Author: David J. Lynch
_David J. Lynch_
Reading time: 22 minutes
Synopsis
The World’s Worst Bet (2025) tells the interesting story of how America believed that free trade and open markets would change the world – but instead caused problems at home. It shows what happened to people and politics, from factory towns that lost many jobs because of China, to weak supply chains revealed by the pandemic. This was a time that people once said would only bring good things.
What’s in it for me? Understand the events that have made our modern world what it is today.
At the end of the 1900s, it seemed like the big risk of globalization had worked. The Cold War was finished, markets were open, and many people thought that free trade and open borders would bring the world together, making it peaceful and rich. They believed that letting China and Russia join the global economy would make these countries richer, more free, and more democratic. For some time, it looked like this was happening. Beijing’s economy grew fast, Wall Street did very well, prices went down, and this new world order seemed impossible to stop.
But things changed. The wealth that globalization created was not shared equally. The early problems – factory towns in the Midwest having a hard time, protests becoming violent, and stricter rule growing in places once thought to be changing – were mostly ignored. Many people started supporting leaders who spoke against the system, as workers felt left behind. Countries that once liked free markets started to protect their own businesses again. In this summary, we will follow how a dream of easily connecting the world turned bad, leading to a new time of countries protecting their own businesses and not being sure about the future. The idea was simple: trade would connect countries and spread freedom. Many years later, the results are clear: the gamble did not work.
Blink 1 – Trading for democracy
In the summer of 1997, Americans felt very hopeful. President Bill Clinton, doing very well because of a strong economy, hosted the G7 meeting in Denver. For the first time, Russia’s Boris Yeltsin joined the main democratic countries in the world there. The meaning was very clear: the Cold War was finished, the global market was growing, and a “new world order” based on free trade and a democratic business system seemed possible to achieve.
Even China, which still had a strict government but was becoming more focused on business, showed it wanted to join the global group. Its leader, Jiang Zemin, even started the day’s trading on Wall Street. People felt very successful. It seemed like the world was connecting more closely because of looser economic rules.
Washington’s main belief was that business could do what talking between countries could not – change how countries were governed from the inside. After what happened in Tiananmen Square, US leaders like George H. W. Bush and Bill Clinton strongly believed that trade would slowly help China become more democratic.
For Clinton, NAFTA (the North American Free Trade Agreement) was his big plan to support this new global order. It was a partnership that would bring the US, Canada, and Mexico together into one strong trading group. Clinton said it would lead to wealth, promising that new jobs, training programs, and money put into new ideas would soften any bad effects.
However, the promised help for people mostly disappeared. Over time and with later governments, the billions of dollars that could have helped workers who lost their jobs became a very small training fund. Because of this, for many people in factory towns, globalization felt less like a chance to do well and more like being left behind.
The big problem was that while the whole economy did well, the good things were not shared fairly. Worker groups did not like NAFTA from the start. This was because basic rules for workers’ rights were not included in the agreements. So, there was no way to stop companies from taking jobs to Mexico, where workers were cheaper.
So, yes, trade agreements like NAFTA made the country richer. They brought cheaper goods and stock markets going up. But they also led to people losing jobs, factories closing, and hopes for the future disappearing.
As we’ll see later, this eventually caused workers, who were once the main supporters of the Democratic Party, to slowly start to support leaders who promised to protect them and take control.
Blink 2 – The shock hits home
Before the ‘90s were over, there were already warning signs.
In 1997, Thailand, Indonesia, and South Korea failed because of risky investments and too much borrowing. Washington and the IMF quickly tried to stop the bad effects, but the harm was very bad. Money lost its value, millions of people lost jobs. This all happened because the global economy had become so connected, and developing countries were very weak.
Then, in Seattle, protests totally disrupted the 1999 World Trade Organization meeting, making them cancel the first session. Tear gas and broken windows made it clear that, even then, people were losing patience with globalization.
