Some pictures are really worth a thousand words

Data can easily be misleading, but it can also report. Indeed, much social and economic reality cannot be adequately internalized without quantitative data that are carefully categorized, skillfully assembled, and carefully interpreted. And when the data is presented in graphic form, the information transmitted can be enormous. These “pictures” are often worth a thousand or more words.

Below we show charts that shatter many myths about international trade and the US economy. It is all compiled from publicly available data, mostly from the websites of US government agencies such as the Bureau of Labor Statistics and the Bureau of Economic Analysis. The first four of these graphs were created by former George Mason University student John Murphy, who is now studying economics at Western Carolina University. Above each graph is a short explanation of the main lesson of that graph.

Pictures

One important lesson that the chart below provides is that the number of jobs in an economy is not constant. As revealed here, the US civilian workforce today (2022) is about 160 percent larger than it was in 1950. So is the number of Americans employed in civilian jobs.

The most common fear about imports is that they lead to net job destruction in the home country’s economy. The following chart casts doubt on this accusation. The growth in US civilian employment from 1950 through the spring of 2022 was unaffected by the steady increase in the amount of inflation-adjusted (that is, “real”) imports into America. Even when the annual increase in imports themselves accelerated, starting in the early 1980s, there was no noticeable negative effect on total employment.

Another misconception about imports is that they reduce the wages of workers in high-wage countries like the United States. However, as shown below, when annual real imports of the United States began to increase at a faster rate starting in the early 1980s, there was no effect on the growth of real workers’ wages.

Some people will protest:The problem is not importing as such, It is that imports outweigh exports – the problem, in other words, is the US trade deficit!“So let’s take a look.

The chart below shows the value of the annual US trade deficit against US civilian employment. Although the United States continually began running annual trade deficits in 1976, the negative impact on employment growth that protectionists had predicted did not materialize. Likewise, comparing the previous chart to the trajectory of the US trade deficit shown below reveals that the growing trade deficit is inconsistent with any long-term decline in inflation-adjusted worker wage growth.

Another common myth is that US industrial production has been in decline for too long. The chart below — reproduced from the St. Louis Federal Reserve’s FRED data site — debunks this myth. US manufacturing production hit an all-time high on the eve of the Great Recession. After falling during the recession, it grew quite a bit before stabilizing for eight years. Manufacturing output fell again during the first bouts of coronavirus hysteria, but since April 2020, it has escalated. In July 2022, this production was only 3 percent below its all-time high in December 2007, and 21 percent above the Great Recession low of June 2009.

A broader measure of production is industrial production, which, in addition to industrial production, includes mining of raw materials and energy production. Industrial production has grown steadily for more than a century. In July 2022, the latest month for which this data is available, US industrial production was at an all-time high.

Given this fact of US industrial production, it is not surprising that, as the following chart shows, US industry eligibility It is also at an all-time high.

Moreover, as the following chart shows, US-based companies do not become seriously overburdened with debt (including debt owed to foreign creditors).

Similarly, the United States family The net worth has also grown (at least since 1987 when Fred started compiling this data). These data, however, have not been adjusted for inflation. Manual inflation adjustment, which I did with this inflation adjuster, shows that total real household net worth in the last quarter of 2019 (just before the data was distorted by coronavirus hysteria, shutdowns, and government spending) was 73 percent higher than it was in Fourth quarter of 2001, when China joined the World Trade Organization. In the last quarter of 2019, real household net worth was 182 percent greater than it was in 1987.

Of course, there are also more families in America today than there were in the past. In 2001, for example, there were 108 million families while in 2019 there were 129 million families. in 2019 dollars, modified The real family net worth increased from $700,213 in 2001 to $849,946 in 2019. Mediator The real family net worth is much smaller than it is You know? Real net worth. In 2019, the median real household net worth (US$67,560 for 2020) was 9 percent higher than it was in 2001.

No data or sets of graphs, no matter how carefully constructed and intelligently interpreted, can convey a complete picture of the economy. Clearly, data like the one shown above is a “big picture”. They say very little about flesh-and-blood individuals or particular businesses. However, such data can convey important information, which is often the opposite of popular narratives about the economy in general, and about trade in particular.

Donald J. Boudreau

Donald J. Boudreau

Donald J. Boudreaux is a Senior Fellow at the American Institute for Economic Research and with the F.A. Hayek Program for Advanced Studies in Philosophy, Politics, and Economics at George Mason University’s Mercatos Center. Member of the Board of Directors of the Mercatos Center; He is professor of economics and former chair of the economics department at George Mason University. He is the author of books Basic Hayek, GlobalizationAnd the Hypocrites and half-intelligenceHis articles appear in publications such as The Wall Street Journal, The New York TimesAnd the US News & World Report In addition to many scientific journals. He writes a blog called Cafe Hayek and a regular column on economics for Pittsburgh Tribune review. Boudreaux holds a doctorate in economics from Auburn University and a law degree from the University of Virginia.

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