(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)