There’s a story haunting American politics. It’s a story told by right-wing populists like Donald Trump and JD Vance and left-wing populists like Bernie Sanders. The story goes something like this: There once was an America, in the 1950s and 1960s, that made stuff. People could go off to work in factories and earn a decent middle-class wage. Then came globalization and the era of market-worshiping neoliberalism. During the 1990s and early 2000s, America signed free trade deals like NAFTA. China entered the World Trade Organization in 2001. Jobs were shipped overseas. Factories shut down. The rich prospered while members of the working class got pummeled and ended up voting for Trump.
The problem with this story is that it’s 75 percent bonkers — historically inaccurate on nearly every front.
In the first place, there never was a market-worshiping era of pure globalization. As the economics writer Noah Smith has noted, top marginal tax rates were significantly higher in 2016 than in 1992. Federal spending on social programs went up, not down. Government policy became more progressive (favoring those down the income scale), not less. Much of the economy grew more regulated, not less. U.S. tariff rates were basically stagnant.
The era between the start of the Clinton administration and the end of the Obama one was not a libertarian/globalist free-for-all. It was an era of mainstream presidents who tried to balance dynamism and solidarity.
The second problem with the populist story is that it gets its chronology wrong. America really did deindustrialize. As the American Enterprise Institute economist Michael Strain has shown, wages really did stagnate, but they did so mostly in the 1970s and 1980s, not in the supposed era of neoliberal globalism.
Smith helpfully divides the recent American economic history into three eras. There was the postwar boom from 1945 to 1973. Then there was the era of oil shocks, a productivity slowdown and wage stagnation, from 1973 to 1994. Then there was a return to higher productivity and higher wage growth, from 1994 to today. That is to say: Median wages have grown since NAFTA and the W.T.O., not declined.
The third problem with the story is that it exaggerates how much foreign competition has hurt American workers. Yes, the China shock was real. In a landmark 2013 paper, David Autor, David Dorn and Gordon Hanson found that America lost an average of 90,000 jobs per year between 1990 and 2007 because of imports from China. But put that in perspective. According to Strain, five million Americans currently separate from their employers per month. Plus, in a 2019 paper, Robert C. Feenstra, Hong Ma and Yuan Xu found that the China shock job losses were largely offset by job gains, owing to higher exports.
American manufacturing jobs have declined mostly for the same reason American farming jobs have declined. We’re more productive, able to make more stuff with fewer workers. That’s not primarily a story about neoliberalism or globalization; it’s progress.
If manufacturing jobs are moving, it’s often from the American Midwest to the American South. As Gary Winslett pointed out in The Washington Post, in 1970 the Rust Belt was responsible for nearly half of all manufacturing exports while the South was responsible for only a quarter. Today, the South is responsible for half of all manufacturing exports while the Rust Belt is only responsible for a quarter. The Southern states lured manufacturing investments with right-to-work laws, cheap energy, affordable housing, low-cost land and fast permitting. Today, the No. 1 auto-exporting state is Alabama. It’s really hard to argue that America’s problem is a lack of manufacturing jobs when nearly half a million manufacturing job openings are unfilled today.
The so-called era of neoliberal globalism has not produced the American carnage that Trump imagines. According to the political scientist Yascha Mounk, in the 1990s and early 2000s, America and Europe were similarly affluent. Today, the American economy has left the other rich economies in the dust. American G.D.P. per capita is around $83,000, while Germany’s is around $54,000, France’s is around $45,000 and Italy’s is around $39,000.
As The Economist recently noted, “On a per-person basis, American economic output is now about 40 percent higher than in Western Europe and Canada, and 60 percent higher than in Japan — roughly twice as large as the gaps between them in 1990. Average wages in America’s poorest state, Mississippi, are higher than the averages in Britain, Canada and Germany.”
Trumpian economic populism is an attempt to move beyond the relatively moderate economic policies of George W. Bush Republicanism. Progressive populism is an attempt to move beyond the relatively moderate economic policies of Bill Clinton and Barack Obama. But the Obama years, to take one example, were not exactly horrific, either. Economic growth steadily accelerated over his presidential term. America saw one of its longest periods of job growth. Wage levels began to recover from the financial crisis around 2016.
These statistics are not abstractions that don’t touch regular people’s lives. According to the Organization for Economic Cooperation and Development, in 2023 American households had $63,000 in disposable income, while French households had only $35,000 and British households had only $36,000. The average home size in the United States is around 2,000 square feet. The average British home size is less than 1,000 square feet.
Americans pay for greater prosperity with higher income inequality. But as Mounk points out, the inequality gap is not as great as one might think. Between 2019 and 2023, wages for people at the bottom of the income scale rose much faster than wages for people at the top.
I am not saying that the American economy is hunky dory. There is, for example, the affordability crisis — housing, education and health care have become more and more expensive. But that, too, is not a story about globalization and neoliberalism.
I am saying that the populists on the left and the right are proposing a sharp break with the economic policies that have prevailed over the last 30 years, and that they are wrong to do so.
I am saying that the basic approach to economic policymaking that prevailed between 1992 and 2017 was sensible, and that our job today is to build on it. The abundance agenda folks suggest things like housing deregulation to increase the housing supply. Rahm Emanuel suggests combining the earned-income tax credit and the child tax credit into a single family credit that could, for example, sharply reduce child poverty. Those are promising ways to keep the country moving forward.
I am also saying that the forces driving the current wave of global populism are not primarily economic. They are mostly about immigration, cultural values, the rise of social distrust, the way the educated class has zoomed away from the rest of society and come to dominate the commanding heights of Washington, New York and Los Angeles, and the way many Americans have lost faith in those leading institutions.
The crucial divide in our politics is not defined by income levels; it’s defined by educational attainment, with more educated people swinging left and the less educated swinging right. The smartest Trump supporters I read, like N.S. Lyons, see themselves fighting against the educated elite, the technocrats who value personal autonomy over everything, who seek to destroy moral norms and national borders. These populists rise in defense of strong gods — faith, family, flag — which they believe are threatened by the acid bath of modernity.
Many progressive Democrats imagine they can win back working-class votes with economic populism — by bashing the oligarchy and embracing industrial policy — but that’s a mirage. Joe Biden shoveled large amounts of money to working-class voters in red states, and it did him no electoral good. That’s because you can’t solve with dollars a problem that is fundamentally about values and respect.
If Democrats are going to win majorities again, they need to be both the party of the educated class and, at least somewhat, the working class. Given how vast the cultural and lifestyle chasms there are between these two castes, that’s just a phenomenally hard problem. Many Democrats are now rallying around Representative Alexandria Ocasio-Cortez. But a New York economic progressive with a 30 percent national favorability rating is probably not the right way to go.
If you didn’t like the so-called era of neoliberalism, wait until you experience how much fun postliberalism will be. Trump is taking a sledgehammer to the sources of American prosperity: global competition, immigrant talent, scientific research and the universities.
Healthy societies have the ability to assess their strengths and weaknesses honestly. The story the populists tell about globalization and neoliberalism is a gross distortion that leads to all sorts of terrible conclusions. America has many pathologies that drive the distemper of our times, but — at least until the populists gained power — economic decline was not among them.
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David Brooks is an Opinion columnist for The Times, writing about political, social and cultural trends. @nytdavidbrooks
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