World Shrugs As US Backslides | Tim Sahay | TMR
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Summary
Takeaways
- ❖The neoliberal economic order has failed to deliver peace and prosperity, leading to a global search for new models.
- ❖Trump's policies, characterized by tariffs and a focus on fossil fuels, are viewed internationally as the US "giving up" on future industries.
- ❖Countries like Mexico, Brazil, and China are aggressively pursuing green industrialization and diversifying trade away from an unreliable US.
- ❖The US faces impending energy shortages and blackouts due to rising AI electricity demand and the dismantling of green energy infrastructure.
Insights
1Collapse of Neoliberalism and US Regression
The neoliberal economic system, which promised peace and prosperity, has demonstrably failed, evidenced by the 2008 financial crisis, prolonged wars in the Middle East, and critical shortages during the pandemic (e.g., baby formula). The US, under Trump, is responding with protectionism, tariffs, and a focus on fossil fuels, which is perceived globally as a 'rear guard action' to maintain American primacy rather than investing in future industries.
The 2008 financial collapse and the instability from wars in the Middle East marked the breaking apart of the neoliberal order. The Biden administration's use of the Defense Production Act for baby formula shortages highlighted market failure (). Trump's proposed tariffs are taxes on Americans, making essential goods more expensive without addressing core issues like healthcare or housing affordability ().
2Global Diversification and Green Industrialization Beyond the US
While the US is seen as retreating into outdated economic models, other nations, particularly in the Global South and China, are actively pursuing green industrialization and diversifying their economic partnerships. They are moving 'around and without the US' due to a lack of trust in US economic stability and a desire for cheaper, better green goods.
Mexico, under Claudia Sheinbaum, is pursuing a left-populist, pro-green agenda, investing in solar, wind, and batteries (). Brazil, under Lula, aims to industrialize off its massive green potential instead of just selling raw materials (). China has made a 'green leap forward' in solar panels, EVs (like BYD), and batteries, which are cheaper and widely adopted globally but tariffed out of the US (). Countries are actively seeking new markets and partnerships away from the US ().
3US 'Giving Up' on Future Industries and State Capacity
The US is not merely lagging but actively undermining its capacity to compete in future-oriented sectors. Trump's policies are characterized by 'smashing' the bureaucratic and state capacity necessary to guide capital towards green transition, R&D, and skill development, effectively preserving a hydrocarbon-based economy.
Trump is 'actively smashing what is required for a green transition' including the Department of Energy, IRS, EPA, science agencies, and investments in skills and R&D (). This aims to maintain the US as a hydrocarbon power, despite global trends moving away from oil ().
4Impending US Energy Crisis from AI Demand and Anti-Green Policies
The combination of rapidly increasing electricity demand from AI data centers and the dismantling of green energy incentives in the US is projected to lead to severe energy shortages and blackouts, significantly disrupting industries and consumers.
AI demand is shooting up, with estimates suggesting 6-12% of US electricity will go to AI data centers by 2030 (). The Trump administration's policies are saying 'no' to the fastest-growing energy sources (solar, batteries), removing incentives, slowing permitting, and cancelling factories, which will inevitably lead to shortages and blackouts ().
Bottom Line
The US faces an inevitable future of widespread electricity shortages and blackouts due to the massive energy demands of AI data centers combined with the current administration's active suppression of green energy development.
This will lead to significant economic disruption, increased utility costs for consumers, and a loss of competitiveness in critical tech sectors, as the foundational energy infrastructure cannot support both existing needs and new demands.
This creates an urgent need for rapid, decentralized energy solutions and grid modernization, potentially opening markets for innovative energy storage, microgrids, and efficient AI hardware if policy reverses course.
Global South countries and China are forming new economic alliances and industrializing based on green technologies, effectively creating a parallel global economy that operates 'around and without the US'.
The US risks becoming economically isolated, with its goods and services becoming less relevant or desirable in a rapidly decarbonizing world, leading to a decline in its geopolitical influence and trade power.
US businesses and policymakers must urgently re-evaluate global supply chains, invest heavily in green tech, and rebuild trust with international partners to avoid being left behind in the emerging global economic order.
Lessons
- Recognize the fundamental shift away from neoliberalism and prepare for a global economy increasingly driven by state intervention and industrial policy.
- Invest in green energy and future-facing technologies, as global competitors are rapidly advancing in these sectors while the US risks falling behind.
- Understand the geopolitical implications of diversifying global supply chains and trade relationships, as countries actively seek alternatives to US economic dependence.
- Prepare for potential domestic energy instability in the US, including rising electricity costs and blackouts, due to conflicting energy policies and surging AI demand.
Quotes
"America doesn't seems to be giving up on the industries of the future. And it's sort of like a throwback to the 1950s of a fossil fuel economy of giant uh gas SUVs and you know things that the rest of the world doesn't want."
"The future is going to be the politics of affordability and the politics of sort of supplying essentials, delivering on essentials, provisioning of food and energy and medicine and you know the basic things that people need."
"We in the United States might just be left with these bloated expensive goods and we make these cars that no one else no one in the rest of the world wants and that might create um you know a stunning sort of collapse of one of our biggest industries the auto industry."
"Almost every oil power in the world that is not the United States sort of sees the writing on the wall that oil demand is coming down."
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