In the theater of history, irony often plays a leading role. How did the greatest engine of prosperity the world has ever known — according to the World Bank lifting 1.5 billion people out of crushing poverty — become America’s most dangerous political wager?

Journalist David J. Lynch — author of The World’s Worst Bet: How the Globalization Gamble Went Wrong (And What Would Make It Right) — witnessed first-hand globalization’s arc from golden dawn to political twilight. 

He walked Beijing’s transforming streets in 2002, covered Jakarta’s financial collapse, and sat across from displaced American workers with stories that will break your heart. He asks why the smartest people in Washington were so spectacularly right about the economics and so catastrophically wrong about the politics.

In this conversation, Lynch reveals what he saw on the ground that policymakers missed, why the bipartisan consensus of the 1990s seemed unchallengeable at the time, and how the promises made to American workers were repeatedly sacrificed to other priorities. 

He explains the hidden role global capital-flows played in the current housing crisis, what his recent interview with Bill Clinton revealed about roads not taken, and why the cumulative weight of economic displacement, financial crisis, and rapid social change created the perfect conditions for Donald Trump’s rise.

Lynch doesn’t offer easy answers or simple villains. Instead, he shows us how success itself contained the seeds of political destruction, and why understanding what went wrong matters more than ever as America places another colossal bet on a new form of technological globalization.

The question is whether we’ve learned anything — or whether we’re destined to repeat history’s mistakes with a different vocabulary.

Apple PodcastsGoogle Podcasts RSS

Full Text Transcript:

(As a service to our readers, we provide transcripts with our podcasts. We try to ensure that these transcripts do not include errors. However, due to a constraint of resources, we are not always able to proofread them as closely as we would like and hope that you will excuse any errors that slipped through.)

[00:00:09] Jeff Schechtman: Welcome to the WhoWhatWhy podcast. I’m your host, Jeff Schechtman. In the theater of history, irony often plays the leading role, and few stories illustrate this better than my guest David J. Lynch’s journey from witness to globalization’s golden dawn to chronicler of its political twilight. Picture this, Beijing, 2002, where Lynch wandered streets alive with transformation, ancient donkey carts threading between gleaming Buick minivans, the air electric with possibilities as millions ascended into middle-class comfort their grandparents could never have imagined. He was watching in real time history’s most magnificent poverty reduction engine roaring to life. Yet in that very success lay the seeds of America’s political unraveling. The prosperity that Lynch witnessed flowing through Chinese factories and Indian call centers would, two decades later, fuel the rage that carried Donald Trump to power. Here was globalization’s cruel paradox. It worked exactly as advertised, and that’s precisely what made it politically unsustainable. Lynch’s new book, The World’s Worst Bet, reads like a meditation on success and its discontents, a recognition that the system he watched lift hundreds of millions from destitution was simultaneously hollowing out the political center in America. This isn’t another globalization autopsy, but something rarer, an acknowledgment that our greatest economic triumph became our most dangerous political wager. The power of Lynch’s narrative lies not in academic analysis, but in the accumulation of moments, standing amid the chaos of Jakarta’s financial meltdown, watching China’s WTO entry reshape the world’s economic architecture, sitting across from displaced Ohio workers as they train their own Mexican replacements with a dignity that breaks your heart. These aren’t data points, but human encounters that reveal how vast economic forces touch individual lives in ways that no spreadsheet can capture. Lynch carries the moral authority of someone who refuses easy answers. He won’t dismiss globalization’s breathtaking achievements, the largest middle-class expansion in human history, the democratization of goods and opportunities once reserved for elites, the technological leaps that connected and enriched our world. But he also grasps that celebrating these successes makes the policy failures not less significant, but more inexcusable. The question haunting this book isn’t whether globalization created wealth. It did, spectacularly. But why America proved incapable of distributing that bounty broadly enough to preserve the political coalition that made it possible. Now as America places another colossal bet on industrial policy and what Lynch calls a la carte globalization, we face the eternal question, do we learn from history’s lessons or do we simply repeat the mistakes with a different vocabulary? The answer may determine whether the next chapter of global integration brings us closer together or drives us further apart. David J. Lynch is the global economics correspondent for the Washington Post and author of The World’s Worst Bet, How Globalization’s Gamble Went Wrong and What Would Make It Right. It is my pleasure to welcome David Lynch here to the program. David, thanks so much for joining us today here on the WhoWhatWhy podcast. Yeah, I’m thrilled to be here. Well, it is a delight to have you here. Thank you so much. One of the things that globalization was supposed to do, it was supposed to make China in particular and other nations more democratic. It was supposed to improve conditions for American workers, retrain them, get them in better jobs, earning more money, and create more peace in the world. To a large extent, it didn’t do any of those things. Talk about that first. Sure.

