No Mercy / No Malice: Freedom of Navigation

As read by George Hahn. https://www.profgmedia.com/p/freedom-of-navigation Learn more about your ad choices. Visit podcastchoices.com/adchoices

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• 0:01Scott Galloway?

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• 0:48Speaker 01

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• 1:08Speaker 02

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• 1:54Scott Galloway?

  I'm Scott Galloway, and this is No Mercy, No Malice. Global commerce depends on the freedom to move goods across oceans without paying tribute or risking attack. Freedom of navigation, as read by George Hahn.

• 2:22George Hahn?

  ¿Cómo matas a millones de personas? A. Lento y metodicamente. Nota: Esto no es consejo, sino una observación de mi Yoda personal, el psicólogo Daniel Kahneman.

• 2:37George Hahn?

  "El mundo tiene mucho menos sentido de lo que piensas", escribió en "Pensando, rápido y lento". "La coherencia proviene principalmente de la forma en que funciona tu mente". Nuestros cerebros tienen dos sistemas de pensamiento: rápido (intuitivo, emocional) y lento (lógico, calculado). El pensamiento rápido culmina a América por matar a un estimado 250,000 civiles con bombas atómicas. El pensamiento lento nota que el ejército de Japón mató a 3 millones a 10 millones de civiles durante la Segunda Guerra Mundial. Nos emocionamos por el poder cinematográfico de las nubes de almohadre, no la tasa de muerte,

• 3:18George Hahn?

  porque el 95% de nuestros pensamientos son el producto del pensamiento rápido. Como supuestamente dijo Joseph Stalin: "Una muerte sola es una tragedia. Un millón de muertes es una estadística". Las tragedias estadísticas resultantes de la cerradura de la Stra de Hormuz son invisibles para el cerebro pensante rápido, que está fixado en los precios de energía, los mercados y los postres de mierda que desempeñan como estatismo. Así que vamos a... a detenernos y pensar en los efectos de segundo orden provenientes de un mundo sin libertad de navegación.

• 3:58George Hahn?

  Los primeros conflictos de América fueron luchados para ampliar el principio de libertad de navegación, es decir, el derecho a mover bienes a través de océanos sin la amenaza de violencia o la trampa de tributo. In 1798, we fought an undeclared war against France to stop it from seizing our merchant ships. A decade later, we took on the British Empire to stop it from kidnapping American citizens and forcing them to serve aboard its ships. Between those two wars, we fought two campaigns against the Barbary States in North Africa, ultimately ending the need for American merchants to pay bribes for safe passage.

• 4:40George Hahn?

  These conflicts are largely forgotten, save for two familiar artifacts: That shores-of-Triply line from the Marines hymn, and the Mamaluke sword, which remains part of the Marine dress uniform to this day.

• 4:57George Hahn?

  Those 18th-century American sailors and Marines laid the foundation for today's global prosperity. Over the next 200 years, freedom of navigation evolved from an idea, available only to nations with the maritime firepower to enforce it, into a system of laws and norms that benefit everyone. Today, 85% of goods by volume and 55% by value are moved by sea. Already, the U.S.-Israel war on Iran has caused an unevenly distributed energy shock. In its second rapid assessment of the Hormuz crisis, the United Nations Conference on Trade and Development

• 5:41George Hahn?

  noted that "increases in energy prices are spilling over into supply chains, raising the cost of producing and moving goods across the world."

• 5:53George Hahn?

  This week marks the war's two-month anniversary. The strait has been closed most of that time, but markets, while volatile, have hit record highs. Explaining the cognitive dissonance between bad news and market optimism, European Central Bank President Christine Lagarde said, "This is a crisis where we're learning bit by bit, day by day, what the consequences will be."

• 6:21George Hahn?

  Because tankers and cargo ships move about as fast as bicycles, we're only now beginning to transition from the fuck-around phase to the find-out phase. Some things we're finding out. Carex, which makes a fifth of the world's condoms, said it would raise prices by 30%, increasing the cost of safer sex and probably leading to unwanted pregnancies. Dow said it plans to double a previously announced 15-cent-a-pound price hike for polyethylene, which is used to make bottles, bags, tubing, and textiles. The price increase follows a Tencent boost in March.

• 7:03George Hahn?

  The US Postal Service announced a temporary 8% surcharge on packages, meaning everything you buy online just got more expensive.

• 7:15George Hahn?

  Helium is abundant in the universe, but rare on Earth. Between the closure of the Strait and damage to Qatar's production facilities, 30% of the global helium supply has been disrupted. Spot prices for the gas have doubled since the start of the war. But even if the conflict ends soon, experts say it could take years for Qatar to repair its damaged production capacity. Meanwhile, US helium suppliers have begun notifying customers that they won't be able to fulfill orders. "This is the big one that we always feared would happen. It's the 'black swan' event."

• 7:56George Hahn?

  Cliff Kane, an executive at the helium exploration company Pulsar, told The Wall Street Journal. "It is just going to be a building crescendo of who's going to be able to get their molecules and who is not."

• 8:11George Hahn?

  Helium molecules are embedded throughout the supply chain, and in many cases, there's no good substitute. Affected sectors include semiconductors, aerospace, and fiber optics. The AI buildout is especially vulnerable, as helium is used to produce chips and cool data centers. Eventually, constrained supply will meet the AI boom's increasing demand.

