2026-07-13 20:38:16
“Buy a big house and live in the suburbs” — Tracy Chapman
“Outside suburbia’s sprawling everywhere/ I don’t want to go, baby” — Kim Wilde
I grew up in the suburbs, and when I got the chance, I moved to a big city and never looked back.1 I love living in dense, built-up urban areas, with great train systems and tons of restaurants and shops. Japanese cities are the best in the world, and I’ve written plenty of posts about what makes them so great. But you don’t have to be Japan in order to create amazing metropolises — New York City, Paris, Istanbul, Seoul, London, etc. are all excellent places to live.
I’m far from the only person who feels this way. Rents in New York City are absolutely insane — $5300 a month to live in Manhattan, $4350 to live in Brooklyn. That’s partly because there are a lot of good jobs in NYC — it’s a cluster for industries like finance and media. But more and more, Americans move to cities because they like living there.
As early as 2000, economists were starting to find that “amenities” were driving America’s urban revival even more than job opportunities were. Couture and Handbury (2020) find that wanting to be close to restaurants and nightlife explains about 40% of the trend of young, high-earning, college-educated people2 moving to cities in recent decades. Furthermore, the stereotype of dense cities as crime-ridden and unsafe is just wrong — NYC has one of the lowest violent crime rates among big cities in America.
I’ve been a relentless advocate of building more dense, walkable cities in America. Not only would this raise GDP (because of improved clustering effects), but it would let Americans live where they want. The demand for life in cities like NYC exceeds America’s willingness to supply these environments; this raises rents in places like NYC, which pushes a lot of people into the suburbs who don’t want to be there. Forcing those city types into the ‘burbs raises rents for people who like suburbia. Basically, everyone would be happy if America had a few more Manhattans and a lot more Brooklyns.
Yet among my fellow urbanists and YIMBYs, I often encounter disdain or outright hostility toward the suburbs that define most of America’s present urban landscape. This isn’t just an urbanist thing, of course — my own parents had a lot of negative things to say about suburbia, and ranting against its sterility and boredom is a staple of pop culture. But the criticisms are just way overdone; the suburbs are not the isolating, lonely hell that they’re often made out to be.
And I think that the constant ranting against the suburbs complicates the quest for denser cities. It creates the suspicion that urbanists and YIMBYs want to make the whole nation into Manhattan. Nothing like that could ever happen, of course; even Japan is mostly suburbanized. But painting the quest for denser metropolises as an attack on suburbia makes everything needlessly confrontational, polarized, and zero-sum.
So I think it’s helpful to go through some reasons why the suburbs aren’t actually as bad as they say.
One of the most persistent myths about suburbia is that it forces you to commute a long way to work:
It’s possible, of course, for something like this to be true. If cities refuse to build housing (which they do), and if jobs are concentrated in the city center (thanks to clustering effects or agglomeration or whatever), then people will be forced to live far out on the periphery and endure punishing commutes to get to work.
The thing is, it’s not true. Despite greater sprawl, Americans have some of the shortest commutes in the developed world. This is from the OECD:
Why do Americans take less time to commute to work? One reason is that it’s not just our homes that are scattered and dispersed; our workplaces are too. America’s urban agglomerations are polycentric; they’re not just one central business district surrounded by concentric rings of houses. Suburbanites tend to live near where they work.
Another reason Americans have shorter commutes is that cars are almost always faster than public transit at getting you from point A to point B. This isn’t just true in places like America and Canada that are built with cars in mind. It’s true in places like Stockholm and Amsterdam that were built to be transit-friendly — even when you take parking time into account. In fact, it’s not even close. This is from “Disparities in travel times between car and transit: Spatiotemporal patterns in cities”, by Liao et al. (2020):
We use real-world data to make realistic estimates of travel time by car and by PT [Public Transit] and compare their performance by time of day and by travel distance across cities. Our results suggest that using PT takes on average 1.4–2.6 times longer than driving a car. The share of area where travel time favours PT over car use is very small: 0.62% (0.65%), 0.44% (0.48%), 1.10% (1.22%) and 1.16% (1.19%) for the daily average (and during peak hours) for São Paulo, Sydney, Stockholm, and Amsterdam, respectively…A systematic comparison between these two modes shows that the average travel time disparity is surprisingly similar across cities…for travel distances less than 3 km, then increases rapidly but quickly stabilises at around 2. [emphasis mine]
And here’s a chart, showing that public transit takes more time whether you’re measuring in terms of the length of the trip or the percent of the population reached:
That doesn’t mean cars are better than public transit. Cars cost more, and they require a lot more land to move the same number of people. But because they take you directly from point to point, instead of making a circuit and stopping periodically, they get you there faster.
Of course, commuting by car and commuting by train or bus aren’t the same experience. Driving gives you more privacy, but it forces you to pay attention to the road instead of reading or playing games. Traffic can be frustrating, but so can jostling and bumping strangers for a space on the train. You’re a lot less likely to be sexually harassed in your car, but you’re more likely to die in an accident than to be murdered on the bus. And so on.3
But the point is, cars are not a cost forced upon suburbanites in exchange for their large houses, as some urbanists believe. They are a thing people want in and of themselves, and are willing to pay a lot of money for, all over the world. The convenience, sense of freedom, and privacy cars offer is a benefit of suburbia to many people, in addition to the large house and cheap land. Car ownership is a form of wealth.
Again and again, I hear urbanists declare that the suburbs are lonely and isolating. It certainly sounds logical. In a city, you’re walking past other people constantly — on the street, on the train, in cafes and restaurants. In suburbia, you’re shut at home inside your giant house or alone in the metal shell of your car. How could suburbia not be more lonely than the big city?
But in survey after survey, we don’t find this to be the case. Here’s Abshire et al. (2022):
Data were obtained from 616 adults (278 from small rural, 100 from large rural, 98 from suburban, and 140 from urban areas) from June 2018 through October 2019…Mean unadjusted loneliness scores were lower in suburban compared to urban areas…The prevalence of loneliness was 50.7%, 59.0%, 40.8%, and 54.3% in small rural, large rural, suburban, and urban areas, respectively. Suburban living was associated with lower odds for being lonely compared to urban living…but this association was not statistically significant in the adjusted model[.] [emphasis mine]
And here’s Hammond et al. (2021):
Data from 756 participants who completed 16,602 assessments between April 2018 and March 2020 were used in order to investigate associations between momentary feeling of loneliness, the social environment (i.e. overcrowding, social inclusivity, population density) and the built environment (i.e. contact with nature)…Increased overcrowding and population density were associated with higher levels of loneliness; in contrast, social inclusivity and contact with nature were associated with lower levels of loneliness. These associations remained significant after adjusting for age, gender, ethnicity, education and occupation. [emphasis mine]
And here’s Morris and Pfeiffer (2016):
Based on data from the 2003 to 2013 American Time Use Surveys, this research…assess[es] whether suburban living is associated with less socializing than city living in mid-to-large American metropolitan areas. After controlling for personal characteristics, we find no meaningful difference in suburbanites’ and city dwellers’ time spent socializing across a wide range of social activities. [emphasis mine]
Bower et al. (2022) review 57 different studies and find no systematic association between loneliness and any measurable feature of the built environment.
Why doesn’t the simple intuition work here? Probably because people aren’t just like particles bouncing around in a chemistry experiment — they don’t simply form human connections and bonds just because they happen to walk past each other. A few relationships form from random urban conversations, but most form through work, or friends-of-friends, or shared hobbies, etc.
