While one may not agree with everything that Zeihan says, this section of his interview is worth pondering over:
“Number two is demography. People of different ages act differently. For those in their twenties and thirties, it is all about consumption. Their incomes are low; it is house loans, car loans, college loans. High growth, but high debt. For your mature workers in their 40’s, 50’s, and 60’s, they are preparing for retirement and their incomes are very high. This is all the investment capital that makes the world move. This is the tax base. Young folks do the consuming. Older folks take care of the investment capital. Finally, once they retire they start drawing more from the system than they put in. Pensions and health care start to overwhelm their finances and that becomes a problem for governments.
In a traditional demography, the elderly are the smallest group. The folks in the middle group are larger and the young workers make up the bulk. It is a pyramid. But with urbanization and the post-World War II experience, we have had a collapse in birth rate throughout most of the world and now the demography is completely inverted in a lot of the world: the big bulge in the demography is not the young worker but the mature worker who is socking away a lot of capital for retirement and paying huge taxes.
By the time you get to 2022, the majority of the baby boomers will have retired, and they will take all that investment capital and all that tax money with them. Every government on the planet is going to have to get along with a lot less income while they have to dish out a lot more payment for the retirees. There is only one country in the world that is an exception to that: the United States, because we are the only place where the boomers actually had kids. We come out on the other end all right because the millennial generation is large and by the time they are in their 40’s and 50’s, our demographics will have more or less fixed themselves. That does not happen anywhere else. Everywhere else, the population gets older every year, the population gets less skilled every year, and financial costs go up every year. The European financial crisis, the Japanese financial crisis—these are as good as they will ever be right now. It is all downhill from here. While the United States is losing interest in maintaining the global system, at the same time the global structure breaks down, the United States is becoming the only market in the world. And it is going to be keeping to itself. That is a triple hit to every economy in the world. If you are a trade-based economy like Korea or China or Germany, you get hit from every possible angle at the same time.”