Summary: Degrowth has gained influence by combining environmental concerns with calls for redistribution. Its central arguments, however, falsely assume that economic growth requires consuming more physical resources. Evidence suggests that economic growth can be decoupled from environmental harm, while greater economic freedom can improve social and ecological outcomes. Degrowth is more of a rhetorical strategy than a serious academic concept.

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In recent years, an intellectual movement known as “degrowth” has grown in popularity through the efforts of a small but growing group of academics and activists. Key texts that champion this ideology, such as Jason Hickel’s 2020 book Less is More: How Degrowth Will Save the World and Kate Raworth’s 2017 Doughnut Economics, appear on bestseller lists and in bookstores worldwide. In 2020, Japanese philosopher Kohei Saito published Capital in the Anthropocene (published in English in 2024 as Slow Down: The Degrowth Manifesto), arguing that Karl Marx, in his later writings, anticipated the damage capitalism would do to the environment and called for rejecting unconstrained economic growth. When Saito’s book was published, it sold an unprecedented 500,000 copies in Japan alone, and it now appears in 15 languages. The degrowth paradigm has become so popular that the Autonomous University of Barcelona now offers it as a master’s degree.

Since the mainstream left and the mainstream right agree that economic growth is an important goal—they just disagree about how to achieve growth and how the proceeds should be spent—it is important to understand the appeal of degrowth.

The main motivation is, likely, ecological: concern for the damage we as humans have done to our environment. Writing this in the hot summer of 2026 as wildfires rage across much of Europe, this motivation from degrowthers is understandable. Yet, as we will see, the evidence for the relationship between economic growth and environmental outcomes is much more nuanced and mixed. Nonetheless, enthusiasm for degrowth rests on the authors’ genuine belief that we could be on the edge of various tipping points that could seriously disrupt our planetary equilibrium.

Feeding into this concern about the impact on the planet are egalitarian impulses. Degrowth is an appealing idea for those who fifty years ago would have been socialists or Marxists of some variety. Supporters of degrowth believe the global middle class is already “rich enough.” In their mind, the solution to poverty is not more growth but redirecting growth. Timothée Parrique, author of Slow Down or Die, a best-seller in France, argues that poverty is not a question of production but of allocation, and that “attempting to eradicate poverty by stimulating GDP growth is like trying to change a car’s direction by adding gas to a full tank.”

Hickel and other advocates for degrowth work backwards from the idea of a “planetary allowance” for growth, which is the additional output that they believe the planet can absorb while staying inside safe ecological limits. They argue this “allowance” should go to those earning below the global average income. What average income should be, however, remains difficult to pin down, though Hickel has suggested that the relevant benchmark should be around $24,000, as that is currently the world average GDP per capita at purchasing power parity.¹

Given how appealing degrowth arguments are to an environmentally aware younger generation, it is worthwhile addressing the former and demonstrating that degrowth rests on a series of misconceptions about economic growth and economic history.

First, degrowthers often appeal to the simple intuition that eventually economic growth must end because continuous growth is impossible. The economist Kenneth Boulding first made the oft-repeated claim that infinite growth is impossible on a planet with finite resources (and, he added, that only a madman or an economist would think otherwise).

If growth is necessarily finite, as the argument goes, then surely the environmental stress that the planet is now showing is a sign that now is a good time to think about slowing growth down or even ending it entirely?  But the claim that we should slow growth now does not follow from the claim that growth is finite. The finitude of growth tells us nothing about when growth might end. Finite might be thousands, or indeed, millions of years. It doesn’t tell us much about the prospects for growth in our own generation or for many generations to come.

Moreover, Boulding’s argument rests on a misconception: the false presumption that economic growth necessitates consuming more resources or producing more physical stuff. This mistake goes back to critics of economics who misunderstod the marginal revolution of the 1870s (i.e., the birth of modern economics). Economic growth is about value. It means producing more of what individuals value. While degrowthers associate economic growth with environmental damage, deforestation, and disregard for our natural habitat, economic growth often brings more parks, reforestation, and cleaner air. Physicists have raised a related objection. Because the Earth contains a finite stock of matter and energy, they argue, economic growth must eventually run into physical limits.

That conclusion confuses growth in economic value with growth in material consumption. As resources become scarcer and more valuable, people have stronger incentives to conserve them, use them more efficiently, recycle them, and find substitutes. Long-run economic growth can therefore increase the value people obtain from resources even as the amount of resources used per unit of value declines.

So economic growth and environmental damage are not necessarily related. Nonetheless, degrowthers can point to the damage that increased temperatures have already caused. The practical debate therefore rests on the extent to which it is possible to decouple economic growth from environmental harms. UK greenhouse gas emissions in 2024 were 54% below 1990 levels even as the British economy grew by approximately 84%. French emissions fell by around 32% in the same period. Degrowthers, in response, point out that some of these reductions came from shifting polluting production overseas and that global emissions have continued to rise. I think the evidence suggests that decoupling is eminently possible and, in fact, happening, but also that the huge uncertainties around future climate change mean we shouldn’t be complacent about the risks involved.