And while meeting a ton of new people is fun, what really gets rid of loneliness is repeated interaction with people you know and care about. Imagine going to ten parties filled with strangers versus having two close friends over for dinner. Which of those is more likely to leave you feeling lonely? What about 100 Hinge dates versus having a relationship? Remember that Japan has the world’s best cities, but struggles with widespread loneliness.
In fact, suburbs have some features that make it easier to interact with the people you really care about. Those big houses aren’t just for walking around all alone and going “Wow my house is so huge”. They’re for entertaining guests. It’s harder to have a dinner party or a TV night or a game night at a tiny little Manhattan apartment than at a big suburban McMansion. Cars help too; those short travel times make it easier to just pop over and hang.
This doesn’t mean cities are socially inferior to suburbs. Constantly meeting new people is exciting. There’s more fun stuff to go out and do with your friends in a city — restaurants, parties, and so on. It’s just a different lifestyle.
The urban revival of the 1990s through the 2010s was a modest thing. It was largely driven by young people, high earners, and educated people. Here are some charts from Jed Kolko a decade ago:
During most of that urban boom, it was actually the suburbs that were growing much faster. And in recent years, the trend toward suburbanization has only accelerated. Here’s a much more recent chart:
Kolko shows that although the densest city centers are rebounding from the pandemic, more than 100% of this is driven by immigration — domestic migration is still strongly away from city centers.
In fact, the new suburbanization trend is being led by Millennials. This is from the Joint Center for Housing Studies:
[W]e found that throughout the past decade millennials were moving to suburbs that were farther out from the city center. There are many ways to define suburbs, and in this paper we rely on a framework that considers rates of homeownership, single-family housing, and car commuting, in addition to proximity to a metro’s urban core. While there is extensive research and discussion about millennial preferences for walkable urban areas, we found that the places with the largest increases of early millennials were both suburban and on the periphery of metropolitan areas. [emphasis mine]
Why are Millennials moving out? Part of it — the part that urbanists and YIMBYs will emphasize — is that they’re being pushed out by higher rents, which are a result of cities failing to build more housing. But that’s not the whole story. Millennials are also being pulled to the suburbs, because suburbs are generally better for raising kids.
Albouy and Faberman (2025) find that the kind of high-skilled workers who drove the urban boomlet of the 1990s through the 2010s tend to move out — and value urban amenities less — once they get a little older:
We show that high-skill workers disproportionately sort into high-amenity areas, but do so relatively early in life. Workers of all skill levels tend to move towards lower-amenity areas during their thirties and forties. Consequently, individuals’ time use and expenditures on activities related to local amenities are U-shaped over the life cycle…We present evidence that the move towards lower-amenity (and lower-cost) metropolitan areas is driven by changes in the number of household children over the life cycle: individuals, particularly the college educated, tend to move towards lower-amenity areas after having their first child. [emphasis mine]
Kolko shows something similar — people with a kid over 6 tended to move out of cities during the urban boomlet, even as childless people and people with young children were moving in:
Anyone with kids can easily rattle off the reasons why suburbs make it easier to raise kids. A big house means more room for kids to have their own bedrooms, space to play, and a back yard to run around in safety. A car makes it a lot easier to ferry kids around to school, or soccer practice, or wherever. Cars also make it much easier to do large grocery shopping trips — try taking a week’s worth of food for a family of four home from the store on foot or on a bike and you’ll quickly understand.
It’s almost a cliche that people move to the city when they’re young — to jump-start their career, to party, to meet friends, to explore the world, to date around, and to find their spouse — and then move out to the ‘burbs once they settle down and have kids. The cliche is rooted in reality.
Instead of treating the suburbs as some sort of hellish place that Americans’ car culture has exiled them to, urbanists should recognize that suburbs have real advantages that dense urban cores can’t easily replicate. Yes, too many Americans are pushed out to the ‘burbs by unaffordable housing. But a lot move there of their own free will, because they want a nice place to raise kids, enjoy a short quiet drive to work, and hang out with their friends in a big comfy house. It’s not the lifestyle for everyone, but it’s the lifestyle that a lot of people love and aspire to.
Which doesn’t mean we should ignore the real disadvantages of suburbia, either. Low-density sprawl is very expensive to maintain. It tends to make people less healthy, because they walk less. It reduces variety among restaurants and brick-and-mortar retail outlets, because it’s harder to cater to niche tastes when you don’t have a critical mass of people nearby. Those tradeoffs shouldn’t be ignored.
Nor should we accept that the current suburban form is the optimal one. A lot of American urbanism has focused not on Manhattanizing urban cores, but on giving suburbs a few more of the benefits of cities — creating “gentle density” with rowhouses and duplexes and small apartment buildings, allowing retail in residential areas, adding bike lanes and commuter rail, and so on. This should all continue.
But it’s simply a mistake to frame the question of urban form as “Which is better, cities or suburbs?”. The answer is that they’re good for different things, and they appeal to different sets of people. Instead of fighting flame wars over whether the whole country should look like Manhattan or the Inland Empire, we should aim for a country that has room for everyone. We should build great city centers for the same reason we should build great suburbs — because Americans deserve to have great places to live, no matter what kind of place they want to live in.
Well ok, not quite. My PhD years and my first year at Stony Brook involved more stints of suburban living.
“Yuppies”, in the parlance of our times.
Whether your car or the bus smells better probably depends on a lot of things.
2026-07-12 17:22:33
I grew up in the 1980s in a small house with only one bathroom shared between four people. The floor was linoleum. There was a carport instead of a garage, and we had one beat-up used Toyota Tercel hatchback. I don’t remember when we got our first color TV, but when I was young we had a black-and-white one that my grandmother gave us. Our furniture was all second-hand and we kept the couches covered up with worn old blankets.
When I was young, I mowed lawns for money. As a high school kid, I signed up to pick cotton by hand (!!) for an agricultural research project at Texas A&M University, for minimum wage1. I have also worked as a cashier. Twice in my life, I have been a member of a labor union, and I have marched in a strike.
I have never once considered myself part of the working class.
Why not? Because I have never thought of class as being defined by a present snapshot of someone’s lifestyle or material circumstances. Instead, I always thought of class as being about someone’s potential. And I grew up always knowing that my economic potential went far beyond the rather humble circumstances of my early childhood.
For one thing, my family was upwardly mobile. My grandparents could probably be called “working class” in their youth — my grandmother worked in a sweatshop as a teenager, my grandfather wore cardboard in his soles because his family couldn’t afford shoes. But after World War 2, thanks to the GI Bill and rapid economic growth, my ancestors advanced into the middle class, with jobs like optometrist, athletic coach, and registered nurse. My father had a PhD and a tenure-track academic job that promised to pay a lot more after a decade of work. We weren’t rocketing up the income distribution, but we were clearly climbing.
Our humble lifestyle in the early and mid 1980s reflected this future orientation. Our family income was probably around the 35th-38th percentile,2 but this was because we were a one-earner family. My mother chose to spend the first seven years of my life as a housewife — which she did in order to make sure my sister and I got a thorough, accelerated education. We lived an abstemious life in part because we saved as much money as we could.
