Dec 23, 2011

"The Next 100 Years" by George Friedman

The Next 100 Years: A forecast for the 21st century by George Friedman is a very interesting book that made some noise, and even was on Farid Zakaria's book of the week section. I read the book recently, and following my notes. I first present a summary of his bold predictions, and then discuss each.

Quick list of predictions:

  1. US will remain a super power for 100 years.
  2. China will collapse by 2020
  3. Russia will have a second collapse (the first being the soviet one) around 2020s
  4. The next 4 powers until 2060: Japan, Turkey, & Poland
  5. A World War 3 (space war) between US-Poland vs Japan-Turkey
  6. The great US-Mexico confrontation of 2100 (since a war might not be possible to happen)

US super power for 100 years

Friedman claims that US is just in its beginning of its ascension to power. And he insists, despite all the economic problems now, US will become even a grandeur super power in the next century. One scan through the first few chapters doesn't fully explain why. However, the lines of the argument become clearer throughout the book.

Friedman provides a brief explanation of Geo-Political analysis. The idea is that there are certain geographic and political properties of each region and country in the world that control its future. Friendman states several times that no matter who is the president of the US, given that US is a global power, it will act in certain ways that are inherent in its position.

In a way, Geo-Political analysis is similar to Value Investing - in that it assumes that there are fundamental properties for successful companies/countries. Countries who have them succeed. otherwise, they fail. eventually.

What are these fundamentals? and why US has them? Friedman lists the following:

  1. US is a large country, huge market, rich resources, and faces 2 oceans
  2. US controls the oceans of the sea - thus controls the the global lines of commerce.
  3. US has a low population density. This will play a huge role in US dominance starting 2030, when the populations of the advanced world will be decreasing and they will be competing for immigrants. Immigrants will prefer US.

Notice that "current economic state" is not listed. Friedman doesn't say this explicitly, but he seems to think that if the fundamentals of the US are correct, it'll be able to get out of any situation it is in - even if that involves a show or power or even war.

This way of thinking is foreign for us - generation dot-com. We tend to believe that the smartest country economically gains dominance. We do not think consciously about the possibility of war to gain wealth. In a way, Friedman says that if Japan poses economic danger to US, the US may prevent Japanese fleets from exporting good or importing raw materials. China buys a lot of the US bonds. If US doesn't want to pay back, or wants China to buy more, "persuading" China might not be a totally economic formula.

Friendman further presents his own interpretation of few US history incidents:

  1. the great depression (I have to look at the book again to summarize this correctly, TBD)
  2. the 50-year cycle. He claims that the dominant socio-political landscape changes every 50 years. Each cycle starts with a president who truly represents the needs and hopes of the new dominant group, and ends with a president trying desparetely to apply old solutions to new problems and fails to satisfy the new dominant group. The groups are:
    * 1775-1825: aristocrats, english?
    * 1825-1875: fronteirsmen, Irish?
    * 1875-1925: ? can't remember
    * 1925-1975: city dwellers, wasp?
    * 1975-2025: suburbs (because of highways)
  3. finally, the credit crisis: I have to review the book to say what exactly

China's Collapse by 2020

Friedman claims that China's economy is just like Japan in 1980:

  1. The debt-to-GDP is very high, and the cost of money is artificially low (government controls the savings rate of the citizens and what companies get the loans). Japan's debt-to-GDP was ~%20 when the banking system failed there. China's is estimated at %25-40. He doesn't explain where the numbers come from.
  2. Thus, he says that just like Japan in the 80s, Chinese companies' success depends on volume of exports, not profit margins. They need high revenue to pay off their debt and get more. This is why their prices are very low.
  3. Thus, on the site of first US recession (since US is china's biggest market), Chinese companies & banking system will fail. He expects that to happen by 2020
  4. He explains that even though China is communist, it had good relations with the US because of Cold War. my enemy's enemy is my friend.
  5. He also claims that China's political unity depends on economic success and payoffs. Thus, the country might go through a civil war (similar to that of Mao) between the poor center and the rich coast. The coastal cities are rich because of foreign relations.

