Over the last couple of days, I have been especially struck by Trumpists (and Trump himself) carrying on about making America wealthy again. All of this pain is needed to rebalance the global economy (or something!), they keep telling us.
For example:
Of course, when you take medicine and you aren’t actually sick, there can be negative results.
Let’s look at Gross Domestic Product, which is THE basic indicator of national wealth. It is a measurement of all economic activity within a country for a given year.
Here are the top ten (source: Worldometer). Guess who’s #1? And note the margin between #1 and #2 (indeed, #2+#3+#4 is still not enough to top #1). Look also at the far right-hand column. We control 26.11% of the global economy. How anyone looks at these numbers and thinks that we are being screwed isn’t very smart.
An even better measure is to look at GDP per capita. This takes the total GDP and divides it by the population (i.e., economic input generated per person on average). Here are the top ten. BTW, GDP per capita gives an even better understanding of national economic health. US per capita GDP was $80,706 in 2023 while China’s was $12,509. It is one of the reasons people should understand that, as vast and powerful as China is, the US is far wealthier and more powerful.
For further comparison, Russia’s GDP per capita for 2023 was $13,899 and Mexico’s was $13,790.
Before anyone has a sad about the US being 7th on this list, consider the degree to which looking at very small population countries ahead of us on this list, especially in what amounts to city-states in some of these cases. For further context, let’s look at GDP per capita in US metropolitan areas (source: Wikipedia).
But wait, you say, there are plenty of Americans who are struggling! We need to fix that!
To which I say: you are correct! But the issue is not that the world is ripping us off, nor is it that we aren’t wealthy as a country.
It seems pretty clear that the issue is not one of wealth. It is a question of wealth distribution.
That is not to say that there haven’t been costs to globalization that we have done a poor job of addressing. But instead of pretending like we are going to bring back some era of manufacturing that will restore textile plants in rural Alabama, how about spending some money on education, infrastructure, and new industries? You know, maybe taxing the very wealthy more to help those being damaged by globalization?
I know that new tax cuts aren’t going to solve this problem.
I know that tariffs are going to damage existing manufacturing, not the other way around.
And even bringing manufacturing back to the US isn’t going to lead to mass new employment.
Tariffs will not put dollars in the pockets of lower-income persons. Indeed, it will do the opposite.
In terms of the medicine that Trump is wanting to force feed us, note this clip:
The full quote talks about having automated plants in the US doing the screwing. And from there, Lutnick extrapolates that there would be jobs for those who service the machines and the plants. All well and good, but all of this will mean some jobs, but not the mass jobs of manufacturing in the past.
Plus, it will mean more expensive phones, making it harder for the working class to afford them.
The madness of all of this is difficult to digest.
Back to the main point: America is currently the wealthiest in the world, but there are some legitimate questions about wealth distribution. These trade wars will help none of that.
For those still not paying attention, tariffs are taxes on imports, and the cost of which will be borne disproportionately by lower-income citizens. Not only will imported goods increase in price, so will domestically produced items because of the basic dynamics of decreased competition from foreign goods.
And, of course, there are some things that we cannot produce in the US. Coffee, for example.