What were we saving for? My college education, and my sister’s. We were smart kids; we knew we would go to good schools, and we did.3 We knew our college educations would allow us to get good jobs that paid more than our parents ever made. And we were right.
As for the union membership, I was part of the grad student instructors’ union at the University of Michigan, and the professors’ union at Stony Brook. When I marched in a strike in 2008 to secure a raise and health benefits, I was already getting paid to complete a PhD that would eventually increase my earning power even more. Even as I scarfed free food from charcuterie boards at departmental events to save money, I was building up my future earning power at a rapid clip.
Class in some countries is about the past; you can be a shabby aristocrat if your grandfather was the Earl of Whatevershire. In American policy discussions, class is often implicitly about the present — where you lie in the income and wealth distributions this year. But on some level, everyone knows that class in America is really about the future.
Milton Friedman had a theory that sort of gets at this idea, in fact. It’s called the Permanent Income Hypothesis. “Permanent income” is the income you can expect to make over the course of your life. If you’re a shabby grad student living off of cup ramen, your current income is low, but your permanent income is high, because you know you’re probably going to make a lot of money in the future.4
But class in America isn’t just about the money you will make in the future; it’s about the money you could make if you wanted. I know schoolteachers who live modern middle-class lifestyles despite having graduated from the best schools in the country. They could have gone to work for companies and made decently big bucks, but they preferred a more laid-back lifestyle. Whether their children should count as middle class or upper class is an interesting question, but they themselves are clearly the American equivalent of Europe’s shabby aristocrats, because they forsook the upper-class lifestyle voluntarily.
Meanwhile, there are millions upon millions of Americans for whom working in high-paying salaried jobs was just never an option, and never will be. They will spend their entire careers driving long hours in a truck, or stocking shelves at a store, or installing smoke alarms in people’s houses, simply because this is the best they can do.
This explains at least part of why most low-income Americans traditionally consider themselves middle class. They expect to be middle-class at some point; they don’t think they’ll be trapped driving a truck or stocking a shelf forever.5 And it could also explain why the number of Americans calling themselves “lower class” rose in the 2000s and 2010s, as growth in incomes temporarily stagnated and the potential for rapid downward mobility became clearer after the financial crisis:
I’m being very approximate here, of course, and I’m speaking for the country more than I probably should. In fact, America has less class consciousness than many other societies, and when we do talk about the idea, there’s rarely agreement on what it should mean. I wrote about the contested nature of class in American society two years ago:
But I’m speaking from my own personal experience because I think it illustrates something important about class in America. Although we disagree about what the concept should mean, most of us feel deeply uncomfortable with a notion of class that ignores future possibilities. When we see a guy proudly wear a United Auto Workers jacket even though his only UAW experience was as a grad student instructor at Harvard University, something about it feels deeply inauthentic:
There’s nothing wrong with this, of course. It’s not fake; the UAW really does include grad student unions these days. And MacKay could easily be doing this not out of rank political opportunism, but from a sincere desire to express solidarity with union workers from all walks of life.
And yet Evan MacKay is really not in the same boat as people who stand on an assembly line, even if those people make more money than he does. He could, if he wanted, go work in private equity and live in a mansion on Cape Cod. Your typical UAW member could not do that. There’s a sense in which his jacket’s implicit claim of “we’re all in this together” papers over that harsh reality.
Progressives have had an extremely tough time appealing to Americans with low incomes and low education levels. Decades ago, those people tended to vote for Democrats; in 2024, they broke solidly for Donald Trump. Even as they’ve become more and more progressive, the Dems have become the party of well-educated high earners:
Even people who identify themselves as “working class” have been abandoning the Democrats:
Joe Biden tried very hard to win over labor unions, but the Teamsters — once a Democratic stalwart — refused to endorse him.
The socialist faction might style itself a friend of the working class, but it faces the same problem. Zohran Mamdani won his mayoral race thanks to the support of higher-income, educated voters, while his defeated “establishment” opponent did better with lower-income people, Blacks, and Hispanics. Other socialist victories have seen a similar pattern.
This is not actually a new problem. A century ago, in The Road to Wigan Pier, George Orwell complained bitterly that the British socialists of his day were middle-class intellectual elites who failed to win over the working class because they were completely out of touch:
The first thing that must strike any outside observer is that Socialism, in its developed form is a theory confined entirely to the middle classes. The typical Socialist is not, as tremulous old ladies imagine, a ferocious-looking working man with greasy overalls and a raucous voice. He is either a youthful snob-Bolshevik who in five years' time will quite probably have made a wealthy marriage and been converted to Roman Catholicism; or, still more typically, a prim little man with a white-collar job, usually a secret teetotaller and often with vegetarian leanings, with a history of Nonconformity behind him, and, above all, with a social position which he has no intention of forfeiting. [emphasis mine]
Half a century later, Barbara and John Ehrenreich wrote something similar about the American left in their essay on “the professional-managerial class”. The “PMC”, as it has become known, was beginning to dominate the political left even in 1977; today, it arguably forms the Democratic Party’s most important voter base. The DSA faction that’s now becoming more influential within the party is disproportionately drawn from this class — 80% of DSA members had college degrees in 2021, and more than a third had postgraduate degrees (more than twice the national average).
Although they might not have realized it, what the Ehrenreichs were describing was a result of the rising economic importance of human capital. The “youthful snob-Bolshevik[s]” Orwell described in the 1930s were few in number, but the growth of knowledge industries has made this group of people far more numerous — and far more influential in our culture and our politics.
Because of its Marxist inheritance, the idea of the working class is very important to American socialists. But that’s been increasingly hard to square with the fact that voters with lower income and lower education have been steadily drifting away from the Democrats, and form relatively little of the DSA’s membership. One response has been for some socialists to paint themselves as the actual working class. This is a less charitable interpretation of Evan MacKay’s UAW jacket, and it’s also something that has come up in casual conversation. This is from my post back in 2024:
In January 2017, I was at a house party in Berkeley. People were discussing why Hillary Clinton had lost to Donald Trump, and one woman — a law student at the University of California — declared that it was because Clinton had ignored the “working class”. I asked her to describe someone in the working class. She imagined a “sex worker” who had a bunch of student loans and a humanities degree that she wasn’t able to use… I had expected her to describe a unionized auto worker or steelworker or a stereotypical Midwestern guy in a hard hat,…I was utterly unprepared for her to instead describe someone from her own educated progressive social circles…To this law student, the “working class” was simply those of her friends who were most down on their luck.
But on some level, I think this just doesn’t ring true, even within socialist circles. Class in America is just too deeply connected with earning potential and human capital; most people can’t really bring themselves to believe that someone with a diploma from a good school is “working class”, even if they happen to be pulling an unlivable wage as an adjunct professor and sleeping in their car at the moment.
So socialists are always on the lookout for champions who seem more authentically working class. They thought they found such a champion in Graham Platner, who recently dropped out of his Maine Senate race due to rape allegations. This is from a New York Times story about how Platner was recruited:
Last July, in a small town in coastal Maine, three progressive, self-styled recruiters of economic populists showed up at the blue-shingled house of Graham Platner, a little-known oyster farmer and Marine veteran who lived largely off government benefits…They knew his name from local labor organizers and activists, and they had watched a video on the internet of him talking about oysters. Struck by his left-leaning ideology, his working-class affect and his gravelly voice, they became convinced that he could win a Senate seat in Maine — and quickly persuaded Mr. Platner of the same…The recruiters — Dan Moraff, Leanne Fan and Morris Katz — told Mr. Platner he was “the one,” a “hero of the movement,” “a historical figure” who could be “leading a revolution,” according to half a dozen people with knowledge of their conversations.
