first things first why are the people in this room successful
american agriculture from 1776 to roughly world war ii that was the greatest economic
expansion ever in human history you ever give any thought to why that is the case
well here's a hint this is a list of every war that happened in europe for
that 150 year period that interfered with food supplies somewhere in the continent
here's a list of all the wars in north america that did the same thing hmm
let's look at why that happened why europe had so much of a problem feeding themselves and why
the united states and canada had no problem whatsoever it really comes down to this big
area right in the middle of the continent we of course know this is the greater midwest it's the
largest chunk of available land on the planet but more important than the ability to grow food
is the ability to get it from a to b moving things from a to b is very difficult look at the blue on
this map the interconnected waterways of the mississippi basin the intracoastal waterways
collectively that's about 16 000 miles of waterway now moving goods from a to b on land if you have a
rail system if you have a road network is still 15 times as expensive as moving them via water
and this network here is the largest network in the world in fact it has more miles of waterway
than the rest of the world put together this is a system that is nice and secure as well there's
deserts that separate us from mexico forests and lakes from canada you've got oceans on
both side it's really hard to invade the united states hasn't been tried in the last 200 years
you put it all together and you get a political and economic system that cannot fail despite the
best interests and the best effort of whoever they elect and for the last 22 years wow have
we had some doozies canadians don't snicker too much i've been watching your system too
and then here's europe northern european planes a nice area it grows fairly it grows quite a bit
of crop but it's much thinner in fact from north to south at its thickest point it's only about as
thick as iowa is where are my iowans no one from iowa this time oh one hey marshalltown peace out
anyway but the rivers in europe are not interconnected like the mississippi they
cross the northern european plain south to north very few of them interconnects you have french
rivers and german rivers and dutch rivers and polish rivers each one is separate and when you
have countries like that that are basically in each other's faces because there's no separation
the german border is the dutch heartland you get a very different method for interacting with the
world and interacting with each other you have to establish lines of supply independent of your
in your neighbors whereas wisconsin iowa illinois we're all in the same basket and so you get what
we in the united states consider to be ancient history you get the imperial system where the
british navy guards british trade with the british colonies and the french navy trades with french
colonies guarded by the french navy and they don't interact if they can help it because because they
don't want to become dependent on someone else that might go to war with them in the near future
and so they always buy from the united states so until 1945 this is how the world worked and for
the united states and canada it was absolutely brilliant and then we went and messed it all up
in 1945 the united states changed the way the world worked at the end of world war ii we said
okay no no no more of this imperial crap i'm we're tired of the world going to war every
few years because somebody has a bug up their butt instead what we're going to do is we're
going to allow everyone to trade with everyone else we're going to open our market not just
the largest market that the world has ever seen but the only market to survive the war the u.s
consumer market at that time was twice the size of the rest of the world put together and then we're
going to use our navy the only one that survived the war to guarantee that trade for everybody
for the european allies this was a dream come true and for the germans and the japanese this
was very confusing because they had just fought a very serious military conflict to get just this
like you know you really should have brought this up in 1929 we could have avoided a lot of problems
why could the united states make this happen well it's pretty straightforward this is a
jump carrier traditional jump carrier there's 10 of those in the world none of them are american
this is a super carrier there's 10 of these in the world each one has over five times
the combat capability of one of these guys there's ten of them they're all american
in 1944 and in 2014 the united states has a stronger blue water projection navy than the rest
of the planet put together and if you were to sail the entire global navy against the united states
it would only take a couple of american task forces and it would all be over in a few hours
that balance of power has not changed in 70 years so this system exists because the americans made
it but that doesn't mean that the americans use it all that much and actually it's the worst possible
system for the people in this room the green areas are the areas where it's easy to grow crops winter
is harsh enough to kill the bugs but not harsh enough to drive the people away summer is warm
enough so the crops can ripen but not so warm that things catch on fire rain is relatively common
transport is relatively easy those are the green areas these are the areas that grew crops reliably
before 1945. you'll notice that the single biggest chunk of that of course is the united states
the purple areas are areas that you can grow things but you really have to put your back
into it and your checkbook the soil is rockier the winters are harsher it may be subtropical
you can make these places green but it's very very expensive and you have to apply extra fertilizer
extra pesticide every single year to make it go what we did with bretton woods is allow the purple
areas to develop because they were no longer colonies they were independent countries they
were no longer the targets of wars they were the targets of investment and your competitive
advantage degraded considerably brazil india china all became economic superpowers in their own way
the key thing to remember about bretton woods when you're talking about it today though
is we don't use it as a percentage of gdp the united states is one of the most
isolated economies in the world despite being the largest by a factor of three
as a percentage of gdp the only three countries in the world that are less interconnected than
we are are brazil south sudan and rwanda that's it even afghanistan is more wired than we are
best part this green line our imports one third of that is energy that's disappearing very
quickly for the remainder one third of it is nafta basically a near domestic situation okay so that's
piece one the united states controls the system created the system but doesn't use the system
and the only reason the system is still there is because of the cool heads in washington
you