[00:04:12] David J. Lynch: Well, my hope in this book was to explain the transformation of the U.S. and global economies over the past 30 years or so, and to try and explain how we got from the optimism, indeed, almost euphoria over globalization in the early 1990s, middle 1990s, to where we are today with the rise of economic nationalism, populism, conflict around the world. Where we’ve ended up is not at all the destination that policymakers had in mind 30 years ago. And the hope was that we’d get both widespread shared prosperity here at home, and we’d see, as you suggested, greater peace and harmony around the world, and that the political liberalization of our former authoritarian adversaries in the then Soviet Union and in China would proceed apace. And for a good bit of time, that did seem to be happening. I moved to China about six months after the Chinese joined the WTO, and prosperity was breaking out all over, and the society was alive with possibility. And there were the stirrings of some political change. I remember interviewing students on the campus of Beijing University, which is one of the country’s great institutions of higher education, and this is in probably 2002, 2003. And they, almost to a person, had little or no interest in joining the Communist Party. They were interested in getting out there and getting a job, starting a business, making money, living a better life. And the Communist Party was in places experimenting with the small-scale elections, you know, at the village level, with competing candidates approved by the Communist Party, of course. But, you know, different flavors of communism, I suppose you could say, at the local level. And so you could tell yourself a story, many of us did, and I was part of the conventional wisdom, certainly at the time, that this would motor along in a pretty linear fashion, and eventually we would get to a point where China was a, if not a, certainly not a Jeffersonian democracy, nobody really expected that, but that China might follow the East Asian path that South Korea and Taiwan and others had followed. And, of course, that is not where we’ve ended up.

[00:07:00] Jeff Schechtman: You talk about the euphoria at the time, with the beginnings of globalization, the hope for it. It became, as you talk about, kind of the Washington consensus, the policy consensus of the time. How did that consensus arrive?

[00:07:16] David J. Lynch: Well, I think it arose out of the situation that greeted us at the end of the Cold War. I mean, I’m 66, so I grew up with the Cold War. I was born in the waning months of the Eisenhower administration, so I saw the whole arc of this in my youth and later as a student in college and graduate school. And, you know, I have to say, I don’t think anybody really, except the most high-eyed optimist or committed ideologue, I don’t think anybody really expected the Berlin Wall one day would, in fact, crumble, and that the Soviet Union would just go poof on Christmas Day, of all things, in 1991. And so if you, you know, if you were of a generation, of a policymaking generation that experienced the Cold War, felt its permanence, and then saw it end with a pretty clear victory by the good guys, and you saw democracy and free markets sweep across Eastern Europe and the Soviet Union, and you saw the Tiananmen Square uprising in China, it was easy to feel like, as Francis Fukuyama wrote, this was the end of history, that the democracy and free markets really were sort of the natural end state almost of human evolution, and that, okay, Tiananmen Square didn’t have a happy ending, but, you know, that was just a bump in the road. And inevitably, as greater global commerce proceeded, and as China prospered, a middle class, a Chinese middle class would arise there, and those people would demand sources of information that they would need to make investment and other decisions, demand free sources of information, demand a greater say in the governance of their lives. And again, in those early years, when I was living there, you could see those stirrings. But ultimately, the reform momentum petered out in China. Other interests within the government and within the society asserted themselves, and Beijing took a hard turn back towards the state-centric economy.