Is Platner actually working class? You can argue it either way. He went to a good college but dropped out due to psychological issues. He’s the son of a lawyer and an architect, but failed to make much money with his oyster farming business, and mostly lived on welfare benefits. He doesn’t fit cleanly into the kind of class categories I described above.
But the people who picked him do! Dan Moraff and Morris Katz are both educated scions of rich families — Moraff’s ancestor founded the company that became Toys “R” Us — while Leanne Fan is a sociology PhD student. If the NYT’s reporting is correct, they appear to have picked Platner based entirely on stereotypes and vibes — he seemed rough and tough and down on his luck, so they assumed he was a real working class guy who could connect with other working class guys. This seems to have convinced them that Platner was a messianic figure who could bring wayward working-class voters back to the Democratic fold.
As many people have said, if Trump is “a poor person’s idea of a rich person,” Platner is basically the opposite — a rich person’s idea of a working-class person.
This episode doesn’t make me particularly optimistic about Democrats’ ability to reconnect with their rapidly vanishing blue-collar base. I don’t think it’s impossible, of course. But it would probably require moderating on social issues — DEI, immigration, etc. — instead of just running candidates that pattern-match to the kind of people that bullied rich lefty kids back in junior high.
The Platner saga also makes me a bit pessimistic about American society as a whole. Although we don’t talk about class much, it’s separating us more and more, and the cultural gap is now so big that lots of Americans seem unable to even imagine what Americans from other social classes are like.
The integrating institutions that once pushed us together across class lines — church, the military, schools in mixed-income neighborhoods — have waned in importance. College has grown to fill some of that void, but less than half of the country is really prepared to handle the rigors of a college education, and so it ends up dividing our society more than it unites it. Mass media has fragmented into the millions of little social verticals that make up the internet. We’ve sorted ourselves geographically — knowledge workers live together in progressive urban enclaves on the coasts, while blue-collar types inhabit the small towns and down-market suburbs.
I read Tocqueville, and I miss the roiling, fluid, egalitarian young democracy that I never knew. I think back to my childhood, in a little house on a dusty side street in a small Texas town, and I feel like I can just barely recall the fading embers of that stubbornly classless democracy. Something happened between then and now. We let the Old World sneak up on us.
In case you’re wondering what picking cotton by hand is like, it sucks. Other than my teenage friends and myself, the only people willing to do it were illegal immigrants from Mexico. Working alongside illegal immigrants, knowing that it was just a summer experience for me but would be their job for the rest of their life, gave me a deep respect for illegal immigrant laborers. Yes, they violated my country’s sovereign border, but they did it so that they could do backbreaking low-paid menial labor for their whole lives, just to feed their families back home. And they worked harder than my friends and I did, even knowing that their future would probably never get any better than that. Those are the people whose lives of backbreaking labor put cheap food on your table.
For households, it was more like the 45th percentile. My dad’s salary was almost twice the median personal income of the time. Part of the reason my childhood sounds a bit shabby is that the whole country was a lot poorer back then; one-bathroom houses without garages weren’t so unusual.
I went to Stanford; my sister got into Harvard but turned it down to go to the University of Michigan, because of my family’s quixotic belief that public schools are good. That turned out to be a very expensive decision on her part; Stanford, with its incredibly generous need-based financial aid policies, charged me zero tuition, while my sister had to pay out-of-state tuition despite a merit scholarship. Fortunately, my family had saved money, and so was able to pay for my sister’s college without making her take out student loans.
Friedman’s hypothesis turned out to be wrong — he thought only permanent income mattered for consumption, but it turns out that temporary ups and downs matter too. But expectations of future income are a factor that determines people’s current behavior, so Friedman’s intellectual effort wasn’t wasted.
For the upper-class and rich people who identify as “middle class”, it’s probably more of a combination of A) humility/social desirability bias, and B) the fact that they’re comparing themselves to other rich people in their social circles.
2026-07-10 23:23:02
In my post on America’s 250-year anniversary, I argued that respect for the individual was the “secret sauce” in the U.S.’ long-lasting preeminence among nations. But it was certainly not the only factor. There were plenty of institutional innovations that helped the U.S. stay on top — economically, militarily, and in terms of the attractiveness of its society.
One of these was American science. Today we take things like the modern research university, government grants for science, public-to-private research spinoffs, etc. for granted, but a lot of that infrastructure wasn’t there before World War 2. It was either invented or scaled up massively by the U.S. government in the postwar period, led by far-sighted scientist-bureaucrats like Vannevar Bush (pictured above). If you want to read about this history, a good place to start would be Jonathan Gruber and Simon Johnson’s excellent book Jump-Starting America.
Those scientific institutions didn’t exist in a vacuum, however. They were backed by the U.S. government’s abiding faith in the power of science — and, even more fundamentally, by deep popular trust in the scientific enterprise. Science gave us radar and the atom bomb in wartime, and in peacetime it gave us plastics, vaccines, cheap food, and a thousand other things that made our lives easier. Science was also the driver behind American industry — chemicals, aerospace, telecommunications, computers, electronics, and so on.
We owed science our jobs, our livelihoods, our comfortable living standards, and our greatness and power as a nation. It’s little wonder that both political parties, even as they fought viciously over other issues, were steadfast in their support of science. For a long time, the only people who distrusted science were a hippie fringe on the left who disliked modernity (or thought they did, anyway), who also disliked American industry and American power, and who subscribed to an early version of degrowth environmentalism.
America’s scientific enterprise is still strong, especially compared to the systems in Europe, Japan, Korea, and other developed countries. It has lost a lot of ground to China in a relative sense, but a lot of that is because of China’s incredible growth; as China has poured untold amounts of money and talent into its research labs, spending and output have overtaken the U.S. by some measures.
There are a few ways in which China’s rise creates problems for American science — for example, top scientists can choose to work in China instead of in the U.S. — and of course there’s the concern that China’s technological strength will help its military to reign supreme. But overall, China’s rise in science should be good for American science, since American scientists can use Chinese discoveries for free and build on them.
The much bigger problem is that the scientific enterprise America built during and after World War 2 is now being threatened with absolute decline. The biggest problem, of course, is that much of the country — the Republican half — has basically lost faith in the scientific enterprise. To what degree this loss of faith is justified is an open question, and deserves to be discussed openly. But the larger point — that the system that powered American dominance is under threat — is true either way.
There’s a myth, popular in right-wing circles, that scientists have lost the trust of regular Americans — either due to the increasingly left-wing composition of academic departments, or to misbehavior during Covid, or to DEI-related research taking over science, etc. This also fits with a wider narrative that Americans are losing trust in all of our institutions.
But it just isn’t true. Poll after poll shows that on the whole, Americans still trust scientists and want to spend more on science. For example, here’s a Pew poll from late 2025 showing that although about a fifth of Republicans did lose confidence in science in 2020, two thirds still have at least “a fair amount” of confidence:
That same poll found that scientists are among America’s most trusted groups — even better trusted than the military!
In fact, Americans trust scientists more than people in most other countries do.
