October 1, 2025 • 34 mins
This week on The Sounds of Film, host Tom Needham speaks with journalist and author David J. Lynch about his new book, The World’s Worst Bet: How the Globalization Gamble Went Wrong and What Would Make It Right.
Lynch joined The Washington Post in 2017 after covering white-collar crime for the Financial Times. He has also served as cybersecurity editor at Politico and as a senior writer at Bloomberg News. Earlier in his career, he reported on the global economy for USA Today, opening bureaus in London and Beijing, and covered the wars in Kosovo and Iraq as an embedded journalist with the U.S. Marines. He was also the paper’s first Nieman fellow at Harvard University.
In The World’s Worst Bet: How the Globalization Gamble Went Wrong and What Would Make It Right, Lynch argues that the United States miscalculated by overcommitting to globalization. Instead of universal prosperity and greater political liberalization, the result was industrial decline, economic dislocation, and a surge in populism. Blending history with on-the-ground reporting, the book traces globalization’s trajectory from the fall of the Soviet Union to today’s geopolitical rivalries, while offering ideas for a more balanced path forward.
About The Sounds of Film
The Sounds of Film is America’s longest running film and music radio show. For over 35 years, host Tom Needham has delivered an eclectic mix of music and interviews to audiences across Long Island, parts of Connecticut, and streaming worldwide on WUSB. The program has featured guests such as Alec Baldwin, Billy Joel, William H. Macy, Dionne Warwick, Chuck D, Ernest Dickerson, Hal Hartley, Peter Fonda, and Rory Kennedy.
The Sounds of Film Podcast is available on Spotify, Apple Podcasts, and Amazon Music.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:01):
Hi, this is Tom Needham, and youare listening to the sounds of
film today. My guest is David J Lynch,
veteran journalist at The Washington Post and author of
The World's Worst Bet, How the Globalization Gamble Went Wrong
and What Would Make It Right. We'll be talking about his work
(00:21):
examining the global economy, trade and the forces reshaping
our financial future. David, thank you so much for
joining us on the program. Glad to be here, Tom.
Yeah. I've been following your work
for a long time. Globalization is something I've
always been interested in, the pros and cons.
Can you just explain to our listeners who are maybe not that
(00:43):
familiar with the term in terms of what it actually means,
globalization? Sure.
Yeah, it it is a mouthful. I, I think of it as referring to
the easy movement across national borders of goods,
services, ideas, people, technology, all the things that
(01:09):
add up to an economy, if you will.
And, and we've of course seen greater integration of of
economies over the past 20 or 30years, which is the period of
time that I try to chronicle in,in the world's worst bet.
On this show, we've covered, youknow, books and films for quite
(01:29):
some time. I'm just kind of curious how the
view of globalization has changed over time.
I, I think maybe your view has even evolved.
But I remember going back and watching films like by Michael
Moore, You know, Roger and Me. And it, it's strange to me
because at one point it seemed like sometimes the the left or
(01:53):
liberals were critical of globalization in terms of what
it was doing to the auto industry and, and other
industries in America. But more recently, it seems like
Donald Trump and the right has kind of picked up on this
populist attitude that maybe globalization is hurting us.
(02:14):
So can you explain a little bit about how just people's
perception of globalization has changed, and also how
politically different parties have perceived globalization
differently at different times? Yeah, absolutely.
And that, that's a, a central theme of the book.
And, and you know, I'm, I'm old enough to have, have lived
(02:35):
through all this. So I've sort of experienced and,
and felt the, the evolution of, of views across the political
spectrum over this, you know, quarter century or so.
You know, if you go back where my book starts in the 1990s,
we're we're in the immediate post Cold War era.
And you know, things are going pretty good for the United
(02:56):
States. People have lived through an
extraordinary series of changes.The Berlin Wall has come down.
Democracy and free markets have spread across Eastern Europe and
across the entire former Soviet empire.
The Soviet Union itself disappears on Christmas Day in
1991. So it's really a remarkable
(03:19):
time. And for those of us who lived
through the Cold War, I mean, I'll just say personally, I
never expected to see any of those developments occur in my
lifetime. I thought the Berlin all was
permanent. I thought the Soviet Union was
permanent. And so when all that vanishes
and the United States is really standing above every other power
(03:40):
on the planet by the late 1990's, the economy is cranking
along, the stock market's roaring ahead, It's a pretty
heady time. And I think the the view in
those years of globalization wasthat it was, as Bill Clinton
said, a fact, not a choice, thatbecause of technology in large
(04:03):
part of a more globally integrated economy, was
inevitable. It wasn't something we could
stop. It was something we could shape,
and we should try to shape it. And but the conventional wisdom
at the time was that this was, you know, a good thing.
And there were dissident voices on both the left and the right,
(04:24):
but they were really drowned outby a by a bipartisan view,
whether it was Bill Clinton or George W Bush looking ahead and
saying, you know, greater globalization is going to do a
couple of things. It's going to bring us
widespread shared prosperity here at home, and it's going to
lead to a more harmonious environment abroad as former
(04:47):
authoritarian countries like China and the Soviet and and
post Soviet Russia begin liberalizing their political
systems in part because of expanded trade.
The idea was we'd have more, more trade that would promote
economic development in places like China.
You'd get a rising middle class.It would, over time demand a
(05:08):
greater say in the way its liveswere being governed.
And that would inevitably lead to the sort of political change
in China that we had seen earlier in places like South
Korea and Taiwan. And, you know, I lived in China
for the first few years after itjoined the the World Trade
(05:29):
Organization in 2001. And in those early years, it did
seem like that was happening. But the reform momentum
eventually petered out pretty quickly in China.
The the effects of globalizationon specific groups of people in
the United States, factory workers in in basic
(05:49):
manufacturing in particular, were greater than we had
anticipated. And to Fast forward a bit, we've
we've ended up in a place both here at home and abroad, which
is not the destination that we had in mind back in the 1990s.
When you describe that we lost jobs and it had unintended
(06:11):
consequences, can you paint a fuller picture in terms of like
what this adoption of the globalization movement really
has done for the American worker?