Still, Clinton believed that globalization could not be stopped. People working on the deal kept going to finish an agreement to bring China into the WTO. This move would change world trade more than anything else that decade. Washington only thought about a few things: they believed China joining would open new markets for American goods and have only a small effect on goods coming into the country. But what happened was the exact opposite. Chinese goods poured into the US, changing whole industries.
This led to what was called the “China shock.” As cheaper imported goods increased quickly, whole groups of products – like tires, furniture, and electronics – became too expensive to make in the US. In Union City, Tennessee, Goodyear’s huge tire factory was the main support for middle-class people. When it closed, 1,900 jobs were lost, and the whole local economy was badly damaged.
Trade Adjustment Assistance was the system that was supposed to help people like the Union City workers, but it often was not enough. Not many training places were available. Only one out of three people who got training found jobs in their new areas, and they often earned much less money than before.
Later, experts counted at least 2.4 million US jobs lost because of cheaper goods from China between 1999 and 2011. This might sound like a small number for the whole country, but for local areas, it was very damaging. The big deal never became fair: The US bought much more from China than it sold to China, making the trade deficit (buying more than selling) the highest it had ever been. New technology, which brought more and more machines to the workplace, and trade together changed where jobs and chances were available.
Blink 3 – An unbalanced relationship
As the 2000s went on, the problems with Washington’s gamble on China started to become clearer. In 2008, Joe Biden, who led the Senate Foreign Relations committee, started meetings to talk about America’s very uneven relationship with China. China was not only selling much more to America than America sold to it, but China was also using its money to buy US government bonds. This eventually made China the biggest owner of America’s debt. It was a difficult situation with no simple answer.
This situation had gone on for a long time because, on the surface, things looked good. It was cheap to borrow money, and house payments felt easier. A lot of money from other countries kept Wall Street busy and successful – until it stopped.
That year, in 2008, the whole financial system collapsed because of very bad investment plans, and strange twists kept appearing. Beijing had not only put a lot of money into huge financial companies like Morgan Stanley, Blackstone, and Bear Stearns’ partner CITIC, but they also owned over a trillion dollars of US government debt. People had to beg China’s central bank not to sell their US bonds quickly.
Still, the harm at home was shocking: many trillions of dollars were lost from families’ wealth, and millions of jobs and homes were gone. The political problems that followed were just as bad. From this difficult situation, the Tea Party group appeared. They strongly spoke against government help for banks and people who supported globalization. This moved the Republican Party strongly to the right and made Washington spend less money, even as the economy slowly got better. To offer a different view to the growing extreme ideas, the Occupy Wall Street movement started from the left.
They all had good reasons for their views. By the middle of the decade, stock markets had tripled, but the average family income was only a little bit higher than in 1999. Expensive brands did very well, but factory towns felt like they were not getting better. Even people who had always strongly supported connecting the world started to admit that trade had made the gap between rich and poor bigger.
At the same time, with Xi Jinping now leading China, the government’s control was as strong as ever. Chinese services were caught doing widespread spying on industries. Stealing business secrets online meant that China could weaken foreign businesses even more by taking their designs and making cheaper versions. And when local payment apps – like Alipay and Tenpay – became so big that they might threaten the government banks, strict actions followed. There were limits on who could operate, money penalties, bans in certain areas, and even people were put in jail. The message was very clear – all money matters were controlled by the government.
Blink 4 – When trade became a four-letter word
Back in Washington, ideas about China were finally beginning to change. It was clear that the government’s strong control was not going to get weaker. The gamble had failed. So, at the end of his second term, Obama was thinking about ways to keep China from being too powerful. This was the plan for the Trans-Pacific Partnership. It tried to make connections stronger with other countries in the area so that nations like Japan and Korea would be less likely to accept China’s offers.
But Obama had no special power to speed up trade deals. And by that time, no one wanted to be linked to any big trade deals because they feared it would just make things worse. Even Obama’s VP, Joe Biden, was speaking negatively about the TPP. Trade, and the whole idea of globalization, was becoming a very hot political topic, so the TPP would never happen.