Other polls show that although Republican trust in science has dropped somewhat, Republican support for spending more on science remains very strong:
A Pew poll in 2023 found the exact same thing:
So when MAGA types tell you about scientists losing their credibility, or a drop in trust in science, they’re only talking about themselves. Whatever left-wing politicization of science happened during the Biden administration — and there was definitely some of that — it was not enough to make most Republicans lose faith in the scientific enterprise, or favor research cuts in order to purge unwanted ideology from the system.
That doesn’t mean I think progressives should continue down the path of politicizing scientific research. They should not, and Biden made real missteps in this area. Objectivity clearly matters for public trust of science in the long term. But as of right now, there’s no crisis of trust in science, except among the smallish minority of people who are running around screaming that there’s a crisis of trust in science.
But despite science’s overwhelming popularity and public trust, Trump and his administration are launching an unprecedented and devastating attack on American science — cutting funding, and forcing science projects to undergo ideological review by government commissars.
2026-07-08 11:56:06
“Her belly may be full, but her spirit will be empty.” — Captain Picard
Usually, these “GDP is actually good” posts start with a big disclaimer — an acknowledgement of all the things GDP doesn’t measure, all the reasons that measuring GDP is an inexact science, and all the ways that we need to improve society other than just making the GDP line go up. If you want a standard wonky explanation of why GDP is a useful number, here’s one that I wrote four years ago:
Today I’m going to do something a little different. I’m going to tell you what I think the debate over GDP is really about.
Free trade usually raises GDP. Immigration, done right, raises GDP.1 Rightists in America want less free trade and less immigration. But every time they propose restricting trade and immigration, someone — either libertarian business/econ types on their own side, or moderate liberals on the other side — says “That will make America poorer!”. So they want some way to neutralize this objection, so they can do things that will, in fact, make America poorer.
So America’s right borrowed an argument from the European left. The European left favors degrowth, and another term for degrowth is “making GDP go down on purpose”. So naturally, they’re always trying to find reasons to denigrate GDP as a metric of human flourishing (see here, here, and here for examples). The American right is simply tweaking these arguments to make them more appealing to their own base.
JD Vance, who has emerged as the consensus leader of the New Right, makes a bunch of these anti-GDP arguments in his new book. For example, he uses the example of Japan to point out that unobserved quality differences in non-traded products can make it difficult to compare GDP across countries:
If you’re focused on GDP, a $6 pint of Japanese strawberries is no different from a $6 pint of American strawberries. If you’re focused on dollars and cents, each contributes equally to the economic indicators. But if everyone in Japan eats better strawberries than everyone in America, the economic indicators have failed to measure something meaningful.
This is actually a good argument, and I’ve made it myself many times in the past. I’m in Japan right now, and there actually are a lot of little things that make Japanese products and services a bit nicer than their American counterparts — clean tables at Starbucks, slightly better-tasting food, and so on. Economists who try to adjust for quality differences end up catching some of these things, but probably miss most of them. That ends up creating a problem for GDP comparisons between countries. And it’s only one of many such problems. Comparing lifestyles in countries where life is very different is just a difficult thing to do.
But instead of simply noting that economics is hard, JD Vance uses this good argument as a reason to bash the entire field of economics:
When I got back home, a friend asked me if I learned anything on my trip to Japan. “Yes,” I replied snidely. “Maybe economics is just fake.”
When you read some of Vance’s other arguments against GDP, his agenda becomes clearer:
[A]s the decline of Christianity has left us without a shared moral language, economics has stepped into the vacuum. We pretend there are scientific answers to questions of values. Take one of the major issues of the 2024 campaign and a significant focus of our time in the White House: Should our trade policy be oriented around protecting domestic industries and jobs or around ensuring a short-term supply of cheap consumer goods?
This idea — that economists urge values of base consumerism on society, and ignore other moral considerations — is common in European leftist discourse. But instead of urging us to care more about inequality, power, and so on, as European leftists do, Vance wants us to care more about spiritual elevation, morality, community — i.e., things that the American right cares about. He goes on to write:
[W]e now live in a society almost blinded to considerations outside of the economic. This way of thinking is inherently opposed to the Christian way, which demands more focus on people…Take, for instance, the time we spend with our children…Domestic labor—that done by moms and dads—if unpaid, is uncounted in measures like GDP. When I leave work to spend time with my children, when I cook them dinner or argue with them about eating their carrots, I am engaged in economically unproductive work. No money changes hands, so it doesn’t show up in our national figures. By contrast, if I left for dinner at 6 p.m. and returned to work until midnight while paying a total stranger to look after my kid, my contribution to GDP would be much higher.
and:
If you step away from the glory of economic statistics, so much of American life has gone wrong. An influx of prescription opioids became a flood of synthetic opioids, which has led to tens of thousands of deaths each year and a declining life expectancy among a substantial portion of our society. We have made great progress on reducing infant mortality, but we send our children into a world—even in the physical security of their own homes—that bombards them with images and influences that have left them isolated, depressed, and increasingly at risk of self-harm. We are more disconnected, lonely, and isolated, even in the midst of historic levels of material comfort.
All this economic abundance coexists with intense spiritual misery. We orient people toward a life of consumption. We tell them to find meaning in the home they buy, the money they earn, the prestige of their job. We bombard them with all manner of creature comforts, and add their consumption—price club mega-size junk—to our national GDP. We use that GDP as a yardstick for our broader society, which is why it’s possible for false prophet economists to argue the American Dream is healthy even as suicide and addiction rates soar and the laughter of children fades from our streets.
Some of these arguments are — in my opinion — reasonable. A culture of overwork can boost GDP, at least in the short term, at the expense of quality time with family. This is actually a common argument of the center-left, which is why liberals have long fought — often successfully — for more paid family leave and other policies that reduce GDP slightly in exchange for more quality time with family. Whether this has increased birth rates isn’t clear — the evidence is very mixed — but it’s a very popular policy.
Other arguments are clearly mistaken. Over-prescription of opioids has clearly reduced GDP, by a massive amount. Yes, selling a bunch of opioid painkillers to Americans raises GDP by a few billion dollars, but this is vastly outweighed by the trillions of dollars of GDP that we lose from having a bunch more people addicted to painkillers, heroin, and fentanyl. Here’s the Philadelphia Fed in 2023:
There is growing evidence that the opioid epidemic has harmed many aspects of the real economy, including the labor market, consumer finance, and municipal finance. According to analyses from the Council of Economic Advisers’ 2019 report, the annual (nominal) economic cost of the opioid epidemic, including the cost of lives lost, is estimated at about $700 billion (roughly 3.4 percent of GDP) in 2018 alone, and over $2.5 trillion from 2015 to 2018. [emphasis mine]
So if you care about GDP, you should view curbing opioid and opiate abuse as a huge priority! Vance is simply not thinking about this very clearly.
But Vance’s real problem is that he conflates correlation with causation. In words that could have come straight from the mouth of a European degrowther, he rails against “creature comforts”, “consumption”, and “price club mega-size junk”. But nowhere does he explain why depriving Americans of these creature comforts would give them closer-knit families, a stronger sense of morality, stronger communities, reduced loneliness, and so on.
