a lot of things but then 9/11 blindsided us and let's call it what it is we had a monochromatic foreign policy focused on one issue in one region then we had Barack Obama now Obama gave a photo Barack Obama gave a lot of kind of exit interviews with a lot of media in his final year where he demonstrated a deep understanding of the context in the details of relations with the Russians and the limitations of green power everything you could possibly imagine but he didn't have any policies on any of it see Brock Obama's fatal flaw was he hated people and he refused to take meetings he went to Capitol Hill fewer times than any American in history with the exception of Harrison but the dude who live died of pneumonia unlike week three for eight years we didn't have a foreign policy but we still maintained this global order we just weren't getting anything on the backside in a series of countries that had never really been significant economic players rose to prominence because they got all the freebies without having to hand anything back so places like South Africa Brazil South Korea Poland India Russia and of course China Trump is not just the fourth [ __ ] the problem with Donald Trump is he's got a point he's got a really good point strategically the global order is no longer working for us but economically it was never supposed to we subsidized the Alliance the Alliance the fights the Soviets that was the deal which means that when the global order goes away it doesn't hit our economic system because that was the bride so there's a number of reasons couple dozen why the United States is actually going to just coast through this next period in history pretty well I'm gonna talk about just a few as they apply to Curry County first of all GDP the United States is the least involved trading country in the world last year only about 8% of GDP came from international exchanges or domestic system about half of that's within NAFTA in Kern County the number is less than 1% you guys live in the interior of a large populated state everything that you do is absorbed locally and so problems for you none next the shale revolution now the broader the columns here the greater the volume of crude production and the taller the columns the greater the cost of producing it so OPEX there on the far left US shale is on the far right this is data from 2012 back then the us kicked out about four million barrels a day of crude from the shale plays and it was very very expensive but since then we've had a series of technological breakthroughs and things like water management and drilling technology and here's where we were at the first quarter of this year the breakeven price fullcycle breakeven price in the US shale fields is now below $40 a barrel what does that mean for you you do you don't do shale at all it's illegal here and at the rate these technologies are driving that price down by the end of 2020 the full cycle production cost for US shale will be below Kern County's lifting costs for your traditional crude that's the environment in front of your energy sector it's not all bad these are where all the good shale plays are in the world the deep red ones are the ones we actually have decent geological data on there are five that are currently not being tapped that are economically viable with today's technology that already have the infrastructure the capital and the staffing in place you are one of the five the Monterey shale is probably the third best shale play in this country and because the North the North Dakotans and the Texans and the Pennsylvania's have already done the heavy technological lifting as soon as laws change here it's gonna be a gold rush give you an idea of how big it can get the Permian Basin in West Texas this year alone is going to add more new production than double your current output and it's probably gonna do it again next year the math has changed your energy production in terms of conventional is the cleanest in the country shales cleaner it's time to start changing the conversation there is a way that you would have lower emissions and use less water have less inputs it just doesn't use conventional crude let's talk green energy this is a solar map if your goal is to actually generate usable power and reduce carbon emissions you have to be in the red zone that's the only place where the seasonality is sufficiently narrow and the Sun is intensely bright enough where you can even try it obviously you're in that zone here's the same thing for wind again it has to be in the red you guys are in there and registers it's a really small footprint nice current let's combine these into a single map greenest solar blue is wind these are only the good zones fun fact it's worse than this because this assumes the climate doesn't get in the way this assumes that you're a low enough elevation that the wind turbines still spin this assumes you don't have icing problems this assumes you don't have dust storms now pay attention to these particular zones North America and China because we all know Turner's the rising superpower whatever let's make all those changes u.s. looks pretty good Kern County still has solar still has wind the rest of the world not so much there are only three first world countries that can actually make a reasonable go with green energy now let's put your situation in context we talk about East current as being an ideal zone it is in West Texas there is empty flat open dust-free level land equivalent to three California Central Valley's not three California Central Valley's that are flat and open three in total so far Texas has added 25 gigawatts of wind and about 4 gigawatts of solar now you're on wind you're like oh and on Sol you're like whatever cuz you know you Kern County has beat Texas when it comes to solar but here's the thing we have no state mandate we have no state subsidies Texans aren't green because they care about the environment Texans put in green power because they're cheap I think I'm the only one who actually paid for his panels actually over the course of the next five years Texas is going to be the number one solar state and probably five to ten years from now guess what the first city in the country is it's going to go 100% Green Power Dallas Fort Worth Dallas Fort Worth hangs environmentalists the math has changed we waited for you to do all the research and development than technological stuff and put in earlier generations of the stuff we waited for at all work then we put it in that so Texas does it Texas doesn't believe in government it's a different system okay let's talk food the deep blue and the deep green those are the states that are significant exporters of grain-based calories wheat corn rice soy everybody else is in that importer with countries in red and orange importing at least half of the calories that they consume now in a global system that starts to fall apart where supply chains become more of a problem these are the countries that are looking at at least a 40% reduction