The Antithesis of Bretton Woods

MAGA’s talking heads don't hold a candle to the great minds of Bretton Woods.

The United States is withdrawing from the rules-based world order that it created. In doing so, it is repudiating the wisdom of one of the world’s most historic gatherings of great minds. Over three weeks in July 1944, the US hosted 44 allied nations in Bretton Woods, New Hampshire. Some 730 delegates were tasked with creating a new post-world War II architecture of international finance. They succeeded at a time when a depression- and war-battered world could not afford failure.

Thought leadership, especially that of John Maynard Keynes (UK) and Harry Dexter White (US), proved decisive in shaping the outcome As captured brilliantly in Ben Steil’s opus, The Battle of Bretton Woods, the great minds of Bretton Woods drew on a deep sense of history, creative innovations in economics and finance, and artful diplomacy to grapple with the weighty challenges confronting a battered postwar world. They understood the imperatives of taking a global perspective, embracing the principles of free trade, cross-border capital flows, and the need for oversight of global finance and foreign exchange rates. They established new institutional pillars — the International Monetary Fund and the World Bank — to bring a new architecture to life. And they set the world on a path toward reciprocal trade liberalization, laying the groundwork for the General Agreement on Tariffs and Trade (1947), which has since morphed into the World Trade Organization.

Bretton Woods was the defining moment for globalization. It knitted a war-torn world together and lit a spark to cross-border trade as an engine of global growth. Yet over the years, it came to be seen as imperfect accomplishment. Fixed-rate foreign exchange management was a weak link and all too frequent global financial crises — namely, the Asian Crisis of 1997-98 and the Global Crisis of 2008-09 — underscored the twin failures of financial-stability surveillance and rules-based compliance. And the WTO has lost its capacity to adjudicate trade disputes. Despite these serious problems and post-crisis setbacks that followed, the Bretton Woods Conference endures as one of the greatest collective exercises in deep-thinking problem solving that the modern world has ever known.

But MAGA knows better. That’s especially true of its leader, US President Donald J. Trump. Globalization is now seen as America’s problem, not the solution. And those supporting it, the demonized globalists, are the enemy. The great minds of Bretton Woods have become the villains in a revisionist history. Trump and several of his leading MAGA acolytes — Peter Navarro, Scott Bessent, Howard Lutnick, Stephen Miran, and even Steve Bannon — are smug in their belief that they have cracked the code of a new and better global order. They call it America First — essentially untying the many knots of globalization, unshackling the US as Golden Age powerhouse, and pushing the rest of the world down as a consequence. Unlike Bretton Woods, America First is not about moral and thought leadership. It is about global dominance.

But what does MAGA really know? It certainly knows how to chastise scapegoats that stand in its way. Just ask George Soros. In doing so, MAGA plays to the populist discontent of the American middle class, as scripted by JD Vance in Hillbilly Elegy. MAGA singles out enemies at home — immigrants (both illegal and legal), elites (universities, scientists, and cultural institutions), and opponents of the MAGA State (law firms, alleged woke supporters of DEI). And it singles out enemies abroad — especially China, as the personification of all that is wrong with the Bretton Woods architecture of globalization.

But does MAGA have a theory of how the world works? It certainly doesn’t have a clue about the evolution of cross-border trade. As its flawed reciprocal tariff formula demonstrates, it fixates on bilateral trade deficits in a multilateral world. It has no understanding of the link between America’s anemic domestic saving rate and a chronic balance-of-payments deficit that requires massive inflows of foreign capital (like Chinese purchases of Treasuries) to keep the US economy growing. It has failed to recognize the role that its outsize Federal budget deficits will play in continuing to suppress domestic saving, spawning the balance-of-payments and trade deficits that it howls about. Nor has MAGA has made any effort to understand the complexities of cross-border supply chains — how they knit the world together, provide extraordinary efficiencies to global production, distort the measures of bilateral trade, and hold the line on global inflation thereby boosting the standard of living for otherwise hard-pressed middle-class American consumers.

No, MAGA only has a rough idea — very different than a theory — of how America First is supposed to work. But it fails to understand how the US economy gets from point A to point B, from a globalized to a stand-alone, autarkical economy. It believes in the bludgeoning power of tariffs to force this transition on the US and global economy. It ignores the risks of a trade war and global recession that might arise from this wrenching transition. And MAGA pays no heed to the costs this transition might impose on other nations, especially those who have been lifted from abject poverty through trade liberalization and global growth.

Most of all, MAGA doesn’t have great minds like those of Bretton Woods. There are rumors, based on a November 2024 paper by Stephen Miran, of a so-called Mar-a-Lago Accord, as a modern-day Bretton Woods Conference, that might formalize MAGA’s conception of a new world financial order. Apparently, the paper was good enough for Miran to land a big job in the new administration as Chair of the Council of Economic Advisors. But job search, for an administration who initially came up with Matt Gaetz as Attorney General, should not be seen as a validation of the intellectual rigor required to solve tough, big problems.

Miran’s proposal for a “carefully planned” restructuring of the world financial system falls apart when he finesses the contradiction between a weak-dollar policy and a greenback that maintains its role as the world’s major reserve currency. With Donald Trump driving a stake into the heart of America’s NATO alliance with Europe and threatening territorial expansion into Greenland, Panama, Gaza, and even Canada, the US is already at great danger in squandering the moral authority of the dollar’s “exorbitant privilege.” How might that fit into a Mar-a-Lago Plan to remake the world around America First? Stephen Miran, who assumes away such a possibility, is not exactly a modern-day John Maynard Keynes.

Those who drink the MAGA Kool Aid obviously feel quite differently about all this. Shortly after Trump caved on his reciprocal tariff plan, US Commerce Secretary Howard Lutnick, MAGA’s star mouthpiece for the moment, argued on CNBC to “…let Donald Trump drive the car. Donald Trump is in charge. Never bet against Donald Trump.” Subsequent spin from the White House now claims that this latest flip-flop was Trump’s plan all along — as if ominous gyrations in financial markets has nothing to do with it. Oh really?

Donald Trump is reactive, barren of strategic thinking. He is also authoritarian, unwilling to draw on internal debate between great minds that might go into the conceptualization of a well thought out plan. Full disclosure: I was the next guest on CNBC’s “Fast Money” after Lutnick on April 9. As I was about to go on the air, the producers informed me the time of my segment had to be cut because Secretary Lutnick talks a lot. Talking and thinking are two different things. MAGA’s talking heads don't hold a candle to the great minds of Bretton Woods.