Globalization Hasn't Failed America, Politicians Have

Norbert Michel

This week at the World Economic Forum’s annual meeting in Davos, the spectacle of American politicians attacking the goose that laid the golden egg continued with Commerce Secretary Howard Lutnick.

That flies in the face of Lutnick’s own success. He became one of the richest people in the world working at the global financial services company Cantor Fitzgerald starting in 1983.

Now, he’s telling the world that “globalization has failed the West and the United States of America. It’s a failed policy … and it has left America behind.”

This narrative is dead wrong. It’s populist politics at its finest.

Yes, America has had its share of economic problems. And it still does. But the idea that American workers or families, overall, have been decimated because commerce expanded around the globe is not true.

Cato’s research and the research of dozens of other scholars have shown that most Americans have done better over the past few decades. There was no great stagnation. The middle class was not hollowed out. The middle class disappeared only to the extent that so many middle-income earners started earning even higher income.

Here’s an entire book about it, along with examples of how people misuse statistics to “prove” that Americans have it so bad. Going further, this post provides a roundup of the many, many scholarly articles and general acknowledgments that this stagnation story is just a myth. It also provides a smattering of the many examples of how Americans’ living standards are higher now. They’re not lower, and they didn’t stagnate starting in the 1970s, 1980s, 1990s, or early 2000s.

Politicians who tell you that global commerce, free trade, free markets, or anything else has hollowed out the American middle class, killed American manufacturing, or destroyed all the good jobs are dead wrong. Politicians say what people want to hear so that they’ll get elected, it’s just what they do.

This list is not comprehensive, and it purposely excludes much of the work that we’ve done at Cato to avoid heavily biasing the results. But it’s a pretty good start.

• William Cline, “U.S. Median Household Income Has Risen More Than You Think”
• Richard V. Burkhauser, Jeff Larrimore, and Kosali I. Simon, “A ‘Second Opinion’ on the Economic Health of the American Middle Class”
• Michael Strain, “The Myth of Income Stagnation”
• Scott Winship, “Stagnationists Are Simply Wrong” and “What You Need to Know From the New CBO Income Figures”
• Gerald Auten and David Splinter, “Income Inequality in the United States: Using Tax Data to Measure Long-Term Trends”
• Thomas A. Hirschl and Mark R. Rank, “The Life Course Dynamics of Affluence”
• Scott Lincicome, “The American Wealth Machine and Its Misguided Discontents” and “The Annoying Persistence of the Income Stagnation Myth”
• John F. Early, “The Myth of American Income Inequality”
• Allison Schrager, “The American Middle Class Is Shrinking, and That’s OK”
• Jeremy Horpedahl, “One-Third of US Families Earn Over $150,000″
• Stephen J. Rose and Scott Winship, “The Middle Class Is Shrinking Because of a Booming Upper-Middle Class”
• Holly Jean Soto, “The Never-Ending Myth of the ‘Rich Getting Richer’ ”
• The Geography of Transport Systems, “Percentage of Households by Number of Vehicles, 1960–2020″
• Franco Cazzaniga, “The Invisible Wealth: Mismeasurement of Quality, the Myth of Stagnation, and the Underestimation of Real Income Growth”
• Jeff E. Biddle, “Explaining the Spread of Residential Air Conditioning, 1955–1980″
• Irena Martincevic, “Unraveling the Remarkable Surge in Air Conditioning in U.S. Homes in the Last 30 Years”
• Phil Gramm and Donald J. Boudreaux, “The Triumph of Economic Freedom”
• The Economist, “The Incomes of America’s Poorest Are Growing Faster Than Those of Its Richest”
• Robert R. Callis, “Rate of Homeownership Higher Than Before Pandemic in All Regions”
• Chloe Taylor, “ ‘Richcession’ Hits as 3.5 Million Millionaires Lost Their Status Last Year—While the Average Person Saw Wealth Spike”
• Dana Thomson et al., “Lessons From a Historic Decline in Child Poverty”
• Bill Fay, “Poverty in the United States: Number in Poverty and Poverty Rate Using Official Poverty Measure: 1959 to 2022″
• The Economist, “America’s Affordability Crisis Is (Mostly) a Mirage”
• Veronique de Rugy, “ ‘Bring Back American Manufacturing’? It’s Alive and Stronger Than Ever”
• Scott Winship, “Understanding Trends in Worker Pay Over the Past 50 Years”
• Enghin Atalay et al., “Hidden Growth in US Manufacturing Productivity”
• Norbert Michel and Jerome Famularo, “Trying to ‘Bring Back’ Manufacturing Jobs Is a Fool’s Errand”
• Norbert Michel and Jerome Famularo, “Economic Mobility, Not Manufacturing Decline, Is the Real Rust Belt Story”
• John Stosell, with Cato’s Scott Lincicome
• Washington Post’s Dominic Pino, with how spreads between US real GDP per capita and other countries have changed between 1990 and 2024
• Finally, here’s a quick international comparison chart of GDP per capita with the US … wait for it … on top.

Sooner or later, reality has to set in. Hopefully it’s not too late.

-Christian Kruse provided research assistance for this post.