[00:09:37] Jeff Schechtman: To what extent was there opposition to this in American policy corridors at the time? Because in large measure, as you talk about, there was a real bipartisan consensus behind this idea.

[00:09:51] David J. Lynch: Yeah, there was. And it’s interesting, the Republican Party of the time, and this is, of course, quite different than under President Trump, but the Republican Party of the time was almost uniformly in favor of free trade. The Democrats were more split, but, pardon me, split between sort of traditional labor union opposition to trade as threatening the interests of the workers, and other activist groups, environmentalists, and the like who had related concerns. And then the sort of what Bill Clinton built himself as this new Democrat. And remember, if you’re in the early 1990s in the Democratic Party, the Democrats had lost three consecutive presidential elections, and they had an image nationally, I think, they were caricatured by the Republicans as tax and spend Democrats. They had a hard time of establishing sort of national power. And it took Bill Clinton’s recasting of the party in a more market friendly and business friendly direction to change that. So there was, even under Clinton, there was still a division within the Democratic Party. But you look at the congressional votes on NAFTA. From memory, I think there was something like 100 House Democrats who voted for that. By the time we get the later in the decade, toward the end of the decade, and China’s entry into the WTO requires some legislation here to tweak their status under U.S. trade law. That was, if you look at the roster of prominent figures who supported that on the Hill, and it was a who’s who of the Republican and Democratic parties, Leonard Woodcock, the former labor leader was in favor of it. Brent Scowcroft, who had been National Security Advisor under the first President Bush, said this is one of the few policy, and I’m paraphrasing, but it was to the extent, or along the lines of this is one of the few policy initiatives where there’s just no downside. And, you know, you go back and you read some of the quotes from the time, and it really is remarkable. And again, I would put myself in in the, I had no particular clairvoyance at the time, and I don’t claim any. I would have been probably in that same camp of optimists. But Joe Biden, as a senator on the floor during the debate, you know, dismissed any concerns over what China’s economic rise might mean. Because, you know, the Chinese economy at the time, what he said was, it’s only the same size as the economy of the Netherlands. So it’s certainly not going to bring about the collapse of American manufacturing. George Bush, the second George W. Bush, when he was running for office, talked about his hopes that, and it was really more than hope. As I think of it, it was more a certainty that, in his words, economic freedom would create what he called habits of liberty, and habits of liberty would lead to democracy. And that was the expectation at the time. And, you know, we just, I think we spent a lot of time collectively thinking about how greater global integration would change China. And we didn’t fully take on board or consider how it would change us.

[00:13:31] Jeff Schechtman: One of the other aspects of it that went beyond just free trade and the movement of goods and services throughout the world in a more frictionless way was the free flow of capital around the world. And that played a major role in this talk about that.