Yep, I I think it's important toto bear in mind a couple of
things. First, globalization has
produced significant economic benefits both outside the US and
(06:37):
and here in the US Abroad, it's lifted, according to the
International Monetary Fund, something like a billion and a
half people out of the worst sort of crushing poverty, most
of them in China. But India, Southeast Asia,
(06:57):
Eastern Europe, a lot of people have have much better lives
today than they would have had otherwise.
And that's not something to to discount.
Now that won't get you elected in Ohio or Pennsylvania.
So what about here at home? Well, here at home, we've all
benefited to some degree. The benefits economically of
(07:21):
globalization, I say, have been spread across the economy like
frosting on a cake. We all get a little bit of it.
Low cost products from China help keep inflation absolutely
under control for 15 years or so.
That gave the average family a greater purchasing power of
(07:41):
about $1500 a year in the first decade of this century.
So meaningful increase, better mix of jobs in the economy, not
more jobs. That's an important part, but
point, but a better mix of jobs,better availability of products
as well. You know, I grew up in
Connecticut back in the 1960s. I can remember, you know, we, we
(08:04):
can get fresh fruits and vegetables for about two months
a year. And the rest of the time, you
know, stuff was coming out of a can, a lot of fruit cocktail
back in the 1960s. But now, you know, if I feel
like corn on the cob in the middle of a snowstorm in
February, I can get it here in Virginia thanks to trade, thanks
to trade with places like Mexicoand other places South of the
(08:24):
border. So these are real benefits.
The costs, though, have not beenspread the same way as the
benefits. The costs have been
concentrated. They've been, I think of them
almost like economic tumors in specific factory dependent
communities across the midsection of the country and in
(08:46):
specific groups of people, thosewith the the least education,
often just a high school degree and the fewest skills in basic
manufacturing. Those were the the types of
jobs, the types of industries that were kind of ripe for
destruction or disruption at thetime that China came on the
scene. And that's where you're really
(09:08):
seeing the workers who've who'veborne the brunt of this process.
One of the other things that we've learned in recent years is
that when we experienced COVID and the pandemic, Americans were
kind of shocked. I don't know if they should
have, but but they were shocked to learn that many of the goods
(09:30):
that they depended on and we're used to having access to, when
the supply chains had disruptions, they were just
where lots of important things that we didn't have access to
anymore, or at least not as much.
Can you talk about supply chainsand what we've learned about the
effects of globalization? Yeah, it's, it's a similar story
(09:53):
in the sense of sort of a, you know, 22 sided coin, if you
will, that on the one hand, these global supply chains are
really, you know, an extraordinary accomplishment to,
to, to break up the production of a particular good into its
component parts. And have, you know, some factory
(10:16):
in Taiwan doing one piece and Malaysia doing another piece.
And the parts go into China and more work is done there.
And then it gets on a boat and it comes over here and maybe
there's a bit of final finishingwork done here, or maybe it's
the entire product. But these are really extra
ordinary feats of industrial choreography and an economic
(10:40):
planning. And when they work well, they've
they do a great job of, of boosting corporate profits.
The problem is, along the way, we kind of ignored the warning
signs about the risks we were running, and many of them were
natural disasters. You know, there were earthquakes
in the late 90s in Taiwan that disrupted semiconductor
(11:03):
production. There was a famous episode in
2011 off the coast of Japan, an earthquake registering 9.0 on
the Richter scale, which is justa mammoth, mammoth earthquake
sent a tsunami 4 stories high washing across 10s of thousands
(11:28):
of acres of Japan and knocking offline a a nuclear power plant
there. And, you know, the disruption
that emanated out of that one episode, you know, there was
one, the only plant in the worldthat made something that I've
never heard of before called Cyrillic pigment, which is a
substance that goes into auto paint to give auto paint its its
(11:51):
distinctive glitter. And the only plant in the world
that made that was right in the shadow of this nuclear power
plant. So it's knocked offline 10 days
later, AGM plant in Louisiana goes offline as a consequence,
because that one goes offline. Another GM plant in upstate New
York goes offline idling, You know, a, a good number of
(12:12):
workers in in both places. And so we, we had and, and GM
was far from alone and being affected by that incident.
And a couple months later you'vegot a historic monsoon season
in, in Thailand that floods about 1000 factories, big impact
on hard drive manufacturers, other electronics plants.
(12:34):
And so we, we saw these warningswhere we were reminded about the
risks we were running because inmany cases, companies would
spread these supply chains out and they'd really have single
source operations in at key parts of, of the, of the chain.
And so if that one plant goes offline, you know, you're,
(12:56):
you're out of luck. But the, you know, the, the
system financially is set up. So if you're, you know, the CEO
of a company, you're incentivized to look at the
bottom line above all else. And building in resilience or
redundancy to your supply chain costs money.
You know, either you're going tobuild up a a warehouse full of
(13:18):
parts to tide you over in case of a disruption.
Well, that costs money. You got to pay for those parts.
You got to put them in a warehouse.
The warehouse costs money. You got to hire a security guard
and make sure nobody walks off with them.
And all of that is cost. And we chose collectively not to
bear those costs and and we saw the consequences during the
(13:41):
pandemic. I know that this is sort of an
old argument, but I remember thedebate about whether
globalization leads to sweatshops and just exploitation
of workers in different parts ofthe world.
I also know the argument that I think you kind of alluded to
later that when you look at it over the the long run, even in
(14:07):
those places where maybe there were less than perfect working
conditions, 1 can make the argument that in those areas
life did improve. If that's a fair argument, I
don't know. But what can you describe in
terms of how companies used thisnew system to just kind of chase
(14:31):
cheap labor wherever it was available around the world?
Yeah, I, I think, I think there is that duality.
There's no question that one of the big attractions for
multinationals, particularly in the early days in the 1990s
before China formally joined theWTO, and then of course, in the
(14:53):
first decade of this century after it, after it had.
There's no question that that low wages in places like China
and Mexico is is what often attracted corporations to move
their factories down there. Because you know what I've
interviewed some of these guys. I remember, and I talk about
this in the book of a plant in Niles, OH, that made steel
(15:19):
doors. And I forget exactly how much
the workers were making there. And this is now about 17 years
ago, but I remember interviewingthem.
A private equity company had hadbought up the plant and had
decided to move the work down toMexico.
And let's say the guys there were making 20 bucks an hour.
The guys in Mexico were going tobe making about two bucks a day.
