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01 / 05
Dear Americans, Define “Worse Off”

Blog Post | Health & Demographics

Dear Americans, Define “Worse Off”

American declinism is a compelling political narrative, but what does the economic data have to say about it?

Summary: Many Americans are pessimistic about their future and believe that life will get worse. However, this narrative does not match the economic reality of the country, which is doing well by most measures. This article challenges the common perception of American decline and shows how the United States remains a prosperous and innovative nation with many opportunities for growth.


The United States is doing quite well. You wouldn’t know it if you read the headlines, listened to the bombastic political disputes, or even asked Americans.

In a March poll, a majority of Americans had low confidence that life would be better for their children. A CNN poll published in April showed that less than a third of respondents would call economic conditions good. A McKinsey survey released in December fully captured the negative sentiment, with pessimism cut across all income groups and demographics: “Americans are feeling opportunity slipping away.”

In stark contrast, The Economist in April ran a cover story in a diametrically different flavor, pointing to all the good things happening in America.

Yes, you read that right. In between the bank collapses, looming recession, runaway national debt, culture wars, political sandbox, Trump obsession in both political camps, shootings, opioid epidemic, runaway costs for food and health care, millions of men out of the labor force, fears of nuclear conflict, etc., there are fundamentally good things going on.

The magazine’s editors and contributors aren’t trying to brush over the troubles—in slanted whataboutism or the style of the “everything is fine” meme (a carefree dog in a room engulfed in flames). Rather, they are trying to balance the overharsh thrashing that American life, economy, and society have endured recently.

One strategy used by those of us trained in history to trivialize the present is to look back far enough. Compared to the miserable toil and pain that was most of humanity’s plight until recently, our present ills look quaint. Striving to get work-life balance right? Struggling to make ends meet? Energy bill unusually large this year? Try having three failed harvests in a row, starving to the point that you boil the leather off your shoes for evening soup; watch nature take most of your children; or huddle together for shared body heat since there is precious little fuel to stave off the winter cold.

The list of ills troubling Americans in 2023 is astonishingly long and of a different kind altogether. But in strictly economic terms, it’s much harder to see what millions of Americans are so pessimistic about. U.S. unemployment is around record-low levels. Real earnings, while they’ve come down from the recent years’ pandemic-infused turbulence, are on par with pre-pandemic levels, noticeably higher than ever before.

The graph shows the growth in median usual weekly real earnings since the late 1970s.

Inflation—a nominal rather than real metric that worries households much more than it does economists—is also coming down. The U.S. economy, as a share of the G7—an international grouping of the United States and seven other rich economies—is larger than it was 30 years ago. “Adjusted for purchasing power, only those in über-rich petrostates and financial hubs enjoy a higher income per person,” concludes The Economist. The poorest states in the United States are on par with the richest European countries.

The stylized facts about U.S. and European economies—found in economics textbooks or old social policy reports—used to be that Americans work harder and longer for higher income, but Europeans live better lives with better social safety nets. These days even that seems to be changing, as the U.S. welfare state is approaching European levels both in comprehensiveness and total spending. Richer Americans spend more of their resources, public and private, on social ills. According to Organisation for Economic Co-operation and Development statistics, government social spending (as a share of gross domestic product) is above Australia, Iceland, and Norway, trailing “socialist” Sweden and Canada only by a few percentage points. (America is second only to France when adjusting for “net” social spending that includes private spending and tax breaks for social purposes.)

The demographic problem hopelessly plaguing many other countries is much smaller in America, which has “a younger population and a higher fertility rate than other rich countries.”

Americans still work more hours than most Europeans or Japanese, and the hours they put in are, on average, more valuable than those of labor forces elsewhere. Despite millions of (mostly) men making a beeline for the labor market exits, the United States has proportionately added more workers this century than its peers. Still, the number of prime-age American men out of work is rising and is higher than in most European countries. Some reasons men aren’t working include opioids, manufacturing decline, mental illness, and defective care for returning soldiers. They indicate that despite the nation’s economic success, not all is well.

The United States has deeper financial markets, issues the world’s preferred money, has more funds available for venture capital, and fewer rigid labor laws, which allows its world-class managers to hire and fire at need. It is home to the best universities, which still attract the smartest minds from across the world, and dominates innovation; the Silicon Valley powerhouse unquestionably upped Americans’ productivity in the 2010s, its recent spout with banking failures and Californian exodus aside.

How to account for this negativity bias? One gut-fueled answer is that the numbers are wrong. The stats showing the marvels of the U.S. economy just aren’t correct—think mismeasurement or corrupt statisticians. Another is that recent bias clouds our judgment: we forget the pains of the “good old days” and romanticize how glorious they really were. There is always something bad somewhere that we can hone in on and conclude that, therefore, things are going in the wrong direction. Bad things happening in front of one’s eyes or slapped on newspaper headlines can overshadow the gradual improvement of most things going well or moving in the right direction.