Degrowthers talk about redirecting the global economy or downscaling it. That brings us to the second misconception: the assumption that we (though who “we” are is left unspecified) currently pursue policies that seek to maximize economic growth. In this way, degrowthers blame all the myriad problems, including (perceived or real) stagnant living standards, inequality, and political polarization, not on a lack of economic growth but on the pursuit of growth.

Even commentators and journalists critical of degrowth often buy this premise; they too assume a “they” who chooses policies that maximize growth and wonder whether adding other goals alongside growth might make sense. In truth, however, there is no “we” or “they” in control of the economy. To think that that is the case is to mistake the spontaneous order of the marketplace for a machine or engine that is driven or directed by policymakers. Of course, politicians mention growth as an important outcome, but in reality they are seeking reelection. That means politicians are incentivized to pursue policies that they think will appeal to the median voter. While politicians can’t ignore the economy, the idea that they are dead set on “maximizing” growth to the detriment of other objectives cannot be seriously maintained.

Third, just as degrowthers misinterpret current policies as those intended to “maximize economic growth,” they also seriously misrepresent the history of economic growth. Hickel’s work provides the historical underpinning of the degrowth ideology. Chapter 3 of his 2018 book, The Divide, is entitled “Where did Poverty Come From?” In it, he asserts that traditional accounts of the Industrial Revolution are false. He argues that the modern world’s wealth stems not from innovation but from conquest and the establishment of an extractive world system based on colonialism and capitalism. It was this exploitation and appropriation that supposedly kickstarted the rise of the West. Indeed, according to Hickel, capitalism created “mass poverty as a historical phenomenon”. In 2023, Hickel and Dylan Sullivan published an attempt to validate this narrative empirically in World Development. If we take this work seriously, mainstream economists and social scientists have misled the public. If the origins of economic growth are in fact responsible for impoverishing millions, why wouldn’t we want degrowth?

That is, of course, a cartoon version of economic history that no specialist in the field takes seriously. Sullivan and Hickel’s most substantive evidence is simply that Robert Allen’s estimates of real wages and welfare ratios show significant declines after 1500, which is when they date the rise of capitalism in Europe. But economic historians have known for decades that living standards fell as populations recovered from the Black Death. That is consistent with a simple Malthusian model, and it tells us next to nothing about the relationship between markets, capitalism and economic growth.

Nor is that an isolated lapse by the proponents of degrowth. Economists have tried to formalize and test Raworth’s doughnut model, which describes a “safe and just space” between a social floor of basic needs and an ecological ceiling of planetary boundaries. Raworth suggests that more capitalist economies stray further from that space. A recent test found the opposite: economies with more economic freedom tend toward less imbalance, improving on social and ecological measures together rather than trading one off against the other.

Critics of degrowth, including economists who are sympathetic to the goals of redistribution and egalitarianism, have commented on its infeasibility. Branko Milanović, for example, notes that even though degrowthers believe in economic growth for the poorest in the global economy, their proposals would require some 86 percent of people in currently rich countries to reduce their standards of living. As Milanović rightly notes, the idea that citizens of rich countries would accept such cuts voluntarily and democratically is pure magical thinking.

That brings us to a fourth fallacy committed by the degrowth movement: the idea that degrowth can be achieved without mass coercion and violence.

The reality, of course, is that degrowth would require a massive increase in governmental organization and intervention in the economy. Parrique asks: “Should every company make a profit? Should we let the markets decide what we produce?” The implicit answer is “no,” for as Parrique continues: “degrowth is planned—meaning it is democratically discussed with society and organized in advance by public authorities and the economy’s stakeholders according to a plan.”

And so, the degrowthers return to the errors made by socialist planners in the 20th century. Degrowthers talk about broadening human capabilities, individual freedom and collective self-realization. “Let’s draw up plans for the boldest utopias without fearing the changes they will impose,” writes Parrique. But the rest of us have heard such calls for revolutionary action before. Needless to say, they have ended badly. 

Or perhaps degrowth is not meant to be taken seriously. That is, degrowth is more of a political slogan than a serious academic concept. The radical policies required to reduce the living standards of the middle classes in developed economies would be so politically infeasible that degrowth advocates tend to retreat from the bailey of actual degrowth to the motte of more generic proposals for global redistribution.

Indeed, in The Divide, Hickel ends by arguing for quite run-of-the-mill left-leaning policies such as universal basic income or replacing GDP measures with GPI (Genuine Progress Indicator). His more recent book, Less is More, is subtitled How Degrowth Will Save the World. But it similarly ends with fairly normal left-wing proposals. Understood this way, degrowth may be less radical than it seems, and is more a way of shifting the rhetorical backdrop of policy debates in favor of more redistributive and left-wing policies.

