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Naomi Klein Interview: Trump, Musk, Pandemic Rage, and Climate Denial

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Wherever corporate power is running roughshod over culture, the climate, the economy, or our politics, progressives can count on Naomi Klein to provide a clear-eyed assessment of the damage and to offer pathways to resist with hope, rather than cower in despair.

A social activist and public intellectual, Klein is the author of The Shock Doctrineabout how right-wing elites leverage moments of crisis to advance unpopular economic agendas — and This Changes Everything: Capitalism Versus the Climate, an examination of how free-market dogma is accelerating the threat to our planet’s survival. Her most recent book, Doppelganger, limns how conspiracy culture is shattering our notions of shared reality. 

Klein recently co-authored an essay for The Guardian, sounding alarm about the dark worldview of politically insurgent tech billionaires like Elon Musk and Peter Thiel. Klein views these men — who are guiding Donald Trump’s presidency — as abandoning any positive vision for our collective future, and instead retrenching in preparation for a dark, nearly end times-level social collapse, from which they and other elites emerge unscathed, and all powerful. “The governing ideology of the far-right in our age of escalating disasters,” she writes, “has become a monstrous, supremacist survivalism.”

Rolling Stone reached out to Klein for a conversation about Trump’s unique shock doctrine — as well as his administration’s confounding war on science and basic research. Klein is a professor at the University of British Columbia, where she directs the Centre for Climate Justice. (You can almost forget she’s not American until you hear the pop of a hard ‘a’ when she says “against.”) Klein also offered her views on the recent Canadian election, and the legacy of Pope Francis, who invited her in 2015 to participate in the launch of his encyclical calling for a shared reverence of the glories of our Earth.

The following transcript has been edited for length and clarity.

For readers who are unfamiliar, can you quickly unpack the thesis of The Shock Doctrine?

In its simplest terms, the shock doctrine is just a strategy to advance deeply unpopular — and profitable — ideas. It’s using a moment of crisis to advance policies that benefit elites, but that tend to be opposed by most voters. 

Trump’s trade war is certainly creating a shock. On some level, this protectionism runs counter to the GOP’s free-market free-for-all we’ve watched since Ronald Reagan. Yet on a macroeconomic level, it also looks like they’re trying to cool off the economy so they can justify jamming through their tax bill, which is the same old Republican wish list: tax breaks for the wealthy and cuts to the social safety net. 

Look, there’s only so much I can do to make any of this seem rational. Because I do think we’re in an extreme phase — which is what I was trying to get at with that “end times fascism” piece. 

What I’ve been tracking with The Shock Doctrine is a normie version of this. When people have public assets and social services, they tend to protect them. People tend to be opposed to water privatization, public transit privatization, Social Security privatization. So the right needs a crisis to exploit. You need an austerity crisis, or you need to do it in the name of bringing down inflation.  

This is not a new phenomenon. I quote [the preeminent right-wing economist] Milton Friedman in the Shock Doctrine, saying, “Only a crisis, real or perceived, produces real change,” and when that crisis occurs, change “depends on the ideas that are lying around.” 

He came up with that theory about how to advance his ideas, because he had seen the left do it during the Great Depression — when you had the social safety net emerge in the United States. People were trying to get at the root causes behind the Great Depression. Deregulated capitalism? Let’s regulate it. And let’s make sure nobody falls through the cracks six times. These were real attempts to solve crises.

But Friedman believed everything went wrong with the New Deal. So this was always a counter-revolution. The Friedman version of this was: Let’s be the ones who are ready. When the crisis occurs, let’s ram [our agenda] through. And then when it doesn’t do what it’s supposed to do, we’ll ram it through even harder. 

What do you see as different about our current moment?

The reason that we’re in a deranged circle of hell here is that we’re very deep in the project. There’s not much to sell off; there’s not much left to privatize; there’s not much left to deregulate. And the effects of all of their earlier successes mean that we are in a very volatile state. Whether it’s our Earth systems in the face of climate change, or how financialized and shock prone our economy is. 

The shocks are not surprises anymore. The shocks come continuously. Not just the way Trump generates them — and that is different from earlier forms of shock. But the system itself generates shocks, at a staccato tempo. 

