Vladimir Putin obviously didn’t get the memo. The kleptocrat handbook has changed. You don’t invade countries anymore because after the smoke clears, you have to fix their plumbing and heating and cell service. Instead, you hire them.
Some estimate Mr. Putin may be worth $100 billion via hidden holdings in Gazprom, Russia’s state-owned energy company. But Jeff Bezos and Bill Gates are worth more and they don’t control any tanks. Their success shows the world is now divided into horizontal slices, with the most productive sitting on top. The American empire, if you want to call it that, is a horizontal empire. Mr. Putin’s attempt to re-create the Soviet Union’s vertical empire is doomed to fail.
As digitization allowed design and control to be separated from manufacturing, the world got horizontal, organizing into stacks of companies, industries and even countries to which markets provide capital based on their value-add.
IBM vertically integrated computers, while Microsoft, Intel, Dell, Singapore-made disk drives and Japanese memory chips dominated slices of the personal-computing stack. AT&T was vertical, the Internet horizontal, with Google and Amazon sitting on top of the data-center, fiber-optics and cable-modem slices. Apple adds its operating system to smartphones after paying Foxconn to assemble Korean screens and Taiwanese chips in China. Successful companies give up owning everything to expand opportunities.
As long as the U.S. provides the stuff at the top, its horizontal empire will endure, creating societal wealth and enough technology and taxes to defend itself and its allies. These include Japan, South Korea and Taiwan, all of which have far higher gross domestic product per capita than vertical commodity-dominated Russia. Especially in trade, horizontal topples vertical.
Under the guise of reuniting the Soviet Union’s footprint, Mr. Putin wants to control oil and gas distribution to clueless nuclear-reducing, wind-dependent, energy-deprived European countries.