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1. World GDP per capita was $24,248 in 2024, measured at purchasing power parity (World Bank). But GDP per capita is not household income: it also counts investment, government spending, depreciation, and retained corporate earnings, and so runs several times higher than what households actually receive. A more accurate measure of average household income is the one used by Branko Milanović, who puts the global mean at $PPP 16 a day, or roughly $5,800 a year. See Branko Milanović, “Degrowth: Solving the Impasse by Magical Thinking,” Global Inequality and More, April 28, 2021. Hickel uses the GDP per capita benchmark himself: in his 2017 reply to Milanović he put world average GDP per capita at $17,600 (PPP) and called it “not dystopic.”

Summary: For the past half-century, much of the developed world has experienced a puzzling slowdown in productivity growth—the rate at which workers and businesses become more efficient over time. While digital technologies have advanced at a remarkable pace, innovation in the physical world has slowed considerably. The problem is not a lack of scientific breakthroughs or a shortage of good ideas. Rather, it is a failure to translate discoveries into products, infrastructure, and services that improve everyday life. This slowdown is largely the result of policy choices. By reforming outdated permitting systems, using innovation incentives such as R&D prizes and Advance Market Commitments, and reducing barriers created by protected local monopolies, we can accelerate the spread of new technologies and usher in a new era of prosperity.

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In a previous exploration of the housing affordability crisis, I observed a sobering reality: artificial scarcity is often a policy choice. We have placed arbitrary limits—mostly through local governments—on our ability to build homes, driving up costs and restricting opportunity. But this pattern of self-imposed constraint does not stop at the edges of our neighborhoods. It extends into the institutions and policies that shape economic growth. It is one of the primary reasons why, despite living in an age of extraordinary digital innovation, we remain stuck in a decades-long productivity slump.

Economists often measure technological progress using a concept called Total Factor Productivity (TFP). In simple terms, TFP measures how efficiently an economy turns labor, land, and capital into goods and services. When TFP rises, society discovers better ways to produce more with the same resources.

From the 1920s through the early 1970s, TFP in the United States and much of the developed world grew at more than 2 percent per year. This was the era that gave us commercial aviation, widespread electrification, antibiotics, and the Apollo program. The physical world was transformed in a single generation.

Since the early 1970s, however, productivity growth has slowed dramatically to less than 1 percent in most years. As investor Peter Thiel famously quipped, “We wanted flying cars; instead, we got 140 characters.” Digital technologies have advanced rapidly, while progress in energy, transportation, infrastructure, and advanced manufacturing has been far slower. We can send vast amounts of information across the globe in milliseconds, yet we often struggle to build major infrastructure projects on time or on budget.

A 2020 paper by Nicholas Bloom and co-authors argues that good ideas are getting harder to find – that is, more investment in research and development has become necessary for each new patentable idea. However, more recent research by Teresa Fort and co-authors (currently in working paper form) suggests that this is not the case. The Bloom et al. result may, in fact, be an artifact of focusing on manufacturing firms, which were dominant from about 1970 to 1990. Fort and her co-authors show that patenting and innovation have shifted in recent decades, becoming dominated by firms in information, management, and professional services.

Because manufacturing is a physical process, it is much more likely to be subject to, for example, environmental regulations, whereas an IT firm operates in a much less regulated sector. So, our relative stagnation may not be the result of a scientific drought after all. Universities and research laboratories continue to produce remarkable discoveries. We are not failing at invention; we are failing at diffusion, the process of turning new discoveries into widely used products and services.

The Diffusion Deficit and the Permitting Veto

Innovation does not benefit society until it escapes the laboratory and enters the marketplace. The journey from a peer-reviewed paper to a consumer-ready product is long, expensive, and uncertain. Over time, policymakers have added layer upon layer of regulatory complexity to that journey.

Physical innovation requires physical construction. New technologies need testing facilities, advanced laboratories, semiconductor fabrication plants, energy infrastructure, and transportation networks. Yet building almost anything of significance in the modern West often requires navigating years of environmental reviews, public-comment periods, and multi-agency approvals.

Laws such as the National Environmental Policy Act (NEPA) and state-level counterparts such as the California Environmental Quality Act (CEQA) were originally intended to prevent environmental harm. Over time, however, they have increasingly become tools for the delay of progress. Because these laws frequently allow opponents to challenge projects on procedural grounds, they have contributed to what political scientist Francis Fukuyama calls a “vetocracy”—a system in which many actors can block decisions but few can make them. Average NEPA environmental impact statements now take almost four years to complete, with many extending far beyond a decade. Thankfully, the median is a bit shorter, but still about 2.5 years.

Consider the recent push to reshore semiconductor manufacturing. While the government has allocated billions of dollars in subsidies to build these vital factories, the physical construction is bottlenecked by years of permitting and environmental reviews. A state-of-the-art fabrication plant (commonly called a “fab”) that takes 18 months to build in Taiwan or South Korea can take three to five years just to obtain a permit in the United States.

