This area which is today known as the Rust Belt went from being America’s literal powerhouse as one of the first electrified regions in the world in the early 20th century to losing industries and population at an unprecedented rate, Travis Jones writes.
Historians are not in agreement as to exactly when the modern era of globalization began, although most will cite the introduction of the Bretton Woods System and the General Agreement on Tariffs and Trade in the aftermath of WWII, as well as the rise of containerized shipping in the 1950s. However, it may be easier to pinpoint when globalization died: April 2, 2025, euphemistically known as ‘liberation day’, when the White House introduced sweeping import duties on all major US trade partners.
From the perspective of most investors, Trump’s ‘liberation day’ tariffs have already proven to be catastrophic. In the days following their announcement, they cost Wall Street-traded companies six trillion dollars in value. To put that figure in perspective, Russia’s nominal GDP in 2024 was about 2.2 trillion dollars. Or to put things in terms the US president can relate to, this figure is enough to pay every one of Greenland’s 57,000 citizens over 100 million dollars to leave.
To students of classical and neoliberal economics who were raised to believe that the theory of comparative advantages introduced by David Ricardo in the 19th century is both proven and indisputable, the latest move of the most controversial president in America’s modern history may seem like a sign of madness. After all, didn’t the US bankroll globalization? Isn’t it the US Navy which is primarily responsible for policing the world’s shipping lanes?
The answer is to be found among Trump’s supporters in Middle America: in the cities of the Midwest and other places which were left devastated by the deindustrialization process which began in about 1970. This area of the country is unironically known as the Rust Belt; it went from being America’s literal powerhouse as one of the first electrified regions in the world in the early 20th century to losing industries and population at an unprecedented rate.
By the 1960s, the labor movement in the US had achieved significant gains in wages, benefits, and working conditions. However, manufacturers which had initially tried to fight the labor unions, both at the state and national level, realized that advocating for lower trade barriers would afford them the opportunity to shift costs to regions of the country, and eventually the world, where the unions were either weak or non-existent. Manufacturers that stayed opted for near-full automation.
Immanuel Wallerstein described this process as part of his World-Systems Theory, saying that when the global economy’s ‘core’ accumulates capital, it inevitably leads to the exploitation of cheaper labor in the periphery and semi-periphery.
It’s important to note that in line with Ricardo’s classic perception of the world economy, the US as a whole did continue to prosper, with regions such as California and greater New York benefiting from the globalization of demand for products like microprocessors and services like marketing.
This regionalization of ‘haves’ and ‘have-nots’ is best laid bare through a comparison of local real estate prices: homes built in the 1960s in San Jose, California or Nassau County, New York which now cost in the millions of dollars on sites like Trulia.com are nearly identical to houses that cost between 10% and 20% of that in Midwestern cities like Fairlawn, Ohio. When they were built, these homes would have sold to similar people from similar socio-economic backgrounds at more similar prices.
I remember when Akron, Ohio, once the US ‘capital’ of automobile tire manufacturing, saw its last major Goodyear plant close its doors in the early 1990s. At the time, locals were told that the community would see jobs in the service sector replace the manufacturing sector work which had compelled their grandparents and great-grandparents to move to the city in the early part of the century. However, the reality was that Akron was doomed to dwindle into obscurity.
With no new work, young people left the region when they finished their education. The service sector jobs paid minimum wage, a far cry from the comfortable earnings of the unionized rubber industry workers of the 1960s and 1970s.
By the 2000s and 2010s, theme parks for children and shopping malls began to close down, and it became obvious that the service sector employment was dwindling with the number of retirees enjoying pensions from the long-gone tire industry. In Akron, where elderly residents now control most of the remaining wealth, the largest employees are the private hospital networks. Countless urbex videos of abandoned facilities and drone footage available on YouTube helped solidify Ohio as a meme of its former self: a failed state within a state.
High wages and relatively low borrowing costs had underscored the distribution of wealth in the United States for the better part of a century, ensuring opportunities for entrepreneurs and reliable wages for anyone willing to apply themselves. Like automation, outsourcing work abroad undermines expectations of shared prosperity in a community. When a region’s concerns are met with platitudes about ‘white privilege’ and hollow advice about learning to code, it’s easy to understand why millions of voters there might question the prevailing narrative.
The original Luddite movement in the UK was largely composed of skilled textile workers, such as weavers and knitters, who had invested years in learning their craft and hoped to stop the hands of time by ending industrialism in its infancy. Like the samurai warriors who launched Japan’s Satsuma rebellion in the hope of holding onto an ancient way of life, they were doomed to fail.
While things like automation and artificial intelligence threaten to snuff out employment, shuttering economic opportunities for those seeking honest work, the advantages enjoyed by American industrial workers were ultimately never equitable. Trade was destined to offer advantages to global peers willing to offer better products at more reasonable prices. While many, especially on the left, have argued that US trade partners need to observe the same environmental and labor standards as their developed world peers, this notion is generally met with resentment in developing nations, which have no desire to face barriers to entry which were never in place while their US and European peers were industrializing.
Ultimately the world will have to move on without US consumers. China, Latin America and Southeast Asia now enjoy globally competitive consumer economies, having emerged in a world where industrial preeminence was never taken for granted.