Monetary economists often talk about “money illusion,” where sticker shocks at the store give us the impression that we are poorer simply because the numbers are bigger—even if our wages kept pace with inflation or even exceeded it, which they historically have done.

If prices in aggregate increased by roughly 8 percent last year, but the Social Security cost-of-living adjustment raised benefits by 8.7 percent, it takes a lot of statistical wiggling to conclude that pensioners therefore are (much) worse off.

The grand irony, concludes a story from The Economist, is that knee-jerk reactions from a political class obsessed with the decline that they think they see may create that very decline:

Most of these potentially self-harming policies have their roots in a declinist view that, economically at least, simply does not reflect the facts. The diagnoses are that China is getting ahead, or that immigrants are a menace, that large corporations are bastions of woke power and free trade a form of treachery.

Disaster and declinism, as appealing and captivating as they are on a personal level and as persuasive and all-encompassing they become in the political arena, remain poor guides to the modern world.

World Bank | Quality of Government

Côte D’Ivoire’s Land Reforms Are Unlocking Jobs and Growth

“Secure land tenure transforms dormant assets into active capital—unlocking access to credit, encouraging investment, and spurring entrepreneurship. These are the building blocks of job creation and economic growth.

When landowners have secure property rights, they invest more in their land. Existing data shows that with secure property rights, agricultural output increases by 40% on average. Efficient land rental markets also significantly boost productivity, with up to 60% productivity gains and 25% welfare improvements for tenants…

Building on a long-term partnership with the World Bank, the Government of Côte d’Ivoire has dramatically accelerated delivery of formal land records to customary landholders in rural areas by implementing legal, regulatory, and institutional reforms and digitizing the customary rural land registration process, which is led by the Rural Land Agency (Agence Foncière Rurale – AFOR).

This has enabled a five-fold increase in the number of land certificates delivered in just five years compared to the previous 20 years.”

From World Bank.

UNICEF | Child Labor

100 Million Fewer Children Are in Child Labour Today than in 2000

“While the elimination of child labour remains an unfinished task, the latest global estimates bring some welcome news. After a concerning rise in child labour captured by the global estimates for 2020, a feared further deterioration in the wake of the COVID-19 pandemic has not materialized, and the world has succeeded in returning to a path of progress. There are over 100 million fewer children in child labour today than in 2000, even as the child population increased by 230 million over the same period.”

From UNICEF.

Blog Post | Manufacturing

Grim Old Days: Virginia Postrel’s Fabric of Civilization

Beneath today’s abundance of clothing lies a long and brutal history.

Summary: Virginia Postrel’s book weaves a sweeping history of textiles as both drivers of innovation and toil. From ancient women spinning for months to make a single garment to brutal sumptuary laws and dye trades steeped in labor and odor, it is revealed how fabric shaped the foundations of human society.


Virginia Postrel’s The Fabric of Civilization: How Textiles Made the World is the riveting story of how humanity’s quest for thread, cloth, and clothing built modern civilization, by motivating achievements from the Neolithic Revolution to the Industrial Revolution and more. While much of the book contains inspiring tales of innovation, artistry, and entrepreneurship, the parts of the book about the preindustrial era also reveal some dark and disturbing facts about the past.

In the preindustrial era, clothing was often painstakingly produced at home. Postrel estimates that, in Roman times, it took a woman about 909 hours—or 114 days, almost 4 months—to spin enough wool into yarn for a single toga. With the later invention of the spinning wheel, the time needed to produce yarn for a similarly sized garment dropped to around 440 hours, or 50 days. Even in the 18th century, on the eve of industrialization, Yorkshire wool spinners using the most advanced treadle spinning wheels of the time would have needed 14 days to produce enough yarn for a single pair of trousers. Today, by contrast, spinning is almost entirely automated, with a single worker overseeing machines that are able to produce 75,000 pounds of yarn a year—enough to knit 18 million T-shirts.

Most preindustrial women devoted enormous amounts of time to producing thread, which they learned how to make during childhood. It is not an exaggeration to say, as Postrel does, “Most preindustrial women spent their lives spinning.” This was true across much of the world. Consider Mesoamerica:

At only four years old, an Aztec girl was introduced to spinning tools. By age six, she was making her first yarn. If she slacked off or spun poorly, her mother punished her by pricking her wrists with thorns, beating her with a stick, or forcing her to inhale chili smoke.

These girls often multitasked while spinning: “preindustrial spinners could work while minding children or tending flocks, gossiping or shopping, or waiting for a pot to boil.” The near-constant nature of the task meant that prior to the Industrial Revolution, “industry’s visual representation was a woman spinning thread: diligent, productive, and absolutely essential” to the functioning of society, and from antiquity onward cloth-making was viewed as a key feminine virtue. Ancient Greek pottery portrays spinning “as both the signature activity of the good housewife and something prostitutes do between clients,” showing that women of different social classes were bound to spend much of their lives engaged in this task.