The result is predictable: projects take longer, cost more, and become less attractive to investors. Even when governments provide subsidies for strategic industries such as semiconductor manufacturing, years of permitting can slow implementation. Time is money, and prolonged regulatory uncertainty discourages investment in capital-intensive industries.

The solution is straightforward, even if politically difficult. Critical infrastructure, advanced manufacturing facilities, and research laboratories should face streamlined approval processes. If projects satisfy clearly defined environmental and safety standards, they should be approved in months rather than years.

Pull Mechanisms: R&D Prizes and Commercialization

Reducing regulatory barriers is only part of the solution. We must also rethink how innovation is encouraged and financed.

In addition to corporate financing, most governments try to support innovation through “push” funding. Researchers receive grants to conduct experiments, purchase equipment, and explore new ideas. This model, some economists argue, can be effective for basic science, especially when commercial applications may be years away.

Commercialization presents a different challenge. Many promising technologies fall into what innovators call the “Valley of Death” – the difficult period between a successful laboratory demonstration and a commercially viable product. At this stage, development costs rise sharply while uncertainty remains high.

That is where “pull” mechanisms become valuable. Instead of paying for research inputs, policymakers reward successful outputs. An Advance Market Commitment (AMC), for example, guarantees that a buyer will purchase a product if it is successfully developed. Rather than funding every possible approach, the sponsor commits to paying for results.

Economist Michael Kremer helped pioneer this approach through vaccine development programs. More recently, Operation Warp Speed demonstrated its effectiveness. The government did more than fund vaccine research; it guaranteed large future purchases for successful vaccines. By reducing market risk, policymakers encouraged firms to accelerate development and manufacturing simultaneously. The result was one of the fastest vaccine-development efforts in history.

Consider other approaches. Throughout history, prizes have also stimulated innovation. The Longitude Prize helped solve a critical navigation problem for maritime trade, while the Ansari X Prize helped launch the private spaceflight industry. Pull mechanisms align private incentives with public goals by rewarding success rather than political connections or grant-writing skill.

Breaking Local Monopolies and Regulatory Capture

When people hear the word “monopoly,” they often think of large technology companies. Yet some of the most significant barriers to innovation exist at the local level.

The electric utility sector provides a clear example of how regulatory design shapes technological adoption. Because most utilities operate as regulated monopolies with government-guaranteed rates of return on capital investments, their business model relies on continuous, large-scale infrastructure growth. 

Put simply, utilities make more money the bigger power plants and power lines they build, so they usually prefer huge projects over things like rooftop solar panels that let people generate their own power without the utility having to build as much infrastructure.

Decentralized energy technologies—such as local battery storage, micro-grids, and advanced management software—directly threaten this model by optimizing the existing grid and reducing the need for new capital projects. As a result, studies from the MIT Energy Initiative and industry financial analysts indicate that utilities frequently leverage legacy regulatory processes to delay or block these decentralized innovations from integrating into the wider network.

Similar dynamics exist elsewhere. State dealership franchise laws frequently restrict direct-to-consumer automobile sales, making it more difficult for new manufacturers to enter the market. Occupational licensing requirements now affect roughly one-fifth of American workers and can create barriers to entry that limit competition and labor mobility.

Innovation depends on what economist Joseph Schumpeter called “creative destruction” – the replacement of older, less efficient business models with better ones. When established interests use regulation to shield themselves from competition, they slow technological adoption and reduce future productivity growth. Encouraging competition and reducing regulatory barriers at the state and local level would help accelerate the diffusion of new ideas throughout the economy.

Choosing Abundance

The productivity slowdown is not an immutable law of nature. It is, at least in part, the consequence of policy choices. Human ingenuity remains as powerful as ever. We have more scientists, more capital, and better tools than any previous generation. The challenge is not generating ideas; it is allowing those ideas to spread.

By streamlining permitting processes, expanding the use of R&D prizes and Advance Market Commitments, and reducing barriers created by protected local monopolies, we can accelerate innovation in the physical world.

An additional one or two percentage points of annual productivity growth may sound insignificant. Yet when compounded over decades, the effects are transformative. Higher productivity means higher incomes, better health outcomes, more abundant energy, and greater opportunities for future generations. The ideas already exist. The question is whether we will allow them to flourish.

Summary: The 2026 World Cup has highlighted the remarkable abundance of everyday life in the United States, as international visitors have enthusiastically embraced experiences that many Americans take for granted. This viral phenomenon reflects the country’s high standard of living while illustrating how economic dynamism, open markets, and private enterprise contribute to widespread prosperity and hospitality. The influx of foreign visitors also demonstrates tourism’s value as both a major economic export and a source of American soft power, strengthening international goodwill through personal experiences rather than government efforts.

