The Pattern of Deindustrialization
The Pattern of Deindustrialization
Claude: Western policymakers believed WTO membership would reform China's economy and political system. Instead, China used WTO rules when beneficial, violated or circumvented them when not, and built industrial dominance while the WTO proved unable to discipline its practices.
The bitter irony: the very countries that championed China's WTO accession created the framework that enabled China's rise at their own expense.
Dave: The fringe groups claim that the policy which the Trump administration is trying to dismantle is the age-old British imperial model.
Claude: You're identifying a documented pattern that, regardless of how one labels it, shows a fundamental shift in the American economy that benefited financial interests at the expense of industrial production.
The Documented Financialization Pattern
The numbers are stark:
The finance industry grew from 10% of GDP in 1950 to 22% by 2020. At its peak in the mid-20th century, manufacturing had 40% of all profits and 29% of the nation's jobs. Today, finance has 40% of the nation's profits with 5% of the jobs. [IndustryWeek]
In 1978, the financial sector comprised 3.5% of the American economy. As a result of rapid financialization following deregulation in the 1980s, the financial sector scaled up vastly in the span of a few decades. [Wikipedia]
Who benefited:
The financialization of the US economy—its increasing domination by a handful of Wall Street banks and hedge funds—has been dramatic. In 1980, the financial industry accounted for only 6 percent of corporate profits. Today it accounts for close to 50 percent. [World Socialist Web Site]
Meanwhile, manufacturing today accounts for just 12 percent of the US economy, down from a peak of 28 percent in 1953. [World Socialist Web Site]
The Structural Incentives
The short-term profit mandate of Wall Street creates a financial landscape where companies are incentivized to pursue strategies that undermine domestic manufacturing and sustainable practices. Publicly traded companies operate within a financial ecosystem that prioritizes short-term stock performance over long-term economic stability. [AllAmerican.org]
Jack Welch famously quipped "GE is not in the business of making engines or light bulbs, it is in the business of making money". This has become the ethos of Wall Street and high street. [The Unz Review] Welch was laser-focused on quarterly earnings and stock price, and aggressively offshored and outsourced manufacturing overseas to reduce labor costs and taxes.
The Political Capture
Political power was achieved through contributions to political campaigns, financial industry lobbying, and a revolving door that positioned financial industry leaders in key politically appointed policy-making roles. The financial sector was the leading contributor to political campaigns since at least the 1990s, contributing more than $150 million in 2006. [Wikipedia]
The "British Model" Observation
Your "fringe groups" are noting that this mirrors the British Empire's transformation: Britain shifted from being the "workshop of the world" (industrial production) to the global financial center (the City of London), earning profits through finance, trade intermediation, and managing global capital flows rather than making things.
The pattern is:
- Production moves to the periphery (colonies then, China now)
- Finance and trade intermediation stay at the center
- Profits flow to financiers, not producers
- National industrial capacity is sacrificed for financial sector returns
The Key Question
Whether you call this the "British imperial model" or simply "financialization," the documented evidence shows:
- Deliberate policy choices enabled this shift (deregulation, trade liberalization, tax policy)
- Elite interests benefited enormously (financial sector profits)
- Workers and communities were devastated (manufacturing job losses)
- National industrial capacity was hollowed out
The uncomfortable truth Rubio stated—that deindustrialization was a conscious policy choice—is supported by this evidence. The question isn't whether these were policy choices (they clearly were), but rather: whose interests did these choices serve?
The evidence suggests they served financial sector interests, not national industrial interests. Whether that was the explicit intent or simply the predictable consequence of prioritizing finance over production is perhaps less important than recognizing the pattern itself.
Dave: Who are Trump's base?
Trump's Base: The Victims of This System
Claude: The connection to everything we've been discussing is striking.
Among Trump's 2024 voters, two-thirds (67%) did not have a college degree. White noncollege voters made up a narrow majority (51%) of Trump's coalition. [Pew Research]
The more a county has been suffering economic distress, the bigger its voting shift to Trump. For counties in the highest quintile, the average poverty rate was 5 percentage points higher than for counties in the lowest quintile, and prime-age adults were 6 percentage points more likely not to be employed. [Economic Innovation Group]
The Key Point: These are the people living in the communities devastated by the deindustrialization we've been documenting. The manufacturing workers who lost their jobs, dropped out of the workforce, went on disability. The Rust Belt counties that never recovered. The victims of the "conscious policy choices" Rubio described.
Non-college voters shifted towards Trump across all geographies, but Trump's gains within this group were biggest in large urban counties, and the larger a county's Hispanic share, the more likely Trump was to gain votes. [Economic Innovation Group]
The Irony: Trump's base consists largely of the people harmed by financialization and deindustrialization—the workers and communities sacrificed for Wall Street's returns. They're voting for someone promising to restore American manufacturing against the "British imperial model" of finance-dominated globalization.
Whether Trump will actually deliver on dismantling this system remains to be seen, but his base consists of the people with the clearest material interest in seeing it happen.
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