If you look back to earlier stages of how neoliberalism came to different parts of the world — in the states under Reagan, in the U.K. under [conservative Prime Minister Margaret] Thatcher — it was its own kind of utopian project: We’re going to get rid of all the dead wood, and we’re going to have this efficient economy, and the rising tides will lift all boats. Democracy will spread throughout the world. I came of age politically with the collapse of the Berlin Wall, when [political scientist] Francis Fukuyama [observing the triumph of the capitalist West in the Cold War] declared “the end of history.”

But now, capitalism has entered a radical and apocalyptic phase. There is no utopian vision in any of this. Instead, there’s a final battle. And this is where it gets really dark. The people who are advancing this agenda are also building their luxury bunkers and their spaceships to Mars. They don’t believe that there is a future. These people believe history is ending, literally. It’s end times! Get onto your rocket ship, or get into your golden city in the sky. And that is distinct. 

It’s important to see the continuities with earlier moments of shock and shock exploitation. But we have to not be blinded by history — where we think that all we’re seeing is repetition. Because history is cumulative. The fact that this has been done many times before, successfully, means that the stakes are infinitely higher. And it also means that the people who are doing it have to rationalize something much more monstrous. 

That’s a lot to unpack. So you’re saying that in the early stages of this process, you had the Soviet Union, with a competing system of state-run economics. So one could imagine bringing about a neoliberal revolution, which leaves the world awash in freedom and prosperity, and, gosh, things will be amazing. But now, in this later stage, there’s no new frontier to target. In fact, everything that they’ve done so far has imperiled the livability of the planet. So the billionaires and their political faction are preparing for something dark and apocalyptic?

Yes. Which isn’t to say that Peter Thiel and Elon Musk think that they’re the ones who are going to face the consequences. That’s where these stories follow a similar narrative structure to the rapture. [The evangelical fable in which the faithful are hoovered up to heaven while unbelievers are left behind to face the chaos and violence of the End Times.] And that, whether or not you’re religious, is quite frightening. Because they’re not telling a story where everyone is OK. They’re telling a story that is more like that biblical story, where the chosen get lifted up and are protected, in their golden city in the sky. But maybe in this case in their fortress nation state, or in their luxury bunker.

Or is Mars that city in the sky?

Exactly. There is also this story of a great culling. We started to hear more open talk during Covid of, well, “Maybe we should just let the virus do its work.” And, “Maybe we should just let it cull the herd.” I don’t think we have reckoned enough with the fact that a lot of people now more openly believe in these eugenics-inflected ideas — “Maybe climate change is just gonna cull humanity. And that’s OK.”

You have somebody like J.D. Vance talking about the order of love — and our job is to love your family first, and then your neighbors, and then your community. [With the dark implication that it’s OK to disregard those at the margins.] But the pope said, You have it wrong. That’s not what Catholic doctrine says. That’s not what loving your neighbor is. Francis said love is not a series of concentric circles. 

But that is what MAGA is telling itself: the story that says you don’t have to care about people being deported to Salvadoran gulags. In fact, you need to celebrate that. It’s all of this culling —

Arguably we see that in Health and Human Services Secretary Robert F. Kennedy Jr.’s move to end federal support for the anti-overdose medication Narcan or the LGBTQ+ suicide hotline. Or in the demolition of U.S. foreign aid and the suspension of global health support, which may cause millions of deaths in the developing world.

This is an openly supremacist project. The supremacist ideas surge when they are needed to rationalize monstrous policies. This accelerated during Covid. For people who wanted an argument about why they didn’t need to do anything — whether it was mask, or get vaccinated, or close their yoga studio, or whatever it was. People started playing with: “Well, what would it feel like to just not give a shit if people die?” And once you play with that, you’re playing with fire. And it starts spreading. And it becomes, “Well, who else could we say it’s OK if they die?” 

Another piece of this puzzle is the corrupting influence of wealth concentration, which is another byproduct of the successes of these [economic] policies. When you have the rapid-fire privatization that has been the hallmark of the neoliberal era, that’s how you get oligarchs. We first started using the term, recently, talking about oligarchs who got exceedingly wealthy in the privatization era of post-Soviet Russia. Or the oligarchs in the privatizations of Mexico — where you [still] have a state monopoly, except it’s private. 

And here’s the puzzle. These people were not hurt during the pandemic. Billionaires doubled their wealth in the first year of Covid. So it’s not just about money. It’s about being so rich that you actually believe yourself to be God. This is the corrupting influence. 

We have all these slogans: “Every billionaire is a policy failure.” But it goes beyond that. When you have people who have more money than has ever been concentrated in the history of money — you do believe that you’re better than other people, in a way that I don’t think that we can totally fathom. 