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As briefly mentioned in my last column for The Dispatch, World Cup tourists’ repeated astonishment with everyday American abundance has become a viral sensation—and in a very good way. Seemingly not a day goes by without some happy foreign soccer fan raving on social media or to the press about quintessentially “American” things—free drink refills, bottomless chips and salsa, ginormous sports stadiums, fancy cars, big houses, ranch dressing, frigid air conditioning, shiny hospitals, etc.—that we consider relatively mundane features of daily life in the United States. (Buc-ee’s, Costco, and Texas Roadhouse have been particularly big hits, and for good reason.)

These viral posts have delighted American onlookers and captured endless media commentary on how the foreigners’ innocent—and often hilarious—observations have helped unite a divided U.S. and remind us locals of just how good we have it. In an era of endless grousing about the U.S. economy—reflected in various surveys of American “sentiment” and sometimes even justified—the ongoing episode has been a welcome, optimistic change of pace and a loud, folk-libertarian reminder that a nation’s capital, policies, and political class are most definitely not the same as its communities and citizens.

The scenes have also raised several noteworthy economic policy points—some good, some ominous—that deserve more attention.

Yes, We Have It Pretty Darn Good

For starters, the amazement of relatively wealthy foreigners—you don’t take weeks off touring America if you’re dirt poor—at relatively middle-class American environments is real-world evidence of our nation’s immense everyday wealth. 

The timing couldn’t be better (and, no, I’m not talking about the A/C-less heatwave in Europe).

As The Economist just documented, earlier this year Nobel laureate Paul Krugman and several other elite economists got into a heated (and very wonky) online debate about whether Americans’ living standards really were zooming ahead of those of our European counterparts.  The main point of contention was how to measure individuals’ purchasing power in both places, with one approach showing an increasing wealth gap and the other (Krugman’s) a relatively steady one. You can see the difference in the chart below: Using a constant “purchasing power parity” adjustment shows France’s GDP per capita—a standard way to measure individual wealth—to be declining versus that of the U.S., while using a “current PPP” adjustment shows little long term change, and thus a different wealth narrative.

As someone who loves both visiting foreign countries and returning home to my American creature comforts, I freely admit my biases in this debate. But both sides do raise some legitimate issues about how we should measure living standards across countries, as well as what should be measured. Overall, the debate has been delightfully intense and catty—at least for nerds like me.

Yet, as The Economist points out, both sides also seem to agree on a few things: First, Europe is growing more slowly than America, thanks in large part to the economic dynamism and tech-fueled productivity here. Second, even Krugman’s pro-Europe data (see chart above)—along with many other sources—show Americans to have higher average wages and more disposable income (yes, even after accounting for out-of-pocket healthcare costs) than the average European in most places (yes, there are exceptions), due to our superior labor productivity and their leisure choices. Third, and most importantly, both sides want to support their reading of the data with an “eye test”—i.e., visiting each place and just looking around—that the economists believe will confirm their own American/European wealth story. 

Hilariously enough, thousands of European World Cup tourists—along with ones from Japan and other countries, too—have performed just that test, mere days after the economists proposed it. And the result is an absolute rout for Team America:

There are many reasons for the foreigners’ astonishment. (A big one, in my opinion, is that these folks are seeing parts of Real America, especially in the Sun Belt and Midwest, that foreign tourists rarely visit, yet—as we’ve discussed here repeatedly—allow not-rich Americans to live very comfortable lives.) And, to be sure, not all the astonishment is genuine. 

But a lot of it obviously is, and at its root lies the Great American Prosperity Machine. Deal with it, haters.

Capitalist “Charity” Is Still Good

Another fascinating and wholesome part of the foreigners’ U.S. experience has been the outpouring of support they’ve received from both normie Americans—workers, neighbors, random passersby, etc.—and a wide range of American celebrities and companies. Most notable in this regard has been German soccer (fußball) fan Freddy, whose daily adventures in Middle America have earned him a giant online following and a Forrest Gump-like amount of in-kind support from pro sports teams, hotels, airlines, and a smattering of famous athletes, entertainers, and politicians (including at least one sitting governor who volunteered to help Freddy attend Germany’s game in Toronto after a flight cancellation). Freddy’s experience is unique, but only in terms of its magnitude: A wide range of U.S. businesses, municipalities, and influencers have rolled out the red carpet for these happy foreign visitors, greatly adding to the entire feel-good experience.

Unsurprisingly, this support has led dismissive cynics to explain that, actually, a lot of it is just a selfish attempt to boost sales, brands, and online engagement instead of genuine generosity and kindness. Some of those allegations are clearly false, but the correct ones are hardly worth complaining about. Instead, they evoke yet another lesson from Adam Smith: “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.”