[00:13:48] David J. Lynch: Absolutely. And I should say my story is much broader than trade. I describe globalization as the easy movement across borders of goods and money and technology and ideas. So it’s a far broader phenomenon. But the capital piece is an important piece, and it is related to the trade picture. And I’ll try to make this as easy as possible, because I don’t want to send your listeners running for cover if we get too deep into the financial weeds. But basically, we in the United States buy a lot more from China than they buy from us. That’s true today. It was true 20 years ago, 25 years ago. And as a consequence, we’re buying all that stuff from China. So the Chinese end up with a lot of dollars, and they have to do something with those dollars. So they want to do something that’s safe and that gives them a decent financial return. So by and large, they invest them in the U.S. Treasury market. That’s the deepest, most liquid capital market. You can buy treasuries. You’ll get a fair return. If you need cash, you can sell treasuries at any moment. So it’s a pretty good, safe investment. Well, as this incredible river of money flows into the U.S. Treasury market, it pushes yields or the return on those treasuries down. And the Chinese and other foreign central banks in the first years of the 2000s over a period of four or five years bought up literally all the new treasury issuance and the new debt issuance by Fannie and Freddie was similarly safe for four years, four or five years, which is extraordinary. Well, as that river of money flowed into treasuries, private sector investors, particularly European banks who also wanted safe investments but were a little more sensitive to the return said, well, geez, the returns on the treasuries are lower than I’d like them to be because the Chinese have rushed into that market. So I’ve got to look for something else if I’m a European bank. And they poured their money into the mortgage-backed securities market. As you remember, these were the securities that the big investment banks on Wall Street created by cobbling together lots of different mortgages from all over the country, different markets. And the idea was by taking lots and lots of mortgages and packaging them into one security, I’ll reduce the risk and I can still offer a good return. The credit rating agency said, hey, these are AAA rated. These are virtually as good as treasuries. Well, that was music to the ears of the European banks. So they flooded into buying mortgage-backed securities. That encouraged the guys on Wall Street to keep creating more and more mortgage-backed securities as the housing bubble inflated and inflated and inflated. And so the bottom line of all this is all this foreign capital pouring into the US market had the effect of encouraging at the margin of making the bubble a little bigger than it otherwise would have been and thus making the bust a little worse than it otherwise would have been.

[00:17:11] Jeff Schechtman: And there had been pressure for this building, it seems, for a long time, even into the late 70s and into the mid 80s. People like Walter Wriston at Citibank really pushing for this free flow of capital around the world.

[00:17:25] David J. Lynch: And we saw the impact of this, of course, back in the late 90s, 97, with the Asian financial crisis, which started in Thailand, when, to simplify, all this hot money flows in as Western investors discover markets like Thailand and the money comes flowing in and then something goes wrong and the money flows out just as fast and leaves wreckage behind. And we saw that hit one Asian economy after the next. I describe in the book being in Jakarta in May of 1998, when the 35-year reign of the Indonesian dictator Suharto came to an end and came to an end as a consequence of the disruption and tumult caused by these rapid-fire global capital movements in and out of markets at the whim of Wall Street and enabled by technology, particularly fiber optic cables, that allowed guys to make instant trades on a dime with great consequences for people’s livelihoods across Asia. And as I say in the book, you know, I covered Suharto’s fall and a little bit about a year later, I was in Russia during the ruble crisis. And at the time, I didn’t really connect the dots. I wasn’t, I guess, sophisticated enough or attentive enough to see what was happening as evidence of some sort of systemic weakness with the whole project, the whole globalization project. And it was only with hindsight years later that it dawned on me that I’d sort of been present at the creation, if you will. And that same sort of, the same consequences of rapid-fire capital flows coupled with light or inadequate regulation is what we experienced in the housing crisis.

[00:19:30] Jeff Schechtman: Let’s talk a little bit about the success of globalization, the way in which it created a rising middle class throughout the world.

[00:19:38] David J. Lynch: Yeah, and that’s an important point because, you know, I think it’s understandable people would read my title, The World’s Worth It, how the globalization gamble went wrong and what would make it right, and think, oh, this guy’s some sort of anti-globalization guy. Couldn’t be further from the truth. You know, my life has benefited immeasurably from globalization. I’m fortunate enough to have lived abroad for about nine years in London, Beijing. Two of my three boys, or our three boys, I should say, were born overseas. You know, I see globalization as the greatest engine of prosperity we’ve ever created or experienced. And, you know, by the IMF’s account, of 1.5 billion people around the world have been lifted out of the worst sort of crushing poverty thanks to global integration and globalization. And that’s, you know, no mean accomplishment. That’s a big deal. And it’s not just folks in the developing world. We here in the United States and in other advanced economies, we’ve benefited by a better mix of jobs in the economy, by better availability of products on our store shelves, and by greater purchasing power because inflation was kept under control for 10 or 15 years thanks to inexpensive goods from China and elsewhere. I think one study that I saw said the typical American household had gained $1,500 a year in purchasing power thanks to globalization in that first decade of the 2000s. So the accomplishments are real and will continue to be real because globalization is not over. It’s only changing. And we can talk about that later. But we’ve, for 10 years now, sort of been stalled, at least on the sort of merchandise trade component of globalization. And my argument is we’re not going to be able to move forward with the next wave of globalization if we don’t learn the lessons of what we got wrong with the previous 25 or 30 years.

