Our New Global Economy

Summary

The video script delves into the US government's strategic reshaping of the global economy, with a focus on domestic production and reducing reliance on foreign markets. It highlights President Joe Biden's vision of manufacturing wind turbine blades in Pittsburgh, not Beijing, and leading in electric vehicle production. The narrative explores the historical context of global trade and the post-WWII economic system, contrasting it with the current move towards economic nationalism and protectionism. The script discusses the impact of globalization, the China shock, and the recent shift in US policy under both Trump and Biden administrations to protect domestic industries, including the CHIPS Act's investment in microchip production. It also addresses the vulnerabilities exposed by the COVID-19 pandemic, the strategic competition with China, and the potential risks of economic entanglements turning into tools of conflict. The summary concludes by noting the parallels with the 1930s, emphasizing the need for vigilance as the world navigates a new economic era.

Takeaways

• 🌐 The US government is reshaping the global economy, emphasizing domestic production over global reliance, as seen in Joe Biden's address to Congress.
• 🏭 American workers are being positioned to lead in the production of electric vehicles and batteries, highlighting a shift towards domestic manufacturing capabilities.
• 🔄 The global economy is undergoing a significant shift, possibly returning to an economic system reminiscent of the period before World War II.
• 💻 The US and its allies post-WWII established a global economic system that stabilized currency and reduced trade barriers, leading to an interconnected world market.
• 📈 China's integration into the global economy post-1980s led to its rapid economic growth, but also resulted in job losses and economic challenges for some American communities.
• 🛒 The benefits of globalization, such as lower consumer prices, have been offset by the economic disruption and job losses in certain regions, leading to a reevaluation of the system.
• 🛠️ There's a current move towards economic nationalism and protectionism, with governments investing in domestic industries and moving supply chains back within their borders.
• 🛡️ Protectionist policies are being implemented to protect jobs, address climate change, secure supply chains, and counter the rise of strategic competitors like China.
• 🚫 The US is imposing tariffs and restrictions on certain imports and investments, particularly targeting China, to protect domestic industries and technology.
• ⚖️ The global economic landscape is changing, with a focus on self-sufficiency and national security, which could potentially alter the dynamics of international trade and relations.
• ⚠️ There are concerns that the current shift towards protectionism and economic nationalism could lead to increased tensions and conflicts, similar to the 1930s.

Q & A

What is the main focus of the video script?

The main focus of the video script is to explore the shifting dynamics of the global economy, particularly in relation to trade policies, protectionism, and the role of major powers like the United States and China.

What significant event marked the beginning of reshaping the global economy according to the script?

Joe Biden's address to Congress, where he emphasized the potential of domestic production over outsourcing, marked the beginning of reshaping the global economy as highlighted in the script.

What historical event led to the emergence of the US as a dominant global power?

The Second World War led to the emergence of the US as the most powerful country ever, which played a pivotal role in shaping the post-war global economic system.

How did the US and its allies reshape the world economy post-World War II?

The US and its allies established the US dollar as the top currency, promoted free trade, and facilitated international cooperation to lower tariffs, effectively opening up borders and creating a more interconnected global market.

What was the role of China in the global economy after embracing free trade?

China became a significant player in the global economy by leveraging its cheap labor and participating in global trade. Millions of people in China were lifted out of poverty as the country embraced the principles of the global economy.

What led to the shift towards protectionist policies in various countries?

Factors such as job losses in certain industries, concerns about environmental sustainability, fragility exposed by the COVID-19 pandemic, and geopolitical tensions, particularly with China, contributed to the shift towards protectionist policies.

What are some examples of protectionist measures mentioned in the script?

Examples of protectionist measures include government subsidies to domestic industries, imposition of tariffs on imports, restrictions on foreign investment, and incentivizing companies to relocate production back to their home countries.

How did the script highlight the relationship between economic entanglements and geopolitical tensions?

The script suggests that economic entanglements, once seen as a means to promote peace and cooperation, are now viewed as potential tools of conflict, especially in the context of rising tensions between major powers like the US and China.

What role did technology play in the reshaping of the global economy according to the script?

Technology facilitated the globalization process by enabling the efficient flow of information, capital, and goods across borders. However, it also contributed to concerns about job displacement, environmental impact, and reliance on complex supply chains.

What potential consequences or risks are associated with the shift towards protectionism?