Why would taking away Americans’ large houses, SUVs, big-screen TVs, or central air conditioning make them spiritually richer? Modern Europe — which JD Vance spends much of his time railing against — lacks most of these things. And yet America has higher fertility rates than Europe, we go to church much more, and we have a much more robust social conservative movement. Europe has also been far more restrictive of speech that criticizes Islam, as Vance repeatedly notes. Yes, America has been trending away from social conservatism and Christianity in recent decades, but so has Europe, and the gap remains. Other developed countries in East Asia — most of which are moderately poorer than the U.S. in GDP terms — are extremely secular.
What about America’s past? We were much poorer in the 1950s, yet we went to church a lot more, had larger families, and so on. If you took away the material gains we’ve made since then, would we go back to tradwives and bowling leagues and lawn parties and Sunday church and 4 kids per family?
Perhaps, but it’s doubtful. Remember that the 1950s and 1960s were the culmination of a long upswing of community, religiosity, and so on in American society — something the sociologist Robert Putnam has documented extensively. Church attendance rose:
Fertility was on the upswing too:
And if you believe Putnam’s numbers, social solidarity increased all throughout the early 20th century:
It’s important to remember that this all came during the most robust and rapid period of GDP growth that America has ever seen. Over the period in which our social solidarity was soaring, our GDP per capita nearly tripled:
It was during this time that Americans got many of the “creature comforts” that Vance despises — the single-family homes, the cars, the televisions, the lawns, and so on. The image of that material prosperity, depicted in glossy ads and paintings from the time, is a powerful part of 1950s nostalgia.
In fact, many economists argue that one big cause of the Baby Boom was the fact that economic growth — bigger houses, better medical care, new labor-saving devices like washing machines, refrigerators, and vacuums, and so on — made it easier and cheaper to raise kids. This is from a relevant Works in Progress article by Anvar Sarygulov & Phoebe Arslanagic-Little:
Parenthood rapidly became much easier and safer between the 1930s and 1950s. The spread of labour-saving devices in the home such as washing machines and fridges made raising children easier; improvements in medicine making childbirth safer; and easier access to housing made it cheaper to house larger families…
[H]ousehold electrification paved the way for other technologies, including home refrigeration…By the 1940s, electric washing machines were becoming normal in middle class homes…Between 1936 and 1956, America’s maternal death rate fell by 94 percent, from 51 deaths per 10,000 live births to under 3…[M]edical advances, which were being made across the West, radically reduced the most serious potential cost faced by prospective mothers: life itself…
Alongside strides forward in household and medical technology…[I]t became easier to secure a home in which to raise children. The number of houses built soared across the West after World War Two…This house-building bonanza led to sharp rises in homeownership rates.
The golden thread linking the phenomena that comprise the triple mechanism we describe above – advances in household technology, progress in medical technology, and easier access to housing – is that they together sharply reduced the cost of having children. [emphasis mine]
If you like the kind of society we had in 1960, you can’t ignore the story of how we got to 1960. The answer was “economic growth”. This, combined with the examples of Europe and Asia, is why there’s no reason to believe that forcing Americans to be poorer — taking away the “creature comforts” Vance despises — would lead us to suddenly rediscover the value of community, family, and religion.
Now it’s worth noting that if you were to decrease America’s GDP to poor-country levels — below $15,000 per person, as opposed to over $90,000 today — you might be able to raise fertility. That’s how low you have to go before most countries have fertility above replacement level:
Countries with a basically pre-modern standard of living — where many women can’t read or write, and infant mortality is so high that families have to have many kids as a form of insurance — tend to have above-replacement fertility (though some don’t). But even this law is weakening, as fertility rates in Sub-Saharan Africa plunge, so even that extreme level of GDP reduction would probably fail to restore high fertility over the long run. Also, I kind of doubt that JD Vance wants to force Americans to live lives similar to those lived in Sub-Saharan Africa.
What about JD Vance’s preferred policies — trade protectionism and immigration reduction? Would those restore American community, family, and religion, at the expense of a bit of GDP? As I said earlier, that’s actually what I think this whole debate is really about.
On trade, you’ve seen Trump explicitly make the argument that Americans are going to need to suffer a bit of material deprivation in order to achieve the administration’s goals:
But how will doing this restore community, family, etc.? Presumably you could make an argument that protectionism will bring back good manufacturing jobs, which will then give men the confidence and social standing they need to get married and have kids. There’s just one big problem with this, though: Trump’s trade policy doesn’t actually increase the number of good manufacturing jobs. We’ve lost manufacturing jobs since Trump took office last year!
In fact, Trump’s tariffs are hurting the U.S. manufacturing sector, by raising the cost of intermediate goods. Economists understand this pretty well; JD Vance, who thinks “economics is just fake”, does not seem to understand it.2
How about immigration? Rightists will endlessly cite Robert Putnam’s finding that diversity reduces social trust in American communities. But as Bryan Caplan and many others have pointed out, the effect size is tiny — in Putnam’s research, going from zero diversity to maximum diversity reduces social trust by the equivalent of 1 point on a 100-point scale. This suggests that all the mass deportations in the world won’t move the needle on American community and togetherness.
In other words, JD Vance’s crusade against GDP is a cargo cult. Sure, GDP doesn’t measure “the beauty of our poetry or the strength of our marriages,” to use Robert F. Kennedy’s famous words. But that doesn’t mean that making Americans poorer will make their poetry more beautiful or their marriages stronger. Nor does it mean that policies that also happen to make us a bit poorer, like immigration reduction or tariffs, are any more likely to strengthen our society.
In a famous episode of Star Trek: The Next Generation — my favorite TV show of all time — Captain Picard castigates an alien for turning his society into a fascist empire. When the alien responds that the fascist government’s forced modernization program raised his daughter out of poverty, Picard responds with the beautiful quote at the top of this post: “Her belly may be full, but her spirit will be empty.” But was Picard arguing that it was the full bellies themselves that emptied the people’s spirits? Was he merely arguing that the fascist empire ought to become a poorer fascist empire, in order to restore the virtue of the people? Only a fool would think so.
Look, I also want America to have a stronger society. I want us to have more kids. I want us to have more stable families. I want us to have closer-knit communities, better moral values, etc. But that doesn’t mean the New Right knows how to get us there. So far, the New Right has built nothing — no new community organizations or institutions, no religious revival, nothing that would knit our society together. It has merely thrashed and thrashed against modernity, with no plan for a replacement. JD Vance’s crusade against GDP is simply more of the same.
“Done right” means getting immigrants who, on average, earn more than the native-born. This raises GDP by a composition effect — you have richer people on average. It also probably raises GDP by other means — increasing market size which increases returns to scale, boosting innovation and entrepreneurship, and so on. If you get mostly low-skilled immigrants, things get dicier — the composition effect reduces GDP because you’re importing poorer people, but the increased market size may still cancel that out. But in general, if you want higher per capita GDP, you should be selective in terms of who you let into the country. Total GDP, of course, is a different matter — if you want a bigger country, in order to be more powerful in military terms, then letting in tons of low-skilled immigrants may be worth it even if they reduce per capita GDP. And of course, there are distributional reasons to allow in low-skilled immigration — eldercare and so on. But basically, if you let in high-skilled immigrants, your society gets richer by pretty much every metric.
In fact, if you care about Americans having jobs, maximizing GDP growth is an important part of the equation. Okun’s Law — one of the most well-established regularities in economics — states that the unemployment rate is very strongly (negatively) correlated with quarterly GDP growth:
And only when GDP is growing robustly is there upward pressure on wages. The greatest period of growth for working-class wages in America since the 1960s was 2014-2024, despite inflation and the pandemic, because steady GDP growth kept us at full employment for most of that time.