In 2016, voters who had watched factories close while the rich got richer were ready for a change. Both Bernie Sanders and Donald Trump gave them what they wanted – strongly criticizing the global system that Washington once praised. Trump pointed at NAFTA, China’s entry into the WTO, and the suggested TPP as clear things to blame. Crowds in places like Indiana, which had recently suffered greatly when the Carrier Corporation moved its air conditioning factory jobs to Mexico, were easily convinced.
Hillary Clinton, who had once got more votes than expected from white working-class people, found it hard to convince people with a promise of help and retraining in towns that had been hearing that same message for years. But what really hurt was that her campaign, which used a lot of information, focused on getting people to vote in big cities. This meant that factory towns and the Democrats in the suburbs who had once voted for Reagan felt mostly forgotten.
After Clinton lost the 2016 election, studies showed many different reasons were connected: worries about culture and feelings against other races were mixed with serious money problems. Trump won in 89 of the 100 counties most affected by China in the first elections. At his gatherings, the words “jobs,” “trade,” and “China” got the loudest cheers.
But even as he promised a return of factory jobs, Trump’s own plans did not agree with each other. He ended NAFTA and put high taxes on steel and most goods from China. But at the same time, he offered big tax cuts that increased the government’s debt and brought in more goods from other countries. The new process for removing tariffs made the Commerce Department control who could import. This meant a small, busy team of about 30 people went through many thousands of companies asking not to pay the tariffs. The trade deficit hardly changed, and by the time his first term was over, fewer people worked in factories than when he became president.
Blink 5 – The chain comes undone
In the many years before COVID, America built a huge, busy system that covered the whole world. Big international companies broke down making products into many steps – chips here, wiring there, putting it all together somewhere else. They put it all together using a system called “just-in-time” delivery. “Just-in-time” meant companies did not keep many parts in storage or pay to look after them. Making products was planned carefully so that all the different parts arrived in shipping containers at the exact moment they were needed to be put together.
Half of all world trade became parts and components, not finished products. Boeing’s 787 airplane was the perfect example of globalization: Japanese wings, Italian tail parts, British engines. The system worked well and made a lot of money – but it was also easy to harm.
The pandemic broke it completely. Strict shutdowns in Chinese areas, where many thousands of foreign companies had factories, stopped the flow of important goods, from life-saving breathing machines to small computer chips. Harbors became full; containers piled up. A trip that once took three and a half days now took more than two weeks. It was not just that there was not enough ability to handle goods; there was also not enough information. Each transfer – from ship to terminal, to train, to truck – was unknown, separated from the rest. Working fast does not mean being strong enough to deal with problems.
Even with Trump’s promises that the lack of goods would end, things like cereal and laptops were still missing from shops. In the 2020 election, the country looked to Joe Biden to see if he could fix the problems. His first plan was to check important supply chains for 100 days. He made government groups and businesses share information. This led to a new system called FLOW. This meant people working in transport could finally see what was coming before it arrived at the harbors. The cost of shipping slowly got lower, but the political problems caused by rising prices continued.
Biden kept the taxes Trump had placed on Chinese goods and did even more. He promised no new deals to open markets until America had rebuilt its own country. This meant there would be more job training programs and stronger rules to buy American products. Also, talks about trade would care more about workers’ rights. The most important part of Biden’s plan was the $53 billion CHIPS and Science Act. This was partly made to help the US start making its own computer chips again.
Intel started building in Ohio. New computer chip factories were built in Arizona, Texas, and New York. The number of jobs wouldn’t bring back the old factory work from the 1970s, but the goal was bigger: shorter, stronger supply chains and a technology advantage kept safe from other countries.
Blink 6 – The limits of the tariff game
Biden’s plan clearly aimed to change the trade relationship with China. At the same time, it aimed to create a new, modern industry using computer chips and clean energy. By 2024, these ideas came together in one direct action: 100 percent taxes on Chinese electric cars and high new taxes on other green products that got government help.