The script hints at potential consequences such as economic instability, increased geopolitical tensions, and a resurgence of nationalist sentiments, which could lead to further polarization and conflicts reminiscent of past historical periods.

Outlines

00:00

🌐 Global Economic Reshaping and National Self-Sufficiency

The paragraph discusses the US government's quiet efforts to reshape the global economy, as illustrated by President Joe Biden's address to Congress. It emphasizes the potential for American manufacturing of wind turbine blades and electric vehicles, suggesting a move away from global dependency. The speaker, Johnny, hints at a new era in the global system, possibly resembling the economic climate prior to World War II. The video aims to explore the complexity of the global economy, the increasing interconnectedness of nations, and the emerging strategies that are altering these connections due to new threats and values, particularly the rivalry between two superpowers.

05:01

💹 The Emergence of Global Trade and its Impact

This paragraph delves into the history of global trade, highlighting its significance as a key factor in human progress. It describes the benefits of specialization and exchange, which have been central to human civilization's development. The text outlines the economic landscape by the 1900s, marked by global trade but hindered by differing trade rules and currencies. The post-World War II era is portrayed as a turning point, with the US establishing the dollar as the dominant currency and working to reduce tariffs. This led to an open global market, attracting countries like China, which opened its coastal cities to capitalize on the opportunities presented by the global economy. However, this shift also resulted in job losses in the US, leading to feelings of betrayal and economic hardship for some American communities.

10:03

📉 The Shift from Globalization to Economic Nationalism

The paragraph discusses the shift from the 1990s' optimism about free trade and globalization to a more recent trend of economic nationalism. It mentions the fall of the Soviet Union and the perceived triumph of free-market capitalism. However, it contrasts this with the current reality of escalating trade barriers and tariffs, as countries like the US, India, South Korea, Japan, Australia, and Nigeria encourage domestic production. The US is highlighted as changing its economic policy under the Trump and Biden administrations, with measures like the CHIPS Act aiming to reduce reliance on foreign production and increase domestic manufacturing of vital components like microchips. The paragraph suggests that this shift is driven by a desire to protect domestic industries and respond to the challenges posed by China's rise.

15:03

🛡️ Protectionist Policies and the Response to Globalization

This section examines the reasons behind the shift towards protectionist policies. It identifies four key areas of concern: the impact on workers who have lost jobs due to globalization, the need to address climate change through green infrastructure, the vulnerabilities exposed by the COVID-19 pandemic in global supply chains, and the strategic threat posed by China's economic and military rise. The paragraph highlights how economic interdependence, once thought to promote peace, is now seen as a potential tool for conflict, with examples like China's control over rare-earth elements and Russia's disruption of natural gas supplies to Europe. The US's focus on bringing production back home and the bipartisan support for economic nationalism are also emphasized.

20:05

⚠️ Historical Parallels and the Future of Global Trade

The final paragraph draws a cautious parallel between the current rise in protectionism and the 1930s, a period that led to significant economic crises and, ultimately, World War II. It warns of the potential dangers of inward-looking policies, populism, and great power conflicts but clarifies that the speaker does not believe history is simply repeating itself. The paragraph concludes with a lighter note, promoting a poster called 'All Maps Are Wrong,' which explores various map projections of the Earth and their inherent inaccuracies, appealing to map enthusiasts.

Keywords

💡Global Economy

The global economy refers to the network of economic interactions and trade that takes place on an international scale, involving various countries, corporations, and consumers. In the video, it is depicted as being reshaped by the US government in ways that could significantly alter the world's economic landscape, as seen in the emphasis on domestic production of goods like wind turbine blades and electric vehicles.

💡Tariffs

Tariffs are taxes imposed on goods being transported across international borders. They are used by governments to protect domestic industries by making foreign goods more expensive. The video discusses new tariffs being implemented by both the US and China, highlighting the ongoing trade tensions and their impact on the global economic system.

💡Microchips

Microchips, also known as semiconductors or chips, are essential components in modern electronics that facilitate various operations in devices. They are a point of contention in the video as the US aims to produce more of these domestically, rather than relying on imports from Asia, to protect the nation's technological edge and safeguard against potential supply chain disruptions.

💡Supply Chains

Supply chains describe the network of organizations, people, activities, information, and resources involved in producing and delivering a product or service. The video touches on the vulnerabilities exposed by the COVID-19 pandemic, where global supply chains were disrupted, leading to calls for more localized and resilient supply chains to reduce dependency on foreign sources.

