Why El Paso's Location on the Border Could Be Its Biggest Economic Advantage

The Future of El Paso in the Decline of Globalization

Hi, thank you so much for checking out the YouTube channel. My name is John Peña with Peña El Paso Realty Group. If you are looking to buy, sell, or invest in El Paso, please reach out to us as we are the best real estate company in El Paso.

And we talk a ton about El Paso, rightly so, but what we wanted to do for this episode to kind of wrap up the year is actually look forward into the future, right? That's kind of like a whole New Year's thing, right? You kind of reflect on your past, but you also make objectives, goals, you kind of start

planning for the future, and we wanted to do just that with you. And so recently, Vic Kolink, I hope I'm saying his name right because I steal all of his material like always, but anyway, this gentleman is a writer for the El Paso Times and he recently put out an article kind of about the snapshot of El Paso's local economy.

He talks about jobs, small businesses, everything like that. And basically in a nutshell, it was like, you know, look, the El Paso economy did just fine this last year, 2022, but there are certainly signs that it will decelerate this year, 2023. Why?

Everybody knows inflation, recession, higher interest rates, all those are going to have a dampening effect on all of the economies in our country and El Paso is not going to be spared that. However, what I wanted to talk about, I think is actually way more interesting.

It's more of a kind of a macro long-term vision of El Paso in the next 10, 20, 30, 40, 50 years. And I think I have some super interesting content to share with you. And so let's just go ahead and jump right in it.

So right now there's a lot of attention around migrants and immigration because right now there happens to be an influx of migrants coming in to El Paso for a variety of reasons, primarily a lack of decent immigration laws. But you know, that's a whole nother story.

And by the way, too, I'll make a plug for El Paso Times. If you really want to know exactly what's going on in El Paso with that migrant situation, check out El Paso Times. That's a very unbiased, boots on the ground newspaper.

And like I said, they're going to give it to you straight. So plug for them. I love the El Paso Times. But anyway, so El Paso, since we're on the border with Mexico, a lot of people see this

as a bad thing. Oh, well, we're the ones who are going to be overrun by immigrants. And you know, the city is going to fall into ruin and it's going to be taken over and none of that is true, of course.

But like I said, if you watch the news, you might think differently. But what's really interesting is that actually El Paso's geographical location on the border with Mexico is what is going to make it so much more successful than so many other cities in our country in the future.

And let me back that up with with some very interesting information. So all right. I've been really in this. I stumbled onto this.

Actually, some other people gave me this this recommendation. A book by Peter Zion is called The End of the World is Just the Beginning, Mapping the Collapse of Globalization. This is a fascinating book.

You should definitely check it out if you're at all into kind of just world events, history, predicting what might happen in the future. Unbelievable. Great YouTube videos to spare you or if you don't want to read the book.

This is what Peter Zion essentially asserts is is happening and it's going to happen in the future of the world. All right. Number one, the last 75 years have been basically a golden era, right?

Think end of World War Two, you know, to to now basically a golden era making globalization possible. OK, but that is over. OK, now let me say that again.

Globalization. Right. Think global supply chains. How do global supply chains stay intact?

The U.S. Navy. That's how. Right. At the end of World War Two, the United States didn't just, you know, decide to conquer all

of the countries that it could have potentially having been a very dominant player. What it did, it stepped back and said, look, we don't want to take over any of your lands, your country. What we do want to do is get everybody to kind of come together.

Let's all agree on basically not going to war with one another. And then the fruits of all of our labors will, you know, magnify into into greatness. And that's in the end, by the way, we'll use our massively powerful U.S. Navy to basically maintain law and order on the seas, which is how globalization, supply chains and all

of this is going to take place. And guess what? It worked out right. Globalization has taken off and that's where we've essentially kind of had this golden

era. Lots of second, third world countries have been able to essentially industrialize in a very short amount of time and now find themselves, you know, much more wealthier countries. However, that is over, according to Peter Zahan.

Why is it over? Essentially a lack of capital and a lack of labor. OK, let me explain. So this may not sound like a big deal, but it is.

OK, trust me, if you're interested in this, check out this book. A big problem globally is that our populations are declining massively to the point of no return for many, many countries, including China and these other countries. Right.

Meaning that the lack of people having enough babies to essentially grow up and entered in into the labor force to provide the labor which provides a capital that we're at a point of no return with most, most countries. Right.

Declining global popular populations are going to have a devastating effect on globalization. It simply is going to make it such that it is no longer possible to have the labor inputs to produce the outputs anymore. Right.

The U.S. is one of the few countries that is actually doing OK with population. But currently the U.S. labor market is short about 400,000 workers. That's only going to increase year over year until 2034, where there's going to be a worker shortage of 900,000 people.

OK, so it's like I said in the case in other countries is much, much worse. OK. So third thing, it means that basically countries and regions will have no choice but to make their own goods, grow their own food, secure their own energy, fight their own battles

and basically do it with populations that are basically shrinking and aging. Another reason why Peter basically argues that globalization is over. We're entering into a time when there's not enough energy and not enough food globally. OK.

So in the United States, we're very, very fortunate, primarily because of our geography and our land, our rivers, our water, like all of that, the Midwest, where we can have very rich and fertile soil still. So we're fortunate in our country to be OK on the energy and the foodstuffs front.