(15:42):
And the last thing the guys in Ohio had to do before they were
putting the unemployment line was train the Mexican workers on
how to use the equipment that was being crated up and shipped
down to Mexico. Now, as I say in the book, you
know, an economist will will hear that anecdote and say, you
know, an anecdote, The plural ofanecdote is not data.
(16:04):
And so, OK, that's a that's a sad story you're telling me,
Dave. But you know, you got to step
back and look at the big picture.
But and, and that of course, youknow, to some degree is true.
You're never going to run an economic system that's going to
make 100% of the people happy and fulfilled and, and carefree
(16:24):
100% of the time. But, you know, for, for people
wondering, you know, why, why did people in some of these
factory dependent communities turn against globalization or
turn against trade liberalization?
It's because of the power of, ofthose episodes.
The guys who who live through that and see their jobs taken
(16:45):
and moved somewhere else where somebody will work for, you
know, a tenth of their wage are understandably resentful of
political leaders who are not somuch letting that happen is
letting that happen and then doing nothing for the guys left
behind. And that's a central theme of my
(17:06):
book as well. You know, the, the, the way that
the, the politicians often marketed trade liberalization,
whether it was the North American Free Trade Agreement,
NAFTA, or China's joining the WTO several years later is a
Bill Clinton used to say this aswell, that they're going to be
winners and losers. But that's OK because the
(17:29):
winners gains are going to be sogreat that they're going to be
able to provide for the losers, provide them with the relocation
assistance, the retraining, whatever financial support and
help they're going to need so that they're not left behind as
the rest of us move into this brave new world of a globalized
economy. And, you know, the problem is
(17:50):
that just never happened. It was always just rhetoric.
And the main program, which is called Trade adjustment
Assistance, that was supposed toprovide this assistance for
folks was always chronically underfunded.
It was a real afterthought. It was really regarded.
Nobody really liked it. The labor unions called it
(18:10):
burial insurance. Corporations didn't want to be
taxed to pay for it. Republicans in Washington, from
an ideological standpoint, preferred to let the market all
sort this out. And Democrats dropped the ball
as well. And so you just have a a history
of that program of being a day late and a dollar short.
(18:34):
David, we have listeners from both sides of political
spectrum, but it seems that there is a good chunk of the
country right now who are rightly or wrongly, starting to
wake up and form this opinion that America's corporations, who
(18:56):
often refer to themselves as being Americans, are really
global corporations. And I, I think anyone who's been
in business for a long time always knew that.
But it seems that there's a a group of citizens now who are
becoming finally kind of educated about that and are
(19:18):
starting to have this feeling that a lot of these corporate
CEOs and, and their businesses, at least up until recently, did
not always have the best interest of the country, America
in in place. How could they?
(19:39):
They are operating in hundreds of countries.
They're a business and they haveto do what's best for the
business. But this is something that some
people are just starting to learn and and these corporate
leaders also have tremendous influence on our government and
contribute, you know, funding topoliticians.
(20:02):
So what do you feel about this group right now?
Are they correct in starting to become suspicious of the the
actions of of business leaders or do they have it all wrong?
Well, I think it's certainly true that over recent decades,
(20:24):
corporations have change their orientation from a broader focus
on, you know, the the local community workers, you know, the
360° view, so to speak, to focuspretty single mindedly on what's
(20:45):
described as shareholder value, creating shareholder value.
And, and who are the shareholders?
The shareholders are the people who literally own the stock of
the of the company in in question.
Now that can be, that could be you and I through our 401 KS.
It can be large institutional investors be hedge funds, it can
be the, the, the top management of the company.
(21:09):
But but the point is that the focus then becomes what, what do
I have to do as CEO to drive greater and greater profits
quarter after quarter? And that's the kind of incentive
structure that leads you to lookat everything, you know through
(21:30):
the lens of, of cost or gain. And that's part of the the
orientation that that promoted the move of so much work
offshore. Now, I have to say, if you want
to, you know, if you if you wantcorporations to behave
differently, you'd have to create a different incentive
structure. Human beings respond to
(21:52):
incentives. And you know, we went through a
time where the incentive structure for CEO pay was
changed to link CEO pay to stockperformance.
And the thought at the time thatthat was a reform, quote UN
quote. And the thought was, well, if we
(22:12):
can, if we can align the incentive of the CEO with the
incentive of those of us who ownthe stock, we'll all benefit,
right? He'll, he'll work hard to get
the stock up. That'll be good for you and me
because we own a few shares in the in the four O 1K and and
that'll quote UN quote align ourincentives with the CEOs and
(22:36):
that's had other, other consequences is along with what
what was intended. But I I do think that's part of
the story. Are people naive to think that
if there is a company in their country, whichever country it
may be, that that country shouldexpect some kind of allegiance
(22:58):
from the company? Is that just not the world that
we really live in? No, I, I wouldn't say naive.
I, I think, I think it's certainly appropriate.
You know, I, I remember President Obama got in a lot of
trouble and I forget the exact circumstances.
I think it was a campaign speechwhere he was talking about the
private sector and, and referredto the idea of a, of a business
(23:24):
sort of single handedly claimingcredit for its success.
And he said something like, you know, you, you didn't build
that. And he, he got enormous
blowback. But I, it was perhaps an inept
expression of what I'm about to say.
Hopefully I, I won't get the same blowback.
But I think his point and, and, and what would justify the, the
(23:45):
attitude on the part of people that you're describing is, you
know, any, any company you know,in, in any state in, in the
union is relying on roads that are paid for by taxpayers to get
its goods in and out of the market.
It's hiring workers that in mostcases were educated in the
(24:06):
public school system paid for bytaxes.
It's no doubt taking advantage of particular provisions in the
tax code designed to incentivizeits investment or it's research.
And all of these provisions, allthese parts of society, the
public, the social compact, if you will.
(24:29):
I think do do make it legitimatefor for voters to say, well, you
know, hang on you, you owe us something other than just just a
good quarterly report. You know, you, you need to take
a broader view of your public obligations.
There are some who think that one way you can either punish
(24:50):
companies or countries and try and give them an incentive to
give more beneficial outcomes to1's individual country is
through tariffs. What are the pros and cons of
using tariffs in this way? Yep.
