Name: The World's Worst Bet
Rating: 4.3 (54 reviews)
Author: David J. Lynch

Introduction

What’s in it for me? Connect the dots on the events that have shaped our modern world.

At the end of the twentieth century, it seemed the great gamble of globalization had already paid off. The Cold War was over, markets were open, and many believed that free trade and open borders would knit the world together in peace and prosperity. Bringing China and Russia into the global economy would make them richer, freer, and more democratic. And for a while, it looked like it might be working. Beijing boomed, Wall Street soared, prices dropped, and the new world order appeared unstoppable.

But the story turned. The prosperity that globalization created was never evenly shared, and the warning signs – Midwest factory towns suffering, protests turning violent, and growing authoritarianism in places once thought to be reforming – went largely ignored. Populism surged as workers were left behind, and nations that once cheered free markets began building walls again. In this Blink we’ll trace how a dream of seamless global integration curdled into a new age of protectionism and uncertainty. The bet was simple: that trade would bind nations and spread freedom. Decades later, the results are in: the wager went bad.

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Trading for democracy

In the summer of 1997, American optimism was surging. President Bill Clinton, riding high on a booming economy, hosted the G7 summit in Denver, where for the first time Russia’s Boris Yeltsin joined the world’s leading democracies at the table. The symbolism was unmistakable: the Cold War was over, the global market was expanding, and a “new world order” rooted in free trade and democratic capitalism appeared within reach.

Even China, still authoritarian but increasingly capitalistic, was signaling its intent to join the global club, with its leader Jiang Zemin ringing the opening bell on Wall Street. The mood was triumphant. It felt like the world was knitting itself together under the banner of economic liberalization.

Washington’s guiding assumption was that commerce could do what diplomacy could not – reshape political systems from within. After the events of Tiananmen Square, US leaders from George H. W. Bush to Bill Clinton insisted that trade would gradually lead China toward democracy.

For Clinton, NAFTA, or the North American Free Trade Agreement, was his grand effort in promoting this new global order – a partnership that would knit the US, Canada, and Mexico into one dynamic trade bloc. Clinton pitched it as a bridge to prosperity, promising that new jobs, retraining programs, and investments in innovation would cushion any shocks.

Yet the promised safety nets mostly evaporated. Over time and subsequent administrations, the billions in aid that could have helped displaced workers shrank to a token training fund. As a result, for many in manufacturing towns, globalization felt less like opportunity and more like abandonment.

The big problem was, that while the economy as a whole thrived, the benefits weren’t shared evenly. Labor unions were opposed to NAFTA from the start because minimum labor standards weren’t baked into the agreements. So there was nothing to stop manufacturers from moving jobs to Mexico where the labor was cheaper.

So, yes, trade agreements like NAFTA lifted national wealth. It brought cheaper goods and rising stock markets, but it also brought layoffs, factory closures, and vanishing futures.

And as we’ll see in the sections ahead, this eventually led workers, who once formed the backbone of the Democratic Party, to drift toward candidates who promised protection and control.

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The shock hits home

Before the ‘90s were over, there were already warning signs.

In 1997, Thailand, Indonesia, and South Korea collapsed under the weight of speculative finance and overborrowing. Washington and the IMF rushed to contain the fallout, but the damage was brutal – currencies collapsed, millions lost jobs – all because of how connected the global economy had become, and how vulnerable developing nations were.

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Key idea 3 of 7

An unbalanced relationship

As the 2000s unfolded, the complications surrounding Washington’s China bet were starting to become clearer. Joe Biden, as chair of the Senate Foreign Relations committee, opened hearings in 2008 to address the nation’s wildly imbalanced relationship with China. Not only was China selling far more to America than it bought, but China was also using its profits to invest in US Treasury securities, which eventually turned China into the biggest single owner of American debt. It was, to put it mildly, a predicament that offered no easy solution.

It had gone on for so long because, on paper, things were looking good. Borrowing stayed cheap, mortgages felt lighter, and a river of foreign savings kept Wall Street humming – until it didn’t.

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Key idea 4 of 7

When trade became a four-letter word

Back in Washington, views on China were finally starting to shift. It was clear that the grip of party control wasn’t going to loosen. The bet was off. So, at the end of his second term, Obama was considering ways to box China out. This was the strategy behind the Trans-Pacific Partnership, which attempted to strengthen ties to other partners in the region so that nations like Japan and Korea would be less tempted by Beijing’s deals.

But Obama had no fast-track authority. And by that time, no one wanted their name attached to any big trade deals for fear that it would just worsen the situation. Even Obama’s VP, Joe Biden, was throwing shade on the TPP. Trade, and the very concept of globalization, was turning into a political lightning rod, and so the TPP would never come to pass.

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Key idea 5 of 7

The chain comes undone

In the decades before COVID, America built a vast, humming machine that spanned the planet. Multinationals sliced production into pieces – chips here, wiring there, assembly somewhere else – and stitched it together with “just-in-time” logistics. “Just-in-time” meant that companies no longer spent money on the storage and upkeep of parts. Assembly was fine-tuned so that all the various pieces arrived in shipping containers just in time to be put together.

Half of all world trade became parts and components, not finished goods. Boeing’s 787 was the epitome of globalization: Japanese wings, Italian stabilizers, British engines. The system was efficient and lucrative – but also vulnerable.

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The limits of the tariff game

Biden’s agenda was clearly aimed at trying to reconfigure the trade relationship with China, while at the same time developing a new, forward-thinking industry based on semiconductors and renewable energy. By 2024, those strands tied together in one blunt move: 100 percent tariffs on Chinese EVs and steep new duties on other subsidized green products.

But by that point, Russia had launched a full-scale invasion of Ukraine, which sent gas prices soaring. Inflation was an ongoing problem. Biden’s efforts weren’t reaching places like Trumbull County, in Ohio, where decades of manufacturing losses flipped a sixty–forty Obama stronghold into firm Trump territory.

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Key idea 7 of 7

Getting it right for the next era

If we’re to look at the past for any answers that may help us in the future, one of the major improvements that needs to be made is creating a better safety net for Americans. Obamacare loosened the job-insurance knot, which was an important first step. But pandemic aid really proved that the federal government could enact a multi-faceted initiative capable of cushioning the brutal blows of the modern economy.

In the best case scenario, there should be a safety net for workers that offers wage insurance and more relevant retraining programs. On top of that, there should be more attention placed on helping communities recover. When new jobs are created, more often than not, they’re located in metro areas, far removed from the “left-behind” counties. It doesn’t have to be that way.

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The World's Worst Bet summary