Podcast · Futucast #289 · 2022-08-08 · 1:00:53 · In Finnish

The End of the World Is Just the Beginning — Sami Miettinen on Futucast #289

Published as “Sami Miettinen | Maailmanloppu on vain alkua #289”

Hosted by: William von der Pahlen · Isak Rautio

▶ Watch on Futucast

Two books, read against each other. Peter Zeihan’s The End of the World Is Just the Beginning, whose two engines are depopulation and deglobalisation, and Ray Dalio’s account of a cyclical world order in which powers rise and fall. Both are pessimistic. The episode’s actual question is where an optimist should stop being one.

Miettinen sets his own frame first: markets fix bottlenecks surprisingly fast. Production constraints and energy crises get substituted around. What breaks the mechanism is removing the market — Xi Jinping in China — or removing a supplier from the system by force, as with Russia. Combine totalitarianism in China with Russian raw materials taken off the grid and even a market economy struggles, at least in the short run.

Demography, which he takes seriously

Zeihan’s strongest material, on both men’s reading. The demographic pyramid has become a ball almost everywhere and a misshapen one in several countries. Zeihan goes so far as to argue that Russia’s territorial ambitions in Ukraine are partly demographic — absorbing a population of roughly forty million to fill out its own distorted age structure.

Miettinen’s domestic application is Finland’s €10 billion sustainability gap, which is essentially the age structure: an ever-larger dependent population, made worse by allocating what resources remain into care ratios that pull people out of the productive workforce, and by pension patches that push the state further into deficit.

Zeihan’s winners are the countries with both immigration and boomers who had children, which is the United States — with Mexico as a demographic blessing beside it — giving it perhaps two decades of overwhelming advantage over China and Germany, which he places at the top of the losers’ list.

His China claim is the one both men flag as extraordinary: that the population has been miscounted for a decade or more, with the number of young women overstated by something like a hundred million. Whether or not the figure holds, the ageing is not in dispute. China went from agrarian to industrialised in a single generation — where Finland took several — and Zeihan’s argument is that it loses that position in a single generation too, for want of workers. The birth rate has fallen from five to seven children per woman to around 1.2 within a generation, and ending the one-child policy did not move it. Miettinen’s addition is the mechanism: children were free labour in an agrarian economy and are expensive in an urban one, and a totalitarian state with an uncertain future does not encourage having them.

The paradox neither resolves: Chinese youth unemployment at twenty per cent, which does not compute against a shrinking cohort. Miettinen’s parallel is that in Finland too, older workers hold the labour market and the young are admitted through apprenticeship structures.

Deglobalisation, which he does not

Here Miettinen pushes back hard, and the hosts push with him.

Zeihan’s chain is that globalised trade rests on American naval supremacy — the US has more than ten carriers where others have one — and that a United States which is energy and food self-sufficient, and which is onshoring from China anyway, has no reason to keep providing free global security and free supply chains. Withdraw the navy and container shipping becomes unsafe, and the twenty-euro barbecue that arrives from China over six slow months at effectively no cost stops arriving.

Miettinen’s objection is to the absolutism rather than the direction. This gas will never come again. The price of food will go up and stay up forever. Statements of that kind are, as he puts it, close to astrology, because things rarely stay put. His live counter-example: the first grain ship had just sailed safely from Ukraine to Turkey. The hosts add the structural version — the world does not run on one variable, and automation, AI and changing work may let smaller workforces do the same job, in the same way markets are currently solving the energy allocation problem.

What Miettinen does accept from the argument is the shortening of supply chains, which follows even without the naval thesis: Chinese labour is getting expensive, so China cannot remain the world’s production machine indefinitely. And he accepts a set of hard inputs as real constraints — less labour, fewer raw materials, less energy, and less room for mercantilist export strategies. Understanding those, he says, still leaves you able to change a nation’s course. What frustrates him is drifting on old inertia with the wrong strategy because the debt wall always allows one more year.

He also offers a market check on the doom scenario as it stood: rates had risen, the long end had collapsed, commodity prices had fallen. A prolonged period of high rates and high commodity prices and stagflation — the configuration the pessimistic case requires — looked, on that evidence, unlikely rather than inevitable.

Ray Dalio’s cycles

The complementary frame. Dalio’s internal cycle runs from revolution or renewal through construction, into a phase where borrowing stops funding development and starts funding the maintenance of an existing standard of living. Rautio’s summary is that people become satisfied with what they have — psychologically fine, developmentally fatal.

Miettinen picks out three: internal security, external security, and the debt and reserve currency cycle. On the United States, Dalio is pessimistic despite American strength, because the debt cycle has run and internal security has deteriorated badly into two countries that mix like oil and water. Economic inequality feeds the internal insecurity, which makes an America-first retreat entirely plausible — which is where Dalio and Zeihan meet from opposite directions.

Miettinen accepts the internal security deterioration as the strongest part. He has made episodes about identity politics and polarisation; the country is armed; and one plausible resolution is divergence between states rather than resolution at federal level. His and Rautio’s shared caution is that internet polarisation is not the same as real-world polarisation, and the question is when people notice they have more in common than not.

Miettinen also notes, drily, that Dalio is a very large investor in China — and that when Zeihan was asked why Dalio is so optimistic about it, the answer was that his money is there. Dalio’s own defence of China is that a planned economy can simply mandate outcomes: self-driving cars across a city, because privacy and individual risk are not constraints. The trade-off Dalio frames is that you cannot have freedom, privacy and the third value simultaneously, and China has chosen the arrangement with the least freedom — with the Uyghur region as a decades-long test of a total surveillance state and the Shanghai lockdown as a large-scale trial that did not go well, though it did identify the dissidents efficiently.

