Cross-posted from Unadorned Notes.
History is not ending, but the rules have changed.
If the last decade was defined by the slow-motion unraveling of hyperglobalization, the past two years have finally made the regime shift impossible to ignore. What once passed for cyclical “trade tensions” or technocratic skirmishes has matured into a structural reset—one whose implications extend far beyond the headline metrics favored by mainstream commentary.
The realignment now underway is not simply a matter of tariffs, regulatory tweaks, or the latest iteration of “America First” or “China Dream.” It is, in every substantive sense, the construction of a parallel world order. The old system—built on the illusion of costless integration and ever-deepening interdependence—is giving way to something far more contingent, more fragmented, and frankly, more interesting.
Globalization: Not Dead, But Bifurcating
First, a Bayesian update: the hypothesis of global “decoupling” as performative noise should be downweighted. What we are seeing is not the slow death of globalization per se, but a selective rerouting of its arteries. Call it “America with aligned partners, minus China,” or, more precisely, the emergence of blocs built on overlapping interests, credible commitments, and mutual hedging. Capital, talent, and supply chains are reorienting themselves according to a new calculus—one in which political alignment, strategic reliability, and supply resilience supersede the last decimal of cost optimization.
The evidence is no longer ambiguous. Trade corridors are deepening between the U.S., Mexico, India, and Southeast Asia, even as dependencies on China are methodically unwound. In parallel, new institutional frameworks (IPEF, Quad, AUKUS) are quietly laying the rules for this next phase. The fiction of a frictionless global marketplace now serves mainly as nostalgia for a system that no longer exists. What replaces it will not be a return to autarky, but a noisy, iterative process of trial and error—where “allies” and “strategic partners” are redefined in real time.
Permanent Volatility: The Price of Strategic Autonomy
There is also little reason to expect a reversion to the low-volatility, low-inflation equilibrium of the 2010s. The persistent stickiness of inflation, the rolling energy and supply chain crises, and the now-chronic uncertainty in capital flows are features, not bugs, of this new landscape. What central banks once dismissed as “transitory” now seems closer to a permanent tax on naive optimization.
More importantly, the volatility is not random noise—it is endogenous to the system itself. Industrial policy, export controls, and geopolitical hedging have become sources of structural uncertainty. For investors, businesses, and policymakers alike, this is not a temporary dislocation. It is the new baseline, and it is unlikely to abate before the dust settles on this global reset—which, by all accounts, may take several more years.
Defense, Technology, and the Return of State Capacity
One notable feature of this cycle is the blurring of boundaries between public and private R&D. The West’s belated rediscovery of “industrial policy” is not simply a matter of subsidies or procurement budgets. It is a cultural pivot: top-tier technical talent, once allergic to state priorities, is now routinely drawn into defense, dual-use technologies, and the (re)building of “sovereign” supply chains.
The proliferation of AI-centric startups in defense and the renewed emphasis on domestic semiconductor manufacturing are symptomatic. The incentives now point toward speed, resilience, and functional sovereignty, rather than global market share for its own sake. This is not to romanticize the results—bureaucratic inertia and regulatory rent-seeking are alive and well—but the direction of travel is unmistakable.
The Emerging Geography of Opportunity
It is tempting to project yesterday’s power centers onto tomorrow’s landscape, but that would be a category error. China’s relative position is not merely challenged by external tariffs or technology bans; it faces deeper headwinds: demographic decline, structural debt, and the diminishing returns of a state-driven growth model.
Meanwhile, countries that sit at the intersection of credible alignment, operational capacity, and market access—India, Vietnam, Mexico, and certain Eastern European economies—are rapidly gaining share in manufacturing and services. The “China+1” narrative is being realized not as pundit fantasy but as lived economic reality, visible in trade data, FDI flows, and the shifting preferences of global firms. The U.S. itself, by virtue of geography, technological ecosystem, and resource endowments, is positioned to be the “least dirty shirt” in this new order, at least for the foreseeable future.
Final Thoughts: Optionality Over Optimization
The correct response to this structural shift is neither panic nor nostalgia. Rather, it is to adopt a posture of robust optionality. For individuals and institutions alike, the age of “efficient frontier” thinking has given way to the age of “antifragility under constraint.” If the old world rewarded leverage, the new one punishes overextension and prizes optionality—be it in supply chains, alliances, or intellectual capital.
As always, the temptation will be to search for a new equilibrium. But Bayesian realism suggests that the only constant over the next decade is the likelihood of further regime change—strategic, technological, and institutional. It is not so much that the world is becoming unrecognizable, but that the meta-game itself is evolving, faster than most of its participants can adjust. The wise will be those who build systems capable of learning, adaptation, and controlled risk-taking, not those clinging to yesterday’s playbook.
