You've got to take a step back way back, really to the beginning of the industrial period
or before, if you want to.
The point was there are very few places in the world that have good geography internally
that allows them to consolidate into a single ethnic group and do so in a way that generates
wealth.
You need flatland.
You need good agricultural space.
You need a good river so you can move things around in your own system.
That doesn't happen in large portions of the planet.
And even that isn't quite enough.
You have to have significant barriers between you and your neighbors.
Otherwise, you'll tend to get invaded every generation or two.
This means that in the world before what we consider normal, there were really only about
a dozen significant powers, and they would branch out beyond these core zones as empires
in order to conquer large tracts of territory and use those resources to feed their populations,
to trade, to have captive markets, and ultimately, to outcompete everyone else who was among
those 12.
This led to wars, a lot of them.
Constantly, bigger and badder wars as the industrial period built.
Eventually, you got things like tanks, and artillery, and ultimately, hydrogen bonds.
That lead to World War II.
That brought the entire system crashing down.
And of those 12 geographies in the world, only 1 of them wasn't leveled, and that was
the United States.
So at the end of World War II, the Americans brought their allies together at Bretton Woods,
New Hampshire and basically held a conference and laid out what the rules of the new age
were going to be.
So instead of everyone competing for global domination, it's pretty clear the United States
held all the tools here-- had the only global Navy, had the only economy that had survived
the war, had the only industrial base.
So the Americans proposed a trade.
We'll open our markets to you so you can export your way back to affluence.
We'll use our Navy to patrol the global oceans so that you can buy any product from anywhere
in the world, ship it home, process it into finished goods, and then re-export it for
hard currency.
We'll protect the entire supply chain, so you're not any longer limited to the territory
in which you directly control.
You can access everything.
And in exchange, all we ask is for the right to protect you from the Soviets.
And for all the empires, there was a degree of confusion on here.
So they're like, OK, let me get this right.
You're going to give us for free everything that we have been struggling to achieve ourselves
for the last thousand years, and you're going to protect us.
Deal.
That's the Cold War.
This is NATO.
This is the European Union.
This is the Chinese Communist Party.
Because the beauty of the Bretton Woods deal was you could extend it to new members at
any time.
And as the 40s turned into the 50s turned into the 60s turned into the 70s, the Bretton
Woods alliance continued to expand, and expand, and expand, providing the economic basis for
the Soviet containment strategy.
And that lasted right up until the end of the Cold War.
The problem is when the Cold War ended, all of a sudden, the security strategy needed
to be updated, which meant that the global economic system needed to be updated.
Because for the Americans, trade wasn't about trade.
Trade was about security.
That's the bribe you use to get cooperation.
The president we had at the time was Herbert Walker Bush, someone who was well positioned
in terms of understanding foreign affairs to know how to play it forward.
And he put together a team to figure out what's next?
How do we take Bretton Woods and update it for this new strategic era?
But Americans voted him out of office.
And in the next 6 consecutive federal election contests, Americans decisively chose the candidate
who celebrated his lack of foreign expertise.
So the economic aspects of the Bretton Woods system lingered on-- the idea that the US
will provide security for global trade that will lubricate the system financially, that
the Americans will be the market of first and last resort.
But the idea that there was any sort of quid pro quo, that faded away.
And in a series of events, the Americans became disenchanted with this system because now,
they were subsidizing countries that were no longer under the security umbrella.
Places became more powerful-- your Brazils, your Indias, especially your Chinas.