The Middle Class Myth and China’s Future with Noah Smith

Today on Moment of Zen, Erik Torenberg and Noah Smith debunk the myth that globalization destroyed America's middle class, showing wages actually grew during hyperglobalization. It examines the limited "China shock" impact and critiques how both political tribes' technology fears may handicap America's competitiveness against China.

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HIGHLIGHTS OF THE DISCUSSION:

Main Argument

Myth: Globalization hollowed out America's middle class

Reality: Middle class moved UP income brackets; wages grew 40% during peak globalization

Real Causes

1973 oil shock caused wage stagnation (70s-80s), not globalization

China shock (2000s): Only 2M manufacturing jobs lost, limited scope

America vs. China

US: Less globalized than most countries; only 4% manufacturing trade deficit

China: Cities will look shabby in 30 years; exports falling as % of GDP

Political Technology Paralysis

Republicans: Fear hardware (solar, batteries, EVs)

Progressives: Fear software (AI, social media)

Both sides handicapping American tech leadership while China advances