Scholars (ahem) often apply this quote to explain that “selfish” market transactions among free people are not only mutually beneficial but also can have broader social benefits and generate the wealth individuals need to perform charity (which Americans do a lot of, by the way). But Smith’s famous line also often applies to many “charitable” acts by corporations and celebrities: While maybe not motivated by pure altruism, these efforts are often a strategic effort to drive long-term profitability by improving brand reputation, attracting customers and workers, and generating more sales. 

There’s little reason to view such motivation as unseemly. First, the act still makes people better off in some way (and often entertains and encourages onlookers, too), so who cares whether it was done for “benevolent” or “selfish” reasons? “Dinner,” in Smith’s terms, still gets served. Second, it’s usually impossible to say why these “charitable” people and firms decided to help Freddy (and any others in need)—and it’s usually a combination of both sympathy and self-interest/promotion. On the latter motivation, see point 1 and Smith above. On the former, check out his other book.

Tourism as a Massive US Services Export (And Source of “Soft Power”)

Admittedly, the World Cup visitor story isn’t all wine and roses, and there are—as noted—some less-optimistic policy lessons buried in here, too. For one thing, all these visitors are a stark reminder of the economic and geopolitical value of foreign tourism—and its recent, policy-driven decline here in America.

As we discussed last year, one of the more interesting and unfortunate results of Trump’s tariff wars, deportations, and related overseas antagonism (threatening to invade Greenland, calling Canada the “51^st state,” etc.) has been foreigners’ independent retaliation against U.S. goods and services. And tourism—a U.S. services export—has been the trend’s most conspicuous victim. According to a May 2026 Congressional Research Service report, in fact, international visits were down in 10 of 12 months last year, with the only increases coming before Trump took office (January) and due to an abnormally late Easter (April):

This drop, in turn, hurt lots of American businesses and likely reduced U.S. economic growth last year by billions of dollars:

According to the U.S. Bureau of Economic Analysis, in 2023, travel and tourism (both domestic and international) accounted for approximately 3% of U.S. gross domestic product (GDP). According to the World Travel and Tourism Council (WTTC), a nonprofit organization that advocates for and researches global tourism, international visitor spending in the United States was approximately $176 billion in 2025, a 4.6% decrease from 2024. WTTC further noted that GDP for the travel and tourism sector increased 4.1% globally in 2025 from 2024 but grew 0.9% for the United States.

On the bright side, CRS goes on to note that the World Cup could boost foreign visits and GDP growth in 2026, and—judging from the packed bars/restaurants and sky-high prices for match tickets, airline fares, and hotel rooms—you can easily see why. Even with a few embarrassing visa-related snafus, the monthlong event has been going pretty smoothly so far and is forecast to attract almost 1.25 million international visitors, each expected to spend more than $5,000 (nearly twice the typical international tourist). None of that erases the roughly $12.5 billion in lost international visitor spending that WTTC projected for 2025, but it’s still a welcome rebound—especially for the smaller American businesses that depend heavily on foreign tourist spending each year.

The scenes of international comity surrounding the World Cup in 2026 are also a vivid, real-time reminder of how U.S. tourism is a market-based source of America’s “soft power,” improving the United States’ image abroad and advancing U.S. geopolitical objectives without spending taxpayer dollars (or doing stuff far worse than just that). Scholars call this the “contact hypothesis,” i.e., the notion that person-to-person encounters can affect overseas perceptions of a country in ways that no government messaging campaign or foreign aid package can match. World Cup visitors’ ecstatic consumption of everyday Americana is soft power in (mostly) organic form, with our culture, hospitality, and abundance doing the diplomatic work that American government officials can’t (or won’t) do.

To be clear, the goodwill America earns from Waffle House, Bass Pro Shops, Fenway Park—and the Americans who live and work near these and other iconic spots—doesn’t automatically translate into durable shifts in foreign acceptance of U.S. policy. But at a time when America’s global image has taken a few (ahem) hits, having a million-plus foreigners document their travels and return home as amateur American ambassadors is a welcome development, reminding people everywhere that the words of one guy in the Oval Office don’t represent a 350 million-person country. 

The only question is whether the foreign tourism boost—and good vibes—can continue after the World Cup ends. The answer, unfortunately, will probably not be in Costco’s hands.

Seeing the Linkages Between Trade and Peace

Relatedly, all these good vibes are a nice reminder of one of the ways that trade—in this case both foreign tourism and global sports entertainment—can help encourage peace. As I documented in a 2020 paper, a wide body of research finds that heightened foreign trade can meaningfully reduce (but not eliminate) the chances of armed international conflict through several channels: 

First, by making countries more commercially interdependent, trade encourages these nations to avoid war or other large-scale armed conflicts (which could impose substantial economic losses). Second, trade and commercial bargaining are more cost-effective than war as a means of resolving disputes with, or obtaining resources from, another country. Third, trade increases material prosperity (e.g., goods, services, investment, ideas) and promotes mutual tolerance and understanding. And fourth, free trade can limit the political power of domestic constituencies that may benefit from increased conflict.

