The World in Which We Live Now
Lecture at the Annual Meeting of the Ron Paul Institute, 2025
Friends, I have seven points. Why seven? Because I’ve been reading too much Babylonian history recently.
FROM CONNECTIVITY TO TECHNOFEUDALISM
The first one is about concentration, a distinctive feature of the modern world, often tied to what I called the Black Swan problem. We now see winner-take-all effects everywhere, owing to connectivity. Imagine an island with many species but a high density per square meter. Compare that to a continent, where opening up space leads to fewer species per meter because some will eventually dominate. This mirrors cultural and economic life today.
Take books, for instance. Everyone reads the same ones — think Harry Potter or, for music, The Beatles. In publishing, a few authors prevail. You either sell 20 million copies or you’re working at Starbucks (unless you boycott the firm, as I do personally). This concentration applies to opera singers too. In the past, they could make a living locally because there were no audiovisual recordings. Now, a few stars capture most of the income.
This concentration isn’t inherently bad — it’s just part of market mechanisms, the way things work. The problem arises when it becomes sticky at the top. The road from a college dorm to dominating through Google was once short, and search engines like AltaVista could disappear in minutes, replaced by the newly universally adopted Google. But now, replacing Google is harder because dominance is entrenched, which is unhealthy. This leads to what some like Varoufakis call technofeudalism.
Concentration also applies to viruses. COVID spread globally in about a week, dominating the planet. Compare that to the bubonic plague, which took years to travel from what was Constantinople to Northern England and never reached the Americas due to limited connectivity. Today’s hyper-connectivity amplifies concentration, which is only pathological if we cling to an archaic, early 20th-century textbook understanding of economic, social, cultural, and biological life.
In wealth, for example, only 20% of billionaire families in the U.S. remain after 20 years, but in Europe, it’s the reverse — concentration is getting stickier, and we’re heading toward the more stultified European version globally.
Comment 1
Capitalism works not just by allowing upward mobility, but by accelerating its downward equivalent.
DYNAMICS AND MISUNDERSTANDING OF HISTORICAL PROCESSES
The second point is our difficulty in grasping dynamics, particularly in geopolitics, because historians and statisticians view history differently. My specialty is in stochastic processes (sort of), so I see history as a dynamic process, not a static textbook description.
Comment 2
Both GDP and its rate of growth can fool one in projecting future states; but errors from ignoring growth differentials can be monstrous owing to their compounding. When in doubt, use the rate of growth as status quo.
When I published The Black Swan in 2007 (it became a bestseller again recently, despite warnings that my tweets on Palestine would cause my books to be sold for $1 at discount stores. Threats of cancellation keep coming, though)… In 2007, the U.S. accounted for about 20% of the world economy (using purchasing power parity, the most rational metric), Europe about the same, and China around 6%. Now, the U.S. is roughly 15% and declining, Europe is about 14% and dropping faster, while China is north of 20%. This shift happened within the lifespan of a book.
Small differences in compound growth produce massive outcome differentials over time, as Warren Buffett keeps preaching. Even if you measure GDP in real dollars, the story is similar, with the same growth but different starting bases.
Now consider military expenditures: the U.S. spends about a trillion dollars annually, while China spends roughly a third of that. But compare what they get for their money. A chair made in China might cost $1, but here, it’s far more expensive. Apply that to military production, and you see who’s becoming the real superpower. If China isn’t there yet, wait two weeks or two months — it’s happening fast. This isn’t pro- or anti-China; it’s just reality.
- China makes things cheaper in general and comparatively much cheaper in the military field. The U.S. has a $53,000 garbage can problem.
- The U.S. weapons industry, as mentioned by Col. McGregor, is not competitive; it is one of the three areas that costs “a lot in the U.S.,” along with healthcare and education — the latter can cost two orders of magnitude more here.
- China spends a third of U.S. military in nominal terms. You can figure out what is going on since they don’t have the $53,000 garbage can problem yet.
- By some mental bias, people think that status quo is GDP. No; it is GDP growth. China pulled from 6% to more than 20% of world GDP (PPP) in 15 years. So consider what the state of geopolitics would be in 2035.
Our projections often fail because we rely on primitive analyses of the past, ignoring second-order effects. In the future, discussions about war might need to happen in Beijing, not Washington, where overpaid officials may not grasp these evolutions.
THE S-CURVE AND ECONOMIC SATURATION
The third point is the S-curve, which I discussed in Antifragile. In biology and economics, entities grow in a convex way, then slow as they saturate — growth may be unbounded, but remains sub-logarithmic. Once you have a two-car garage, do you need a five-car garage? Some might, but most don’t — the incentive diminishes.
China is growing fast because many still lack basics like a car, while Europe and the U.S. have reached saturation, with little incentive for further growth. And many are discovering that lifestyle improvements, such as bicycling paths and pedestrian- and cyclist-friendly cities, may not produce economic growth.
The problem is that it is saturated economies, like the U.S. and Europe, that carry the most debt. There’s a French saying: On ne prête qu’aux riches (“One only lends to the rich”). But when you’re rich and borrow heavily, you need growth to service that debt, which is harder at the top of the S-curve.
Further, policies like tariffs, as seen under the current administration, can stifle growth by forcing resources into lower-margin activities — like asking a brain surgeon to do some gardening two days a week to avoid being “ripped off” by professional gardeners. This shift from higher added value to lower added value depresses GDP, a point orthodox economists agree on — and this, at the time when we need growth the most.