in their ability to grow the crop in the first place this is what famine looks like folks the continental and scope it's a country killer it's a culture killer and if you are an American farmer it is quite possibly the best end scenario of all the last time the global agricultural system seized up like this it was the early 1800s the Napoleonic Wars every food exporter in the world had a crisis simultaneously with the exception of the United States it was our pioneer era it was the greatest expansion of agricultural wealth in human history and we're about to have it again there are only five countries that are gonna come along for the ride on that particular boom only five countries that can expand agricultural output in that environment now the first one of course is the United States it will expand more than everybody else put together the next two I'm sorry the next one is Myanmar anybody here grow rice okay we'll move on Argentina and France a little bit of everything Australia it's all about the wheat it's all about the beef however Australia is right on the edge climate wise it makes east Kern look wet sometimes so they're not a consistent competitor they've got rises and falls that happen pretty dramatically and then the last one is freakin a little Lou New Zealand now New Zealand has tripled their Dairy Herd in the last 40 years they now the world's number one dairy exporter they've got the land they've got the climate they never get snow it never gets too hot you put up four posts and some wire and yellow ribbons you have a dairy paddock you're done that's it lowest development cost for it in the world as a side effect of New Zealand's dairy industry they are already the world's fifth largest beef exporter one of these days it is going to occur to some clever Kiwi that they can raise cattle for beef on purpose and they're gonna take that market by storm okay factor number five demography now what we have here is a standard demographic profile you've got children at the bottom young adults mature adults retirees at the top men on one side women on the other this is India this is what's called a consumption lead demographic because whenever you've got your bulge in your population below roughly age 40 it's all about the spending kids cars college pops pimping sment but they're new yeah you tell that joke in like Texas and everyone's just like stealing silence they're new they've got high demands but they don't have the income to match so they have to borrow to make up the difference college loans car loans mortgages fun thing about a system like India they don't necessarily need to be part of a global network because all those young people can consume almost everything that the country produces they can be shut off from everyone else that's not the case for the Koreans and a baby bust back in the 70s and 80s they never recovered so they've got a lot of people in that 40 to 65 bracket the mature workers the people who have been in their careers for 30 years know everything there is to know but the kids have moved out in the house has been paid down yet they've got all this money coming in from their expertise so this is a system that instead of being driven by consumption is driven by capital and investment great infrastructure great mid-career training fantastic technological base but it has to be part of a broader network because they can't possibly consume what all those highly productive workers produce and then if you're not careful you turn into Japan Japan's got an interesting problem how do you run a first world economy without a workforce there's a reason that they are the world's leader in automation fun fact about robots they don't vote yet so it doesn't matter where you put them tokyo for positions large chunks of their industrial base in third countries in order to purchase strategic friendship the four largest toyota facilities kentucky in texas kind of in the middle kind of chimney i want to draw your attention to that bulge down below those are the millennials god damn Millennials now while i love making fun of millennials this isn't that kind of presentation so just take a couple subtle digs that bald is what has kept the united states out of recession since probably 2010 and there's enough young people in that balls that their consumption will probably keep us out of recession for at least another five years maybe seven certainly at least to all those fidgets spinners add up second good thing about the millennials is if you fast-forward to the year 2030 they start edging into that tax paying class so we all have heard about the baby boomers retiring and how it's the snake swallowing the watermelon that is true i don't mean to talk you out of that concern it's very real but there is a light at the end of the tunnel third we're the only ones with a light at the end of the tunnel because if you look at the combined demography of the rich world without the americans nobody else has millennials we're in the midst of the great transition the united states has become the only country that can absorb global exports at the same time it's abandoning the global order that makes those exports possible it's a one-two punch to everybody else that most countries won't survive about California's demography a little bit later 6th geography the tan area that's the greater Midwest largest chunk of arable land in the world out produces the rest of the world's major zones by a factor of 2 to 1 sorry I said that wrong out produces the next two zones combined the yellow yellow the blue lines the greater Mississippi system that's the world's largest natural navigational water network moving things by water is about 112 the cost of moving them by land and it perfectly overlays the world's greatest production of bulk products got that ok in addition the mountains and deserts to the south the force and lakes to the north ocean moats on either side the United States not only is the richest chunk of territory in the world it is the most securable we are condemned to be in an economic financial cultural industrial agricultural and military superpower decades of bipartisan effort have yet to screw this up and we didn't figure out how to do so last night either and then finally there's the imbalance that is occurring at the end of the current age on the right you got a jump carrier on the left you have a super carrier the jump carrier has about 1/7 the combat capability of the super carrier there are 20 jump carriers in the world half our American there are 10 super carriers in the world all of them are American 1 American super carrier battle group has more combat capability they've been combined navies of the rest of the planet now we're in the process of decommissioning our carriers to replace them with bigger carries that have lasers at current rates of naval bailout the combined global Navy will roughly equal the American Navy in the year 20 to 40 the Chinese flagship their carrier former Casino I'm not worried so the United