President Donald Trump and his fellow economic nationalists never tire of insisting that ordinary Americans have been harmed by free trade. Mr. Trump sounded this theme in his first inauguration speech, when he alleged that “for many decades, we’ve enriched foreign industry at the expense of American industry…. We’ve made other countries rich while the wealth, strength, and confidence of our country has disappeared over the horizon…. One by one, the factories shuttered and left our shores, with not even a thought about the millions upon millions of American workers left behind. The wealth of our middle class has been ripped from their homes and then redistributed across the entire world.”
A more recent appearance of this theme is in his administration’s brief to the US Supreme Court in support of the “Liberation Day” tariffs — a brief that reads in part as if it were dictated by Mr. Trump himself. That brief declares baldly that “without tariffs, we are a poor nation.” Because tariff rates generally fell for the 80 years prior to Mr. Trump’s first term in office, it follows from the president’s logic that Americans have been made poorer over those years — and especially since the mid-1970s when the United States began running what will soon be a half-century-long uninterrupted string of annual trade deficits.
Here at The Daily Economy and elsewhere, serious researchers have long and repeatedly offered straightforward evidence against this Trumpian thesis. For example, inflation-adjusted per-capita GDP is today at an all-time high, as are real wages. Also today at, or very near, their all-time highs are US industrial production, industrial capacity, and exports.
The rate of unemployment is quite low.
These facts alone suffice to discredit assertions that crafty foreigners have taken advantage of unpatriotic or weak officials in Washington to inflict economic depredations on ordinary Americans.
Yet no matter how unambiguous the data, or how frequently they are repeated, they seem unable to unseat the myth that Americans have been impoverished by free trade. Perhaps these data are too abstract, too ethereal, too academic.
So to assess the trend of American living standards over the past several decades, let’s look instead at data that are more concrete.
Ordinary Enrichments
Life Expectancy
Start with what is perhaps the single most important feature of living standards, namely, the amount of time we live to enjoy those standards. Life expectancy has risen. Life expectancy today is three percent longer than in 2000, five percent longer than in 1990, eight percent longer than in 1980, 12 percent longer than in 1970, and 13 percent longer than in 1960.
In light of this happy trend it’s no surprise that the percentage of the US population who are age 100 and older is today (2020) 78 percent larger than in 2000, twice as large as in 1990, 4.2 times larger than in 1980, 6.3 times larger than in 1970, and 8.3 times larger than in 1960.
Because life expectancy rises when wealth increases, Americans’ rising living standards are not only themselves a component of wealth, they also reflect Americans’ rising wealth.
Housing
Today, the average floor size of a new single-family home is 2,408 square feet. The floor size of this home is 6.3 percent larger than that of a new single-family home in 2000 (the year before China joined the World Trade Organization). It’s 16 percent larger than in 1990 (four years before the North American Free Trade Agreement was launched), 38 percent larger than in 1980 (five years after America last ran an annual trade surplus), 61 percent larger than in 1970, and 90 percent larger than in 1960.
This positive trend is even more impressive when accounting for the fall in the number of people who live in the average American household. Today, each resident of that household has 11 percent more square feet of living space than did a resident of an average new single-family home in 2000, 22 percent more space than in 1990, 53 percent more space than in 1980, 102 percent more space than in 1970, and 149 percent more space than in 1960.
I’m unable to find reliable data on the cubic footage of the average American home, and of how this measure has changed over time. (If you know of a source of such data, please share that source with me.) I’m willing to bet (literally!) that the average US home today not only has more square footage than it did in the past — say, in 1975 — but also more cubic footage.
Some of this increase in living space might be due to land-use restrictions that promote the building of single-family homes and discourage the building of multiple-family complexes. But because living space is a desirable good, the demand for which increases as people become wealthier, undoubtedly, some of this increase in living space reflects ordinary Americans’ increased prosperity. (Keep in mind also, however, that insofar as land-use restrictions result in the building of fewer houses, these restrictions make per-person housing occupancy higher than it would otherwise be.)
Automobiles
What about personal transportation? Today, just eight percent of US households own no automobile, while 59 percent own two or more automobiles. These figures are much better than in the past. In 2000, nine percent owned no car, and 57 percent owned two or more. In 1980, 13 percent of households were automobile-less, while 52 percent had two or more. In 1970, almost one in five US households (18 percent) owned no automobile, while only 35 percent owned two or more vehicles.
Groceries
Supermarkets today carry many more items than they did in the past. Estimates vary, but supermarkets now carry roughly 32,000 different items (with some estimates being over 40,000 items, and some even as high as 50,000), while in 1975 the number was around 9,000.
Innovation and Everything Else
One could go on, of course. Almost needless to say – but I’ll say it nevertheless – in 1975 almost no one owned a personal computer, and absolutely no one owned a smartphone. There was no Internet for ordinary people. Commercial air travel (which was still heavily regulated) was a luxury. Automobiles had no backup cameras, navigation screens, or keyless features. There was no streaming music. Most Americans had a choice of a whopping four broadcast television channels – and all television was low-def. Coffee quality was poor and the selection of beer was minuscule. There was no LASIK surgery. And luggage was true to its name: unable to roll, it had to be lugged. This list could be greatly extended.
There is simply no truth to the countless claims that Americans have been economically impoverished over the past few decades by freer trade and globalization.
