In the 1940s sweaters were american made, did not cost $400, and the median american had more disposable income than now. The people who benefitted from outsourcing were those buying shares, not sweaters.
However, the median American did not have more disposable income back then compared to now. In 2020, the median American has about $16763 in disposable income, whereas in 1959 (the furthest back data I could get in https://tradingeconomics.com/united-states/disposable-person...) had about $351, which inflation adjusted would be $3,120.14 in 2020 dollars (5X less).
So while globalization didn't necessarily drop the cost of sweaters, I think we can say that the median American is better off today than in the past with regards to disposable income.
If you look at the prices of ordinary things over time, I'd guess that the prices stayed relatively same. But consider the fact that while median purchasing power has 5X-ed since the 1950s, prices staying the same is a testament to the power of free trade.
the average price of a house in 1959 was $10K for a disposable income o $351 (3.5%)
the average price of a house in 2020 is $270K for a disposable income of $16K (5.9%)
We have larger disposable income but the difference is not nearly as substantial as these other measures show. I do think that we earn more overall because we are more productive than back then.
In the $7.95 transaction, the buyer spent a higher percentage of their wealth buying the sweater than the $80 transaction today. By keeping the inflation adjusted price the same but boosting a buyer's disposable income, free trade has allowed the buyer to spend more of their income on other things within the domestic economy.
Multiply this scenario across every buyer (i.e. everyone) in the domestic economy, the increased productivity has allowed for more consumption and economic growth.
Let's consider the scenario in reverse, if keeping $7.95 locally is the best policy, would you advocate someone in California to not buy goods made in Missouri? After all, labor is much cheaper in Missouri. How about someone in San Francisco not buying goods from someone in Central Valley?
An average person could build a house themselves and keep the money they would spend in their "domestic" wallet economy instead of paying some contractor. Why do we hire contractors who might live in a far away town then? It's because it's mutually beneficial. I get a house that's better constructed faster than I could ever build it, the contractor gets compensated for their money. The time and productivity I saved in that transaction far outweighs the cost paid to the contractor.
And why is that? Because it made sense based on the options provided to them. And who decides what those are? The people with money and power, not the consumer.
If you think the median american had more disposable income in 1940 than today, you are hilariously uninformed.
https://fred.stlouisfed.org/series/DSPIC96 (only goes back to ~1960, and the I think this is mean, not median, but also a huge enough trend that it is impossible to deny).
I am trying to understand that graph, it is not so easy actually.
What does it mean that 2020 shows 15K average disposable income in the US? That the average person has 15K left once they pay absolutely necessary to subsist? I find it hard to believe.
I think most people using the word "disposable income" would use the term the way I stated. Also the post you reply to uses it in that sense, not as a relative value to taxes.
I believe this graph shows something different altogether, it simply shows wages - taxes. It has no bearing as to the purchasing power of that salary and what you could afford with it.
However, the median American did not have more disposable income back then compared to now. In 2020, the median American has about $16763 in disposable income, whereas in 1959 (the furthest back data I could get in https://tradingeconomics.com/united-states/disposable-person...) had about $351, which inflation adjusted would be $3,120.14 in 2020 dollars (5X less).
So while globalization didn't necessarily drop the cost of sweaters, I think we can say that the median American is better off today than in the past with regards to disposable income.
If you look at the prices of ordinary things over time, I'd guess that the prices stayed relatively same. But consider the fact that while median purchasing power has 5X-ed since the 1950s, prices staying the same is a testament to the power of free trade.