💡Economic Nationalism

Economic nationalism is the policy of government intervention in the economy to protect domestic industries and promote self-sufficiency. The video highlights a shift towards economic nationalism in the US and other countries, with increased government spending and protectionist measures aimed at bringing production back home and protecting key industries.

💡Climate Crisis

The climate crisis, also known as the climate emergency, refers to the critical and long-term changes in the Earth's climate. The video mentions the need for governments to address this crisis through economic policy, such as promoting green infrastructure like electric vehicles and solar panels, which the free market may not incentivize sufficiently on its own.

💡Trade Barriers

Trade barriers are measures taken by a country to protect its domestic industries from foreign competition by limiting imports. The video discusses how various countries are imposing trade barriers in the name of protection, which is reminiscent of actions taken in the 1930s that contributed to economic strife and, eventually, the Second World War.

💡Data Brokers

Data brokers are companies that collect and sell personal information about individuals to other companies for marketing or other purposes. In the video, the issue of data privacy is raised, with the mention of a service that helps individuals remove their information from data broker lists, highlighting concerns over how personal data is used and sold in the digital age.

💡Globalization

Globalization is the process by which businesses or other organizations develop international influence or start operating on an international scale. The video explores the reversal of globalization trends, where policies that once encouraged global cooperation and trade are now being reconsidered in favor of protectionist measures to safeguard national interests.

💡Clean Energy

Clean energy refers to energy sources that are considered to be environmentally friendly and non-polluting, such as solar, wind, and hydro power. The video discusses the government's role in promoting clean energy through subsidies and other incentives, as part of a broader shift towards addressing climate change and reducing reliance on fossil fuels.

💡China Shock

The term 'China shock' refers to the impact on the US economy, particularly on jobs and local communities, following China's entry into the World Trade Organization and the subsequent increase in imports from China. The video uses this concept to illustrate the negative consequences some American workers faced as jobs were offshored to China, leading to a sense of betrayal and economic hardship in certain regions.

Highlights

The US government is reshaping the global economy with implications that could last for decades.

Joe Biden's address to Congress signals a shift towards domestic production of goods previously manufactured overseas.

The global economic system is undergoing changes that could rival the shifts seen before World War II.

American workers are being positioned to lead in the production of electric vehicles and batteries.

The video aims to explore the complex global economy and how interconnections are being redefined.

New tariffs and trade policies are indicative of a new rivalry between global superpowers.

The US is advocating for domestic chip production to reduce reliance on foreign technology.

Incogni, a data privacy service, is highlighted as a solution to combat unwanted marketing and spam.

Global trade has been a significant achievement of human civilization, leading to the modern economy.

The post-WWII era saw the US and its allies establish new rules for a globalized economy.

China's integration into the global economy led to a massive economic transformation and脱贫 (lifting out of poverty).

The shift of manufacturing to China resulted in job losses and economic challenges for American workers.

The global economy has been incredibly beneficial for price reduction and economic growth in many countries.

The complexity of global supply chains was exposed by the COVID-19 pandemic, leading to calls for more localized production.

The US and other nations are implementing protectionist policies to safeguard jobs, the environment, and supply chain resilience.

The rapid rise of China as an economic and military power has led to increased tensions and a strategic reevaluation of trade policies.

Economic entanglements that were thought to prevent conflict are now seen as potential leverage points in global rivalries.

Joe Biden's administration is investing in domestic production and economic nationalism to counteract the free market's distribution of production.

The current economic climate shares similarities with the 1930s, raising concerns about the potential for increased global strife.

Transcripts

(suspenseful music) (horn blares)

(crowd applauds) (camera shutter clicks)

- [Johnny] The US government

is quietly reshaping the global economy

in ways that will change our world forever.

(tense music)

You can see this in just one sentence

from Joe Biden's first address to Congress.

(Congress applauding)

- Think about it,

there is simply no reason why the blades for wind turbines

can't be built in Pittsburgh instead of Beijing.

No reason, no reason, none. (Congress applauds)

- [Johnny] This seems just

like a boring political statement,

but I promise this statement is a bigger deal than it seems

because it marks a new era in our global system,

a system that all of us participate in,

whether we know it or not,

or maybe it's a rerun of an economic system

that the globe turned to right before the Second World War.

- There's no reason why American workers can't lead

the world in the production

of electric vehicles and batteries.

I mean, there is no reason.