(25:10):
So President Trump is has raisedtariffs to their highest level
in just about a century. You have to go back to the 1930s
to find anything comparable. And his argument, I think, is
that by making, by putting a tariff, which is just a fancy
word for a tax, by taxing foreign products, you make them
(25:31):
more expensive to the end consumer here in the United
States. And so I as a consumer would
look at a foreign widget and it's now more expensive because
of the tariff. And so I'll be incentivized to
buy a made in America widget instead.
That's kind of the theory of thecase.
(25:53):
The problem is, and we'll take areal world example, steel, the
president has put a sizable tariff on foreign steel and
aluminum. Now that's designed to make
those foreign products more expensive so that US Steel and
Cleveland Cliffs and Nucor will be able to sell more of their
domestic made steel. But the tariff is, let's say
(26:17):
25%. So the foreign steel goes up
25%. Well, that allows the domestic
makers to raise their prices by,say, 20%.
And they're still going to be cheaper than the foreign
product. And you're helping the workers
at say, US Steel. You're, you're making you're,
you're making it so there's moredemand for their products.
(26:38):
So that's good news for people who work for US Steel.
Maybe US Steel will go out and hire a few more steel workers.
But the problem is there's 10 times as many workers who are in
the industries that use steel. Think about car makers, GM and
Ford and Stalantis, and you've now made their input, the steel
that they turn into a car. You've made it more expensive.
(27:00):
So that's bad news for GM and Ford and Stalantis.
So they may have to lay off someworkers.
They probably won't sell as manycars because they're going to
have to raise their prices. So you've got that sort of
balancing act across the economy.
Every time you impose a tariff, which again is just a tax,
you're changing the relative price of some good or product in
(27:22):
a way that has wider repercussions.
And I should say just, you know,briefly, and this is where I
conclude my book, is that, you know, I think both parties,
whether it's the Republicans with tariffs or the Democrats
with industrial policy, which are subsidies to promote favored
industries, are kind of fightingthe last war on the
(27:45):
globalization front. In other words, they're both
trying to bring back manufacturing job that is left
and they're fighting, you know, really historic broad forces in
doing that. We've we've seen the, the share
of manufacturing work in this economy has been declining since
the 1950s, long before globalization came around.
(28:06):
And that's largely a a result ofautomation, just as we no longer
need as many people on the farm as we did 100 or so years ago
when, you know, most Americans worked on the farm.
And then thanks to automation, they came off the farm.
We were still able to produce all the food we needed with
fewer people. People went into the factory.
(28:27):
And now, thanks to automation infactories, we don't need as many
people in factories to produce what we need.
And So what I say in in the world's worst bet is you know
that the so-called China shock, the rise of China in the first
decade of the century is not going to be the last time that
American workers are going to face great upheaval and tumbled.
(28:50):
And we need to start thinking about doing more on labor market
policies, social safety net to fulfill the promises that
politicians made in the 1990s and never kept.
One last question, Can you just tell me what concerns you the
most? You've alluded to a lot of the
(29:10):
things that have gone wrong, butwhat do you feel is the most
pressing issues facing us right now due to globalization?
And what is the number one thingbesides what you just said right
now that you think that we can do to improve things?
Yeah. I think we need, we need to sort
(29:32):
out our China policy. We've we've got a, we've got a,
a different. We, we haven't, we haven't sort
of reached a sustainable equilibrium in our approach to
China. We, we had a bipartisan
consensus around the turn of thecentury and for the 1st 15 or so
(29:56):
years that China was going to liberalize, was going to, was
going to become more and more market oriented and would be
part of this US-led international order.
I think that it is now been put aside.
And you've got competing schoolsof thought now on whether, you
know, we need to completely decouple or separate ourselves
(30:18):
economically from China, which is easier said than done, or
whether there's still opportunities to cooperate on
some things, you know, disease prevention, climate change, what
are called sort of transnationalissues that are out there.
We can't escape them no matter how how much we try and where we
(30:39):
would have a shared interest with the Chinese and with other
countries in trying to address them.
And, you know, I'll say I don't think that it's clear yet where
the Trump administration has come down on a lot of these
issues. There are certainly very tough
elements within the administration, tough on China
(31:00):
who do want to decouple as much as possible.
But I think President Trump is sort of still in deal making
mode. And I think it's it's going to
be interesting over the next, you know, four to six months to
see where he lands on this. Because I think he I think, you
know, all else being equal, his approach to problems is to try
(31:23):
and come up with a deal to try and find something he can
package. It could be broader than trade.
You know, there's, there's talk if you look back in the 1980s
how Ronald Reagan sort of addressed the trade, the then
trade issue of the day, which was Japan.
You know, the, the Reagan administration put limits,
(31:45):
voluntary export limits on Japanese cars and encouraged the
Japanese car companies to set upplants here in the United States
employing Americans. So, you know, I've got 2
Japanese cars, Japanese name plates in my garage, but they
were made by American workers here in the United States.
And there are some people who think, you know, that model
(32:08):
could be applied to China as well, particularly with their
low cost electric vehicles. And now there's a whole set of
national security related concerns around that data
transfer and the like that makesthe China situation a lot
different from the Japan situation in the 1980s.
But but resolving this relationship or putting this
(32:32):
relationship with China on a, you know, sustainable footing
doesn't mean we're going to be friends.
But we're sort of stuck on the same planet with each other.
And they're not going away and we're not going away.
And so figuring out how these two great powers are going to
interact and coexist, I think isreally the challenge of the day.
(32:53):
In your opinion, is some kind ofdeal, some kind of plan to work
together more likely than a war in the near future?
Yeah, I, I, if I were a betting man, I, I think, I think that's,
that's where things are headed. Now, whether that's a deal, you
know, you remember President Trump signed what was called the
phase one trade deal in January of 2020.
(33:15):
That deal ultimately turned out to be less than we thought at
the time, in part because the pandemic interrupted everything,
including the purchases that China had pledged to make under
that deal. But it it's going to be very
interesting to see what happens over the next several months.
He he President Trump clearly wants to go to China, clearly
(33:37):
wants to get in the room with Chinese President Xi Jinping and
try to make something happen. Well, David, I want to thank you
for coming on the Sounds of Film.
Where can people go online to see your writing and to find out
about your book? Well, they can.