Nor is this simply a case of correlation vs. causation. The mechanism is aggregate demand — when the economy is growing fast, people need more workers to produce things. So if you increase aggregate demand to make GDP grow faster, you raise total employment (though you don’t always want to do this, because of inflation). Yes, you can give people government jobs when the economy isn’t growing, but A) these jobs will generally not be great, and B) this will lower productivity and put downward pressure on wages. So for good jobs, you need GDP growth.
2026-07-06 16:54:30
Back in the 2010s, a lot of people marveled at China’s seemingly recession-proof economy. Throughout the global financial crisis of 2008 and the Chinese stock market crash and capital flight of 2015, the country never recorded a single quarter of negative economic growth. Here’s what I wrote back in 2019:
China’s government seems to have developed a highly effective new form of economic stabilization. Its extensive control of the financial system allows it to turn on a flood of bank loans when the economy looks weak, and restrain credit when the danger has passed. China’s avoidance of recession in at least the past three decades suggests that this form of credit-based stabilization is more effective than traditional, more indirect stimulation of the economy through government deficits and central bank monetary easing…When a recession threatens, the government tells banks to lend --— to local governments, construction companies and real estate developers. Then, if the credits go bad, the government swoops in and takes the nonperforming loans off of financial companies’ books. Uninterrupted rapid growth then shrinks the government debt as a percentage of gross domestic product, and the system sails blithely forward[.]
And here’s what I wrote in 2018:
China…directed banks to lend lots more money [in 2009]. The World Bank estimated that increased bank credit represented 40 percent of China’s stimulus. Much of the lending was done by China’s four large state-owned banks. The money went to infrastructure, real estate and all kinds of corporate projects, many of which were carried out by the country’s state-owned enterprises.
Basically, most countries use two types of policy to get the economy moving again when some sort of negative shock hits it:
monetary policy (e.g. cutting interest rates), and
fiscal policy (e.g. stimulus spending).
Macroeconomists disagree about why interest rate cuts give the economy a boost, but most agree that the policy usually has an effect. Although there are many other theories and interpretations, one way you can think of rate cuts is as a financial policy — by making it easier for businesses to borrow and invest, low interest rates stimulate business activity. Fiscal policy, in contrast, pretty much bypasses the world of finance and aims directly at the real economy — you build a bridge or a road, which employs some people who might otherwise be unemployed, and then those people turn around and spend their money elsewhere in the economy, igniting a virtuous cycle of spending and working.
China uses both of those, but it also uses a third policy: financial policy. Instead of simply cutting interest rates and hoping that this filters through to bank lending, China’s government uses its direct control over the banking system to push banks to lend more. In the 2010s, after the Great Recession and the 2015 Chinese stock crash, this mostly meant lending to real estate companies. This lending fueled the biggest property boom the world has ever seen.
The boom ended in late 2021. The crash of the Chinese property developer Evergrande began a sequence of bankruptcies and defaults across the entire real estate sector. China’s property prices began to fall, and have not stopped falling to this day:
Chinese housing construction plummeted as well:
But despite the housing crash, China’s official growth rate never fell below zero — or even below 3%:
In fact, China did this by resorting to a version of the same playbook it used in 2009 and 2015. The Chinese party-state called up its captive banking system and told it to lend huge amounts of money to manufacturing companies. And that’s exactly what it did — industrial loans surged, even as real estate loans petered out:
It’s tempting to cry “China’s done it again!” In fact, that’s exactly what some people are now doing:
Skeptics will caution, of course, that this sort of stabilization policy can come with a cost: lower productivity growth and economic inefficiency over the long term. That’s probably what happened in the 2010s, as China’s repeated use of real estate lending to stabilize the economy directed resources to inefficient real-estate companies and led to lower productivity growth. Now there’s the possibility that China’s wave of financial stimulus in 2022-2024 may lead to an overhang of unproductive “zombie” companies that keep soaking up labor and other resources for years to come:
But admirers of China’s economic system will be undeterred. They will point out that productivity is hard to measure; that long-term costs are both uncertain and hard to verify; and that long-term problems can always be fixed later. The more important fact, they’ll argue, is that China did exactly what Xi Jinping said it would do — to pivot away from an excessive reliance on real estate without causing the economy to shrink. “Chinamaxxers” will use this as reason to crow about the superiority of the Chinese way, while left-leaning intellectuals will use China’s performance as a foil to demonstrate the benefits of greater government control over the economy.
There’s just one problem with this triumphalism: China did, in fact, have an economic crash as a result of its real estate bust.
The first way to see this is to look at China’s job market. In 2023, China famously modified its youth unemployment data to use a narrow definition of unemployment, because the numbers were getting too high. But even the revision couldn’t mask the upward trend:
Overall unemployment was recorded as rising only a small amount. But as Bloomberg reported at the time, China’s total unemployment numbers aren’t a very good measure of the labor market, and alternative indicators told a much more pessimistic story:
Alternative indicators and anecdotal reports suggest unemployment is worse than the official monthly figures show…[T]he [official headline] figures aren’t sensitive to changes in the number of migrants from China’s rural areas who work in cities; they also don’t capture the number of people who have dropped out of the labor market for more than three months or those unable to start work…
The employment sub-index for China’s non-manufacturing purchasing manager’s index, which tracks hiring intentions in the service and construction sector, has stayed consistently below pre-pandemic levels for most of the past 12 months…Official data shows there’s been no growth in the migrant worker population since the pandemic…The average number of workers at industrial enterprises with revenues above 20 million yuan ($3.1 million) fell to 7,398 in November 2021 from 7,419 in November 2020, according to official statistics…Because of the weak labor market, record numbers of young people are preparing to take exams to qualify for post graduate courses or enter the civil service [and] would not be counted as job seekers[.]
What about GDP growth? In her tweet above, Kathleen Tyson declares that China “was the first to deflate a massive, leveraged housing bubble without a single quarter of economic contraction or loss of growth momentum in the real economy”. But is that true?
Well, no, it’s not. According to China’s official statistics, the Chinese economy shrank by 0.8% in the second quarter of 2022:
China’s growth is usually reported in year/year numbers, but quarter/quarter is how the U.S. and most countries do their reporting. So by the kind of measurement Americans are used to hearing about, China’s economy officially contracted at an annualized rate of over -3% in the second quarter of 2022. This was also revised down from the -9.3% that was reported in the initial version of the statistics. As for “loss of growth momentum”, China’s economy is officially growing around 2 percentage points slower than it was just before the pandemic.
So even if we accept the official numbers, the claim is wrong. But should we accept the official numbers? Probably not. There is evidence that the Chinese government “smooths” its growth numbers — in good years, it fudges downward, and in bad years it fudges upward. This is from Nakamura et al. (2016), who use detailed data on Chinese consumption to estimate how incomes changed:
Our estimates suggest that official statistics present a smoothed version of reality. We find that inflation was overestimated and growth underestimated by several percentage points per year in the late 1990s. In contrast, since 2002, official inflation statistics have risen only modestly, but our Engel curve based estimates have risen much more. Our estimates imply that growth was substantially lower than official statistics suggest since 2002, and actually dipped into negative territory in 2007 and 2008.