What does Elon Musk think it means to be the richest person in the world? How does that change you? One of the ways that it changes people’s brains is you believe the rules shouldn’t apply to you. You believe you should be able to act like a king. And when you can’t — when you’re told by the state you actually have to follow these rules, or do other things — it ignites rage. And we’re in that rage. 

That rage also comes from empowered workers saying, “We don’t want to build this contract that’s going to give tech to ICE.” Or, “We think we should be able to work from home.” Or, “We think you shouldn’t sexually harass your workers.” Particularly in Silicon Valley — even though these aren’t unionized workplaces for the most part — workers have been empowered to stand up to their bosses. You think about the Google walkout [over sexual harassment].

We underestimated the rage that inspired. So we’re in a counter-revolution. And it’s hard to understand, because these people have everything. But what they want is beyond that. They want to not be accountable to anyone. Because what they want is absolutely everything.

A key part of the Trump agenda, which is confounding a lot of people, is the administration’s war on science and basic research. You wrote a post on Bluesky characterizing this as “pandemic revenge,” because “as far as these oligarchs are concerned, all science does is tell them stuff they cannot do.” Can you expand on that?

I’ve spent a lot of time studying the infrastructure of climate-change denial. I interviewed the then-head of the Heartland Institute, Joseph Bast — a University of Chicago trained economist — back in 2011 about why he’d decided to make climate change denial the main mission. He said that they realized that if the science was true, that anything would be justified by way of regulation. Very, very robust regulation. And so, he said, “We took another look at the science.”  

I thought, “Oh, that’s an extraordinarily honest thing to say.” It was very motivated reasoning. If the science is true, everything that they do at the Heartland Institute — which is argue for more deregulation of markets and more privatization — would be in jeopardy.  

I’ve been seeing parallels in the backlash against Covid public-health measures. Something extraordinary happened in the United States. In the name of saving the lives of some of the most vulnerable people in society — the elderly, the disabled, immunocompromised — shopping malls were closed, factories too. Not for very long, but the first move was to lock down. 

The decision was made to put lives ahead of markets. And I’m not sure I ever thought I would live to see that. Many Republicans were advocating at the time, “Just let it rip,” and, “Maybe this is what God wants,” and, “Maybe old people should sacrifice themselves for young people.” But despite all of that, it did happen. 

We know from Elon Musk’s trajectory that this was an important part of his radicalization — how angry he was that he had to close his factories, briefly. And anger at workers who were saying, “Why should we come back to the office when there are risks, when we’ve seen that we can work from home?” 

I see something recognizable in this rage from what I’ve seen studying climate change denial. Science is saying: This is the best way to save lives. But this is not the best way to run the business. And this is actively threatening my bottom line. This is part of the wholesale attack on research and public health. 

So, if you end the public funding that creates the evidence about what you should and shouldn’t do, that allows you to do whatever you want?

No research, no problem. 

Oof.

Look, they’re not just attacking the “woke” parts of the university. They’re attacking everything. You see all these ways that they’re turning off the lights. 

One of the most extraordinary things came when they cut a bunch of partnership programs between NOAA and Princeton. (If you don’t remember this, I don’t blame you; it’s a minor footnote in so many other profoundly wild things that have happened.) 

The Commerce Department announced it was cutting $4 million for Princeton’s world-renowned climate research programs, to bring them in line with Trump’s objectives and priorities. Among the cuts was a program called the Cooperative Institute for Modeling the Earth System I — that’s the official name of it. The government’s reason for defunding the research was that it promotes “exaggerated and implausible climate threats, contributing to a phenomenon known as ‘climate anxiety,’ which has increased significantly among America’s youth.” 

This is a can-do problem-solving attitude! Knowing about climate impacts makes young people anxious. That’s the problem. And the solution is: Don’t tell us. No research. No problem. 

That attitude is pervasive. 

These moves are being made by very smart, rich people who have made their money on the back of research and technological advances. How do we square that?

There are wild fantasies that AI is just going to be able to fix it. Sure, we’re attacking cancer research, but don’t fret: AI is going to fix cancer for us. Or fix climate change for us. This is mainly just a story of rationalization. I don’t think they really believe that. But you do need some kind of a story that you tell yourself that would make this kind of attack on research infrastructure palatable.