We have the capacity. (Congress applauds)

(tense music) (machine flutters)

- [Johnny] In this video, I want to peek under the hood

of the endlessly complex and fascinating global economy,

to show you just how deeply connected we've all become

and how those connections are being cut and weaponized.

All of this thanks to new threats, new risks,

new realizations, new values,

and above all, a new rivalry between two great powers.

This is the world that we are moving into.

It's how things will work for decades to come,

and it's important that we understand it.

(suspenseful music)

So let me give you an overview

of what is becoming the new global economy.

- The new tariffs from both sides

went into effect earlier this morning.

- [Reporter] The US tariffs have kicked in.

- China can't put as many tariffs on us

as we can put on them.

- China is still the biggest threat to the United States.

(tense music)

- [Biden] Folks, we need to make these chips

right here in America.

- Hey, so for a long time I've been at war with marketers,

people who call my phone, even though I don't want them to,

and who send me emails,

even though I never gave them my email address.

We're all familiar with this.

It's called spam, and it is increasingly a problem.

But then I recently learned that I actually have the right

to request that I be taken off of all of the lists

that people use to buy and sell my information.

The problem is, even though I have all these rights,

I'm not gonna go through the process

of like requesting a formal like removal of my name

off of every one of these hundreds

of data broker lists that I'm on.

Incogni is the sponsor of today's video,

which is why I'm talking about this.

I'm very grateful to them for supporting our journalism.

I signed up for Incogni,

and I gave them permission to act on my behalf

to go take my name off of data broker lists,

and then they start the process of requesting

that your name be taken off.

Some of these companies are kind of shady

and they like try to push back,

and Incogni takes the time to follow up

and push until you are taken off that list.

The best part is you get to watch the progress

all on this nice dashboard

that tells you what lists your name has been taken off of.

I recently learned just how pervasive

these data broker lists are.

Like, they use it not only

to like fill up your inbox with spam,

but also to like track your web browsing activity,

which they then can sell to like a health insurance company,

which could like jack up your premiums.

Luckily, Incogni has helped strip me away from these lists,

and my phone is now strangely quiet.

My inbox is not a hornet's nest.

So if you wanna try this out,

there's a link in my description.

It is incogni.com/johnnyharris.

When you click the link, you get a pretty big discount.

It's like 60% off when you sign up for the annual plan.

I do the annual plan

because once you're taken off these lists,

you immediately get put back on,

and Incogni constantly monitors month after month

to make sure that you stay off these lists.

So yeah, big discount.

Click the link in my description,

use the code, and you'll get the big discount.

You can try it out and see if it clears your life of spam

and makes you feel like you have a little more privacy

in your life.

Let's dive into this story.

It's a big one, it's an important one,

and I'm excited to share it with you.

(mysterious music)

The economy that we live in,

that we all take for granted, is actually relatively new.

The clothes that you're wearing right now, the computer

or the phone that you're looking at to watch this video,

the materials that your house is made out of,

the fibers in the blanket that you use at night,

the food you eat, all of it is a product

of perhaps one of the most significant achievements

of our species: global trade.

(mysterious music) (camera shutter clicking)

Early on, humans discovered the magic that occurs

when a group of people specialize

in producing something valuable like grain.

They make more than they need,

and then they take that excess

and they give it to another group

who also made too much of something

because they specialize in a specific thing, maybe textiles.

And through this exchange,

both parties benefit way more than they could on their own.

It was this kind of cooperation that leveled our species up

beyond any other animal on Earth.

So we just kept doing it.

In fact, the history of our human civilization

is largely the history of people trading

on an ever-growing scale.

Today, this is normal. We call it the economy.

By the time the 1900s rolled around,

we had a pretty connected world.

There was global trade all over the place,

but it was still pretty clunky.

Everyone had different trade rules, different currencies.

Countries were worried that foreign products would threaten

their domestic producers, so they put up trade barriers

and imposed big tariffs on stuff coming into their country.

Then, 70 years, ago came that war

that almost tore this world apart.

(explosions thunder) (engines rumble)

Out of the ashes of that war,

the US emerged as the most powerful country ever.

It had troops and influence in every corner of the globe.

And with that new power,

the US and its allies wrote a new playbook

for the world economy. (dollar sign chimes)

They would make it so that the US dollar

was the top currency.

Everything would kind of be pegged to the US dollar.

This helped stabilize the whole system.