They can find my writing at the Washington Post,
washingtonpost.com. And if you go to the search
(34:00):
function there and type in DavidJ Lynch, you'll get to my
profile page where you can, you'll see more of my writing
than you could ever want to. And As for the book, The World's
Worst Bet, How the globalizationgamble Went Wrong and what would
make it right, That's available on Amazon and Barnes and Noble
and all your other favorite booksellers, independent
(34:22):
booksellers in your local communities.
And if if you do pick it up, I hope you enjoy it and I hope you
post a review. You can also find me on social
media that at David J Lynch on both X and Blue Sky.
Well, David, I want to thank youagain for coming on the program
and I want to highly recommend The World's Worst Bet, a very
(34:43):
important book and a lot of valuable information in there.
David, it was a pleasure speaking with you.
Thanks for having me, I enjoyed it.
Hi, this is Tom Needham, and youare listening to the sounds of
film today. My guest is David J Lynch,
veteran journalist at The Washington Post and author of
The World's Worst Bet, How the Globalization Gamble Went Wrong
and What Would Make It Right. We'll be talking about his work
(00:21):
examining the global economy, trade and the forces reshaping
our financial future. David, thank you so much for
joining us on the program. Glad to be here, Tom.
Yeah. I've been following your work
for a long time. Globalization is something I've
always been interested in, the pros and cons.
Can you just explain to our listeners who are maybe not that
(00:43):
familiar with the term in terms of what it actually means,
globalization? Sure.
Yeah, it it is a mouthful. I, I think of it as referring to
the easy movement across national borders of goods,
services, ideas, people, technology, all the things that
(01:09):
add up to an economy, if you will.
And, and we've of course seen greater integration of of
economies over the past 20 or 30years, which is the period of
time that I try to chronicle in,in the world's worst bet.
On this show, we've covered, youknow, books and films for quite
(01:29):
some time. I'm just kind of curious how the
view of globalization has changed over time.
I, I think maybe your view has even evolved.
But I remember going back and watching films like by Michael
Moore, You know, Roger and Me. And it, it's strange to me
because at one point it seemed like sometimes the the left or
(01:53):
liberals were critical of globalization in terms of what
it was doing to the auto industry and, and other
industries in America. But more recently, it seems like
Donald Trump and the right has kind of picked up on this
populist attitude that maybe globalization is hurting us.
(02:14):
So can you explain a little bit about how just people's
perception of globalization has changed, and also how
politically different parties have perceived globalization
differently at different times? Yeah, absolutely.
And that, that's a, a central theme of the book.
And, and you know, I'm, I'm old enough to have, have lived
(02:35):
through all this. So I've sort of experienced and,
and felt the, the evolution of, of views across the political
spectrum over this, you know, quarter century or so.
You know, if you go back where my book starts in the 1990s,
we're we're in the immediate post Cold War era.
And you know, things are going pretty good for the United
(02:56):
States. People have lived through an
extraordinary series of changes.The Berlin Wall has come down.
Democracy and free markets have spread across Eastern Europe and
across the entire former Soviet empire.
The Soviet Union itself disappears on Christmas Day in
1991. So it's really a remarkable
(03:19):
time. And for those of us who lived
through the Cold War, I mean, I'll just say personally, I
never expected to see any of those developments occur in my
lifetime. I thought the Berlin all was
permanent. I thought the Soviet Union was
permanent. And so when all that vanishes
and the United States is really standing above every other power
(03:40):
on the planet by the late 1990's, the economy is cranking
along, the stock market's roaring ahead, It's a pretty
heady time. And I think the the view in
those years of globalization wasthat it was, as Bill Clinton
said, a fact, not a choice, thatbecause of technology in large
(04:03):
part of a more globally integrated economy, was
inevitable. It wasn't something we could
stop. It was something we could shape,
and we should try to shape it. And but the conventional wisdom
at the time was that this was, you know, a good thing.
And there were dissident voices on both the left and the right,
(04:24):
but they were really drowned outby a by a bipartisan view,
whether it was Bill Clinton or George W Bush looking ahead and
saying, you know, greater globalization is going to do a
couple of things. It's going to bring us
widespread shared prosperity here at home, and it's going to
lead to a more harmonious environment abroad as former
(04:47):
authoritarian countries like China and the Soviet and and
post Soviet Russia begin liberalizing their political
systems in part because of expanded trade.
The idea was we'd have more, more trade that would promote
economic development in places like China.
You'd get a rising middle class.It would, over time demand a
(05:08):
greater say in the way its liveswere being governed.
And that would inevitably lead to the sort of political change
in China that we had seen earlier in places like South
Korea and Taiwan. And, you know, I lived in China
for the first few years after itjoined the the World Trade
(05:29):
Organization in 2001. And in those early years, it did
seem like that was happening. But the reform momentum
eventually petered out pretty quickly in China.
The the effects of globalizationon specific groups of people in
the United States, factory workers in in basic
(05:49):
manufacturing in particular, were greater than we had
anticipated. And to Fast forward a bit, we've
we've ended up in a place both here at home and abroad, which
is not the destination that we had in mind back in the 1990s.
When you describe that we lost jobs and it had unintended
(06:11):
consequences, can you paint a fuller picture in terms of like
what this adoption of the globalization movement really
has done for the American worker?
Yep, I I think it's important toto bear in mind a couple of
things. First, globalization has
produced significant economic benefits both outside the US and
(06:37):
and here in the US Abroad, it's lifted, according to the
International Monetary Fund, something like a billion and a
half people out of the worst sort of crushing poverty, most
of them in China. But India, Southeast Asia,
(06:57):
Eastern Europe, a lot of people have have much better lives
today than they would have had otherwise.
And that's not something to to discount.
Now that won't get you elected in Ohio or Pennsylvania.
So what about here at home? Well, here at home, we've all
benefited to some degree. The benefits economically of
(07:21):
globalization, I say, have been spread across the economy like
frosting on a cake. We all get a little bit of it.
Low cost products from China help keep inflation absolutely
under control for 15 years or so.
That gave the average family a greater purchasing power of
(07:41):
about $1500 a year in the first decade of this century.
