We don’t win any more. Mexico and China are picking our pockets. And now, on top of all that, we’re poor.
That’s the latest assertion from – can you guess? – Donald Trump, who expanded on his view of Broken America in a recent interview with the Washington Post. “We were a very powerful, very wealthy country,” the leading Republican presidential contender said. “And we’re a poor country now. We’re a debtor nation. How are you going to get rid of $21 trillion in debt?”
Trump probably knows the accuracy of this claim doesn’t particularly matter, since his declinist narrative appeals to millions of real Americans who feel they’re falling behind, even if they’re not poor, exactly.
But if America is poor, the rest of the world is a Dickensian ghetto. “Trump is wrong,” says economist Donald Boudreaux of George Mason University. “This theme has been propounded for 25 years on both the left and the right, and been consistently debunked.” Here, for instance, are the latest figures on average disposable household income for the world’s most advanced economies, as of 2014:
China and Mexico aren’t included in this list, but if they were, they’d be far, far down. On a similar measure, gross national income per capita, the U.S. figure -- $55,200 -- is 6 times that of Mexico and 7 times that of China.
Trump worries about the United States short-changing its military, but U.S. defense spending is still twice that of China and Russia combined. NATO, which includes the U.S. and 26 allies, spends nearly $1 trillion per year on defense.
Many economists are uncomfortable with the size of national debt, now $19.2 trillion (not $21 trillion, as Trump seems to claim). The bloated debt clearly represents undisciplined spending by Congress, with a stamp of approval from the last two presidents. But it’s also a sign of the U.S. economy’s strength that investors everywhere in the world are willing to lend the United States almost unlimited sums of money at interest rates that today are around 1.9% for a 10-year bond. China pays 2.9% for the same type of bond; Mexico, 6%.
For all of Trump’s misleading bombast, though, it is arguably inaccurate to call America a rich country, either. A few charts explain why. First, here’s median U.S. household income, adjusted for inflation:
The purchasing power of the typical family is considerably below the peak level of 1999, which is why some people feel like they’re falling behind. There’s an important caveat, though: Many advanced nations are enduring the same backsliding, and the U.S. has actually fared better than most of them. We're falling behind -- a bit -- compared with where we used to be, but not compared with people in other countries.
This chart shows the poverty rate of 31 advanced nations:
The poverty rate in the U.S., at 17.9%, is third worst, after Mexico and Israel. Poverty rates are lowest in the Czech Republic, Denmark and Iceland. One reason disposable income is high in the United States is that taxes are relatively low. Taxes are higher in most of Europe, which cuts into income but also funds social programs that sharply lower poverty. Pick your poison.
Finally, this chart shows income inequality for the same 31 nations:
Again, the United States is third worst, after Mexico and Turkey. The most equal nations are Denmark, the Slovak Republic and Slovenia. Again, the U.S. economy has fewer mechanisms for redistributing wealth than in most other countries.
Put it all together, and the U.S. economy performs extremely well in the aggregate. Calling America poor, in fact, is like calling Steph Curry a hack or Jennifer Lawrence a dud. Yet it’s also hard to say America is rich when nearly one-fifth of its citizens live below the poverty line and economic gains flow disproportionately to the wealthy. The way to Make America Great(er) is to expand the portion of people who benefit from what is already working well. That would make the country wealthier than it already is.
Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.