Podcast Summary

New Books Network: David J. Lynch on "The World's Worst Bet: How the Globalization Gamble Went Wrong (And What Would Make It Right)"

Date: September 5, 2025
Host: Deidre Woolard
Guest: David J. Lynch – Global economics correspondent, The Washington Post

Overview of the Episode

In this episode of the New Books Network Economics Channel, host Deidre Woolard interviews David J. Lynch about his new book, The World's Worst Bet: How the Globalization Gamble Went Wrong (And What Would Make It Right). The conversation explores the promises and pitfalls of globalization from the end of the Cold War to the contemporary era of economic nationalism, populist backlash, and shifting global power dynamics.

Lynch breaks down why the “gamble” of integrating global markets delivered uneven results, who benefited and who was left behind, and what lessons policymakers, businesses, and individuals should learn as the landscape continues to shift—with special attention to the China shock, technological change, trade, populist politics, and the future of manufacturing and work.

Key Discussion Points & Insights

1. Origins and Rationale Behind Globalization

[02:25–06:24]

• Lynch frames globalization as the economic story of our time, describing how, after the Cold War, the world seemed poised for US-led prosperity:

  “In the early 1990s... it seemed like free markets and democracy were sweeping the globe. Former adversaries were embracing market economics and seemed ready to join a US led international system. And it all seemed like happy days were here again.” (David J. Lynch, 02:43)

• Policymakers believed integrating workers from the former Soviet bloc and China would raise global living standards, reduce inflation via lower prices, and—critically—promote democracy and peace through free trade.
• However, the link between trade and democratization, especially in China and Russia, “didn’t fully turn out to be the case.”

2. Early Resistance: The Seattle WTO Protests

[06:24–09:45]

• Lynch recounts the 1999 Seattle WTO protests (“Battle of Seattle”) as a significant early sign of anti-globalization sentiment:

  “It symbolized the lack of consensus around how [global trade] should develop.” (David J. Lynch, 07:41)

• Protesters united left-wing labor and environmental groups with right-wing protectionist interests, foreshadowing the later populist backlash.

3. The Tech Sector, Venture Capital, and China’s Rise

[09:45–13:31]

• The early 2000s were marked by a surge of US venture capital in China’s tech sector, with Silicon Valley investors like Tim Draper playing a key role.
• Lynch admits even he underestimated China's speed and innovation:

  “It was very easy to look at China at the time and think, boy, it’s just going to take forever for them to develop to the point where we’re going to have to worry about it... And now 20 years have gone by, and the Chinese military and the Chinese economy is in a very different place than it was then.” (David J. Lynch, 13:37)

• The partnership between American money and Chinese talent created mutual dependency, but also competition that few initially foresaw.

4. The "China Shock" and its Consequences

[14:40–19:44]

• “China shock” refers to the dramatic loss of US manufacturing jobs following China's entry into the WTO.
• Policymakers, including Joe Biden at the time, deeply underestimated the impact:

  “I don’t think we have to worry that China is really going to make that much of a difference to us. Now, of course, that was wrong, badly wrong.” (David J. Lynch, 15:56)

• Lynch highlights that most attention focused on how trade would change China, not how it would transform the US. Economists' models failed to grasp the scale and speed of the disruption.

5. Impact on US Communities and Social Safety Nets

[19:44–23:25]

• Lynch describes the devastation of towns reliant on manufacturing, using Union City, Tennessee, as a case study.
• While globalization brought broad consumer benefits (e.g. lower prices, product variety), its costs were “concentrated like an economic tumor.”

  “The benefits from globalization are spread across the entire economy... The costs or the problems are concentrated like an economic tumor.” (David J. Lynch, 23:31)

• Social support for displaced workers, promised by leaders like Clinton, largely failed to materialize. “At the end of the day, what you can count on... is precious little. You’re basically on your own.”

6. Globalization, Financial Crisis, and Capital Flows

[25:06–29:56]

• Lynch draws a through-line from the US trade deficit with China to the flood of Chinese investment in US bonds, which then helped fuel the pre-2008 real estate bubble:

  “All that capital coming from both Europe and China at the time had the effect of holding down our interest rates, which made it cheaper for American homeowners to do things like refinance their mortgage.” (David J. Lynch, 26:26)

• Globalization amplified the crisis, though regulatory failure was also to blame, aided by a belief in “light touch” regulation that proved misguided.