So meaningful increase, better mix of jobs in the economy, not
more jobs. That's an important part, but
point, but a better mix of jobs,better availability of products
as well. You know, I grew up in
Connecticut back in the 1960s. I can remember, you know, we, we
(08:04):
can get fresh fruits and vegetables for about two months
a year. And the rest of the time, you
know, stuff was coming out of a can, a lot of fruit cocktail
back in the 1960s. But now, you know, if I feel
like corn on the cob in the middle of a snowstorm in
February, I can get it here in Virginia thanks to trade, thanks
to trade with places like Mexicoand other places South of the
(08:24):
border. So these are real benefits.
The costs, though, have not beenspread the same way as the
benefits. The costs have been
concentrated. They've been, I think of them
almost like economic tumors in specific factory dependent
communities across the midsection of the country and in
(08:46):
specific groups of people, thosewith the the least education,
often just a high school degree and the fewest skills in basic
manufacturing. Those were the the types of
jobs, the types of industries that were kind of ripe for
destruction or disruption at thetime that China came on the
scene. And that's where you're really
(09:08):
seeing the workers who've who'veborne the brunt of this process.
One of the other things that we've learned in recent years is
that when we experienced COVID and the pandemic, Americans were
kind of shocked. I don't know if they should
have, but but they were shocked to learn that many of the goods
(09:30):
that they depended on and we're used to having access to, when
the supply chains had disruptions, they were just
where lots of important things that we didn't have access to
anymore, or at least not as much.
Can you talk about supply chainsand what we've learned about the
effects of globalization? Yeah, it's, it's a similar story
(09:53):
in the sense of sort of a, you know, 22 sided coin, if you
will, that on the one hand, these global supply chains are
really, you know, an extraordinary accomplishment to,
to, to break up the production of a particular good into its
component parts. And have, you know, some factory
(10:16):
in Taiwan doing one piece and Malaysia doing another piece.
And the parts go into China and more work is done there.
And then it gets on a boat and it comes over here and maybe
there's a bit of final finishingwork done here, or maybe it's
the entire product. But these are really extra
ordinary feats of industrial choreography and an economic
(10:40):
planning. And when they work well, they've
they do a great job of, of boosting corporate profits.
The problem is, along the way, we kind of ignored the warning
signs about the risks we were running, and many of them were
natural disasters. You know, there were earthquakes
in the late 90s in Taiwan that disrupted semiconductor
(11:03):
production. There was a famous episode in
2011 off the coast of Japan, an earthquake registering 9.0 on
the Richter scale, which is justa mammoth, mammoth earthquake
sent a tsunami 4 stories high washing across 10s of thousands
(11:28):
of acres of Japan and knocking offline a a nuclear power plant
there. And, you know, the disruption
that emanated out of that one episode, you know, there was
one, the only plant in the worldthat made something that I've
never heard of before called Cyrillic pigment, which is a
substance that goes into auto paint to give auto paint its its
(11:51):
distinctive glitter. And the only plant in the world
that made that was right in the shadow of this nuclear power
plant. So it's knocked offline 10 days
later, AGM plant in Louisiana goes offline as a consequence,
because that one goes offline. Another GM plant in upstate New
York goes offline idling, You know, a, a good number of
(12:12):
workers in in both places. And so we, we had and, and GM
was far from alone and being affected by that incident.
And a couple months later you'vegot a historic monsoon season
in, in Thailand that floods about 1000 factories, big impact
on hard drive manufacturers, other electronics plants.
(12:34):
And so we, we saw these warningswhere we were reminded about the
risks we were running because inmany cases, companies would
spread these supply chains out and they'd really have single
source operations in at key parts of, of the, of the chain.
And so if that one plant goes offline, you know, you're,
(12:56):
you're out of luck. But the, you know, the, the
system financially is set up. So if you're, you know, the CEO
of a company, you're incentivized to look at the
bottom line above all else. And building in resilience or
redundancy to your supply chain costs money.
You know, either you're going tobuild up a a warehouse full of
(13:18):
parts to tide you over in case of a disruption.
Well, that costs money. You got to pay for those parts.
You got to put them in a warehouse.
The warehouse costs money. You got to hire a security guard
and make sure nobody walks off with them.
And all of that is cost. And we chose collectively not to
bear those costs and and we saw the consequences during the
(13:41):
pandemic. I know that this is sort of an
old argument, but I remember thedebate about whether
globalization leads to sweatshops and just exploitation
of workers in different parts ofthe world.
I also know the argument that I think you kind of alluded to
later that when you look at it over the the long run, even in
(14:07):
those places where maybe there were less than perfect working
conditions, 1 can make the argument that in those areas
life did improve. If that's a fair argument, I
don't know. But what can you describe in
terms of how companies used thisnew system to just kind of chase
(14:31):
cheap labor wherever it was available around the world?
Yeah, I, I think, I think there is that duality.
There's no question that one of the big attractions for
multinationals, particularly in the early days in the 1990s
before China formally joined theWTO, and then of course, in the
(14:53):
first decade of this century after it, after it had.
There's no question that that low wages in places like China
and Mexico is is what often attracted corporations to move
their factories down there. Because you know what I've
interviewed some of these guys. I remember, and I talk about
this in the book of a plant in Niles, OH, that made steel
(15:19):
doors. And I forget exactly how much
the workers were making there. And this is now about 17 years
ago, but I remember interviewingthem.
A private equity company had hadbought up the plant and had
decided to move the work down toMexico.
And let's say the guys there were making 20 bucks an hour.
The guys in Mexico were going tobe making about two bucks a day.
(15:42):
And the last thing the guys in Ohio had to do before they were
putting the unemployment line was train the Mexican workers on
how to use the equipment that was being crated up and shipped
down to Mexico. Now, as I say in the book, you
know, an economist will will hear that anecdote and say, you
know, an anecdote, The plural ofanecdote is not data.
(16:04):
And so, OK, that's a that's a sad story you're telling me,
Dave. But you know, you got to step
back and look at the big picture.
But and, and that of course, youknow, to some degree is true.
You're never going to run an economic system that's going to
make 100% of the people happy and fulfilled and, and carefree
(16:24):
100% of the time. But, you know, for, for people
wondering, you know, why, why did people in some of these
factory dependent communities turn against globalization or
turn against trade liberalization?
It's because of the power of, ofthose episodes.