• 8:40George Hahn?

  There's no physical shortage right now at the end-user level, a helium industry consultant told Scientific American. It's like a nice sunny day on the beach, but you heard there's a tsunami out there.

• 8:55George Hahn?

  When the tsunami hits, it will pit AI against healthcare. In the US, one-third of the total helium supply is used to cool MRI machines. Healthcare systems are already talking about passing costs on to patients and rationing care.

• 9:16George Hahn?

  Since the start of the war, prices of urea and ammonia, the two most common nitrogen fertilizers, have risen by 65% and 40% respectively. An estimated 30% of the world's fertilizer passes through the strait, further straining already-cremt global fertilizer production. In Russia, the world's number-one fertilizer exporter, plants have been targeted by Ukrainian drones. One recent attack temporarily knocked out 5% of Russian production capacity. China, the second-biggest exporter, banned exports to guard domestic supply.

• 10:00George Hahn?

  In the US, higher fertilizer prices will hurt some farmers more than others, depending on their location and whether they bought fertilizer ahead of the spring planting season. US futures markets have already priced in higher fertilizer costs, but if the strait remains closed into the summer, next year's food prices will rise.

• 10:23George Hahn?

  For poor nations, the crisis is here. An estimated 500 million farmers produce 70% of the world's food supply on farms smaller than 24 acres. Their margin for error is zero. The longer supply chains remain jammed, the worse it gets. One analytics firm estimates that a six-month disruption will spike global food prices by 12% to 18% above pre-war levels by the end of the year.

• 10:59George Hahn?

  Germany's Kiel Institute predicts food price inflation will reach 30% in Zambia, 11% in India, and 8% in Venezuela within a year. By mid-year, the World Bank estimates 45 million people, mostly in developing nations, will experience acute hunger. According to Michael Wertz of the Council on Foreign Relations, "We are witnessing a slow-motion famine machine." Compounding the suffering, wealthy nations cut development assistance 23% from 2024 to 2025.

• 11:41George Hahn?

  As a UN official told The Economist, "The humanitarian shock absorber isn't there anymore." Famines are humanitarian crises in their own right, but they can also precipitate riots, revolution, and war. Marie Antoinette likely never said "let them eat cake," but the infamous line speaks volumes about the immediate cause of the French Revolution. The average 18th-century worker spent half their daily wage on bread. After grain crops failed in 1788 and 1789, bread prices in the country spiked to 88% of the daily wage, lighting the fuse for the violence that followed.

• 12:26George Hahn?

  Food insecurity also set the stage for the Arab Spring. As a Jordanian activist told Time in 2011, "This is a hunger revolution." From a political stability standpoint, food insecurity is both a cause and consequence of violence, contributing to a vicious cycle UN researchers call "a conflict trap." Escholus was correct: "The first casualty of war is the truth." But in a globalized world, casualties continue to mount long after the initial conflict and supply-chain disruption are resolved.

• 13:09George Hahn?

  Fighting a war to open a waterway that was opened before hostilities began is stupid, i.e. we're hurting others while hurting ourselves. But that's me thinking fast. Thinking slowly, the stupidity compounds and metastasizes. The strait isn't open, but it isn't entirely closed either. Iran has created a toll booth where previously there was free sailing. The economic consequences of a single toll booth are small. As the Brussels think tank Brugel noted, "The Gulf nations would pay a toll that amounts

• 13:48George Hahn?

  to $1 to $2 per barrel, increasing the global price by only $0.5 to $0.40 per barrel, a hit that wouldn't register for consumers." The danger isn't the toll, but the precedent. "The concept of the Blue Highway is going away," Salvatore Mercogliano, a former naval officer and associate professor of history at Campbell University in North Carolina, told The Wall Street Journal. "We won't see a return to the normalcy we had prior to this, no matter what."

• 14:27George Hahn?

  One ominous sign: Iran is collecting tolls in crypto and Chinese yuan, undermining dollar supremacy. The greater risk, however, is that toll booths will spread. "If the world accepts paying for tolls for the Strait of Hormuz, then how do we handle the claim China has made that the entire South China Sea is Chinese territorial waters?" Asked retired U.S. Navy Vice Admiral John Fozzie Miller. "If they control the South China Sea, they essentially control the global economy."

• 15:10George Hahn?

  The nightmare scenario isn't worldwide toll booths, or even simultaneous blockades. We can tolerate higher prices and more frequent disruptions. What we shouldn't tolerate is a descent into gangsterism. In the US, Donald Trump has undermined capitalism and the rule of law. See TikTok, tariffs, deploying prosecutions to attack Fed independents and political opponents, etc. Trump's strategic incompetence in Iran is exporting gangsterism to the world. In effect, we're trading in our world policeman badge for regional protection rackets.

• 15:54George Hahn?

  That's not the art of the deal, but the illusion of the steal. The question isn't whether America has the economic and military firepower to prosper in Trump's gangster paradise, but what we lose when we abandon the rules-based order we helped create. Eh?

• 16:16George Hahn?

  Everything.

• 16:20Scott Galloway?

  Life is so rich.

• 16:34Speaker 04

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• 17:04Speaker 05

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