The America-led movement for freer trade has been good for the world and for Americans most of all.
Few technologies, and certainly few so rudimentary in design and execution, have done more for the betterment of the world than shipping containers.
The United States became an economic superpower and a titan of trade, in no small part because of the global adoption of standard containers. They were invented by American entrepreneur Malcom McLean in the mid-1950s. McLean’s first container ship sailed from the port of Newark to the port of Houston in 1956, carrying just 58 20-foot containers.
Standardized containers reduced loading, shipping, and unloading costs dramatically and immediately. As Alexander Hammond notes in his 2019 appraisal of McLean’s contribution, “In 1956, hand-loading loose cargo onto a ship in a U.S. port cost $5.86 per ton ($65.50 in 2023 money). However, thanks to McLean’s new containers, the price fell to just 16 cents per ton ($1.79 in 2023).”
The decline in global shipping costs opened the greatest opportunity to exploit comparative advantage civilization had ever seen. As the cost of moving energy, raw materials, parts, and finished goods by sea fell, shipping quickly became the least onerous aspect of the holistic equation for exporters and importers. The sites of manufacture and consumption became progressively disconnected, with an increasing amount of manufacturing relocating to countries and regions that had a greater comparative advantage.
While this global offshoring of manufacturing was largely a migration from rich countries to low and middle-income countries, the benefits were unquestionably bi-directional. Containerization removed impediments to trade, and in doing so made it possible for people in deeply impoverished countries to climb out of poverty — not by taking aid handouts, but by finding innovative ways to furnish rich countries with their wants and needs, from inexpensive mobile phones and computer hardware to inflatable pools and children’s bicycles.
It’s an economic win-win for developed and developing countries alike, and it did more to lift the world’s poor out of extreme poverty than all the aid programs combined.
Since the end of World War II, GDP per capita in the United States grew from $19,300 (inflation-adjusted, in PPP$2017) to $65,900, while life expectancy at birth in the U.S. climbed by a little over 14 years. In short, trading with the world, and the innumerable resulting flow-on contributions, made for a richer and longer-lived America. Over that same period of increasing international interconnectedness, global GDP per capita and life expectancy grew dramatically, from $3,780 and 42 years, to $17,800 and 74 years, respectively. Globalization and trade didn’t just work for some countries; it worked for nearly everyone — with almost no exceptions.
Countries with higher interconnected trade have a significantly reduced likelihood of conflict. Highly evolved trade systems between countries are the real mutually assured destruction, where a breakdown in trade results in both parties suffering. Globalization, and largely free trade, have made the oceans safer, as it is in everyone’s best interest to keep the containers freely moving. A world that turns its back on embracing the positive-sum gains of interconnectedness would splinter into a zero-sum game of warring factions. In fact, humans ran this very experiment for nearly 10,000 years prior to the modern age of globalization with little success.
Conflict aside, globalization has also proven spectacularly adept at furnishing the West with an unprecedented standard of material living. It’s easy to lose sight of just how significantly global manufacturing and the forces of comparative advantage have driven down the cost, and thus driven up the availability, of the things we want and need. The cost of a dishwasher has fallen by 61 percent since 1979, while air conditioning has fallen by more than 97 percent since 1952. As Gale Pooley points out in his assessment of time price, the number of hours the average person would have to work to afford something has also dropped: “The time price of a refrigerator has fallen by 92.44 percent to 16.44 hours. You can get 13.23 refrigerators today for the time price of one in 1956.”
And let’s not forget the smartphones, headphones, waterproof jackets, laptop computers, silicone spatulas, and millions of other items that have become significantly less expensive and more abundant through the last 50 years of globalized trade.
No matter how you slice it, free markets and largely unrestricted trade have dramatically improved the lives of the average American more than nearly any other general policy position over the last four decades. The result has been much greater access to the goods and services that make the American dream possible. America should continue to lean into what Americans produce best: brilliant minds and equally brilliant ideas, not toasters and plastic flamingos.