There’s a range of rationales. But I do think that somebody like Thiel is telling himself that AI is going to fix it.

He’s not the only one. In your recent piece, you write about Eric Schmidt, the former Google CEO who used to be an Obama guy, who has recently been arguing: Well, we have to just throw caution to the wind to power AI; let er rip with coal, natural gas, and anything that burns, because the AI God will solve the climate problem, somehow. With a blind faith that the AI solution is going to be painless. And without any evidence that actually, this hyper intelligent generative AI can even be called into existence. 

Where it ties in is that AI is a bubble. This is where the growth is. You’re right in calling it an AI God. But I don’t think it is just about belief. There’s a huge amount of motivated reasoning in this, because this is where all of the, all the big money is — including public money, which Eric Schmidt specializes in drumming up. He wants DoD money for AI. 

So the big idea here is that, even though these billionaires are perpetuating catastrophes, they’ve got a grand narrative where they end up being the good guys?

You need that when you’re doing something this damaging. Because we aren’t talking about people who are denying climate change. I mean, Eric Schmidt has been a major funder of climate action through his foundation. Peter Thiel doesn’t deny climate change. Elon Musk doesn’t deny climate change. So you do need a story — but it feels like a rationale after the fact. Most people need a rationale to do terrible things. They don’t wake up in the morning saying, “I’m just going to incinerate the Earth so I can get rich.” You have to have some sort of a story.

Your point is that the real solutions to curbing climate or pandemic disease involve direct regulation, which these mega billionaires are unwilling to tolerate?

It is irresolvable with their vision of how to run their businesses. Peter Thiel is very influential in Trump’s orbit as the patron of J.D. Vance. He is incredibly influential in [advancing] many of the more extreme theories surrounding the MAGA movement. 

He has found religion recently. I don’t know if you’ve been following this, but Peter Thiel is now running Bible study groups in Silicon Valley. He said in a few interviews recently that he believes that the Antichrist is Greta Thunberg. It’s extraordinary. He said that it’s foretold that the Antichrist will be  seeming to spread peace. But here’s his thinking. He says Greta wants everyone to ride a bicycle. (Now, that’s a gross caricature of what she’s said.) But he’s said Greta wants everyone to ride a bicycle. That may seem good, but the only way that could happen is if there was a world government that was regulating it. And that is more evil than the effects of climate change.

The idea is that the actual devil is the regulation that would rein them in. 

So climate is still very much a part of this. He’s not denying climate change. But active climate change denial has become less and less relevant, and it’s more about spinning these conspiracies about what would happen if we were to take climate change seriously. 

We started to see this during the pandemic. There was this pivot from anti-lockdown conspiracy organizing to saying, “OK, their next plan is to use climate change to lock you in your house.” There was all this wild stuff around 15-minute cities

I confess I never understood what the alarm was over the 15-minute city, which is the aim that you’d be able to get everything you need for your daily life — groceries, coffee, restaurants — within a 15-minute walk or bike ride. It always sounded a little like the infamous GOP warning of having “a taco truck on every corner.” Like why is this a bad thing?

There’s always a little grain of truth that they then explode into a vast conspiracy. The conspiratorial logic was the global elites want to lock you in your home and prevent you from going anywhere. 

So instead of it being convenient, they want to keep you from going beyond 15 minutes from your house?

And make you eat bugs. That’s the other part. More and more, climate change denial is just taking the form of conspiracy culture. It’s: “Who started the fires in Lahaina? Did they direct that hurricane to [North Carolina]?” It’s about feeding this narrative of paranoia about global elites wanting to take away your freedom. 

To pivot to Canada minute, I was struck by new Prime Minister Mark Carney’s speech that “President Trump is trying to break us so that America can own us.” That seems to be a pithy warning against the shock doctrine. 

I know Americans want to take heart in what just happened in our election. And it is good that we aren’t electing our version of Trump. But Mark Carney is a lifelong banker, and so his version of standing up to Trump is letting our oligarchs get their wish list in Canada.

My question is if state actors like Canada are feeling this vulnerable in the face of Trump, how do average citizens summon hope?

I don’t think it’s the time to give up. But time is very short. One area where there is — I don’t know if I would use the word “hope” — but where there’s some productive work to be done, is that this [Thiel/Musk] agenda is not the platform that Donald Trump was elected on. There’s quite a lot of vulnerability in the MAGA Frankenstein coalition around the extent to which Trump is not just doing the work of the billionaires, generically, but specifically the of tech billionaires. That is a place to break apart the coalition.