7. Populist Backlash—Tea Party, Occupy, and Trump

[29:56–38:17]

• The aftermath of globalization and the recession drove simultaneous left- and right-wing populist movements: the Tea Party, focused on deficits, and Occupy Wall Street, focused on financial inequality.
• Many Americans who suffered job and community loss perceived the system as rigged and unresponsive. Only in 2016 did a presidential candidate—Trump—offer an “unorthodox approach to globalization”:

  “It’s like that old saying, it’s one damn thing after another. It was the China shock, then it was the financial crisis, then it was the weakest recovery. So bang, bang, bang, nobody seems to be helping them.” (David J. Lynch, 32:57)

• Lynch discusses tensions within the Trump administration between globalists (like Mnuchin) and protectionists (like Bannon, Ross).

8. The Pandemic and Rethinking Supply Chains

[38:17–45:54]

• The COVID-19 pandemic exposed the fragility of global, just-in-time supply chains, leading some companies to attempt diversification (the “China plus one” strategy).
• Nevertheless, “the incentive structure that took us to just in time has not changed enough.” Companies seeking alternatives face uncertainty due to rapidly shifting trade policy and tariffs.

  “There isn’t another China on the planet... So it’s difficult for supply chain executives to figure out how to reshape their networks again, particularly at a time when the President keeps changing the parameters.” (David J. Lynch, 43:37)

9. Challenges of Reshoring Manufacturing

[45:54–54:59]

• US and Chinese companies have both turned inward, focusing on domestic brands and production.
• Policy proposals to “reshore” manufacturing to the US (like Biden’s Made in America) run into practical barriers—some products simply aren’t made in the US anymore, and productivity gains mean fewer jobs if factories do return.

  “Even if you could snap your fingers and get back a factory... maybe you’d get 200 jobs [instead of 2,000].” (David J. Lynch, 52:13)

• The much larger opportunity for American workers will come from the service sector, not manufacturing.

10. Lessons, Looking Forward, and Hopes for Reform

[54:59–58:24]

• Lynch warns that a “reverse China shock”—like a sudden loss of Chinese imports—would be devastating.
• He advocates honest evaluation of both globalization’s benefits and costs, and calls for more robust labor market policies and reforms to the social safety net, especially as new shocks (e.g., AI) loom:

  “Workers need help navigating periods of tremendous change. It’s not enough to just say, good luck to you, off you go.” (David J. Lynch, 56:19)

• The core lesson: If policymakers don’t support the “losers” from globalization, popular support for open markets and new technologies will erode, jeopardizing future prosperity.

Notable Quotes & Memorable Moments

• On Globalization’s Promise and Failure:

  “The idea was, well, trade will promote democracy and trade will promote peace... And that part didn’t fully turn out to be the case.”
  (David J. Lynch, 05:37)

• On Populist Protest at Seattle WTO Meeting:

  “Both left and right had problems with the WTO for similar reasons, seeing it as an infringement on national sovereignty.”
  (David J. Lynch, 08:45)

• On the Cost Distribution of Globalization:

  “I think of it like frosting on a cake. And the costs or the problems are concentrated like an economic tumor.”
  (David J. Lynch, 23:31)

• On Reshoring Manufacturing:

  “If you could snap your fingers and get back a factory... maybe you’d get 200 jobs because productivity has improved... The idea that you’re going to have these factories of the old days...those days are largely gone.”
  (David J. Lynch, 52:13)

• On Preparing for Future Economic Shocks:

  “The China shock is not going to be the last labor market shock to hit this economy... We need to, in my mind, experiment with some more active labor market policies.”
  (David J. Lynch, 56:10)

Timestamps for Key Segments

• [02:25] — Why Lynch wrote the book; framing the globalization “story”
• [04:12] — The core promises and economics of globalization
• [06:41] — Resistance and anti-globalization protests (Seattle WTO)
• [09:45] — US venture capital & early tech partnership with China
• [14:40] — The "China shock" and underestimated impact on US workers
• [19:44] — Community devastation, wealth inequality, and left-behind workers
• [23:25] — Benefits of globalization vs. concentrated economic pain
• [25:06] — How global capital flows contributed to the 2008 financial crisis
• [29:56] — Populist backlash: Tea Party, Occupy, and Trump’s unorthodox message
• [34:28] — Factional conflict in the Trump administration over trade
• [38:17] — Pandemic, supply chain fragility, and China-plus-one
• [45:54] — China’s inward turn, re-shoring US manufacturing, and limits of policy response
• [54:59] — Lessons for the future: active policy, labor markets, and supporting workers

Conclusion

David J. Lynch’s conversation offers a nuanced, critical assessment of 30 years of globalization, profiling its achievements, its victims, and the urgent need for political honesty and new policy frameworks as global economic shocks—from supply chains to technology—continue to arise. He urges not a retreat from global integration, but a smarter, more equitable approach that invests in workers, mitigates disruptions, and preserves broad prosperity.