THE WORLD'S WORST BET

A new world order.

As the last century ended, a popular Washington consensus held that the market had all the answers and that bringing China into the global trading system would cement a peaceful future. That seemed to work out until it didn’t. It’s a discouraging story skillfully told by Lynch, global economics correspondent for the Washington Post. He reminds us that America’s industrial production has been declining since the 1950s and that automation, not foreign competition, remains the biggest factor. Obsessed with cutting costs, American businesses were already moving to Mexico and other nations, but everyone thrilled to China, which had discarded “Maoist idiocy” to open a titanic market to world entrepreneurs. The world was getting richer, and the world’s richest nation could only benefit by trading in this immense, supposedly free market. Giving President Clinton most of the credit, Lynch describes his 1990s crusade for globalization. Business leaders and congressional Republicans were enthusiastic. Labor unions and Democrats were not, but many were won over by promises of government benefits and retraining for laid-off workers. This never happened. Almost everyone agreed that a free market would bring democracy to China; increasingly prosperous citizens would demand it as they had in other nations (Spain, Taiwan, South Korea, Chile). This also didn’t happen, but globalization did make the U.S. wealthier. From 2000 to around 2015, inflation and prices were low, but the 2.4 million jobs lost created great resentment, along with the feeling that China was playing dirty and muscling in on our status as world leader. The political climate soon turned uniformly anti-China. Lynch dismisses President Trump’s solutions, which emphasize tariffs and jingoism. Lynch’s own proposals for international cooperation and a generous safety net are political poison today.

A painfully convincing history of how both political parties decided that worldwide free trade was a good thing.