Free trade has been an incredibly powerful value creator since the Bretton Woods System was created following WW2. Recently, however, the combination of our current stage of the Information Technological Revolution (Carlota Perez) and labor costs has left the middle class in the developed world behind. It will take tremendous investment in infrastructure and retraining to help the middle class catch back up. With CS becoming the most popular major at many colleges, this retraining has hit the younger generation, but there are millions of older workers who may have been permanently impacted. At the individual level, this sucks, and I don’t think that should be forgotten. At the global level, this has almost certainly been a net positive for the over one billion people in developing economies (like China and India) who have been lifted out of extreme poverty. The increased purchasing power in the developed world has reduced some of the economic impact on the middle class, but cheaper goods does not help an under-employed person who values his middle class way of life and full-employment feel better about himself.

Additionally, in Peter Zeihan’s book, he argues that the US protected the Bretton Woods system over the last 70 years because it was a net benefit both for our economic system and energy needs. The book, however, discusses how these benefits are coming to an end for the US and that, for economic and geopolitical reasons, the US will focus on specific trade agreements and will no longer protect global free trade. In his book, he argues that demographics and energy self sufficiency in the US dictate that the ROI on protecting the global free trade movement is shifting negatively. He also discusses that those same global demographics will make it almost impossible for any country to replace the US as the arbiter of international free trade.

What I loved about that book was its focus on the near future and incredibly insightful discussion of the free trade system in context of geopolitics. What he says in the book helps explain a lot of what we’re seeing globally with the rise of the ‘isms and rejection of free trade.