Recent studies reinforce these conclusions. One finds a strong causal “peace dividend” from trade generally, i.e., that a doubling of bilateral trade reduces the probability of militarized conflict by roughly 30 percent. Elsewhere, a recent survey of almost 2,000 Japanese firms finds they routinely pushed for diplomatic solutions to supply-chain disruptions involving allies and adversaries alike—new support for the concept of “commercial peace,” i.e., that global businesses have powerful incentives to oppose wars that might harm their facilities (or, you know, kill their customers).

Regardless of the driver, however, the outcome is clear: While global economic integration can’t eliminate armed conflicts, policies that liberalize trade can make peace among nations more likely—especially when compared to the isolationist, antagonistic alternative the U.S. government is pursuing today.

In their modest but viral way, the million-plus foreigners now cheering in American bars are making a similar point.

A version of this article was published at The Dispatch on 6/25/2026.

Listen to the podcast or read the full transcript here.

Joining me today is economist Michael Strain, Director of Economic Policy Studies at the American Enterprise Institute and a professor at Georgetown University’s School of Public Policy. He is the author of The American Dream Is Not Dead: But Populism Could Kill It and co-author of “Have You Heard the Good News?” an essay in The Free Press that will be the main subject of our discussion. Michael, how are you?

I am well. Thanks for having me.

Let’s walk through this piece. You say that “yes, we have real problems, but widen the aperture, and you’ll see that there has never been a better time to be alive.” Tell me about that.

I think that is self-evidently true. It’s true whether you look at economic outcomes or broader measures of quality of life. But it’s a very controversial statement. Opinion leaders, commentators, and politicians from both parties seem to agree that things are very bad and were much better in the past.

You say all this doomsaying feeds into the populist moment we are living in, and it comes from both sides. Are we living in a populist moment?

I do think we’re living in a populist moment.

There’s always been a populist strain in American politics, but it was amplified by the 2008 crisis. Pat Buchanan’s message from his 1990s presidential campaigns and Donald Trump’s message from 2016 are very similar. Bernie Sanders’ message from the 1990s was very similar to his 2016 campaign. The financial crisis exacerbated this populist impulse: the share of the GOP primary electorate that voted for Buchanan in the run-up to Super Tuesday was around 25 percent; for Trump in 2016, it was around a third.

The financial crisis was global, and in fact we’ve seen a rise of populist politics globally—across Western Europe and the United Kingdom, for instance—that’s quite similar to what’s been happening here at home. My sense is that populist sentiment was reverting to its baseline by 2019, but then the pandemic stirred up a lot of populist sentiment. One characteristic of populism is that it pits the people against the elites, and the elites made a lot of mistakes during the pandemic, such as keeping kids out of school and faulty public health guidance. That exacerbated the populist sentiment.

Tell me about horseshoe theory and the parallels you see between a figure like Zohran Mamdani on the left and a figure like Josh Hawley on the right.

Horseshoe theory is the idea that in a two-party system like ours, the far left and the far right tend to more closely resemble each other the further you go toward the extremes. You see it in support for specific policies: both the far left and the far right are more supportive of organized labor than the center left and center right. They are more supportive of using the tax code to penalize certain corporations or industries. But you also see convergence on a deeper level, where the far left and far right are both less supportive of the US Constitution and our Madisonian system than the center left and center right.

I think now is a good time to ask you what exactly you mean by populism, because people use that word in different ways.

I think of populism as characterized by three big things. The first is pitting the people against the elite. The second is a turn inward: the idea that the US should be economically self-sufficient, that globalization and international trade are bad, and that the US should be very skeptical of immigration and isolationist in foreign policy. The third is a deep pessimism about the current state of the country and prospects for the future.

That populist mentality gives rise to zero-sum grievance; the idea that for me to do better, you have to do worse. For the people to do better, the elites have to be made worse off. For native-born workers to do better, there have to be fewer immigrant workers.

The left and right define “elites” differently, with some overlap. Who are the elites being defined as the enemy by the populists on the right and the left?

Both left-wing and right-wing populists are skeptical of big business, rich people broadly defined, and the media. One important difference is that right-wing populists direct a lot of hostility toward immigrants in a way that left-wing populists don’t. They wouldn’t say immigrants are part of the elite, but they would say the elites are encouraging and allowing large immigrant inflows, which is bad for native-born Americans.

The narrative on both sides is that our economic system, and the political system that supports it, has been fundamentally broken for decades. That system exists to serve the interests of the elites, and, because society is zero-sum under their view, if the elites are doing better, the people are doing worse.

There’s disagreement among populists on the right and left about what needs to be done to fix the system, but they agree that whatever replaces it should be much more intrusive. They agree that market outcomes should be altered much more substantially and that economic liberty should be much more curtailed.

So according to this narrative, life in the United States today is terrible, and we need to burn down the system. But you write that there has never been a better time and place to be alive than in the United States today. Lay out the facts for me.

