Global strategies, regional economic prospects

by Larry Grooms, special to Aerotech News
LANCASTER, Calif.—A global strategist appearing online from Denver before a virtually assembled audience in the Southern California region where technology broke the sound barrier, offered a data-driven prophecy on how technology can break barriers to rapid economic recovery from pandemic.

Keynote speaker Peter Zeihan told the condensed and reformatted Antelope Valley Economic Development and Growth Enterprise (AVEDGE) Business Outlook Conference — Winter Forum 2021 Style the rate and degree of recovery for the state and the region are largely contingent upon having the bulk of the population inoculated against the COVID-19 virus by July, accompanied by rapid reopening of businesses, schools and other institutions.

In Zeihan’s view, the region and state are poised to achieve a swift and dramatic return to a vibrant economic recovery because of pent-up public demand. But the longer inoculation and reopening are delayed the greater and longer lasting will be the threat to economic recovery. “Most countries will never recover to what they were in 2019,” he said, and added that with the rise of variants, “we will have to get booster shots forever.”

Zeihan offered an upbeat forecast that the mountain and desert region of northern Los Angeles and southeastern Kern counties will share two existing economic assets ripe for explosive long-term growth and regional prosperity: Aerospace manufacturing, and advanced research and development into renewable wind and solar energy.

Zeihan presented graphic data showing the Antelope Valley Region to be one of the few places on earth with the climate, geography, infrastructure, technology, and workforce required for advanced R&D in both solar and wind energy. He said the challenge there is working to leverage regional assets to attract research partners.

And Zeihan asserted those same favorable assets also exist for an explosive expansion of the regional aerospace sector in what he characterized as “a world of aerospace that is going to get a lot smaller,” with decline of the European Union’s Airbus consortium and predicted disruption of aerospace business in the Persian Gulf region.

On aerospace, Zeihan said the region already known as America’s Aerospace Valley is positioned to capitalize on its utterly unique combination of assets. He said there is no great secret in achieving aerospace sector growth, both for commercial and military activity. The job, he said, is making aerospace people already living there feel comfortable enough to want to be there and reluctant to leave. “It’s quality of life,” he said.

Zeihan compared the two largest cities in the Antelope Valley. Lancaster and Palmdale, to Taos, N.M., another desert city with similar climate and elevation, but known as a popular tourist destination. He suggested Aerospace Valley communities create and promote activities and amenities to help newcomers feel at home where they work, not thinking about moving away, and getting out into the community after work instead of just going home to watch TV.

Zeihan’s economic development recommendations are based on his analysis of worldwide conditions and trends in demographics, economics, industrial production, and trade.

Extrapolating from long range trends in population age distribution among major trading partners, Zeihan concluded, “Globalization is over.” He said the end of globalization wasn’t brought about by the pandemic, but rather accelerated by three to five years.

He declared the U.S. to be almost perfectly positioned for mutually favorable trade with neighboring and easily accessible trading partners with a growing younger population in a consumption led system. The combination, he explained, benefits places where young, upwardly mobile people are earning more money to buy more things by adding value to trading partner nations. He said those most favorable American trading partners now and in the foreseeable future are Mexico, Canada, Japan, South Korea and the ‘Brexited’ United Kingdom.

Charting comparative population age distribution among industrialized nations, Zeihan said “China is one of the world’s fastest aging countries,” meaning the government’s one-child per family edict finds that nation short of a rising consumer market for imports and a declining workforce. He said Korea had its baby bust 40 years ago. He pointed out how American Baby Boomers, by contrast, had lots of children to sustain trade prosperity.

On three topics, politics, potential military conflicts, and Wall Street, Zeihan offered a voice of calming moderation.

Despite the partisan divide brought on in the 2020 elections, Zeihan said President Biden hasn’t moved to undo foreign trade deals negotiated by former President Trump, and distanced diplomatic dealings with China. Zeihan questioned whether Biden could have improved U.S. trade agreements in even a year or an entire term in office.

Militarily, Zeihan said the U.S. has greatly reduced foreign troop deployments, while upgrading defense capabilities and requiring NATO nations to share more of the costs for their defense. China, he pointed out, is hemmed in on its Pacific shores by a string of neighbors united by a history of violent and non-productive relationships with China. And Zeihan’s views on Wall Street? The subject did not come up.

Editor’s note: Peter Zeihan is an expert in geopolitics: the study of how place impacts financial, economic, cultural, political and military developments. Learn more at www.zeihan.com.

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