Women of every background worked day and night, but still, their efforts were never enough. “Throughout most of human history, producing enough yarn to make cloth was so time-consuming that this essential raw material was always in short supply.”

Having sufficient spun yarn or thread was only the beginning; it still had to be transformed into cloth. “It took three days of steady work to weave a single bolt of silk, about thirteen yards long, enough to outfit two women in blouses and trousers,” although silk-weavers themselves could rarely afford to wear silk. According to Postrel, a Chinese poem from the year 1145, paired with a painting of a modestly dressed, barefoot peasant weaving silk, suggests that “the couple in damask silk . . . should think of the one who wears coarse hemp.”

Subdued colors often defined the clothing of the masses. “‘Any weed can be a dye,’ fifteenth-century Florentine dyers used to say. But that’s only if you want yellows, browns, or grays—the colors yielded by the flavonoids and tannins common in shrubs and trees.” Other dye colors were harder to produce.

In antiquity, Tyrian purple was a dye derived from crushed sea snails, and the notoriously laborious and foul-smelling production process made it expensive. As a result, it became a status symbol, despite the repulsive stench that clung to the fabric it colored. In fact, according to Postrel, the poet Martial included “a fleece twice drenched in Tyrian dye” in a list of offensive odors, with a joke that a wealthy woman wore the reeking color to conceal her own body odor. The fetor became a status symbol. “Even the purple’s notorious stench conveyed prestige, because it proved the shade was the real thing, not an imitation fashioned from cheaper plant dyes.” The color itself was not purple, despite the name, but a dark hue similar to the color of dried blood. Later, during the Renaissance, Italian dyers yielded a bright red from crushed cochineal insects imported from the Americas, as well as other colors that were created by using acidic bran water that was said to smell “like vomit.”

Numerous laws strictly regulated what people were allowed to wear. Italian city-states issued more than 300 sumptuary laws between 1300 and 1500, motivated in part by revenue-hungry governments’ appetite for fines. For example, in the early 1320s, Florence forbade women from owning more than four outfits that were considered presentable enough to wear outside. Postrel quotes the Florentine sumptuary law official Franco Sacchetti as writing that women often ignored the rules and argued with officials until the latter gave up on enforcement; he ends his exasperated account with the saying, “What woman wants the Lord wants, and what the Lord wants comes to pass.” But enough fines were collected to motivate officials to enact ever more restrictions.

In Ming Dynasty China, punishment for dressing above one’s station could include corporal punishment or penal servitude. Yet, as in Florence, and seemingly nearly everywhere that sumptuary laws were imposed, such regulations were routinely flouted, with violators willing to risk punishment or fines. In France in 1726, the authorities harshened the penalty for trafficking certain restricted cotton fabrics, which were made illegal in 1686, to include the death penalty. The French law was not a traditional sumptuary law, but an economic protectionist measure intended to insulate the domestic cloth industry from foreign competition. Postrel quotes the French economist André Morellet lamenting the barbarity of this rule, writing in 1758,

Is it not strange that an otherwise respectable order of citizens solicits terrible punishments such as death and the galleys against Frenchmen, and does so for reasons of commercial interest? Will our descendants be able to believe that our nation was truly as enlightened and civilized as we now like to say when they read that in the middle of the eighteenth century a man in France was hanged for buying [banned cloth] to sell in Grenoble for 58 [coins]?

Despite such disproportionate punishments, the textile-smuggling trade continued.

Postrel’s book exposes the brutal realities woven into the history of textiles; stories not just of uplifting innovation, but of relentless toil, repression, and suffering. Her book fosters a deeper appreciation for the wide range of fabrics and clothes that we now take for granted, and it underscores the human resilience that made such abundance and choice possible.

Curiosities | Trade

The Real Story of the “China Shock”

“The total number of jobs remained largely stable in the U.S.—and even slightly increased—as people adapted to competition from Chinese trade. Trade-exposed places recovered after 2010, primarily by adding young-adult workers, foreign-born immigrants, women and the college-educated to service-sector jobs.

Lost in the alarm over jobs is that trade with China delivered substantial benefits to the U.S. economy. Most obvious are the lower prices Americans pay for everything from clothing and electronics to furniture. One study found that a 1 percentage point increase in imports from China led to about a 1.9% drop in consumer prices in the U.S. For every factory job lost to Chinese competition, American consumers in aggregate gained an estimated $411,000 in consumer welfare. This so-called Walmart effect disproportionately helped middle- and lower-income families, who spend a bigger share of their budget on the kinds of cheap goods China excels at producing.

U.S. businesses also reaped advantages. Manufacturers who use imported parts or materials benefited from cheaper inputs, making them more competitive globally. An American appliance company, for example, could buy low-cost Chinese components to lower its production costs, keep its product prices down and potentially hire more workers.”

From Wall Street Journal.