States is a country with global reach and global assets and global strike capacity but no global interests and the United States is the only country that no longer has an interest in maintaining the global order yeah it's the only country that possibly could for the 5 billion people that were part of that order who depend upon it for their physical and economic well-being that is quite possibly the worst outcome of all this little sketch map shows you the areas that are I expect to experience the greatest Falls these are the places that developed the most over the course of the order from 1946 to the present and these are the places who are utterly incapable of maintaining those gun those gains on their own this is the place where I think expect the shooting to be most intense that is three-quarters of global energy shipments that is three-quarters of global manufacturing supply chain steps that is three-quarters of global agricultural shipments does it all have in common the Americans really don't care it's not their commerce for the most part it's not their allies okay we gotta talk about the guy at the top it's unavoidable now when Trump glided down that golden escalator three glorious years ago everybody thought it was a joke I think he thought it was a joke everybody thought it was a PR ploy for the next few weeks he was ranked 17th of 17 and so the people who came out of the woodwork to volunteer to be on his steering committees were of the quality that you would expect this is where Michael Flynn came from for example and then lo and behold won and the Republican establishment was like oh holy crap wouldn't even think he was a Republican this wasn't he was a registered Democrat when he entered the race which is hilarious anyway all of a sudden the Republican institutions were like we've got a we've got to get some people in there guys you know we got to tell it what it's what it means to be a Republican and the first person in the door was Priebus from the Republican National Committee who took over as chief of staff he tried to inject Republican orthodoxy into this freshman leader in essence he tried to tell Donald Trump what and how to think well we all know that Trump is a weak-willed man and he didn't last a year next Rex Tillerson came in from corporate America to lay out to Donald Trump what global stability means to large corporate activities around the world most of the fortune 500 have moved on from doing most of their business in the u.s. to most of their business abroad well just Trump thought that was borderline treasonous he's gone Gary Cohn came in from New York to explain how financial flows in and out of New York are healthy for the global system well that was math and Trump doesn't like men HR McMaster came in from the Defense Department to speak truth to power oh god that was tedious general Kelly came in to replace pre-business chief of staff and he did something interesting he sent back and he just watched the show for about a week and he realized that the biggest problem the Donald Trump had was information he wasn't consuming the information that was coming in from the CIA about what's going on in the world those briefs were too long they were like a whole page instead he was just going to his phone and watching Fox and Friends and just getting it from Twitter and so the first thing John Kelly did when he actually stepped up to that standing desk that he has in the White House is he took Donald Trump's phone away I see what you're going for there general you know good for putting your finger on the issue but I know how I would respond if someone tried to take my phone away and so now Donald Trump plans his day without consulting his chief of staff Kelley is still officially in office but he's really just holding down carpet that just leaves general mattis at the Defense Department mattis is now the only person on the Trump team who will speak openly and honestly to the president about consequences and context and as a result strategic policy in this country is no longer made with general mattis in the room when the decision has been made he is emailed and he goes off to the Defense Department to issue orders folks that it that's it that's the entire axis of adults and they're all gone which means that this relatively reserved constrained thoughtful Donald Trump that we've all gotten to know over the last two years is about to be unleashed the pace of change is about to accelerate the two people who matter on Team Trump are these gentlemen now the guy on the right you've probably heard of that's John Bolton he's the national security adviser he has a reputation for being a dick that doesn't mean he's dumb this is not his first stint in government he started out at the W administration and back then the North Koreans being North Koreans were starting to ship missile parts to countries that we really didn't want to have long-range missiles and he realized that he couldn't get an international compact together under the W administration because of reputational issues and because we had burned most of our bridges already with the Iraq war so he got a little sneaky he went to the French he said mr. president I just thought you should know that we believe that France is the most powerful country in Europe well yes we are and we've noticed you've got an amazing Navy well yes we do and that people listen to you why absolutely how about we try something here we all agree that North Korea's a problem how about in the waters that we can control with our navies if we see a North Korean ship that is says that it's selling cookies to a country that doesn't import cookies like say Iran we check it out and we report back to the other about what we find and the French were like okay let's do in French waters just with friendships no biggy done did the same thing to Britain and then to Japan and then to South Korea then to China then to Russia and then to Sweden then to Israel seventeen other countries brought them all together he's like you know that deal you think would never happened well you've all just signed documents of exactly the same wording you know what we call that international law it worked it's still working the country he wants to take down China the other guy Robert lied Heiser maintains a much lower profile he's the US Trade Representative now the USTR is responsible for negotiating and enforcing all trade deals it's busy ban these year days busy man these days this is not his first stint in government I either under the Reagan administration he was part of the plaza project quick history lesson 1980 1984 first Reagan term the Cold War was going fast and furious we had a nuclear scare in Berlin it was really important to the Reagan administration that all the allies be shoulder to shoulder on strategic issues so the Reagan was willing to overlook some less than ideal behavior he noticed that the Germans the French the Japanese and others were intervening in currency markets to push down the value of