History Has Restarted
You are destined to live in interesting times
“What we may be witnessing is not just the end of the Cold War, or the passing of a particular period of post-war history, but the end of history as such … That is, the end point of mankind's ideological evolution and the universalization of Western liberal democracy as the final form of human government.”
-Francis Fukuyama, The End of History and the Last Man (1992)
Those words, written by the political scientist Francis Fukuyama shortly after the fall of the Berlin War and end of the Cold War, have been proven false by the 2020s. But for all of my life and for the lives of most people on earth (the average person is 30.0 years old[i]), history has been on pause. No longer. A series of disruptions are reshaping everything and the world has not been this uncertain since at least WW2.
Stepping back, there have been three major turning points in human history, each with massive social upheaval: the Neolithic Revolution (12,000 years ago), the Industrial Revolution, and the Information Revolution. In the Neolithic Revolution, humans went from hunter gathering to sedentary agriculture and animal domestication. The Industrial Revolution moved people from the farms to the cities and is still underway in some developing areas of the world. We’re in the early innings of the Information Revolution and everything from the nature of work to consciousness itself is in flux. Society is changing at an accelerating rate.
How these changes will converge is unknowable, but its safe to say society in 2053 will be unrecognizable from 2023. The wheels of history are rotating around three axels: America, the global order, and technology.
America
Despite forecasts of its demise, the United States has never had a stronger hand relative to the rest of the world than today. But its geographic fortifications are currently under siege by social forces that will redirect the future of the country and as a result, the world.
The pandemic and new technology reshaped the geography of the country and will continue to do so for decades. With an Internet connection, many white-collar workers can now work from anywhere. The resulting population redistribution will revitalize certain areas, decimate others, and change resource consumption patterns. Empty office buildings and the commercial real estate loans that underpin them in urban cores represent a ticking time bomb in the financial system. Younger workers untethered physically from their jobs will be able to care for their parents, upending social safety net assumptions.
Internal migrations will also alter the political balance of power, as states gain and lose population. The New Deal social model, enacted by the Democrats in the 20th century (Social Security by FDR in the 1930s and Medicare by LBJ in the 1960s), is showing signs of fraying. America’s posture in the world - will it export its values or focus inward - is very much up for grabs. The 2024 US Presidential Election is likely to be the most consequential in decades.
Figure 1: Unrest in America
Global Order
Beyond America, the world is changing from being dominated by the US to one characterized by Great Power Competition. The New Cold War between the US and China is splitting the world into competing blocs. Rising powers like Brazil, India, and Turkey are throwing their weight around and picking sides.
In Europe, the largest land war since WW2 has broken out in Ukraine. US involvement in the region will be very much a major question in the 2024 US Presidential Election. Will the US continue to defend Europe through NATO or will Europe stand on its own? The Russo-Ukraine War has already severed Europe from Russia economically.
The Global South (what used to be called the Third World) is not participating in the West’s sanctions on Russia over the war in Ukraine. China, India, Africa, Latin America, and others – all together 6.5 billion of the world’s 7.9 billion people – are eschewing US leadership.
In Asia, a new axis of power has formed on the Eurasian landmass between China and Russia. Together, this alliance spans 12 time zones and includes vast resource wealth. At the same time, China faces substantial headwinds. All countries on the periphery of Asia are sizing up a rising China and, in many cases, arming themselves. None of these countries is more threated by a rising China than the island nation of Taiwan, which China vows to annex by force if necessary. Taiwan is home to a concentrated supply of the 21st century’s most valuable resource, semiconductors, and a war over Taiwan could cause a global depression.
In the Middle East, the American withdrawal from Afghanistan in 2021 completed a much bigger US withdrawal from the broader region. Since WW2, America has guaranteed the region’s security to protect a steady supply of oil. But the Shale Revolution in the 2010s conferred energy independence and America no longer has any reason to be there. China has stepped into the vacuum and brokered a peace deal between regional enemies Saudi Arabia and Iran. China does need Middle Eastern oil and their actions in the region, along with a resurgent OPEC+, will be a major campaign in the New Cold War.
Figure 2: China brokers peace between long-time enemies Saudi Arabia and Iran
Technology
Behind this clash of civilizations is the most important change of all and the one that defines our era: the Information Revolution. Advances in communication, artificial intelligence, and computing power are proceeding at an accelerating rate and will interact with nations and our lives in unknowable ways. The Singularity is a science fiction concept when machine intelligence overtakes human intelligence ushering in infinite advances, something that doesn’t look so fictional these days.
There is a dark version of the future where machines enslave humans. That world is far-fetched but it’s not so hard to imagine a world of AI superpowers, where the US and China compete to have the best AI models like the Cold War competition over nuclear arsenals. China’s 1.4 billion people and their data exhaust are a formidable asset in such a world.
There is also an optimistic version of the future promoted by the techno-utopians. In this world, machines solve all of humanity’s problems and we are free to pursue leisure activities.
Regardless of how it plays out, it will change the world.
Figure 3: Homo sapiens are on the cusp of evolving
Dynamic Systems
All of these systems – America, the global order, technology – are going to interact in unforeseeable ways as history goes on the march. Ad Astra is going to write more about these topics in the future. We’ll be doing a deep dive on commercial real estate and the risks it poses to the financial system. There will be a post on how the US can win the New Cold War. If you missed it, check out our piece on AI. And expect more on Big Tech and the impact of social media on children.
It’s an exciting time to be alive, buckle up.
[i] https://ourworldindata.org/age-structure#:~:text=The%20global%20average%20median%20age,was%20Niger%20at%2014.5%20years.