Our metastatic government and irresponsible fiscal policies exacerbate this. Soon, most U.S. expenditure will go to servicing debt, and we lack the political mechanisms to correct this. Worse, we now depend on foreigners or local retirees to buy our debt. Former President Biden’s policies, like freezing assets in U.S. dollars, discouraged investment in U.S.-denominated assets. If your assets can be frozen because you once met someone who had lunch with the brother-in-law of a banker connected to Putin, why take the risk of holding dollars (or Euros since the U.S. bullied Europe into following suit)?
Central banks are shifting to gold, which has rallied significantly, as BRICS countries move away from dollar reserves.
IV. IMMIGRATION
There has never been a society that welcomed immigration for its own sake, for reasons beyond its economic utility. The West grew wealthy, then ran out of people willing to clean bathrooms, fix roofs, babysit noisy spoiled brats, and mow lawns. It would be prohibitively costly to ask a dentist to spend two days a week gardening for balance. Nor do many youngsters in the middle class dream of growing up to be janitors. So the poor must be imported — reluctantly.
Comment 3
Immigration in small doses is socially benign; immigration in large doses threatens the museum-state perception of the locals as a discontinuity from past history and feels like an invasion, even if it is not.
The United States and Europe became structurally addicted to cheap immigrant labor, building oversized houses with expansive lawns and labor-intensive upkeep. A sharp reduction in this supply would trigger hyperinflation, owing to the nonlinear effects of such squeezes. Remember 2022.
Every Western political party that won office on an anti-immigration platform has ended its term with more immigrants than before. Giorgia Meloni is a recent example.
In that light, recent moves to deport immigrants appear largely symbolic — gestures aimed at winning elections. Some are simply vicious, driven by the urge to humiliate immigrants for its own sake.
Can the West dispense with immigrants? Not without crushing its own global GDP — an option unaffordable to economies already burdened with accumulated deficits. It may be a rational choice in theory but, in practice, almost no one is willing to pay that price.
Note again, I have nothing against closed xenophobic ethnostates per se (so long as they don’t invade others and mind their own business); but under modern conditions one cannot have both such a state and accumulated debt requiring economic growth.
We end up in the strange situation of xenophobic people importing labor for their own purposes while voting against immigration — a sort of tragedy of the commons.
Comment 4
The perception of the number of immigrants tends to be biased considerably higher than reality, perhaps because of salient differences and their visibility from their concentration in dense central areas (a saliency bias).The proportion of Muslims in Europe tends to be under 1/20, ranging between 1/10 and 1/100 in most countries — yet casual perceptions tend to be almost one order of magnitude higher.
Note on Highly Skilled Immigration
There is a marked difference between Europe and the United States in terms of reverse brain drain — the inflow of highly skilled immigrants — which explains the growth differential between the two environments. The U.S., with its more generous (though less equalitarian) academic compensation packages and fewer restrictions on retirement, has consistently drawn Europe’s most aggressive and productive scientists.
At the Tandon School of Engineering of NYU, where I spent more than fifteen years, the near-totality of both faculty and graduate students were foreign-born.
Comment 5
Reversing the direction of brain drain (via visa restrictions) may in fact help the countries of origin by keeping talent locally.
V. THE LIBERATING EFFECT OF SOCIAL MEDIA
The next point is an optimistic one: social media has transformed information flow. Historically, people traded information at the barber shop or fish market, acting as both conveyors and recipients. Big media disrupted this, turning us into passive consumers of TV lectures by the state and a bowdlerized press. Now, platforms like TikTok and X allow us to both share and receive information, returning to a natural model.
Social media is hard to control, even with censorship, and AI makes it even harder to manipulate without producing incoherent outcomes. For example, an ethnic cleansing in Gaza might have been covered up by traditional media in 1995, but in 2025, social media exposes it. The media only matters to politicians or those out of touch — anyone under 30 doesn’t care about ABC News.
So this is good; someone was talking to me about the “media cycle” in Washington and I told him the only people who care about the media are people who are either in a wheelchair or in politics. I’m here because of Facebook (initially) and X/Twitter, not traditional channels, and I’ve refused the media tour for my last couple of books.
Comment 6
One effect of the breaking of traditional, centralized media’s grip on Western citizens is the inability of the Israeli propaganda to frame their ethnic cleansing and Apartheid as a defense of Western values against fundamentalist Islam.
VI. THE GROWING ROLE OF GOVERNMENT
The sixth point is the creeping growth of government invalidating cross-temporal comparisons. In history books, we read about kings like Louis XIV and centralizers like Colbert, but today’s governments are far, far larger and more intrusive.
In Europe, governments account for 40–50% of GDP (higher in France particularly if you include education). In the U.S., it’s higher than reported when you include local government and recent interventions. A century ago, governments were under 15% of GDP, often less than 5%.
Comment 7
Government size is period dependent, invalidating cross-temporal comparisons. At no point have governments been more effectively intrusive, thanks to technology.
Even in economies driven by Adam Smith’s principles, government has grown substantially. In 1500, a dictatorial government couldn’t control much because it was a smaller share of the economy. Today’s governments have far more reach, and this is proving to be unstoppable. A limited-government conservative today is dreaming of what a centralizer was hoping for only a few decades ago.
VII. SCALE IS SIGNIFICANT
The final point is that scale matters when it comes to governance. I have an aphorism phrased by friends as follows: I’m a libertarian at the national level, a Republican at the state level, a Democrat at the municipal level, and a communist at the family level.
The point is, governance depends on scale. Country clubs have rules and enforcement — effectively a government — but nobody complains of country club dictatorships.
Historically, successful models like Venice, Dubai, or Singapore were small city-states. Scale enables effective governance, but as the U.S. economy grows in size and complexity, governance becomes harder. We need even more localism than we had 50 or 100 years ago, but our systems haven’t adapted to this reality.
