“Guns, Germs, and Steel” Meets 2022
For those who have not read Jared Diamond’s classic, Guns, Germs, and Steel, originally published in 1997, perhaps it’s time to pick up a copy. Or if you have read it, perhaps a refresh might be in order. From a political perspective, some may believe Mr. Diamond oversteps in certain areas taking liberty with facts that blur the line with interpretation, his title alone, however, could not be more astute as we think of the major drivers of this year headed into 2022.
For the world we are living in, as we race toward the next year does not look very different than, well, the recent history of humanity. Literally, guns, germs and steel (not necessarily in that order, and interpreted with a bit looser definition today), still remain the best proxies with which we can measure and gauge winners and losers. And lest we end up on the wrong side of the global power equation, it would be good to take lessons from the past as we look to the future.
In his most famous book, Jared Diamond argues that germs—specifically the spread of germs from regions that had immunity to those which did not—helped form the course of history, including European success on the worldstage. Without question, “Germs” are probably on everyone’s mind at the moment. One germ in particular (actually a virus): COVID 19-B.1.617.2 to be exact.
It’s latest iteration, known as the Delta variant, is driving countries back into various stages of lockdown (e.g., China) and even quasi-martial law (e.g., Australia). Even though there are all spectrums of opinion on such topics of masks, vaccinations and return-to-work—and we would not dare opine on this topic as business economists—one thing is clear: how we respond to Delta at a country level will help the US determine its economic footing on a comparative basis heading into 2022.
We do not take it as ironic in the context of Diamond’s work that this germ came out of China —not Europe. But unlike the native populations in the Americas, Asia and other regions that were decimated by smallpox and other germs in world history, the Chinese do not have native immunity or inoculations helping protect themselves against what is increasingly looking like a man-made virus.
Besides germs, we cannot dismiss “steel” as a proxy for future economic growth and stability —and thank goodness, unlike the UK and many parts of Europe, the U.S. can still produce steel to meet most of its domestic needs (and certainly the capacity exists to more fully supply the market). But steel is now joined by other industrial metals (e.g., copper, aluminum, lead, nickel and zinc, etc.) that are equally as critical to economic growth and offensive and defensive military capabilities—not to mention rare earth metals—as critical enablers of stability and world power.
Our previous “steel dumping” challenges from China may have in part been taken care of by tariffs, but in a world where shipping rates from Shanghai to the East Coast now exceed $20,000 for a 40-foot container (up over 500% year-over-year according to Freightos), it is clear that primary metals trade makes more sense as locally as possible, at least for now. Regardless, maintaining domestic capacity from mine-to-mill for critical metals is more important than ever to preserve the US’ economic might on the world stage.
The final header in Jared Diamond’s famous tomb is “Guns”—and here we wish we could say military leadership would not be as important as it once was. But in fact, it is even more important in a world where China continues, both via cyber attacks and its party-led economic takeover of Hong Kong and financial services technology firms, to act as more of a threat than ever to the Western world. While guns today serve as a proxy for a range of offensive and defensive arms that are now both virtual (e.g., infrastructure attacks) and physical (including space-based weapons), it has never been more timely to consider the need for weapons to protect a free society.
Now as then, Guns, Germs, and Steel will define geopolitics (and our own economy) in the years to come.