People who are in it just for the white supremacy are going to stay. But I don’t believe that’s everybody who voted for Trump. And the radicalism of the vision — if they have given up on the future — provides a basis on which to organize, and to oppose, that is incredibly broad. 

I take heart from what we’re seeing from AOC and Bernie — just in naming that this is the culmination of a project of corporate rule that many of us have been trying to stop for a long time. It isn’t just Trumpism. It’s oligarchy. And it isn’t just in the United States. It’s global. More and more people are understanding that.  

The passing of the pope removes moral leadership from the global stage. I know that you were part of the launch of his environmental encyclical and had a personal connection to him. I wonder what you make of his passing and the future of the Catholic Church?

It’s gonna be a fight. When I was at the Vatican as part of this coalition to help launch the encyclical, it was clear that the more conservative Catholics had no interest in bringing this forward, and were threatened by the ways that Pope Francis was challenging the idea that Earth is just there for us — that it’s our dominion. 

Pope Francis was trying to reawaken a sense of sacredness about this earthly realm. And that was part of why he chose Francis as his name. Francis preached to the birds and the plants. He stood for a cosmology that was much closer to what we now associate with indigenous cosmologies, around seeing all of life as being our family.

Where Francis was taking the church was about saying there’s so much here in this dimension that we have a duty to protect and to save and to care for. That’s true. Whatever god you believe in — or none at all — we have a deep duty of care. That provides part of the basis of solidarity that we need to build in the face of these maniacs — sociopaths — who have given up on this world. I believe they’re treasonous to this world and treasonous to creation.

I can’t really speak to the future of the church. But if Pope Francis was able to change an institution with as thick and rigid a history as the Catholic Church — at the speed that he was trying to change it — it shows everybody that we should be doing a hell of a lot more to try to change our own institutions, whether it’s a university or an NGO. What’s our excuse?

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They don’t believe in the future
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Exclusive: NSF faces radical shake-up as officials abolish its 37 divisions

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Killer fungi to spread as climate heats up

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They don't need a warrant

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‘Utterly traumatised’: anger at ordeal of UK woman accused of illegal abortion | Women | The Guardian

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When Nicola Packer took a pregnancy test in November 2020, as the country was in lockdown during the coronavirus pandemic, she did not even believe she was pregnant.

Aged 41 at the time, she thought it more likely that she was perimenopausal, but had been feeling under the weather and when her friend – with whom the pregnancy had been conceived – suggested she took a test, she only did so to “prove him wrong”.

When the test, bought from a chemist around the corner, came back positive, she was “shocked”, but was never in any doubt about what to do. She had never wanted children, and immediately sought a termination.

Under emergency provisions introduced during the pandemic – which were later made permanent – abortion pills could be dispatched by post, following a remote consultation, in pregnancies up to 10 weeks’ gestation.

She took the pills, thinking, as her defence barrister, Fiona Horlick KC, told Isleworth crown court, “that she would only see blood clots to look into the toilet bowl”, but to her shock, hours later, she delivered “a small but fully formed baby”.

This in itself was a traumatic event for Packer, but it would pale in comparison to what followed. She attended A&E at Charing Cross hospital, bleeding and in shock. Staff told her she was in the wrong hospital and to go to Chelsea and Westminster instead, but did not provide an ambulance and left her to make her own way there.

She had brought the foetus with her, but did not immediately tell staff that she had taken abortion medication, because she feared it would affect the care she received.

When she later admitted that she had taken the pills, informing a midwife who had told Packer “she was there to care for her, that her safety was their priority and that whatever happened they were there to support her”, the police were called in.

Uniformed officers arrived at the hospital, and Packer, still recovering from surgery after the birth, was arrested. She was taken into custody and her computers and phone were seized.

It was the start of an ordeal that would stretch for four and a half years, culminating in her standing in the dock, giving evidence as part of her two-week trial.

For periods of the trial Packer was able to stand with composure and a sense of quiet pride. Often, however, this was stripped away under a barrage of deeply personal questioning, as the prosecution asked her to relive one of the worst days of her life, scrutinising every detail she said she could not recall.

Though she seemed steady and stoic at times, she would sometimes give way to tears. When she gave evidence, Packer was joined in court by a small group of friends, who held her hand as she walked into the courtroom and escorted her out whenever she left, be it at the end of the day, or to take a break from her interrogation.