[00:22:00] Jeff Schechtman: RICK Talk about the beginnings of the strains that showed that something was wrong. You talk about supply chain, for example, that, you know, you saw a hint of this back in 2003 with the SARS epidemic and how it impacted supply chains. But talk about the strains that began, the cracks that began to appear early on with globalization.

[00:22:25] David J. Lynch: DAVID Yeah. The supply chain part of this, I think, is fascinating. And we all sort of collectively discovered supply chains during the pandemic. But, you know, part and parcel of the integration of global markets was the spread of global value chains and supply chains around the world and the disaggregation of production, manufacturing, et cetera. So that instead of having all your components built here in the United States and going to a factory, perhaps one state over, and then sent out to local warehouses to be distributed, well, now all of a sudden you’ve got a factory in China that’s fed by components coming from Taiwan and Thailand and maybe Vietnam and then assembled, mostly assembled, shipped from China to maybe Mexico to be finished and then to the United States. So it’s a much different operation, optimized above all else for low cost and efficiency and optimized as part of what’s called the just-in-time manufacturing strategy, which minimizes the cost of carrying inventory. Because, you know, you’ve got sort of a choice as a manufacturer of running just-in-time or just-in-case. Just-in-time means just about as I’m on that assembly line making a car and I’m turning around looking for the next dashboard to install, that dashboard is coming in at the far end of the factory. The just-in-case means I’ve got a corner of my factory that’s filled with a thousand dashboards just sitting there gathering dust while I’m turning them into cars and there’s a cost associated with that. So you want to minimize those costs over time. Companies got very good at operating really lean supply chains, but that required that everything work in sync. And what we saw, and one of the stories I tell looks at the 2011 Fukushima earthquake and tsunami in Japan, was when things go wrong, they sort of cascade through the system. So global supply chains are good at the spreading prosperity, but they’re also good at spreading bad news, if you will. And so, you know, we had this earthquake registered 9.0 on the Richter scale, which is just beyond belief, sent a wall of water about four stories high, washing across a key manufacturing area in Japan, inundated, I think, something like 140,000 acres, knocked offline hundreds of factories. And, you know, one of the, just to give you one example, the only factory in the world that made something called xyrylic pigments, which give auto paint its distinctive glitter, that was knocked offline. So within a few days, that caused a GM plant in Louisiana to shut down the shutdown of that plant ripples up to another GM plant in upstate New York. And all of a sudden, you’ve got guys unemployed in upstate New York and Louisiana, because of a tsunami and earthquake thousands of miles away in Japan. And this was not the first time we’d seen major national natural disasters interfere with supply chains. But the lessons were not really recognized or put into effect, so that not a heck of a lot changed. A few companies took a closer look at their second and third tier suppliers to get a better handle on who they were doing business with. But by and large, the same sort of just-in-time philosophy and the same approach to putting your bets on a limited number of suppliers stayed in place. And that was kind of what did us during the pandemic.

[00:26:47] Jeff Schechtman: At what point did we begin to see the real impact of economic displacement here in the U.S.? While the world was gaining a middle class, the U.S. was suffering. At what point did that begin?

