Looking at the global landscape

Navigating hot topics in today’s world can be unpredictable, but Jacob Shapiro, director of research for the Bespoke Group and host of the Jacob Shapiro podcast, gave some insights during his session on the Dairy Signal podcast Sept. 1.

Shapiro’s presentation, “Beyond the Headlines: Understanding Today’s Global Landscape,” focused on geopolitical issues and artificial intelligence.

“It has been an incredibly eventful year in geopolitics,” he said. “I would tell you, at least from an American perspective, and certainly from an upper Midwest perspective, the most important geopolitical thing that is happening in the world right now, and will have happened this year, is the break in U.S.-Canada relations. There is nothing more important than that.”

Canada has been a major trade partner, passing China, the United Kingdom and Germany in imports and exports, Shapiro said. Locally, he said, Canada is Wisconsin’s biggest trade partner by a large margin.

Shapiro believes this split will hurt Canada’s economy, possibly more than it hurts the U.S., but could mean higher prices for imports coming into America. As a result, he believes there could be an overstock of agricultural commodities that were traded to Canada.

For years now, Shapiro said, he has been talking about a concept called “multipolarity,” which he defines as no dominant country in the world.

“We have been the dominant political, military, cultural, economic, trade country, you name it; the buck had literally stopped with us,” he said. “When I started talking about multipolarity, it was around 2018 or 2019; it was still theoretical. I used to get laughed out of the room. It is no longer theoretical. This is here. So now, when I’m giving presentations, I’m really updating you on how multipolarity is proceeding, rather than guessing or theorizing ‘this is what’s going to happen.’”

One such update was that the world is deglobalizing in a “top-down” style, Shapiro said, which he believes will create more opportunities at local and regional levels.

“If there are fewer international opportunities, by definition that means our local markets, our regional markets are going to become more important to us,” he said.

Shapiro then talked about another shift that is happening worldwide. He said since the 1700s, economies have been geared toward “more” in terms of goods and resources, and people, but fertility rates are down globally, with the exception of Africa.

“Something unprecedented is beginning to happen in global demographics. For the first time since modernity really began, we need to start thinking about how we are going to maintain and improve lifestyles while seeing fewer people,” he said.

One thing that has helped supplement lower fertility rates in the U.S. has been migration, Shapiro said, but those rates are decreasing as well. He said with fewer people, there may come an increase in robots and artificial intelligence.

“I want you to keep two contradictory ideas in your mind at the same time,” Shapiro said “I want you to understand artificial intelligence is the biggest tech innovation we have seen since the internet and the cell phone. I think it will change our lives accordingly. I also want you to understand that AI is absolutely a bubble, and that bubble is going to pop at some point.”

Similar to other advancements in technology, Shapiro said he believes AI will be mapped in an “S” curve, with an initial adoption period leading into an explosion of use, which will then settle into an oversupply.

“I think artificial intelligence is pretty poorly understood in how it’s going to change things,” he said. “I would point you to what Jerry Neumann (investor and adviser) has pointed out, and that is AI is more akin to containerization.”

Shapiro said, similar to Neumann’s essay, people should look at AI like a shipping container or as a medium to help revamp businesses on local and regional levels, not just a tool to use.

“I was absolutely shocked that only 14% of farmers, according to the state of the farm report (from the American Farm Bureau), said they were using AI tools on their farm,” he said. “That is abysmally low.”

Shapiro said he doesn’t see AI as something that will be taking over jobs, but believes that the people who are more successful in the future economy are those who learn to use this medium to increase their productivity and efficiency.

“I would encourage you to start thinking about this,” he said. “When you’re thinking about the local and regional basis, think about the fact that as a country we now import more food than export and there are a lot of opportunities that are hiding in plain sight.”

Americans can start looking more at things that they are buying that could be grown, Shapiro said, giving an example of turmeric in the South or pumpkins in the Midwest, as well as other agricultural tasks. He said farmers could then use a bit of AI to create websites, help with some of the smaller business aspects, become more precise in milking and growing, automate feedings, waterings and fertilizations, and more.

“Everything about the economy is skewing toward bigger and scale,” he said. “I think AI is this interesting technology that allows the small farmer to push back because suddenly he can compete.”

Shapiro said smaller farms should start by looking locally, then regionally, and use AI to increase their productivity, develop the research and build the channels they need to grow.

“More than ever, I feel incredibly optimistic about the global economy because all these pressures…every single one of them is an opportunity,” he said.