At one point, the presiding judge was forced to send the jury away and reprimand Packer’s support group for tutting too loudly and rolling their eyes during a particularly intense, and in their eyes inappropriate, line of questioning.

As the trial came to a close, addressing the jury of three men and nine women for the final time, Horlick said her client was still “utterly traumatised”.

“The facts of this case are a tragedy but they are not a crime,” she said.

While the prosecution may be over, Packer, now 45, will be irreparably changed by the ordeal. The most private details of her life were aired in public – her medical history including past terminations, her sexual preferences, a tragic baby loss in her family, and even intimate photographs of her – shown by the defence to the jury to prove that she did not look pregnant.

In the coming days, there will be questions asked of the Crown Prosecution Service, which brought the case to trial despite Judge Edmunds KC urging the CPS to review whether there was a public interest in trying the case “four and a half years after events”.

At a pre-trial hearing, Edmunds, the recorder of Kensington who presided over the case, said there was a “heavy burden” on the prosecution, particularly given backlogs in the courts system.

Jonathan Lord, an NHS consultant gynaecologist and the clinician in charge of Packer’s care while working at MSI Reproductive Choices, said: “This was a vindictive and brutal prosecution in which the CPS weaponised victim-shaming. Wholly unnecessary details of Nicola’s relationships and sex life were prominent in the prosecution’s opening statement, made in the full knowledge they would be widely reported in the press.

“The police played several recordings of her confidential medical consultations in open court.

“CCTV footage was shown of her arriving at A&E in considerable distress. Packer had to show the court intimate photographs of herself in her defence, all while sat in a packed courtroom as the jury viewed the images. No woman should ever have to endure institutionalised public shaming and humiliation, let alone in 2025 in England.”

The case has furthered calls for a change in the law, which could come as soon as this summer, with two backbench Labour MPs set to lay amendments to the criminal justice bill, seeking to decriminalise abortion.

One of the MPs, Tonia Antoniazzi, who spent a day in court during Packer’s trial, said: “It must be an immense relief for Nicola to have avoided conviction, but it is completely unacceptable that she was forced to endure the indignity and turmoil of a trial. Having met Nicola at the crown court recently, I have seen firsthand the devastating impact that this cruel and unnecessary investigation has had on her life over the last four and a half years.

“The true injustice here is the years of her life stolen by a law written decades before women had the vote, for a ‘crime’ which doesn’t even apply in two nations of the United Kingdom.

“Nicola’s experience, in her own words, includes being taken from her hospital bed to a police cell, denied timely access to essential medical care, and spending every penny she had on lawyers defending her case. This is utterly deplorable, and it is not justice. I do not see how this law can be defended any longer.”

Lord said: “Every agency Nicola needed turned against her. In this, as in other cases, the teams charged with treating, protecting and safeguarding vulnerable women and girls have done the most harm, breaking confidentiality and treating victims as criminals.

“The issue is not simply that Nicola had the misfortune of encountering some callous organisations or individuals, but that our current abortion laws directed and encouraged the actions taken against her.

“The law is causing life-changing harm to the women involved, and in some cases their children too.

“What’s happening, the horrific way the women and their children are being treated – including those with premature labours and natural later pregnancy losses – is a national scandal.”

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Globalization did not hollow out the American middle class

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For years, I’ve been calling for the U.S. to promote manufacturing. When Americans started getting excited about reindustrialization, I cheered. I was a big supporter of Joe Biden’s industrial policy, and I even praised Donald Trump for smashing the pro-free-trade consensus in his first term.

Trump’s tariffs haven’t changed my mind about any of that. Yes, the tariffs are a disaster. But they’re not a disaster because they promote manufacturing; indeed, they are deindustrializing America as we speak, by destroying American manufacturers’ ability to leverage supply chains and export markets. When America has finally realized the futility of Trump’s approach, it will be time to turn once again to the task of reindustrialization — in fact, that task will be even more urgent, given the damage that Trump will have done.

And yet at the same time, I think there’s a misguided narrative about globalization, manufacturing, and the American middle class that has taken hold across much of society. The story goes something like this:

In the 1950s and 1960s, America was a smokestack economy. Unionized factory jobs built a broad-based middle class, and we made everything we needed for ourselves. Then we opened up our country to trade and globalization, and things started going downhill. Wages stagnated due to foreign competition, and good manufacturing jobs were shipped overseas. American cities hollowed out, and we became a nation of winners and losers. The college-educated upper middle class thrived in their professional jobs, while regular Americans were forced to fall back on low-wage service work. Eventually the rage of the dispossessed working class boiled over, resulting in the election of Donald Trump.

