Cato Daily Podcast
Free Trade Didn’t Kill the Middle Class
Apr 11, 2025
Norbert Michel, Cato’s Vice President and Director of the Center for Monetary and Financial Alternatives, dives into the misconceptions surrounding free trade and its impact on the middle class. He argues that tariffs are based on misunderstandings of data and that free trade has greatly benefited most Americans, contrary to common belief. Michel challenges nostalgic views of the past, unpacks wage stagnation, and emphasizes the economic progress since the 1970s. He encourages a recognition of the advantages of trade agreements for both the U.S. and its partners.
11:35
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Quick takeaways
- Free trade has significantly increased income and wealth in the middle class, countering claims of economic decline due to outsourcing.
- Protectionist arguments often misinterpret past economic conditions, ignoring the complex socio-economic challenges that were prevalent during those decades.
Deep dives
Impact of Free Trade on the Middle Class
The argument that free trade has harmed the middle class is fundamentally flawed, as it overlooks the substantial growth in income and wealth within this demographic. Over the last few decades, the percentage of households earning more than $100,000 has significantly increased, while those earning less than this amount have decreased. This shift indicates that the middle class has not been decimated but rather has advanced into higher income brackets, rejecting the notion that factory job losses have equated to a drop in overall quality of life. Additionally, even lower-wage workers have experienced considerable wage growth, demonstrating that the American workforce has not lost out economically as some narratives suggest.
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