[00:27:00] David J. Lynch: Well, I think you started to see some early signs of it pretty quickly in the early 2000s. But it didn’t really… And I think that was because, in part, we underestimated the impact, economists underestimated and policymakers underestimated the impact of China’s rise on our manufacturing sector. And I should say, most of what accounts or what accounts for most of the manufacturing job loss in this country is automation. Just as we went through a process of automating agriculture production, 125 years ago, most Americans worked on a farm. And then we got automated tractors and whatnot, and we needed fewer people to produce our food, so people moved to the factories. In the 1950s, one out every three workers was employed in a factory. Now we’re down to about one out of every 12. So most of that is a natural phenomenon of automation, modernization, and development. But perhaps a quarter of it was due to trade policy. And we started to see that in the early 2000s in really basic manufacturing. And I tell the story of a Goodyear tire plant out in Union City, Tennessee, which, to me, illustrated both the human cost of some of these policies and of globalization writ large, but also the complexity of it. Because the Goodyear plant, which ultimately closed in 2011, went through serial layoffs over the years leading up to that. It wasn’t just the flood of low-cost Chinese tires put them out of business. That was a key part of it, but there were bad decisions by management, bad decisions by the union that was involved there. Technology was a part of it. So all of these factors are sort of marbled together. You know, you can think of them like a cocktail that’s got many ingredients or a stew that’s got meat and potatoes and carrots. You know, the stew isn’t just meat. It’s not just carrots, but it’s all in there together. Similarly, for these kind of economic consequences. And then, of course, you know, you’ve got the China, what economists call the China shock, which is in that first decade of the 2000s. Hard on its heels comes the global financial crisis, which, as we discussed, was exacerbated by global capital flows. So a lot of the same people who feel screwed over by what Washington has done to them through trade policy then feel doubly screwed over by Washington’s response to the global financial crisis. And then before you know it, a few years later, they’ve got a chance to take out their grievances by voting for a very disruptive, very unorthodox presidential candidate.

[00:30:02] Jeff Schechtman: Two things that are also going on simultaneously, you alluded to both of them, was a tremendous amount of social change that was taking place in the country and rapidly speeded up technology.

[00:30:14] David J. Lynch: And there’s no question about it. And, you know, I try to resist single variable explanations. So, you know, when people say, well, what accounts for the rise of Donald Trump? Was that just trade policy and hollowed out manufacturing towns? Or was it just resentment over immigration? Or was it, you know, something other than that? I think trying to pin a phenomenon as broad and historic as the rise of Donald Trump to any one factor is wrong. And I’m not alone. Hillary Clinton and her memoir of the 2016 campaign puts all these ingredients together with the sort of cultural change in particular that you describe. And I have to say, I interviewed her husband, the former president, Bill Clinton, for this book, had a great interview with him. And he explains it in similar terms that, you know, if you’re somebody who’s already on the edge economically because you’ve lost your job in a factory and had to take a job paying perhaps half what you’re used to making, and that was the experience of some of these guys in the tire plant. They go from making $24 an hour to making $12 an hour. Well, imagine in your own life the sacrifices and the stress that would result if your pay were literally cut in half. And then on top of that, you’ve got all this societal change going on all around you. So stuff that, you know, is just completely unfamiliar to you from the world, how the world looked as you were growing up. And suddenly now gay rights is a much, is sort of taken for granted, frankly, across the society. And then transgender rights comes up and is unfamiliar to you when you’re in your, you know, little corner of the world. And then on top of that, you’ve got another financial crisis. And then, you know, it’s one damn thing after another, as the old saying goes. It’s hard to get through that amount of cumulative change if you begin it with economic uncertainty and a lack of stability in your own life. If you can put up with and be open to, I think, is a sort of a rule of human nature. If your basic needs are met, provided for, you and your family are in a good place financially, your kids are in a school that you can pay for, you can afford what they need, then, you know, you’re better positioned to deal with change and unexpected shocks. But boy, if you start in a place where you’re lying in bed awake every night wondering how you’re going to make the mortgage payment, how you’re going to make the car payment, are you going to be able to afford the band uniform for your kids so she can play in the school orchestra, then you just don’t have a lot of psychic reserve to deal with all the other stuff that’s going on.

[00:33:28] Jeff Schechtman: As your colleague Matt Bayh wrote about yesterday in The Post very, very smartly, social media played such a dramatic role in all of this.