But by that point, Russia had started a full war in Ukraine, which made gas prices rise very quickly. Rising prices continued to be a problem. Biden’s efforts were not reaching places like Trumbull County, in Ohio. There, many years of lost factory jobs changed a strong Obama voting area (60% for Obama) into a strong Trump voting area.
Trump’s return to the White House came with a big promise – taxes on almost all goods America buys from other countries, with very high taxes on Chinese goods. He also promised new arguments with nearby countries and friends. Even if all these threats do not happen, the message is clear: the old idea of connecting countries more and more has been replaced by something much more focused on one’s own country.
But Trump’s plan of using many tariffs has its limits. Tariffs are basically a tax that Americans have to pay through higher prices. It’s not a solution by itself. And companies are already finding ways to avoid them. Goods can be sent through Southeast Asia or given a final step there to be called “Mexican” instead of “Chinese.” Supply chains may look less focused on China in reports, but in reality they take longer, indirect routes. This is far from truly bringing back the jobs that left.
The economist Paul Krugman compares it to putting the car in reverse and backing up over the person crossing the street who you’ve already hit once.
Then there’s the hard truth that the problems from globalization, which are still felt, will probably be small compared to what artificial intelligence will cause. According to the IMF’s guesses, most jobs in rich countries will be affected, and many in a bad way – both in factories and in office jobs. Investors like Mark Cuban and economists like Daron Acemoglu are direct: the changes will be bigger than in the last thirty years. The only way to get through this is to train and prepare people to deal with these changes.
Blink 7 – Getting it right for the next era
If we look at the past to find answers for the future, one of the main things that needs to get better is making a better system to help Americans in need. Obamacare made it easier to keep health insurance when changing jobs, which was an important first step. But help given during the pandemic really showed that the national government could start a wide-ranging plan that could soften the hard hits of today’s economy.
Ideally, there should be a system to help workers that offers insurance to cover lost wages and more useful training programs. Also, there should be more focus on helping towns get back on their feet. When new jobs are created, they are usually in big cities, far away from the counties that have been forgotten. It doesn’t have to be that way.
Greenville, South Carolina, shows that change and new life are possible if plans focus on specific places. Greenville lost tens of thousands of jobs when its cloth factories closed down. But with the help of trade schools and universities, the workers still had good skills. The town was able to bring in foreign factories like Bosch and BMW to create new jobs.
Of course, plans and projects cost money, which means we need to think again about taxes. If the US could make companies pay as much tax as they did before Reagan became president, the country would get hundreds of billions of dollars each year. This money could help government budgets and create good job programs. As Pol Antràs, an economics professor at Harvard University, says, anger about globalization will not go away until tax and welfare systems really help the people who suffer.
In a final thought, Bill Clinton can now look back. While he would point to mistakes made along the way – some by him, some by others – he can still argue for globalization. But he would do it by thinking about the whole situation. After all, one thing that makes humans great is their ability to work together to solve big problems. And there is no problem we can’t solve if we share our money and effort.
But history has a harsh final message: the US took the good things from globalization but kept failing to put safety measures in place. That unmet duty connects everything, from steel towns to important election votes. And it is the challenge the next time must finally solve.
Final summary
In this summary of The World’s Worst Bet by David J. Lynch, you’ve learned that America’s big risk on globalization was based on the belief that open markets would bring wealth, democracy, and peace. This was Bill Clinton’s hope in the 1990s when he pushed for free trade and worked out a deal for China to join the global economy. But this led to the “China shock” which caused factories to close, money problems, and angry uprisings by ordinary people. Both main political parties did not fully understand the social problems caused by changing the economy. As rich people got richer, anger grew among ordinary people. This finally led to people rejecting the global system Clinton had created. If we don’t rebuild trust, make local economies stronger, and help workers deal with constant change, the next big change – like from machines doing jobs or world politics – will repeat the same story of hopes, being ignored, and anger.
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