You can see this narrative at work in Joe Nocera’s recent much-discussed post in the Free Press:

No one anymore, on the left or the right, denies that globalization has fractured the U.S., both economically and socially. It has hollowed out once-prosperous regions like the furniture-making areas of North Carolina and the auto manufacturing towns of the Midwest. It has been a driver of income inequality…Trump owes much of his political success to the fury that these realities aroused in working-class Americans.

“My dad ran factories in the Detroit supply-chain orbit,” Financial Times columnist Rana Foroohar told me recently. “In the 1990s, the factories started shutting down. And when I would go home in the 2000s, half of my high-school classmates were on opioids.” She added, “The economic theories didn’t connect with the real world.”

Which raises an obvious question: Why did so many economists, policymakers, and journalists like me refuse to acknowledge the problems with neoliberalism for so long? Why were we so quick to label anyone who even flirted with the idea that maybe the U.S. should be protecting its industrial base, just as other countries did, as a Pat Buchanan-like fool?

One big reason was the most basic one: It meant low prices. Companies could keep their costs low by using China’s (and Mexico’s) comparative advantage: cheap labor. At the same time, companies like Walmart and Costco could buy goods directly from Chinese manufacturers, which invariably had lower prices than comparable American goods.

And you can see the narrative at work in a recent series of tweets by Talmon Joseph Smith:

Like all such narratives, this one consists of layers of myth wrapped around a core of truth. But not all grand economic narratives are created equal — in this case, the layers of myth are thick and juicy, while the core of truth is thin and brittle. Everyone knows about the China Shock paper and the collapse of manufacturing employment by about 3 million in the 2000s. That’s the core of the story, and it’s very real. But there are a lot of big important economic facts that place that story in perspective, which most of the people talking about this topic seem not to know.

Ultimately, the trade-driven collapse in manufacturing was only a small part of the economic story of America over the last half century.

Pundits and politicians alike talk incessantly about the flood of cheap Chinese goods into America. But overall, this is a small percent of what we buy. The U.S. is actually an unusually closed-off economy; as a fraction of GDP, imports are much lower than in most rich countries, and lower even than China:

Trade deficits are an even smaller amount of GDP. U.S. imports of manufactured goods minus exports are equal to about 4% of GDP per year. Our trade deficit with China is about 1% of GDP.

In terms of imported components, America manufactures most of what it uses in production. China’s exports to the U.S. are actually more likely to be intermediate goods rather than the consumer goods we see on the shelves of Wal-Mart — another thing the typical narrative misses. But even so, China makes only about 3.5% of the intermediate goods that American manufacturers need:

So if we eliminated trade deficits, would it reindustrialize America? Even assuming that we replaced the imports 1-for-1 with domestically made goods, the impact on manufacturing’s share of U.S. GDP would be fairly modest. Here’s Paul Krugman:

Last year the U.S. ran a manufactures trade deficit of around 4 percent of GDP. Suppose we assume that this deficit subtracted an equal amount from spending on U.S. manufactured goods. In that case what would happen if we somehow eliminated that deficit?

Well, it would raise the share of manufacturing in GDP — currently 10 percent — by less than 4 percentage points, because manufacturing firms buy a lot of services. A rough estimate is that manufacturing value-added would rise by around 60 percent of the change in sales, or 2.5 percentage points, implying that the manufacturing sector would be around a quarter larger than it is.

So even under the optimal scenario, if we totally eliminated the U.S. trade deficit, manufacturing would go from 10% of U.S. GDP to 12.5% — about the same as its share in 2007, and still far less than Germany, Japan, or China:

You can also see from this chart that other countries haven’t necessarily done an amazing job of protecting their industrial bases, as Nocera claimed; the manufacturing share of GDP is drifting down everywhere.

And this chart is also a hint that trade deficits and manufacturing aren’t as tightly linked as most people seem to think. France has become steadily less manufacturing-intensive since 1960, despite the fact that it historically had very balanced trade, and even ran big trade surpluses in the 90s and 00s. Meanwhile, out of all the countries on the chart, Japan has done the best job of preserving its manufacturing share since 2010, despite running a trade deficit over that time period.