[00:33:38] David J. Lynch: Yeah, and I, it’s funny because that was actually one of the things that Clinton brought up, unprompted, was the extent to which social media, you know, everything from Twitter, now X, Facebook, Instagram, Snapchat, you name it, it has, you know, I guess the good news is it’s allowed everybody to have a voice, but the bad news is that, you know, back in my day, I grew up on the era of black and white TV and, you know, every community might have had their crank or their extremist, but he was generally so far outnumbered in that particular community that he felt like the crank that he was. And now, thanks to social media, the crank in one community can connect with the crank and the extremist in every other community, and they’re able to marshal their forces and become a much bigger influence on the debate and on generating rage and grievance.

[00:34:52] Jeff Schechtman: What might have been different in all of this? You talked to Clinton about this in your interview and in the book. As you look back on the whole panoply of what we’ve been talking about, what might have been done differently that might have resulted in at least a slightly different outcome?

[00:35:11] David J. Lynch: And it’s a good point to say slightly different because, you know, I do think life is lived at the margin, and we’re not talking about a situation with globalization where, gee, you know, it was just a disaster, it was all terrible, so we have to come up with something that will make it 100% different. It’s not that. And particularly, you look at the 2016 election, that turned in 40,000 votes out of 14 million in three states. So bear that in mind in terms of the scale of change that would be necessary to have put us on a different path over the last 10 years. And it’s not just hindsight that allows us to say this, because you look back in the 90s and Bill Clinton said over and over again, and I think of him really as sort of the godfather of US-style globalization. He understood it, he had sophisticated thought about it, he could see where it was headed, and he always said, look, globalization is a fact, it’s not a choice, the question is how we respond to it. It’s going to make the economy better off, going to make all of us better off, but there’s going to be winners and there’s going to be losers. And that’s okay, because the winners’ gains will be so great that they can provide for the losers, so that they’re not left behind, so that we all prosper together. And the losers, quote-unquote, will get the retraining, the relocation assistance, the medical care, whatever support they need in order to be positioned to ride along with us into this brave new world of globalized prosperity. And, you know, Clinton said this repeatedly, and I talk in the book about his last speech as president, appearing in Davos at the World Economic Forum, and at that point, you know, the economy had been cranking along, going gangbusters for several years, stock market was going nuts, unemployment was low, the federal budget had been balanced for a couple of years, believe it or not. And he said, citing all of that, he said, you know, if we can’t take care of our people now, we will never be able to. And he was right, we never did. And it should have been done. Those promises that were made should have been kept. But it was always something else was the priority. In the late 90s, there was a fetish for balancing the budget. You know, a 1% of GDP deficit would have been equally financially responsible, but would have freed up government funds to devote to social needs. After that, we had the war in Iraq, the war in Afghanistan, there was a desire, you know, to get along with a rising China and to sort of be patient with their halting progress by then of economic reforms. And so there was always something else that policymakers prioritized. And I guess to be fair, looking at the aggregate economic results, what’s not to like? You know, we were and are the richest country on the planet. Unemployment for many of these years was quite low. And people were prospering in many communities, in most communities, thanks to globalization. But what we didn’t fully anticipate and what we didn’t fully understand as it was happening was that while globalization spread benefits across the entire economy, like frosting on a cake, it was also leaving behind concentrated costs, almost like economic tumors, in particular communities and among particular groups of people, those with the least education and the fewest skills. And over time, as those people felt themselves victimized first by trade policy, then by the financial crisis, they eventually grew frustrated and angry at their government. And ultimately, we’ve ended up where we’ve ended up.

[00:39:35] Jeff Schechtman: David J. Lynch, his book is The World’s Worst Bet, How the Globalization Gamble Went Wrong and What Would Make It Right. David, I thank you so much for spending time with us today here on the WhoWhatWhy podcast. Happy to do it. Thank you. And thank you for listening and joining us here on the WhoWhatWhy podcast. I hope you join us next week for another WhoWhatWhy podcast. I’m Jeff Sheckman. If you like this podcast, please feel free to share and help others find it by rating and reviewing it on iTunes. You can also support this podcast and all the work we do by going to whowhatwhy.org/donate.