Russia's Collapse in 2020s

  1. He predicts that Russia will go through a second rise, and then a second fall.
  2. The fall will be due to stretching their economy and … have to review the book. I think has to do with the ountries around it.
  3. the most interesting outcome will be the rise of Poland & Turkey - backed by US - to stand for the russian giant. And Japan to a point.

The next 4 super powers: Japan

He predicts Japan will start building a navy power, and once china falls, it'll try to expand its control in the region. US will back it to stand for Russia. It'll seem very friendly power until ~2050.

more details tbd

The next 4 super powers: Turkey (The Islamic Khilafa)

Friedman asserts that Turkey is already an economic power. He says that islamic world has many divisions and internal fights to keep islamist busy. but turkey will take more of a cultural "role" and lead/control the islamic countries of the middle east. much like the ottoman empire before. turkey will get a lot of help from US to stand for russian influence, especially in the baltics and the black sea.

The next 4 super powers: Poland

Poland will be US's first line of defense against russia. thus, it'll become strong, and it'll build influence around east europe. eventually, european countries will see Poland just like the Sovient Union before.

The next 4 super powers: Mexico

Mexico is friedman's surprise. he says it has all the fundamentals to become a super power. it's in north africa - the strongest of the continents. its economy is already big. he asserts that the social problems we hear about are the labor pains of delivering mexico from its indsutrial phase to modern state.

A World War 3 (space war): US-Poland vs Japan-Turkey

This is an interesting chapter. Friedman reiterates that US will get in a war not because it wants to, but because super powers act in predetermined way, and it'll see it as "protecting itself".

in short, turkey and poland will have conflicts, and US will side with Poland, nudging turkey. Japan will also feel restrained as its sphere of influence expands. Turkey and Japan feel that doing a surprise hit against US would send a message to US that it's not the only power in the world.

So, turkey & Japan will blowup US's most advanced (3rd generation) space surveilance system. They will also conduct earth attacks at all known hyper-sonic missle locations. US will respond by using its 2nd generation & secret missle locations to get back very quickly at Japan & Turkey.

Most interestingly, Friedman predicts that WW3 will be very peaceful. He says advanced weapenory will limit casualties to armies and no civilians, and even that to maybe few thousand people. Economic destruction will be big. He also it'll happen quickly.

After this, US will live its golden age (just like after WW2). that's until the big mexican-us confrontation at the end of the ccentury.

The Great US-Mexico Confrontation of 2100

Friendman says that even UN predicts that population in the world will decrease by 2050. He says by 2030 the need for working-age immigrants will become very clear in all advanced nations (europe more than US). these advanced countries will compete for immigrants. US will remain the favorite because of its incentives + population density is still low.

This will cause many immigrants, especially Mexican, to move to US starting 2030s.

unlike all other groups, mexican immigration will cause the "cultural border" between us/mexico to move north.

By ~2080, development in robotics will reduce the need for more workers. Also the economy would get used to functioning in a decreasing population (unlike now when people expect real-estate prices to keep going up - which won't be true after 2030/2050). As a result, US will attempt to stop immigration from Mexico.

This will evolve into the big US-Mexican confrontation by the end of the century. I say confrontation and not war because Friedman predicts that some mexican/us citizens will be senators in both houses across the border. The situation will become weird, where mexicam americans will have a mexican government in the US.

The final outcome of all of this is not clear, and it remains an open question at the end of the book.


The book is very interesting. for me, the biggest takeaway are:

  1. geo-political analysis makes sense, even though something seems missing
  2. future is weirder than fiction
  3. i'm keeping my eye on china. us is in recession now, and let's see what happens there. this is his first prediction. this is something he's been saying since 2007 .

Overall, very interesting book.

5/5 on Arrabi's scale. (this is whether it's worth reading, not that I agree with it)

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