their currency in order to spike exports to the American market stabilize their economic and political systems he put up with him because he needed their support on other issues fast-forward to 1985 Reagan's been reelected Gorbachev is rising to power soviet-american relations are warming considerably he calls the allies together to the Plaza Hotel in New York and says look we see what you're doing and you're gonna stop because if you don't we're gonna pull out of the global order and you can deal with the Soviets by yourselves because we have a side deal now within six months not only had the event intervention stopped it had reversed the US dollar dropped by half-light Heiser was the Reagan administration's hatchet man assigned to Tokyo to make sure they didn't renege on the deal and he did so in a very interesting way when he ever he got his marching orders from the White House he'd go in he'd speak to the Japanese foreign ministry to lay out the American position and then when he was done he'd take off his translator microphone disassemble it right there in front of everybody and have little GI Joe wars with the pieces while the Japanese presented the counter-argument when they were done he put it back together put it on that's very interesting we're gonna do it my way right he makes sure he gets the leash loose from his boss and then he goes in and imposes a deal there's no negotiation with the country that he wants to take down most of all also China for issues going on an international trade right now right all right number one energy specifically because of shale because the United States is now such a small net importer and with the speed of a tweet we could almost become an exporter and we will within two years anyway the administration doesn't care at all what happens to global energy prices because we know that the United States can split off in a matter of a few weeks if it needs to so international price roiling is now seen as a feature rather than a bug next to our the steel and aluminum tariffs and the auto tariffs they are not included in any of the trade deal renegotiations they are designed to be a hammer that you consistently whack people with so that they do things your way on any given moment so we've got deals with the South Koreans and the Mexicans and the Canadians right now these terrorists have not been lifted they've just been temporarily suspended and then finally there's the currency issue and that's the big one most people don't understand how international currency markets international trade kind of work on the back end what the guts of the system is think of it like this if you're a Thai shoemaker and you're selling a bunch of shoes to Uruguay you don't get paid in Uruguay and pesos because nobody in Thailand once or needs or has Uruguayan pesos you also aren't going to get paid in box because nobody in Uruguay has or once or needs Thai Baht so what happens is the Uruguayan's pay in pesos it's converted to dollars on international exchanges and then reconverted to baht for the final payment three-step process what the Obama administration did with the first round of sanction against Iran is build up the logistical system for that middle step so if the US wants to it can step in and say you want dollars No so not only do you lose access to the American market not only do you lose access to anything like oil or wheat or rutabagas that are traded exclusively in US dollars abroad you lose access to anything that requires a currency exchange that's over 90 percent of global trade the remaining 10% that's internal EU trade hell the Europeans use the dollar exchange process for half of their internal trade that's what's coming into play with Iran and that's why everybody has scrambled to do whatever the Trump administration wants to when it comes to Iran that's why there's only eight countries with waivers and those countries have to on average reduce their imports by three-quarters in the next six months we have already seen Iran's oil exports drop by three quarters in the past 14 months and it's gonna drop by another half within the next six and Trump has already threatened this tool against NATO and allies for completely unrelated issues if you want to play internationally at all on anything you have to play by American rules because the United States doesn't care what happens to the global system the next day quick run through the countries this is president moon of Korea now while lots of world leaders were saying no Trump's not serious or oh we can hold them out or all we can wait until he's gone the South Koreans didn't have that option they know that without firm support from the United States at all times that they face the uncertain future and the perhaps the chance of being at war with North Korea Japan and Korea at the same time they must stay on Washington's good side so while everybody else was bad-mouthing Trump president moon came to Washington to cut a deal he didn't get a good one and it's unclear that if when the rubber hits the road that the Americans will be there for the South Koreans when it matters but he didn't have a choice he had to keep Washington happy no matter the price next Mexico now on the left you've got Pena Nieto he is the outgoing Mexican president he is quite possibly the best partner that United States has ever had in Mexico City he's pro-business he's Pro trade we got cooperation on things like the drug war and immigration unfortunately he came to power during the Obama administration and Obama never talked to him because he didn't talk to anybody and then we got Donald Trump who never passed up an opportunity to denigrate New Mexico in the Mexican people missed opportunity his replacement is there on the right that's Lopez Obrador now obradors an interesting chap he combines the anti-foreigner sentiment of donald trump with the shrillness of elizabeth warren with the blind ideology of ted cruz with the political corruption of Hillary Clinton and the pathological refusal to engage in basic mathematics of Bernie Sanders all in one dude you won in a landslide takes over December 1 and there is an opportunity obrador not wanting his first year to be dominated by pissing contest with his with Donald Trump reached out to Pena and reached out to Trump says look if you two can agree on an after reboot before December 1 I'll get it ratified I don't want to have that fight two weeks later we got the new NAFTA deal is it risk-free no definitely not but it doesn't have to go through the house you guys know why Trump is so smug in this photo because the other guy is the only world leader that the global media thinks that Trump is smarter than meet Justin Trudeau now you guys know who Christina Freeland is she's the Canadian foreign minister bright lady probably one of the 10 smartest people that Western civilization has ever produced I beat her in a debate but you know we're not keeping track here Christina Freeland realized five minutes into her first meeting with the