I heard P. J. O’Rourke say: it is cheaper to buy oil than to steal it. In the 1990s, MBA classrooms promoted a powerful idea: “It’s the economy, stupid.” Geopolitics was viewed as an outdated distraction. Supply chain strategy focused almost exclusively on cost minimization, just-in-time delivery, and global efficiency. Political and strategic risks were largely sidelined.
That worldview is now obsolete.
While corporations optimized for spreadsheets, major powers continued treating critical resources, technologies, and capabilities as instruments of national advantage. Historically, acquiring or controlling such assets often relied on usurpation — military conquest, colonization, geopolitical rent-seeking, influence operations, and non-market appropriation.
The Economics of Offense and Defense Have Flipped
For most of history, defense was cheaper than offense. A well-positioned fort and basic defenses could hold off much larger forces.
Today, the opposite is true. Offense has become dramatically cheaper than defense. Low-cost drones, precision munitions, and emerging drone swarms allow destructive power projection at a fraction of historical costs. Protecting everything, everywhere is becoming prohibitively expensive.
Old-School Geopolitics Is Increasingly Unsustainable
The economic burden is enormous. Global military expenditure reached $2.887 trillion in 2025 — roughly 2.5% of world GDP. This represents vast overhead spent on maintaining spheres of influence, overseas bases, sanctions regimes, and strategic denial. In addition, the economic rents that the super powers or the one super power could hope to receive, which could be as large as 4% of their GDP, have all but disappeared.
The Cost of Widgets: Trade vs. Geopolitics
A widget freely traded on open global markets carries primarily the costs of:
- Production
- Logistics
- Modest tariffs (usually low single digits)
The same widget obtained or protected via geopolitical rent-seeking bears massive additional overhead:
- Pro-rata share of nearly $2.9 trillion in annual global military spending
- 10–30%+ cost premiums from duplicated supply chains and “+1” diversification efforts
- Hundreds of billions in annual losses from tariffs, trade restrictions, and compliance costs
Conclusion: It is now cheaper to trade than to usurp or rent-seek.
Modern Strategic Assets Demand Stability
Old-school geopolitics is structurally incompatible with today’s most critical capabilities. You cannot easily build and operate hyperscale data centers, AI clusters, or advanced semiconductor fabs in environments of constant tension, instability, or coercion. These assets require massive long-term capital, reliable energy, global connectivity, rule of law, and international trust.
The Generational Challenge
Many old-school geopolitical strategists still operate with the rent-seeking mindset — spheres of influence, strategic denial, and leverage-based control. Unless they recognize that the new economics of power strongly favor trade, commercial diplomacy, and stable partnerships, progress will be slow. Real change may only accelerate as a new generation of more commercially minded and progressive strategists takes the lead.
Why This Matters for Supply Chain Leaders
- Risk Has Evolved — Primary threats now include regulatory fragmentation, selective decoupling, and weaponized interdependence.
- Resilience Requires Awareness — Diversification must be geopolitically informed.
- Trade and Diplomacy as Strategic Tools — In a world where offense is cheap and old-school methods impose unsustainable environmental, fiscal, and democratic costs, proactive commercial engagement becomes essential.
The Emerging Mantra
The 1990s taught us: It’s the economy, stupid.
The 2020s are teaching a more complete truth:
It is cheaper to trade than to usurp or rent-seek.
Because offense has become cheap, defense expensive, critical infrastructure demands stability, and old-school geopolitics carries trillions in overhead while harming the environment and democratic institutions, the rational path forward is clear: protect vital core capabilities, but aggressively use markets, trade, and diplomacy to secure everything else.
Leaders who understand this shift will build antifragile enterprises and contribute to a more stable, prosperous, and sustainable world. Those who cling to outdated rent-seeking playbooks may find themselves adapting too late.
The market has not eliminated geopolitics. It has simply made smarter, more efficient, and more peaceful methods the rational choice.