So while we tend to focus a lot on the impact of trade on U.S. manufacturing, the truth is that there are much bigger forces at work there. Most of what the U.S. consumes is made here, and most of what the U.S. produces is consumed here, and eliminating trade deficits wouldn’t change either of those basic facts.

Americans, as a people, are startlingly rich. This isn’t just true because a few very rich people pull up the average. If you take median disposable household income, the U.S. comes out way ahead of the pack:

Note that this includes taxes and transfers, including in-kind transfers like government-provided health care.

Other countries may have protected their manufacturing sectors, but middle-class Americans are richer than the middle classes in other countries.

And middle-class Americans’ income has not been stagnant over the years. Here’s real median personal income, which isn’t affected by the shift to two-earner families:

This is an increase of 50% since the early 70s. I wish it had been more, of course, and it has its ups and downs, but 50% is nothing to sneeze at.

As for middle-class wages, they’ve grown less than incomes, since some of the increased income has been in the form of corporate benefits (health care, retirement accounts), investment income, and government benefits. But they have still grown:

Wage growth has resumed since the mid-1990s, despite increasing trade deficits. Note that the China Shock, which threw millions of manufacturing workers out of their jobs, utterly failed to stop wages from resuming their upward climb. Wage stagnation and hyperglobalization just don’t line up, timing-wise. Jason Furman has another good chart that shows this very clearly:

A lot of commentators have gotten so used to the idea that incomes are stagnant that they have trouble believing this data is correct. But as Adam Ozimek points out, the Economic Policy Institute — a pro-union think tank that frequently complains that wages are too low — chooses a very similar measure for median wages. EPI writes that wages “have not been stagnant”, but “have…been suppressed”.

And when we look at the lower percentiles of the wage distribution — the working class and the poor — we see that they’ve grown even more strongly, by over 40% since 1996:

A $4/hr. raise (adjusted for inflation) might not sound like a big deal, but for a poor person it’s pretty huge.

Of course, as Autor et al. show in their famous “China Shock” paper, the harms from Chinese import competition were concentrated among a few workers in a few regions. 2 million workers were only 1.5% of the U.S. workforce at the time, but for that 1.5%, being thrown out of good manufacturing jobs was a heavy blow.

But even in those unlucky regions, the negative effects don’t look to have been permanent. Jeremy Horpedahl points out that wages for the poor in Flint, Michigan and Greensboro, North Carolina — two areas that Nocera claims were “hollowed out” — have actually increased, while middle-class wages have risen in the latter:

And when we look at median income, the two areas look like they’ve recovered their economic health over the last decade:

(Nor is this a composition effect from people moving out; Flint’s population has held roughly steady, while Greensboro’s population has continued to increase smoothly.)

How are the American middle class and working class prospering, if the good manufacturing jobs of yesteryear are all gone? Talmon Joseph Smith scoffs at “service economy jobs”, and Autor et al. find that manufacturing workers displaced by Chinese imports often took crappier, lower-paid jobs in the service sector.

But that describes the 2000s. The 2010s and 2020s have been very different. Deming et al. (2024) show that over the last 15 years, the boom in low-skilled service-sector jobs has gone into reverse, and Americans are instead flooding into higher-skilled professional service jobs:

“Go to college” turns out to have been good advice. The boom jobs of the new era are in things like management, STEM, education, and health care:

It took a couple decades, but we’re finding that Bill Clinton was right — the average American is smart and competent enough to do knowledge work. And it’s being reflected in wages and incomes.

Now, none of this is to say that manufacturing is unimportant. It’s important for national defense, obviously. I also think it’s important for building a balanced, well-rounded economy — adding high-tech manufacturing on top of America’s knowledge industries would make us even richer, and would help us pump up exports and take advantage of multiplier effects. Manufacturing is also ripe for a productivity boom after decades of stagnation.

But the master narrative of protectionism is simply much more myth than fact. Yes, Chinese import competition hurt America a bit in the 2000s. But overall, globalization and trade deficits are not the main reason that manufacturing’s role in the U.S. economy has shrunk. Nor has globalization hollowed out the middle class — because in fact, the middle class has not been hollowed out.

Once we accept that this common protectionist narrative is deeply flawed, we can begin to think more clearly about trade policy, industrial policy, and a bunch of other things.

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sarcozona
23 hours ago
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I cannot believe anyone takes this person seriously
Epiphyte City
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