American president that she was the wrong person for the job not because she was a woman but because Trump has this little thing where he has to feel that he's the smartest person in the room and as long as Christina Freeland was in the same zip code that was never going to happen so she realized that she needed some pretty thing to put in front of her to wear a tight outfit and have some great hair and a good smile to think you know to stand there and smile and nod whenever Donald Trump spoke while she made policy in the background and she found Justin Trudeau is the perfect choice the problem with that strategy is that earlier this year the Canadians hosted the g7 summit which meant that Justin Trudeau had to actually speak and for the first time of Trump's presidency the internal monologue for him puppeting Justin did not match what his ears told him and it all fell apart and shortly thereafter Donald Trump got a bilateral deal with Mexico and light Heiser went up to Cristina Freeland in Washington is like oh I can't wait to see how you're gonna crawl out of this hole and the Canadians had to cave on almost everything that was on the table but that means that the United States now has a deal with South Korea Mexico and Canada that kind of puts this guy in a box Shinzo al baiy was like I thought we had a deal he was a second world leader to see Trump they struck a series of security agreements and always before in the United States security begins an economic deal they've always been linked not anymore a nabe was told to his face that whatever your strategic plans are if they involve the United States you can forget about it so you want us to leave this broad coalition in the Pacific to put ourselves on the front line with our carries with our Marines and hedge in China while you stand behind and cheer I know you're in front it's your neighborhood this is your problem you want a trade deal we'll talk trade you want a military exchange we'll talk military exchanges you want intelligence exchange we'll talk that but those are all separate well we might link them together but you can't and about a month ago the China the Japanese finally caved and started talking bilateral deals in each and every separate item next up Britain brexit has not gone well it's going to be a hard brexit with no deal now in my opinion this was always where it was going to go with the European Union you've got 27 states that all have veto power there's no way you can make everybody happy considering all the issues that are in play especially since some countries one of the punished Britain that's nothing compared to what's coming because the only way that Britain can avoid a hard depression forget recession that's now baked in a depression is to get a free trade deal of the United States as quickly as possible and light Heiser knows this and light Heiser has explained this to Donald Trump quick war story literally yes remember World War one I mean not personally obviously but we had a bunch of destroyers that by the technology of the day were really really crappy started leaking in drydock which shouldn't be technically possible but it happened anyway at the end of the war we scrapped a few of them in order to get parts to keep the rest going but even then it didn't work very well so we ended up mothballing by about forty four of them come World War two and the Berlin blitzes and the Brits were on the ropes and they steamed to Washington say look we need whatever help you can get we realize you're not gonna get the fight but you know what what comes where the ships can we have like well you remember those ships that all of your sailors made fun of you can have those and the Brits royal thank you very much thank God and the American like it will just cost you every single naval base you have in our hemisphere routes that's the sort of deal that the Britons are gonna get on an FTA with the United States something that will lock them into strategic subservience for at least the next half century when merkel showed up at the White House for the first time she thought all she needed to do is explain the situation to Trump so she came with a history lesson mr. Trump Germany's in the most deal strategically difficult place in the world we're in the northern European Plain people can march on us from all directions we have eight major powers right on our borders the only way we have ever discovered that Germany can be successful and safe and ridge is to be better better financing better infrastructure better educational system stronger labor force stronger industrial base but you take anything as efficient as Germany and you make it as big as Germany and it's very existence is perceived by everyone around it to be a mortal threat so European history is this tragic pendulum that swings between periods of German strength which foments a europe-wide rebellion against us that tears us down in a cataclysmic war and makes Europe shattered and turned central Europe into a shatter belt that sucks everybody in mr. president the only way we Europeans have ever found of a way of stopping that pendulum is to bring in an external security guarantor who changes the rules of the game who outlaws war who puts us all on the same side mr. president that's the United States that's NATO that's you do you realize if you do what you say you're going to do that that's not just the end of the European Union in the end of NATO that's the end of Germany itself his response well I do now she didn't come offering anything she didn't understand the transactional nature of American foreign policy now she just wanted Trump to continue what the Americans have been doing for the last 70 years so on her way out the door Donald Trump gave her a parting gift a bill and for services rendered for defending Germany since 1946 for all intents purposes the American German the American European the American NATO relationship ended over a year ago and the institution is just on autopilot right now without no support that just leaves she I mean you gotta trade you with South Korea with the NAFTA countries with Britain and Japan that's already over half of the American trade portfolio remember we're not a trading country which means she has nowhere to go his country is absolutely dependent upon external demand for their manufacturers on external support for their materials and their energy and on freedom of the seas to make everything go both ways China can not survive in a world of anything other than a global order and so they're preparing for lockdown and that's the environment that bilateral relations are right now the question today isn't whether or not the Trump administration is going to play absolute to the end hardball with the Chinese the question is whether or not these trade talks are anything other than a cover with the goal being the absolute destruction of China's a unified nation state because that wouldn't be hard all right you can't have me here the day after the elections without me talking