When big geopolitical summits take place it is sometimes hard to tell who has the power stroke and who is coming off as the groveler. Sometimes there’s a strong meeting of the minds and a palpable sense that great things were accomplished. Other times it appears that the two sides are talking at cross purposes and things only get more rather than less at odds at the end. And then there is a third type of outcome which seems to highlight the vast differences in power positioning that comes with a significantly changing landscape. It is almost as though you can see one side back on its heels (regardless of its relative apparent size) and the other side very intelligently manipulating the play ever so schrewdly to not be obvious about the dynamic underway, but still signaling that there is a new world order evolving before our eyes.
Relative to the United States, I think its fair to suggest that the big powers of the world are obviously China, Russia and India. I’ve made my demographics case about this configuration and whether you just power by economics, population, land mass or nuclear strength, those are the big players. For many equally obvious reasons and based on current events, if you had to pick a Junior Varsity list that comes into play and punches above their weight, you would want to add Israel, Iran, Saudi Arbia and Ukraine. Where Western Europe, Japan, Korea, and Taiwan were once on the field, they are pretty much on the bench at this point. Canada, Australia and South Africa are nice friends to all, but not into the power play. Latin America, Africa, and Middle and Southeast Asia are all playing very different games. I know these are sweeping generalizations, but I more or less stand by them and while the whole point of this piece is to validate that things do change in the world, for my lifetime and probably for this century, I feel that this is the playing field.
So let’s consider where America now stands on that playing field, focusing on both the varsity and the junior varsity. No one is going to deny that we are still an economic powerhouse and that we still have a mighty arsenal of weaponry. But at this point, the argument for the strength and reserve nature of the dollar, not to mention the flight to quality arguments for U.S. government debt is shakier by the day…and that’s without even considering the flanking exercise underway from cryptocurrency. It is interesting to note that the Trump Administration has significantly contributed to this weakening via fiscal and monetary policy moves (tax policy and national debt being the obvious telltales), but also pushing the crypto agenda for largely self-interest reasons. Also contributing to this is the systematic loosening of the financial regulatory system that has made our financial markets so uniquely strong and the envy of the world financial markets for decades. We know the story of where our manufacturing capability stands a very fulsome array now of global competitors who used to compete based on cheap labor and increasingly compete on the strength of a blend of technological automation, logistical prowess and AI engineering advances. While the flow of manufacturing capability is no longer only one way, as it was in the 80s and 90s during the global outsourcing and supply chain era, its fair to say that its no longer an American relative strength and in larger ticket items like ships, we are completely out of the game (witness China surging ahead of us in watchers and submarines). As far as military might goes, the world of warfare has changed meaningfully in the last twenty years. The wars in Iraq and Afghanistan showed first the Russians and then the Americans that conventional warfare in both rugged rural areas and dense urban areas alike is a very different animal that doesn’t lend itself to shock and awe of scaled dominance the way it used to. Think of the British lobsters being shot at from behind every rock and tree during the Revolutionary War or the Mexican army trouncing the famed French army of Napoleon III at the Battle of Puebla. What we’ve seen in Ukraine with drones and with Iran in the Strait of Hormuz is that conventional warfare on land or sea is a new challenge to the largest of superpowers.
So economic and financial power is in flux. Military dominance is in flux. Population dynamics’s are in flux as replacement rates keep falling. Information and technology dominance is flattening as the internet and open sourcing have leveled many playing fields. Land, which used to be the central issue driving power, is far less important than what land, as in where it sits and what it sits atop (think strategic rare earth minerals). Also, land as a productive input for agriculture is far more governed by water and access to fertilizer than ever before and as we see from the AI data center binge and the shipping disruption from where the phosphates reside, these are no longer foregone conclusions as to plentiful availability. And finally, on a more subtle basis, politics is also greatly changed by a combination of changing views on the democracy/authoritarianism spectrum, instant and near total information ubiquity and the whole social media mechanism for manipulating truth and therefore perceived reality.
As Trump and his bevy of economic advisors wrap up their China summit in Beijing, I read the reports and find myself reflecting on the way Trump has handled being with Putin, Netanyahu, MBS, Modi, Zelenskyy and now the new Ayatollah. His interactions with Putin (chronicled and speculated about for years) have been the most obvious clue that he is the groveler and Putin has the power hand for some inexplicable reason. Years in the KGB served him well and meanwhile Trump was busy with reality TV. Netanyahu seems to have gotten Trump’s number and pushes him to do whatever he wants done. Living in hostile Fort Apache Jerusalem for his whole life and serving in the Israeli military and government for over four decades has battle hardened him. Trump’s bone spurs and bankruptcy foibles have distracted him from such focus. MBS has never had to struggle far from privilege and has more money than Croesus. Modi has worked for the RSS, the right-wing nationalist Hindu party in India since he was eight years old and knows exactly who he is and what he wants for India. Zelenskyy is most like Trump in terms of his entertainment background except that for a decade he has literally been on the front line in fatigues against demon Russia. And the Ayatollah only bows to Allah and has Paradise as his reward no matter what happens.
Where does that leave Trump with his corporate chieftains? To begin with, his Dirty Dozen consisted of 5 tech moguls (Musk, Huang and Cook in the lead), 4 finance titans (noticeably missing Jamie Dimon), two limping manufacturers (Boeing and GE Aerospace) and one old-line commodities guy (Cargill). If you are wondering whether they were all there (including Trump) to promote their economic interests rather than America’s national interests, that would be a fair concern. Not a strong negotiating posture for the good old USA. Then there’s Trump’s massive PR problem with the war in Iran. Russia is helping Iran. China is helping Iran. India is probably helping Iran. If Saudi Arabia had to choose between a Shiite Muslim or Christian Nationalist, who do you think would win in the final analysis? Israel has it own agenda and if it fits the US needs, so be it, otherwise “Inshallah”. We might get Ukraine’s help with drone technology, but their trust in us is lower than that held by Western Europe and Canada, which ain’t great any more. And Taiwan…who exactly is Taiwan to Trump and red America at this point? Ah well…the times they are a changin’ and the answer is blowin’ in the wind…its just that these summits just serve to reinforce that we are more the groveler than the power stroke from here on in.