It helped it move more predictably.

It helped countries send and receive money across borders.

The US also got countries together

with the goal of lowering the taxes imposed

on products flowing in and out of their country: tariffs.

And through all these efforts,

all these new rules, borders opened up.

Investors could put their money almost anywhere on Earth

to grow new businesses.

Corporations could look to far away lands

for cheaper workers to set up their factories.

The world became one big market,

and it started to benefit hundreds of millions of people.

(bright music)

So much so that even anti-capitalist China couldn't stay

out of this global economy that was so unrecognizably open,

that was so much more open

than anything the world had ever seen.

There was way too much money to be made, so China jumped in.

They said that they would remain communists,

but they would open up a few dozen of their coastal cities

to be open for business in this new global market.

Millions of China's rural poor flocked

to the coastal cities, these gateways to the global market.

They showed up ready to work, and to work for cheap.

A world away, over in the United States,

corporations looked at all of their factories

in places like Detroit and Buffalo,

and realized that it would make a lot more sense

for them to move all of these factories to China

where they could pay workers a fraction of the wage.

And, spoiler alert, all these coastal cities in China

that opened up to the global economy soon looked like this.

Hundreds of millions of people in China lifted out

of poverty and thrust into this new middle and upper class,

all thanks to the magic of the global economy

based on the rules and policies

that the US had set up after World War II.

It was so good for China and a bunch of other countries,

but for the many Americans whose jobs had just been given

to someone in like Shanghai, this didn't feel like magic.

It felt like betrayal,

like a recipe for poverty and ghost towns.

(haunting music)

This China shock was one of the first big tastes

of the economic pain that this global economy could inflict

on huge numbers of people.

But to everyone else, it was totally worth it,

because thanks to this system,

people were suddenly seeing prices at their stores

drop further than seemed possible.

Washing machines, shoes, tools, toasters, couches,

shirts, socks, toys, mattresses, lawn chairs,

anything you can think of is now flowing

from Chinese factories

and available for dirt cheap at your local Walmart,

all while transforming the lives of people

in places like Vietnam, India, Chile, and Thailand,

who saw huge economic growth during these years.

So by the '80s, China's fully in the global economy,

and it is a gravy train.

The US and UK both elect leaders

who love this free-trade global capitalism.

- More trade, not less is the wave of the future.

- The new system was boosted

by all of this new technology that was coming out,

making it easier to pass information across borders,

to move money, to move people,

to move goods across the globe.

A globe.

Promise to obey.

If we all believe and obey these rules,

it creates the conditions

that made the world into a giant marketplace,

where a corporation could source whatever they needed

to make their product from anywhere in the world,

whatever made the most economic sense.

Soon, products as simple as a T-shirt

would travel along an unfathomably complex supply chain,

using material and labor

from many countries all around the globe,

before eventually showing up conveniently

just in time at the store.

Policy had created mass cooperation between billions

of people who don't speak the same language,

who don't know each other,

but are somehow all getting in on the same market.

This mental construct of economic policy

is what created globalization,

the globalization we know today.

And what's crazy to me is that,

if you tinker with the policy, if you mess with this,

you can reverse a lot of this globalization,

which is exactly what's happening right now.

- There is simply no reason why the blades for wind turbines

can't be built in Pittsburgh instead of Beijing.

- Okay, but let's stick to our timeline here.

We're kind of in the '90s.

And I'll tell you, people in the '90s would've never guessed

what direction this story is about to go.

The Soviet Union had just fallen,

free trade and global capitalism

had unambiguously beat communism,

and the magic of the free market was seen as the solution

for pretty much everything.

Free trade had just ended global conflict

between these great superpowers, maybe forever.

Free trade was eradicating global poverty.

Free trade was pushing countries to adopt democracy.

And here's Bill Clinton,

giddy about how good it's all going,

predicting that free trade would bring democracy to China.

- The more China liberalizes its economy,

the more fully it will liberate the potential of its people,

their initiative, their imagination,

their remarkable spirit of enterprise.

And when individuals have the power not just to dream,

but to realize their dreams,

they will demand a greater say.

- Free trade would prevent our age-old human curse, war,

by so deeply entangling countries

in mutually beneficial deals

that it wouldn't make sense to fight.

After all, free trade had turned Europe

from a continent ravaged by war to this tightly-knit group

where everyone's holding hands and smiling together.

Why wouldn't this naturally just happen to the whole globe?