about politics a little bit so let's start with what's going on with the Trump administration's thinking now this is how a lot of supporters of Trump seem to think that he thinks of the world multi-dimensional Chesky she's not a whole novel lover yeah a whole nother layer from the rest of us well really it's probably more like this now if the game you're playing is one that you don't care about then kicking over the board is not necessarily a bad strategy keep that in mind the rules of the last 70 years no longer apply to the United States and so if we kick over this ally or that I like not a big deal now whether or not Trump fully understands that is an entirely separate topic but he's getting a lot of things right by random if he doesn't have some degree of underlying understanding okay this is how the Democrats see the world the diversity alliance in the middle the green those are the white folks the next layer out are Hispanics the diversity Alliance concept is that the United States is getting younger and more ethnically diverse therefore the Democrats are the natural governing party of the United States and all they have to do is sit back and let demographics run their course well folks the Democrats have never been very good at math this demography only exists in this form in California so yes that strategy can work here and yes you will be dealing with that until the Sun explodes but that is not where the nation is going the most ethnically Democrat or the most demographically diverse state is not California it's New Mexico why second Texas is third and if there's one word that you would use to use to describe Texas it is not blue fun fact second-generation Hispanics are stronger social conservatives than evangelicals so the Democratic strategy of recruiting illegal immigrants and young voters is recruiting people for this election cycle that cannot vote but will vote Republican the next cycle that's a really stupid strategy but it has been the Democratic strategy now for 40 freaking years lo and behold they are down 1,000 seats across the various elected officials of the state legislature or above in this blue way we just had you know how many they picked up 40 that's not a recovery that is the lowest recovery in a midterm election of any oppositional party in American history and that after the biggest push in terms of funding and celebrity endorsements that we have ever seen in this country that is a dead cat bounce nothing more it's worse here's Georgia that's kind of broadly representative of the south still red here's the greater Midwest very white and there's the Northeast you notice how it's aging as the baby boomers move into retirement they're not just shifting from left to right there shifting to write populist at the Ted Cruz variety so the Democratic strategy in its current form is a disaster in waiting of the 15 predictions of a blue wave in the last 30 years we've only had blue progress on three of them that's not a hiccup that's the path that that strategy leads to now that doesn't mean necessarily the Republicans are in good shape now for those of you who were here last time I showed you this chart this kind of breaks down the factions in the various parts of the American political community and I also showed you this this is how we actually ended up in 2016 the two parties for the moment are offline they're reshuffling this happens it's normal it's even healthy technology evolves the balance of power among the states shifts demography demography changes the party shift with it on a delay of 5 to 10 years now the last time this happened it was the 1930s we had the Great Depression we at World War two we had FDR it took twelve years for the parties to shake out into the form that we recognize today keep in mind that African Americans it used to be Republican and the Democrats it used to be the anti regulation big business party the factions are moving so I suggest when you use terms like Democrat and Republican you don't use them too seriously because they don't mean what they used to but this no longer even works because of these guys these are 40 House Republicans who did not bother running the only two that actually ran are in the bottom left corner and their only reason they're on my graphic is they were supposed to be in prison by now lo and behold they managed to stick it out and they won oh my god these 40 gentlemen and or 40 ladies and gentlemen represent the moderate wing of the Republican Party that can do math the national conservative national conservative national security conservatives fiscal conservatives and business conservatives all 40 of them are one of those three factions none of them with the again with the exception of the two guys who are likely to be in prison soon are in the new Congress they didn't even run so what happened this time wasn't a blue way it wasn't a red wave it was an orange wave we saw the moderate heart of the Republican Party not even show up and Trump's version of Republicans filled the entire void the freedom party you know those former tea partiers that is now the liberal wing of the Republican Party in Congress so we got to look at it differently it's a two by two matrix the further to the right you are the more that you think government should stay out of your economic life the further to the left the more you think that government has a responsibility to take as much of the economy as possible and do something with it the closer to the top the more you want the government to stay out of your personal life and the closer to the bottom the more-- that you think the government should play a role in policing social mores now everybody is on here somewhere and if you're near a quarter you a quarter you can combine the two so if you're in the bottom right corner both an economic and social social conservative you think that the government has no role in providing free food to poor people in fact starvation is good for character if you're at the top left an economic and social liberal you look forward to the day that we're all wearing gunnysacks that were issued by the government after it that it paid for by confiscating everybody's private property Kumbaya these are the traditional swing voters for the last 70 years you'll notice they're both socially conservative okay here's the old Democratic Alliance you'll notice it's pretty broad and part of the problem that the Democrats have always had is it's hard to get everybody on the same page you basically have kind of three core constituency groups you've got the urban liberals who tend to be very well-educated and pretty white you've got a mix of minorities and then you've got the unions but look we're african-americans and unions are in that chart they're very far I'd on the social conservative spectrum very hard to get them to show up and then here's the traditional Republican group it's smaller it's more cohesive that's why they tend to win the big elections cuz everybody actually shows up but they also have a