A bunch of analyses claim that China has also done this in response to the property crash. The Rhodium Group used alternative data sources to estimate that China’s economy actually shrank in 2022 and grew much more slowly in 2023 than the official numbers suggest:
Officially, China reported 3.0 percent real GDP growth in 2022, despite the fact that significant proportions of the economy were under strict lockdowns to prevent the spread of COVID-19 during large portions of the year, retail sales fell outright, and investment in the property sector was collapsing. In 2023, the decline in property investment continued, net exports and government spending were drags on growth, and household consumption growth remained relatively low. Beijing provided little direct assistance to households to facilitate spending, and Chinese households added to savings and paid down mortgage debt instead of spending more. Yet China officially reported 5.2 percent real GDP growth in 2023, barely slowing from the pre-pandemic pace of 6 percent in 2019, even though the property sector was experiencing a boom in 2019 and was collapsing in 2023…We estimate that real GDP growth was closer to a contraction of -0.3 percent to -0.8 percent in 2022, and there was only modest growth of 1.5 percent to 2 percent in 2023. [emphasis mine]
The Bank of Finland was a little less negative, but still estimated that growth stalled in 2022:
Capital Economics, which tracks a whole bunch of independent estimates, finds that China probably did experience a recession in 2022, though it’s pretty positive about growth since then.
One particularly pessimistic indicator is inflation, which has slipped into negative territory in China since the real estate bust:
Deflation is a classic sign of low aggregate demand and a slowing economy.
It should be noted that there are a few analysts who disagree, and think that China’s growth numbers are basically accurate. But most independent assessments conclude that China’s growth not only suffered a sharp hit in 2022, but has been weaker in the years since the end of the pandemic.
It makes sense that China’s government would continue their traditional approach of smoothing out growth numbers in the short term in order to project an attitude of stability and calm. But smoothing only works if the economy eventually bounces back. If China is on a new longer-term trajectory of lower growth — which of course remains to be seen — then there will be too few good years to “pay back” the growth that was “borrowed” in the bad years of 2022 and beyond.
I don’t want to detract from China’s accomplishment here, or say that its macroeconomic stability is entirely fake. China has invented — or, perhaps, perfected — an alternative tool for macroeconomic stabilization. Countries all over the world, including the United States, should study China’s financial stabilization policy and think about how to accomplish something similar without direct government control over bank management.
But at the same time, I don’t think we ought to be idolizing Chinese macroeconomic policy either. Even if there don’t turn out to be long-term productivity costs — which is a big “if” — China still hasn’t managed to rewrite the rules of aggregate demand and aggregate supply.
2026-07-04 17:31:52
“What other country would have done this?” — Daniel Inouye
“We don’t repeat this every day, but there are 33 words that are very sacred to all of us. We do the repetition a little differently but ‘We hold these truths to be self-evident. That all men are created equal. That they are endowed by their creator certain inalienable rights. That among these are life, liberty, and the pursuit of happiness.’ It’s operational. Believe me.” — Daniel Inouye
China’s last imperial dynasty, the Qing, lasted 268 years. The Ming Dynasty that preceded it lasted just slightly longer, at 276, while the celebrated Tang made it to 289. Decades before each of those dynasties officially fell, they were shells of their former selves, with much of the land outside the control of the central government.
Barring abrupt catastrophe, the United States — which today marks a quarter of a millennium — will probably last as long as the Qing, the Ming, and probably the Tang. The country’s foundations are certainly shakier than when I was a child, but we have not yet entered an obvious terminal phase. The economy is still robust — our GDP remains on the smooth upward trend it has been on since we started measuring such things eight decades ago:
We cannot (or will not) build a functional passenger train network, but our AI industry is upending the world. Our health care costs twice as much as that of other rich nations, but our houses are huge and luxurious. Our cities are burdened with crime and disorder, but e-commerce delivers everything we need, straight to our door. The hour of the wolf is not yet upon us. It seems a safe bet that there will still be a United States of America in 2044, 2052, and probably 2065.
And yet we’ve reached the stage where we can peer through the fog and see how this grand experiment might be heading toward its conclusion. Much of the country has eased into a comfortable equilibrium of sclerosis; local veto power either prevents the construction of factories, housing, energy, transportation, and other infrastructure, or delays it by decades, or raises the cost to multiples of what other rich countries pay. The past has become more valuable than the future to many Americans; they cling desperately to the power to enforce stasis, preserving a facade of the country they grew up in at the expense of the very dynamism that made that country great.
That sclerosis seeps into everything else. Immigration, and even migration from city to city, becomes a vicious zero-sum fight over a fixed housing supply. Cities decay into museums of themselves. The industries of the future can only be built in America if they take up nearly no land, use nearly no energy, require very little bank financing, and are able to procure skilled labor as needed from abroad. Somehow the internet industry satisfied all of those conditions for three decades, but that time is done.
Our politics, meanwhile, has degenerated into movements defined more by who they hate than by any positive vision for the country’s future. Rightists are consumed by their hatred for immigration, leftists by their hatred for Israel. Even intellectual liberals — my own movement and social class, if only by process of elimination — increasingly subordinate other goals to their dream of lowering the social status of wealthy technologists.
To the extent that popular visions of a better America exist, they are rank and obvious fantasies — homogeneous harmony that rightists will never be able to create, or socialist plenty that socialism is incapable of delivering. There are plenty of workable, feasible future visions that would advance the frontiers of freedom, dignity, and prosperity; no faction of the engaged American public seems particularly interested in them.
Political discourse in America is still the baleful thing it became in the 2010s — a vicious free-for-all of social media influencers using hatred, division, fear, and misinformation to win the ear of the powerful political staffer, think tank, and journalist classes. Everything exists in the shadow of the almost-revolution of the late 2010s — an upheaval whose force has mostly receded but whose damage has yet to be fully assessed. Meanwhile, the country’s powerful enemies abroad are sharpening their knives.
If there is a reason to be pessimistic about America’s future, it’s that so few of the country’s citizens seem to believe in it. We used to be an unusually patriotic nation; now Americans are less proud of their nation than Europeans, Asians, or people in any other major world region:
The rightists who now dominate the GOP believe that America will only be valuable as a going concern if its old ethnic composition can be forcibly restored. The leftists who are surging among the Democrats, meanwhile, have a vision of America as an evil empire that could have come straight from old Soviet propaganda; this idea finds fertile ground among progressives who for a decade have mainlined the notion that America is “stamped from the beginning” with racism. How will the country be saved if no one thinks it’s something worth saving?
It would be foolish, of course, to predict that the U.S. is headed for the scrap heap within our lifetimes; uncountably many such predictions have made fools of the people who made them. The country is not facing mortal, imminent danger; its enemies are powerful but most of its wounds are self-inflicted. The United States may yet survive, with its territory and its constitutional democracy intact, to its 300th birthday and beyond.
Even so, it’s far from clear what a nation will even mean in those decades and centuries to come. The human race as a whole is set to dwindle, as fertility falls below replacement in every corner of the globe. At the same time, more and more of the thinking done on the planet will be done in data centers rather than within human brains. In that posthuman world, it’s not at all clear that humanity will even need the nation-state to provide the crucial organizing and coordinating role it played during the previous two and a half centuries.
So whether or not this is the beginning of the end for America, it’s the beginning of the end for something even bigger and more important — the human age. By that I mean the age when humanity, unassisted by any higher intelligence, broke free of the chains that had bound it for millennia and became something greater.
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