The guys who who live through that and see their jobs taken
(16:45):
and moved somewhere else where somebody will work for, you
know, a tenth of their wage are understandably resentful of
political leaders who are not somuch letting that happen is
letting that happen and then doing nothing for the guys left
behind. And that's a central theme of my
(17:06):
book as well. You know, the, the, the way that
the, the politicians often marketed trade liberalization,
whether it was the North American Free Trade Agreement,
NAFTA, or China's joining the WTO several years later is a
Bill Clinton used to say this aswell, that they're going to be
winners and losers. But that's OK because the
(17:29):
winners gains are going to be sogreat that they're going to be
able to provide for the losers, provide them with the relocation
assistance, the retraining, whatever financial support and
help they're going to need so that they're not left behind as
the rest of us move into this brave new world of a globalized
economy. And, you know, the problem is
(17:50):
that just never happened. It was always just rhetoric.
And the main program, which is called Trade adjustment
Assistance, that was supposed toprovide this assistance for
folks was always chronically underfunded.
It was a real afterthought. It was really regarded.
Nobody really liked it. The labor unions called it
(18:10):
burial insurance. Corporations didn't want to be
taxed to pay for it. Republicans in Washington, from
an ideological standpoint, preferred to let the market all
sort this out. And Democrats dropped the ball
as well. And so you just have a a history
of that program of being a day late and a dollar short.
(18:34):
David, we have listeners from both sides of political
spectrum, but it seems that there is a good chunk of the
country right now who are rightly or wrongly, starting to
wake up and form this opinion that America's corporations, who
(18:56):
often refer to themselves as being Americans, are really
global corporations. And I, I think anyone who's been
in business for a long time always knew that.
But it seems that there's a a group of citizens now who are
becoming finally kind of educated about that and are
(19:18):
starting to have this feeling that a lot of these corporate
CEOs and, and their businesses, at least up until recently, did
not always have the best interest of the country, America
in in place. How could they?
(19:39):
They are operating in hundreds of countries.
They're a business and they haveto do what's best for the
business. But this is something that some
people are just starting to learn and and these corporate
leaders also have tremendous influence on our government and
contribute, you know, funding topoliticians.
(20:02):
So what do you feel about this group right now?
Are they correct in starting to become suspicious of the the
actions of of business leaders or do they have it all wrong?
Well, I think it's certainly true that over recent decades,
(20:24):
corporations have change their orientation from a broader focus
on, you know, the the local community workers, you know, the
360° view, so to speak, to focuspretty single mindedly on what's
(20:45):
described as shareholder value, creating shareholder value.
And, and who are the shareholders?
The shareholders are the people who literally own the stock of
the of the company in in question.
Now that can be, that could be you and I through our 401 KS.
It can be large institutional investors be hedge funds, it can
be the, the, the top management of the company.
(21:09):
But but the point is that the focus then becomes what, what do
I have to do as CEO to drive greater and greater profits
quarter after quarter? And that's the kind of incentive
structure that leads you to lookat everything, you know through
(21:30):
the lens of, of cost or gain. And that's part of the the
orientation that that promoted the move of so much work
offshore. Now, I have to say, if you want
to, you know, if you if you wantcorporations to behave
differently, you'd have to create a different incentive
structure. Human beings respond to
(21:52):
incentives. And you know, we went through a
time where the incentive structure for CEO pay was
changed to link CEO pay to stockperformance.
And the thought at the time thatthat was a reform, quote UN
quote. And the thought was, well, if we
(22:12):
can, if we can align the incentive of the CEO with the
incentive of those of us who ownthe stock, we'll all benefit,
right? He'll, he'll work hard to get
the stock up. That'll be good for you and me
because we own a few shares in the in the four O 1K and and
that'll quote UN quote align ourincentives with the CEOs and
(22:36):
that's had other, other consequences is along with what
what was intended. But I I do think that's part of
the story. Are people naive to think that
if there is a company in their country, whichever country it
may be, that that country shouldexpect some kind of allegiance
(22:58):
from the company? Is that just not the world that
we really live in? No, I, I wouldn't say naive.
I, I think, I think it's certainly appropriate.
You know, I, I remember President Obama got in a lot of
trouble and I forget the exact circumstances.
I think it was a campaign speechwhere he was talking about the
private sector and, and referredto the idea of a, of a business
(23:24):
sort of single handedly claimingcredit for its success.
And he said something like, you know, you, you didn't build
that. And he, he got enormous
blowback. But I, it was perhaps an inept
expression of what I'm about to say.
Hopefully I, I won't get the same blowback.
But I think his point and, and, and what would justify the, the
(23:45):
attitude on the part of people that you're describing is, you
know, any, any company you know,in, in any state in, in the
union is relying on roads that are paid for by taxpayers to get
its goods in and out of the market.
It's hiring workers that in mostcases were educated in the
(24:06):
public school system paid for bytaxes.
It's no doubt taking advantage of particular provisions in the
tax code designed to incentivizeits investment or it's research.
And all of these provisions, allthese parts of society, the
public, the social compact, if you will.
(24:29):
I think do do make it legitimatefor for voters to say, well, you
know, hang on you, you owe us something other than just just a
good quarterly report. You know, you, you need to take
a broader view of your public obligations.
There are some who think that one way you can either punish
(24:50):
companies or countries and try and give them an incentive to
give more beneficial outcomes to1's individual country is
through tariffs. What are the pros and cons of
using tariffs in this way? Yep.
(25:10):
So President Trump is has raisedtariffs to their highest level
in just about a century. You have to go back to the 1930s
to find anything comparable. And his argument, I think, is
that by making, by putting a tariff, which is just a fancy
word for a tax, by taxing foreign products, you make them
(25:31):
more expensive to the end consumer here in the United
States. And so I as a consumer would
look at a foreign widget and it's now more expensive because
of the tariff. And so I'll be incentivized to
buy a made in America widget instead.
That's kind of the theory of thecase.
(25:53):
The problem is, and we'll take areal world example, steel, the
president has put a sizable tariff on foreign steel and
aluminum. Now that's designed to make
those foreign products more expensive so that US Steel and
Cleveland Cliffs and Nucor will be able to sell more of their
domestic made steel. But the tariff is, let's say
(26:17):
25%. So the foreign steel goes up
25%. Well, that allows the domestic
makers to raise their prices by,say, 20%.
