At CapX, I explain what motivated Phil Gramm and me to write our book, The Triumph of Economic Freedom: Debunking the Seven Great Myths of American Capitalism. A slice:
Likewise with America’s own industrial revolution, the ‘Gilded Age’. American schoolchildren are taught that the final third of the 19th century witnessed John D. Rockefeller and other ‘robber barons’ jacking up prices to extortionate levels, poisoning consumers with unsanitary food, suppressing wages down to pauper rates and driving their workers like slaves.
Yet despite still being a staple feature of American textbooks and in the popular media, this tale is false. This era witnessed remarkable economic growth in the US – growth that was shared by ordinary Americans. Although the US population nearly doubled between 1865 and 1900, real per-capita GDP surged upward by 83% and the real annual earnings of all nonfarm workers rose by 62%. The rise in the average real hourly wage of manufacturing workers was especially impressive, jumping – as found by the economist Lawrence Officer – by 158% between 1865 and 1905.
At the dawn of the 20th century, ordinary Americans had more and better food, housing, clothing and leisure than their parents did three decades earlier.
No myth, however, looms as large and ominously today as that which insists that America’s industrial economy and middle class have been ‘hollowed out’ over the past half-century by globalisation. We Americans are told incessantly that starting in the mid-1970s, US industry began to be shipped abroad as trade became freer – a figurative defenestration of the US economy that only accelerated with the 1994 North American Free Trade Agreement (NAFTA) and China’s 2001 entry into the WTO.
And yet all the evidence contradicts this claim.