China continued to make stuff

and send it to the United States.

Our dependency on them and them on us continue to grow,

and that would surely prevent any conflict, right?

Um, no. (deflated music)

It's looking like that's not how it's gonna turn out.

In fact, it's kind of the opposite.

- The new tariffs from both sides

went into effect earlier this morning.

The US has imposed 10% tariffs

on $200 billion worth of Chinese imports.

- China is our military's most consequential strategic

competitor and pacing challenge.

- In a relatively sudden shift,

governments around the world are undoing a lot

of this globalization, this solution to all of our problems.

They're rejecting it.

India is paying companies to keep their production

within their own borders,

especially for important industries

like pharmaceuticals and electronics.

South Korea is giving taxpayer money to companies

to produce green energy infrastructure

instead of waiting for the free market to come build it.

Japan is paying companies to move production back to Japan

and to move their supply chains away from China.

Australia is using taxpayer money

to encourage mining companies to establish the processing

of rare-earth mineral facilities within their borders

instead of abroad.

Nigeria is imposing restrictions on foreign goods

that they want to see produced domestically,

like rice and cement.

They don't wanna be reliant on other countries.

And then you've got Europe,

where tons of countries are investing government money

and protecting homegrown industries

that have always been directed by the global economy,

like energy, agriculture, and cars.

The government getting involved in these markets

incentivizes companies and consumers to make

and sell these products in country

as opposed to looking abroad at the global market.

And of course, leading out on all of this

is the OG of the modern free-market global economy,

the United States, who is suddenly changing course

from how they've been operating,

all the way up until like Obama.

Like, Obama spent a great deal of his time

trying to increase free trade, especially with Asia.

Then, first under Trump and now under Biden,

the US is overhauling its economic policy

to turn back some of this free trade.

And what's crazy is that both Republicans

and Democrats seem to agree that we should do this and fast.

(upbeat music) - There is no reason.

We have the capacity. (Congress applauds)

- Some of these policies include huge government

spending bills, like the CHIPS Act,

which would allocate over 50 billion government dollars

to companies that produce microchips

here in the United States, instead of in Asia,

where the free market had pulled them to set up.

This is also happening in other industries

that the government has deemed vital,

like critical minerals, cars, and clean energy.

But they're not just giving subsidies,

like, it's not just government money washing down

on all these industries, it's also barriers.

Biden is imposing tariffs on imports,

which protects domestic producers of certain industries

because they no longer have to compete

with the global market.

They're also banning American companies

from selling certain products to China.

They're increasing scrutiny on any investment

that comes in from places like China.

Like, this is a big shift.

And the question is, what happened?

How did we get from this free-trade heyday

that was supposed to usher in world peace to this?

(upbeat music)

- Markets have been whipsawed all morning,

and now afternoon, by this ongoing trade war with China.

- The short answer is one word,

the answer to all of this: protection.

Here's my list of four protections

that best explain this big shift in economic policy.

(mysterious music) First, workers,

which we already kind of talked about briefly

with the China shock.

For all the winners of the global economy,

there were lots of losers,

and a lot of them were communities

who found themselves out of work

as their jobs went to cheaper overseas locations.

Now listen, economists argue as to how big

of a problem this actually was,

and you can read all about it in my sources,

but the point is that closed factories

and unemployed communities in the Rust Belt

have a major psychological effect on people

who fear that their jobs might just disappear,

either abroad or be taken over by AI.

So the government is trying to calm people down

by pumping money into certain sectors

to keep jobs in America.

The next big realization about the global economy:

It doesn't really care much

about how much carbon it pumps into our atmosphere.

Our world is barreling towards a very real climate crisis,

and governments realize they're gonna have

to force the market to get serious

about things like electric cars, solar panels,

and other green infrastructure.

The free market is not going to incentivize this.

And if it doesn't happen,

we're gonna have a much bigger problem on our hands.

(mysterious music)

One of the best parts of the global economy

is that our products get made by materials

that are being tossed around the globe at the perfect time,

at the perfect place, to all come together

to be made into a final product,

all to arrive at a shelf at some store

so that we can purchase it.

These supply chains are insane,

and they cross the entire planet.

And it works great

until the world shut down in a global pandemic,

leaving people around the world

without the products that they either needed

or just kinda got used to having.

Again, economists argue about how big of a deal this was.

A lot of them are like,

"No, the supply chains held up really well during COVID."