However, what is going to happen in the near future is the U.S. is going to prioritize manufacturing. And this is where we turn to an eye on El Paso. OK, so let me just recap this as quickly and as succinctly as humanly possible. Globalization is over.

OK, if you can buy into this and understand this, what's going to happen is when we transition from globalization, what do we transition to? All countries are going to have to transition to more of a localization. Right. So growing their own food, fighting their own battles, securing their own energy,

these global supply chains that the U.S. Navy has basically overseen for the last 75 years, that's going to go by the wayside. Right. Why would we continue to spend so, so much capital and military effort on something that doesn't have a meaningful capital impact?

Right. Financial impact. So what's going to happen is basically everybody knows that that China for the last 25 years basically made most of our stuff. Right. We look on the back of any toy or any product.

iPhones come to mind made in China. Right. That is no longer sustainable. Right. So what's going to happen is if countries still want to have stuff, guess what? They're going to have to bring manufacturing in-house.

And that is exactly what is likely to happen in North America, in the United States. So in order to understand the importance of this, you need to understand how manufacturing works best and most efficiently. And it does so when you are able to tap into different skill levels and different wage

levels. Right. So like we said, for the last 25 years, China has done the low skill, low wage stuff. All right. That's going to end. It's already ending.

Apple, who was one of the kind of companies who really stuck in there on China for longer than so many other corporations, are now, as you probably know, if you watch the news, are starting to explore other options. Right. Well, guess which neighboring country is essentially likely to take its place when

it comes to that kind of lower skill level task and lower wage levels? Mexico. Right. Because why? Because Mexico is right, right next door. We can essentially minimize our supply chains and the distance from the consumer.

Right now, we have global supply chains that span not only land masses, but massive water oceans. Right. To get a product from China to here, you're talking about a lot of distance and a lot of money. Whereas if we can shorten those supply chains, we're with our neighbor.

Right. And there's it's simply a landmass. Right. It's a it's a border crossing. And so basically what everyone. Well, I shouldn't say everyone, but basically what Peter Zeihan and many others believe

is that there is going to be an explosion of manufacturing and trade between the United States and Mexico. OK, you could even expand that into North America. So include Canada, the United States, Mexico, and then even, you know, maybe down to South

America as well. There are certainly a number of countries in South America that have a lot of this kind of manufacturing potential as well. Basically, El Paso and San Antonio are the two Texas locations best positioned to benefit from this shift away from globalization.

OK, so really what we're saying here is that if this theory that globalization is coming to an end, if this is true, what's going to happen is that essentially we're going to have to start making our own stuff again. OK, we're no longer going to rely on countries all around the world to make our stuff.

It's simply not practical financially anymore. Right. So what are all of these countries in our world going to have to do? They're going to have to basically become more self-sufficient, more localized. And El Paso and San Antonio in particular are positioned strategically right on the

border, making us, our proximity to Mexico, a huge asset, a huge bonus. We're likely to see a significant amount of businesses, corporations, I mean, you name it, trade firms, manufacturing, infrastructure, industrial infrastructure come to this area. And what's going to happen to the local economy?

Well, it's going to benefit from all of this influx of capital. All right. So now I can already hear people in the comments being like, oh, no, change. We don't want that to happen. Fair enough. But do you want to have stuff?

Do you continue? Do you want to continue to be our participant in one of the strongest economies in the world? And, you know, change is the only constant in life. Right. Change is inevitable, whether we like it or we don't like it, it's going to

happen. And if anything, I think if you're in the southwest, particularly El Paso, the south, even, you know, I think you should be relatively optimistic that there's going to be a lot of opportunity in these areas because of our proximity to Mexico. So, you know, like I said, I just find it interesting that right now I imagine people on

the outside looking in are seeing El Paso and thinking, oh, like too bad for them. They're on the border. Right. Like it's a bad thing. But dare I make the case based off of legitimate research and data that in the

upcoming future, actually what's going to make us stronger, what's going to give us a more kind of huge advantage, quite honestly, is because exactly of our proximity to the border and to Mexico. And so, like I said, I do hope that that is somewhat interesting to you.

Peter Zaihan, I'll put the book cover up here so you can check it out. I've got it on audiobook, so I've been listening to it a ton. But this way, I would definitely be curious about what your comments are. Do you think that this is going to happen?

Do you think that globalization is going to end? If so, do you think that our proximity to Mexico, that we're going to forge a stronger relationship with with Mexico, not only to kind of for a manufacturing base, but also for that big shortage of labor?

You know, it's it's funny sort of with the with the influx of migrants, to tell you the truth, because of declining populations. And this has been the case in America forever. It's a country of immigrants, right, that we've always needed additional labor to to

make our country prosperous. Right. And so it's likely that that's going to to be a trend. But like I said, we're not seeing these great population spurts, not unless the millennials start having a ton of kids.

And it seems like that is perhaps not not so likely. So anyway, super interesting topic. I'm definitely not trying to stir the pot here and get people all riled up. I'm not trying to be political here.

I'm just trying to give you some ideas about what the future could be. And again, I would I would love to to read your comments to see whether or not you agree, disagree. And other than that, that's about it.

I hope that everybody has had a fantastic 2023. We wish you all the best in 2000. And excuse me, I hope you had a fantastic 2022. We wish you all the best in 2023.

If there is anything that we can help you out with, even if it's just sharing information about our amazing city, please reach out to us and we'll see you in the next episode. .