That’s self-evident from the data, especially if you focus on economic outcomes.

Over the last three decades, inflation-adjusted wages for typical workers have increased by 44 percent. Inflation-adjusted household incomes are way up as well. The wealth of the typical household, after adjusting for inflation, has more than doubled over the last three decades. Consumption is at an all-time high as well.

We should care more about the poor than we care about the rich, but if you look at low-income Americans, the bottom 20 percent or bottom third, their outcomes over the past several decades have improved faster than outcomes at the median. So, the evidence is very strong that from an economic perspective, there’s really never been a better time to be alive.

What about inequality?

There’s no question that inequality is a lot higher today than it was in the ‘70s, but most of that growth happened in the ‘80s and ‘90s. My reading of the evidence is that over the last 15 years or so, inequality has either stagnated or declined. Wage inequality has been declining in recent years, and I’m comfortable asserting that we’ve seen a reduction in income inequality over the last decade or two.

I would add that people overstate the importance of inequality. Inequality growth was really rapid in the ‘80s and ‘90s, but people didn’t care about it because average wages were growing quickly, just not as quickly as incomes at the top. Inequality was falling in the decade after the financial crisis, but people were much more concerned about it because the 2008 financial crisis and the Great Recession were such traumatic events. So, I don’t think inequality is really what people are reacting to.

You also discuss non-economic measures of well-being, such as crime and life expectancy. Tell me about some of those.

The story is much the same when you look at broader outcomes. The rate of violent crime has fallen dramatically in the past three decades. Life expectancy dropped in 2020 and 2021, but it’s now once again trending in the right direction. Access to information has obviously never been higher. Leisure time, in terms of paid time away from work, has never been higher. Life in general has also become much safer; you’re much less likely to die of an illness or in a car accident than in previous decades.

Now is actually a particularly strange time to be arguing that our outlook is bleak and life was better decades ago. Think about what artificial intelligence is likely to do for drug discovery, for curing diseases, and for educating kids. We are at the beginning of an age of marvels. We’re likely to see astonishing innovations and improvements in quality of life in the next two decades.

You write that populist leaders actually seem to look down on American workers and households by behaving as if everyday people don’t benefit from material prosperity, low prices, or relatively safe and comfortable jobs.

Can you make that argument comprehensible?

Take the argument that more people should make things with their hands. Many people hear that and think, “Okay, I can kind of get that.” But think about the implications in an economy with a 4 percent unemployment rate. If we’re moving more people into manufacturing, we’re moving people out of services, and service workers earn more on average than manufacturing workers. So, the argument is really that people should move from a higher-wage industry into a lower-wage industry. That may be inconvenient for the populists chasing this vision, but it is just a fact.

There’s an attitude here on the part of populists that it’ll be better for people to work in an industry they have not chosen, that pays lower wages, in a job that’s less physically comfortable or safe than their current job. That strikes me as patronizing and condescending, and antithetical to the way Americans should expect their government to treat them.

How does this piece relate to your book The American Dream Is Not Dead?

The message and arguments are quite similar. The view that the American dream is dead is quite common, with a large focus on the economic components of the American dream, and I don’t see it that way.

You do fear that if enough people believe the dream is dead, they could kill it — that’s the subtitle of your book. How could populism kill the American Dream?

The populist diagnosis of what ails the United States is fundamentally wrong, and the policies that flow from that incorrect diagnosis are going to be harmful. A big trade war or big new social programs or nationalization would be very bad for typical workers and households: wage growth would slow, real wages might even decline, and you’d see a reduction in the rate of innovation and productivity growth. More fundamentally, there’s a real threat to our system of democratic capitalism if the government stops respecting the role that markets play in advancing prosperity and feels generally less constrained about stepping in.

Finally, if you introduce the pervasive belief that the game is rigged, that hard work doesn’t pay off, that typical workers can’t get ahead because the elites are expropriating all the economic gains, you dim people’s aspirations, reduce work effort, and make people less tolerant of risk. You end up creating some of the very problems the populists are incorrectly arguing currently exist.

One thing you do in this book is invite two ideological opponents to provide rebuttals, one from the populist left and one from the populist right, so readers can decide for themselves. One of those arguments is that despite all your data points, there are still real segments of the population who are economically struggling. How would you respond?

There’s no question about that, and we should be focusing our energy on those pockets of problems. If you’re a 50-year-old man who did not graduate high school and has recently been laid off, you’re in a tough spot, and public policy should be doing more to connect you with opportunities.

There have also been time periods of real struggle. 2008 to 2014 or so were bad years for lots of households. My goal is not to be Panglossian. Even when times are good, like they are right now, there are groups of Americans and places in America where things are not going well. But part of the problem of populism is that it doesn’t want to focus our energy on those groups or places. It wants to focus on much larger projects like reordering the global trading system or the American healthcare system, and that’s actually to the detriment of the Americans who are really struggling.