But regardless of what some academic economist is saying

at MIT, all of us are left with a pretty bad taste

in our mouth about supply chains after COVID.

The system feels too fragile.

A lot of us feel too reliant on a fragile system

of far away global connections

that could be rocked at any moment,

which has led to these protectionist policies

that these governments hope will bring supply chains back

inside of their borders.

Okay, finally, and perhaps the most important explanation

in all of this, is that Bill Clinton was totally wrong.

Free trade didn't incentivize China

into a democratic revolution.

The world did not join together

in one big free-trade market,

too entangled to fight with each other.

In fact, quite the opposite has happened.

- Relations between the world's two largest economies

are at their most tense in years.

- After joining the global economy,

China got really rich really fast.

They've kind of started to challenge the US at its own game,

and now they have one of the biggest militaries

on the planet, and they use that military

to assert their influence around their region.

They use their newfound wealth

to project influence around the world

by building stuff or giving loans to people.

And they're kind of trying to dethrone the United States

as the one who's calling the shots

on the global economic order.

I made a whole video about this

that you can go watch if you want,

but the big point here is that the US is worried

about the rapid rise of their rival across the ocean,

especially when the rise of that rival

is in part fueled by American technology,

specifically these little silicon chips, microchips,

that make weapons smart,

and that will be the brains that power the AI revolution.

A lot of Joe Biden's protectionist policies

are actually just aimed right at China,

trying to stop them from using our own tech

to get ahead of us.

Again, I made an entire video about microchips.

You can go to that.

I've kind of made a video about a lot of these things.

But yeah, Joe Biden is also trying to get the supply chains

for these microchips out of China's neighborhood,

meaning out of Taiwan, bringing them back inside our borders

to places like New Albany, Ohio,

nice and safe in the middle of our continent.

So you're gonna see a lot more moments like this

with American presidents or politicians with hard hats on,

speaking at construction sites.

- Folks, we need to make these chips right here in America

to bring down everyday cost and create good jobs.

America's back, and America's leading the way.

(tense music)

- This last point is kind of a brutal recognition

for a lot of people, including me, to be honest,

that our theory that we would all be more peaceful

if we were more economically entangled is kind of wrong,

at least for now.

In fact, these economic entanglements are looking

like they might turn into tools of conflict

as opposed to preventers of conflict.

Like, China has a near monopoly on a lot

of the rare-earth elements that we need to make a ton

of very important products, including military weapons.

And if push comes to shove,

they could very realistically use this as leverage

and cut us off in the exact same way

that we cut them off microchips.

I mean, this just happened.

Vladimir Putin turned off the pipelines

that pumped natural gas into Europe,

the gas that is needed to heat the homes

and run the factories,

showing us that economic entanglements

can actually be a weapon,

and flipping this whole theory on its head.

But yeah, Joe Biden is pouring money

into bringing production home,

and he has a lot of support from all sides of the aisle.

So it's like economic nationalism.

The government is getting involved to undo some

of what the free market did in its heyday,

which was to distribute production of stuff

where it made the most economic sense,

not where it protected people.

- That means we will invent it in America

and make it in America,

and we're gonna make sure we include all of America.

- So that's where we're at.

The world is reacting to some weaknesses that they see

in the global free-trade system.

They're putting up barriers in the name of protection.

And no one's really sure what that means.

Like, it's kind of hard to not look at this

and draw some parallels with the 1930s

when a series of economic crises led countries

to put up trade barriers in the name of protection,

which then led to ever greater economic strife,

leading to unrest and eventually culminating

in the Second World War. (deflated music)

But don't read too far into that.

I'm not trying to like do one of those things

where I'm like, "Every hundred years,

history repeats itself."

That's not what I think is happening here.

But there's some similarities

that we should probably just keep an eye on.

A suite of crises that make us turn inward,

that surge populism and economic nationalism

and the rise of tensions between great powers.

(bright music)

Hey, before you go, I need to tell you one last thing,

which is that we made probably our last batch

of the poster that I designed last year.

It's a poster called "All Maps Are Wrong,"

and I'm very proud of it.

It shows all the ways that you can take our Earth

and project it onto a 2D plane,

which always comes with some distortion.

Anyway, it's kind of a nerdy map-lover thing,

and if you're into that, you should go over and check it out

before they're all gone.

This is probably gonna be our last batch,

so get 'em while they last,

and the link's in the description.