lot going on okay everybody got that here's everybody at once fun fact this is Trump's coalition he's already succeeded in bringing the unions into what I call the Trump latents the next generation of whatever Republican means he's making a really solid run on the Catholics and he's being shockingly successful with Hispanics keep in mind second generation Hispanics tend to vote very socially conservative and there is no more anti-immigration group in this country than Hispanic voters they don't want the competition and so unless it is a family unification issue they want a sealed border the Democrats haven't figured that out yet but Donald Trump has if Donald Trump can get past the race issue and yeah that's a very high bar that circle already represents over forty percent of the American population if you can get over the race issue can you imagine eating into the African American community southern baptists it's not that far off from the evangelicals at present there is no coalition shaping up to resist that the Democrats have probably broken past the point of no return this however would be the likely secondary group the opposition party if you will now again we're early in the process this is year two of four it's probably gonna be a ten year transition this is not written in stone but this kind of fits that urban group that's highly educated that can do math I call them the mafic rats but the business community and the fiscal community are absolutely positively no longer part of the Republican coalition they're not even represented in the White House anymore and so we will naturally see these factions move around until we get new two-party system today projecting forward this is the most likely outcome not a hard forecast but that seems to be where we're going okay that's all we got time for if you're looking for a coaster or perhaps a doorstop on the Left that's accidental superpower that's how it all started shape of the world how we got to where we are how it's breaking down and the international crises Americans are most likely to notice the next one absent starts with the shale revolution plays it forward shows the military conflicts that will erupt around the world as a result and being written right now is this bad boy comes out next November this looks at what countries will actually succeed as the world breaks down teaser alert there Japan Turkey France and Arjun freaking Tina it's not important that you buy them it's not even important that you read them but if you could all go on Amazon for me and review them five stars okay thank you we've got a few minutes for questions I'll take whatever you guys got not all at once come on so Kern County is a big agricultural exporter sure and if we don't care what the rest of the world is eating who's gonna buy our almonds I'm not suggesting that it's a straight line from here to there and for the handful of products especially here in the Central Valley that you guys have invested a lot of infrastructure in to support almonds probably being at the very very top of a short list yeah yeah one of the things I talk to folks in the Midwest is you know all that corn you've planted for the ethanol program it's like they're not even using it for animal fodder anymore so it's time to start thinking in terms of soy or wheat there will eat changes along the way I don't mean to suggest for a moment that it's all business as usual and you need to look at what your export products are and where they're going and whether or not that end market is one that can survive with an unsafe cold system in the case of almond you're primarily talking China and Korea that's a hard no in terms of things that are more storable and are more in the staple category things that you guys have tried to get away from as you move up the value-added scale it might be time to start looking at them again and in terms of things like beef No it all goes to Mexico Mexico looks great I'd also start looking for alternate markets so for example China 100% dependent on global stability Southeast Asia not so much there's almost a trillion people in Southeast Asia there are more coastal Southeast Asians and there are coastal Chinese and Wow much less of a political headache in dealing with them not a straight line but it's mostly good news please as a political professional with with a great intellect in this in this field how what were your thoughts during the last presidential election before the fact what were your own personal thoughts like what are my politics is that what you're asking not not the politics but on the actual election itself and the differences that you saw that you've seen from this presidential election to one's previous sure well remember that the last presidential election was really the first one with social media and whatever a new communication technology comes in it takes 10 20 30 years for the society kind of figure out how to incorporate in the way we were doing we're far better now than we were two years ago although for those of you bastards who are still getting your news from Facebook have you learned nothing we'll get there the rules of the game changed not necessarily in a bad way they just changed so people getting their news from non broadcast formats so it used to be we'd all watch the same news program at all dan Rather and Tom Brokaw and then we would god forbid have conversations about it that's how we communicated that's one of the reasons why the the middle of middle America is so big because we actually got the same information we discussed it we drew conclusions we compared that one in each other in narrowcasting and social media you don't do that you just get the feeds that meet your personal beliefs and you only discuss them with other people who are on the same not a good idea second big thing is the way we've changed fundraising so it used to be that the business community was the big dollar amount and the idea that the political system in the United States was a little corrupt reasonable charge so we did campaign finance reform to remove the business community from the process at the same time social media came in and you could click a couple buttons on your phone and send $10 to better or work all of a sudden instead of the Republican community having the business community and therefore dominating fundraising it was all these five 10 20 dollar donations most of which went to the Democratic side of the equation and mostly went to the most erratic or easy candidates that you could imagine it happened on the right - this is where we got Ted Cruz this is where we got Donald Trump this is where we got Bernie Sanders this is where we got Elizabeth Warren and those people now dominate the system my biggest concern moving forward is unless we get people who are politically moderate who don't mind having a conversation with somebody who necessarily disagrees with them who perhaps gets some information before drawing a conclusion and maybe can do a little bit of math you know