And they're still going to be cheaper than the foreign
product. And you're helping the workers
at say, US Steel. You're, you're making you're,
you're making it so there's moredemand for their products.
(26:38):
So that's good news for people who work for US Steel.
Maybe US Steel will go out and hire a few more steel workers.
But the problem is there's 10 times as many workers who are in
the industries that use steel. Think about car makers, GM and
Ford and Stalantis, and you've now made their input, the steel
that they turn into a car. You've made it more expensive.
(27:00):
So that's bad news for GM and Ford and Stalantis.
So they may have to lay off someworkers.
They probably won't sell as manycars because they're going to
have to raise their prices. So you've got that sort of
balancing act across the economy.
Every time you impose a tariff, which again is just a tax,
you're changing the relative price of some good or product in
(27:22):
a way that has wider repercussions.
And I should say just, you know,briefly, and this is where I
conclude my book, is that, you know, I think both parties,
whether it's the Republicans with tariffs or the Democrats
with industrial policy, which are subsidies to promote favored
industries, are kind of fightingthe last war on the
(27:45):
globalization front. In other words, they're both
trying to bring back manufacturing job that is left
and they're fighting, you know, really historic broad forces in
doing that. We've we've seen the, the share
of manufacturing work in this economy has been declining since
the 1950s, long before globalization came around.
(28:06):
And that's largely a a result ofautomation, just as we no longer
need as many people on the farm as we did 100 or so years ago
when, you know, most Americans worked on the farm.
And then thanks to automation, they came off the farm.
We were still able to produce all the food we needed with
fewer people. People went into the factory.
(28:27):
And now, thanks to automation infactories, we don't need as many
people in factories to produce what we need.
And So what I say in in the world's worst bet is you know
that the so-called China shock, the rise of China in the first
decade of the century is not going to be the last time that
American workers are going to face great upheaval and tumbled.
(28:50):
And we need to start thinking about doing more on labor market
policies, social safety net to fulfill the promises that
politicians made in the 1990s and never kept.
One last question, Can you just tell me what concerns you the
most? You've alluded to a lot of the
(29:10):
things that have gone wrong, butwhat do you feel is the most
pressing issues facing us right now due to globalization?
And what is the number one thingbesides what you just said right
now that you think that we can do to improve things?
Yeah. I think we need, we need to sort
(29:32):
out our China policy. We've we've got a, we've got a,
a different. We, we haven't, we haven't sort
of reached a sustainable equilibrium in our approach to
China. We, we had a bipartisan
consensus around the turn of thecentury and for the 1st 15 or so
(29:56):
years that China was going to liberalize, was going to, was
going to become more and more market oriented and would be
part of this US-led international order.
I think that it is now been put aside.
And you've got competing schoolsof thought now on whether, you
know, we need to completely decouple or separate ourselves
(30:18):
economically from China, which is easier said than done, or
whether there's still opportunities to cooperate on
some things, you know, disease prevention, climate change, what
are called sort of transnationalissues that are out there.
We can't escape them no matter how how much we try and where we
(30:39):
would have a shared interest with the Chinese and with other
countries in trying to address them.
And, you know, I'll say I don't think that it's clear yet where
the Trump administration has come down on a lot of these
issues. There are certainly very tough
elements within the administration, tough on China
(31:00):
who do want to decouple as much as possible.
But I think President Trump is sort of still in deal making
mode. And I think it's it's going to
be interesting over the next, you know, four to six months to
see where he lands on this. Because I think he I think, you
know, all else being equal, his approach to problems is to try
(31:23):
and come up with a deal to try and find something he can
package. It could be broader than trade.
You know, there's, there's talk if you look back in the 1980s
how Ronald Reagan sort of addressed the trade, the then
trade issue of the day, which was Japan.
You know, the, the Reagan administration put limits,
(31:45):
voluntary export limits on Japanese cars and encouraged the
Japanese car companies to set upplants here in the United States
employing Americans. So, you know, I've got 2
Japanese cars, Japanese name plates in my garage, but they
were made by American workers here in the United States.
And there are some people who think, you know, that model
(32:08):
could be applied to China as well, particularly with their
low cost electric vehicles. And now there's a whole set of
national security related concerns around that data
transfer and the like that makesthe China situation a lot
different from the Japan situation in the 1980s.
But but resolving this relationship or putting this
(32:32):
relationship with China on a, you know, sustainable footing
doesn't mean we're going to be friends.
But we're sort of stuck on the same planet with each other.
And they're not going away and we're not going away.
And so figuring out how these two great powers are going to
interact and coexist, I think isreally the challenge of the day.
(32:53):
In your opinion, is some kind ofdeal, some kind of plan to work
together more likely than a war in the near future?
Yeah, I, I, if I were a betting man, I, I think, I think that's,
that's where things are headed. Now, whether that's a deal, you
know, you remember President Trump signed what was called the
phase one trade deal in January of 2020.
(33:15):
That deal ultimately turned out to be less than we thought at
the time, in part because the pandemic interrupted everything,
including the purchases that China had pledged to make under
that deal. But it it's going to be very
interesting to see what happens over the next several months.
He he President Trump clearly wants to go to China, clearly
(33:37):
wants to get in the room with Chinese President Xi Jinping and
try to make something happen. Well, David, I want to thank you
for coming on the Sounds of Film.
Where can people go online to see your writing and to find out
about your book? Well, they can.
They can find my writing at the Washington Post,
washingtonpost.com. And if you go to the search
(34:00):
function there and type in DavidJ Lynch, you'll get to my
profile page where you can, you'll see more of my writing
than you could ever want to. And As for the book, The World's
Worst Bet, How the globalizationgamble Went Wrong and what would
make it right, That's available on Amazon and Barnes and Noble
and all your other favorite booksellers, independent
(34:22):
booksellers in your local communities.
And if if you do pick it up, I hope you enjoy it and I hope you
post a review. You can also find me on social
media that at David J Lynch on both X and Blue Sky.
Well, David, I want to thank youagain for coming on the program
and I want to highly recommend The World's Worst Bet, a very
(34:43):
important book and a lot of valuable information in there.
David, it was a pleasure speaking with you.
Thanks for having me, I enjoyed it.
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