Miettinen’s addition on Xi is the one he finds hardest to believe and keeps returning to: that he is an actual Marxist, that dialectics is genuinely being taught, and that young Chinese say they want state jobs because the party keeps them fed. Private tutoring was banned, which he first read as keeping Western ideas out and now reads as something more thorough. Rautio’s counter is that this may correct itself within a couple of years, because China remains deeply dependent on Western trade and raw materials.

Reserve currency

Dalio’s strongest thread, on Miettinen’s reading. Hegemony and the unit of account move together: everything was done in guilders under the Dutch, in sterling under Britain, and in dollars now. Miettinen holds American equities partly for that reason — market return plus dollar return — and notes many Chinese investors think the same way, which is why he would not hand the baton to the renminbi even if he believed the hegemonic shift. Dalio is more pessimistic about the euro than about the renminbi ever becoming a reserve currency.

Food, fertiliser and the winners

Zeihan’s food thesis rests on three inputs — nitrogen, phosphorus and potash — without which intensive agriculture does not work. Sri Lanka’s attempt to farm without them collapsed within a year, and while a corrupt administration helped, Miettinen reads it as a weak signal that the food system does not function without fertiliser. With Russia and Ukraine both out, the easy grains are missing and nobody obviously replaces them, and Russia is a major nitrogen and potash supplier.

The country picks that follow are the ones he finds genuinely sharp. Argentina, whatever else has gone wrong there, has soil and its own feed — if you were relocating meat production, that is where. France, which was supposed to be a declining and arrogant yellow-vest problem, has solved energy with nuclear and has food self-sufficiency, no gas dependency and therefore no exposure to Russian pressure — leaving Zeihan to pick France and Sweden as Europe’s winners while Finland sits in the grey.

Germany is the reversal. The worst demographic ball in Europe, a gas dependency built deliberately around Nord Stream against Baltic objections and not redirectable eastward for want of pipes, and an economy running a ten per cent current account surplus that has just gone to zero for the first time in thirty years. Miettinen’s point is that the export engine is not coughing because containers are hard to ship but because gas is an input, in chemicals and glass and much else, and cannot easily be substituted — while the car cluster loses to Tesla. The sick man of Europe may be Germany again, and Germany was supposed to be the country that paid for everyone else.

Taiwan and the constraint that runs both ways

Zeihan revised his own prediction, and Miettinen relays it: he would previously have bet on an invasion of Taiwan, but China now will not, having watched Russia reduced to pariah status. On Zeihan’s figures China imports 85 per cent of its food and 85 per cent of its fertiliser, and would face famine within a year under comparable sanctions — Russia being self-sufficient where China is very far from it. Belt and Road, on this reading, is a weak attempt to get that deficit under control; some 13,000 infrastructure loans have been issued in a decade, and the first signs of strain are loans made so borrowers can service earlier loans.

On semiconductors Miettinen is the sceptic. Basic memory can be made anywhere, Finland makes specialty wafers from sand, and Apple makes its own processors — so he does not accept that Taiwan is irreplaceable on the processor side, only that too much sits there if the aim is to cut China out entirely. His industry note is that a Chinese-owned semiconductor manufacturer is building substantial capacity in Vantaa, and that the executive he interviewed described a supply chain so fragmented that geopolitics barely enters the thinking.

The general principle both draw out: in the new order you survive by having something the world needs, which is what puts you in somebody’s alliance chain. Taiwan built a strategic dependency deliberately. Finland, Miettinen notes, chose the NATO jacket and got into the good guys’ club alongside Japan — which Zeihan credits for accommodating the United States despite terrible demographics.

Where the optimism goes

The peace dividend ending is the expensive part. Europe has been running on roughly one per cent of GDP in defence and must double it — a straight deadweight loss from welfare, on top of everything else, and no longer with an easy American market to sell into, because the Americans make it themselves and have the energy and the food besides.

The optimistic case both men land on is technological and specific. Nuclear power is, in Miettinen’s framing, the single largest available lever on several problems at once, demonstrably good and still resisted — Olkiluoto 3 had just come online, Germany had reluctantly kept three reactors, and France’s position rests on exactly this. If you wanted to do something useful in the world, he says, you would lobby for nuclear, and the next generations would thank you.

They also discuss — and hedge visibly — the claim that Western anti-nuclear sentiment was deliberately cultivated by Soviet-era influence operations, citing Douglas Murray and a KGB defector’s interview. Neither presents it as established; Rautio’s version is that these ideas may not have originated there but were amplified because they created disunity.

The episode’s most useful piece of self-discipline is the hosts’ own, delivered while they google carrier construction times live on air and read the answer out: fact-check everything we say. Miettinen adds his own version — macroeconomics is a bit like astrology whenever it forecasts — and admits the book provoked him enough that he now has to read it.

Asked where he would put money for ten to fifteen years without touching it, he says not Europe. The United States, and if China, then the United States anyway — because it is more pleasant to be at the mercy of a market economy than of a Marxist. And the closing optimism is deliberately unserious: Rautio watched Top Gun: Maverick a few days earlier and reports a deep and burning sense that things will be fine.

From the same session: Neuvottelija's own episode

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