moderates until those people show up the primaries to actually help select candidates the systems off the rails and they'll stay off the rails so if you want a moderate Democratic Party or a moderate Republican party or god forbid an actual moderate party that's the way to do it but sitting back and just you know getting your news from your phone every once in a while that's actually part of the problem that's my biggest concern at president it's totally surmountable but it does require us to think a little bit differently about political responsibility okay I've got a question here so that was a fascinating whirlwind tour of geopolitics in like 40 minutes that was fantastic it's done really enjoyed it now one thing that I thought was missing there we've covered a lot of ground here with a lot of countries everywhere except Russia what's your what's your take on Russia and how it plays into US politics as well and you know how do you see us interacting with Russia in the near future so that was the first question and I guess the second one was around trade generally makes countries better off because you know we can do things better on certain areas and other countries can do things some certain things better join join partners if you can make alliances and we kind of share that that helps but I think what you're projecting is a future where US is kind of isolated is that does that make economic sense I mean because I know they're self-sufficient get peace is a huge question ironically Russia is the simpler of the two yeah okay all right okay so there's two things going on with the Russians right now number one the global system was designed to fence in the Soviet Union and so once the Soviet Union died the global system really had no reason to be the Russians are now proving successful at breaking down in their mind at breaking down the global order which has always constrained them bad timing because that means with the Americans gone countries like Germany and Sweden and Britain all of a sudden start acting like normal countries all at the same time and all of them see Russia as a foe so as much as the United States global order was designed to contain Russia it was also designed to contain all the other imperial powers and now all being released at once there's gonna be a show we'll just watch it so that's one piece of it piece number two the Russians are dying out as a people the demography is atrocious they've got the world's highest infection rates for tuberculosis for example probably five to ten percent of the population is TB positive and a lot of it probably bout 1/5 of those people are also also HIV positive the birth rate dropped by 60% post-cold-war alcoholism shot up more heroin addicts in russia than the entire Western Hemisphere you know it's they're dying out as a people which means that they will do absolutely anything that might push back their expiry date messing on Facebook that's an easy call starting a war in Syria to distract people easy call they will do anything to distract disrupt and divide any potential rival anywhere in the world the mistake they made is doing it to the United States and being successful because again that means that the Germans are unleashed if you've been watching German politics Frau Merkel you know the grand unifier is in the process of stepping down the next parliament in Germany the largest party will probably be the alternate for Germany which is their version of the neo-nazis folks we're back in the 30s trade issues really messy short version the United States is a continental economy it's a resource exporter which means it it doesn't necessarily need to be linked into anything else now back before World War two we were primarily a commodity as exporter we did play in manufacturers we mostly when we were doing like carpet bagging stuff in China that's going to come back into vogue probably as a economic what's best word now I'm an Atlanta cyst I'm a green I believe in international trade and all the things they can achieve I lost the people who believe my way are no longer in the political system which means that we are going to go through at least a 10 probably closer to a 30 or 40 year period of the United States more or less looking inward but maintaining that big Club so we will always reserve the right to go out and thump whatever we think needs thumping it's not the world that I want to see but that's the world that it is remember that trade real grade if it's going to be equitable has to allow for common governance and free movement of people and if you don't include those two pieces you get distortions of the sort that let our political system to where we are today and that's the problem that economist has always had they just always assume that the political issue will just take care of itself and that is not the case that's why NAFTA can work but the European Union never could you are very well behaved you got one more if you don't mind it's your show like thank you so much oh this is regarding one of the reasons why us is still a superpower is because of the currency right there's dollars right very strong it helps you give the example about the pesos and the Thai bard conversion everybody has to go to the u.s. dollar to get into the currency they need now in the future do you see all the other nations which we are with our u.s. is the global currency it's about three-quarters of everything that's in circulation for all sorts of trade and store value undeniably dominate number two is the euro about seven years ago the Europeans confiscated and shirt bank deposits to pay for the bailout of Cypriots their Cyprus excuse me as a result anyone who used the Euro outside of Europe stopped they liquidated their accounts they switched over to dollars so they're gone third one down Japan Japan is the country in the world that is the third most likely to intervene in currency markets in any given day nobody wants again the yuan is not internationally traded in fact when they tried to internationalize they realized what they would have to do it sparked a trillion dollars of capital flight in four months and they've dialed it back if they want nothing to do with it next down is Britain they would love to be the global currency again but if there's one thing that every other country in the world agrees on it's that the Brits should never be in charge again and the next one down is Canada you know they run a tight ship but I'm sorry there's only 35 million Canadians they can't lubricate the global system and then it's Australia Sweden Denmark New Zealand and that's all of the world's hard currencies you can call it the least dirty shirt argument but you know the shirt actually has buttons and it's all the same color so you know it's there's just no contest all right you folks have been great thank you very much

Channel: Kern EDC

Views: 226,283

Keywords: Kern County, Energy Summit, Energy, California

Id: BclcpfVn2rg

Length: 65min 44sec (3944 seconds)

Published: Wed Nov 28 2018