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"It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people."

— Adam Smith, The Wealth of Nations

Good Friday charts

Writing at the dawn of the Industrial Revolution, Adam Smith predicted that the "division of labor" would lead to "universal opulence."

As workers focused on a single task, he explained, their efficiency would rise, reducing the time needed to produce goods.

But far from making labor obsolete, as Luddites feared, these productivity gains would create more work, not less.

Greater productivity would raise incomes, broaden consumer demand and create new kinds of work, forming a virtuous cycle of growth and productivity.

For Smith, this feedback loop between specialization, productivity and consumption was the engine of economic progress — the singular force that could lift society beyond mere subsistence.

Globalization is the modern form of Smith’s division of labor.

He never used the term, but he concisely explained how nations, like individuals, benefit by trading freely with one another:

"By means of glasses, hotbeds, and hotwalls, very good grapes can be raised in Scotland, and very good wine too can be made of them at about thirty times the expense for which at least equally good [wine] can be brought from foreign countries. Would it be a reasonable law to prohibit the importation of all foreign wines, merely to encourage the making of claret and burgundy in Scotland?"

It would not be reasonable, no: We’re all better off because France makes the wine and Scotland makes the whiskey.

As simple as that example is, it might be the single best explanation as to why the world is so much richer now than it was in 1776.

We may not have achieved Smith’s "universal opulence" just yet, but global GDP is up over 100x in real, inflation-adjusted terms since he wrote The Wealth of Nations, with most of those gains coming over the last few decades.

Contrary to popular belief, this recent burst of global prosperity has not come at the expense of US jobs.

The economist Joseph Steinberg reviews the academic studies of the so-called "China shock" and concludes there was no such thing: "Jobs were lost in industries that compete with cheap Chinese imports, but more jobs were gained in industries that benefited from access to these imports."

It's true that some manufacturing jobs were replaced with services jobs, which has its pros and cons.

But even manufacturing jobs have been growing recently:​​ Since 2010, the US has added 1.3 million of them.

Surprising, right?

Here’s something even more so: Since 2011, China is estimated to have lost 7.4 million manufacturing jobs.

That’s not the story we usually hear about globalization, but it’s one that Adam Smith anticipated: Jobs will come and go across borders, but if we keep trading with each other, we should all be better off.

Let’s check the charts.

Where’s the emergency, exactly?

Here’s the aforementioned data on the US adding manufacturing jobs. For economists focused on productivity, this might even be bad news: Dominic Pino writes that "the problem with US manufacturing, to the extent that there is one, is that it isn’t destroying enough jobs."

Manufacturing the emergency:

The New York Fed survey of manufacturers found that expectations for new orders hit the lowest level on record. These are just predictions, so maybe it won’t be as bad as that. But early evidence suggests it’ll be pretty bad: Mack Trucks announced yesterday it’s laying off as many as 350 workers because of the new tariffs, Boeing is losing orders for airplanes, and Mr. Beast says he’s moving his chocolate bar business out of the US.

Some good news:

I’ve been a little puzzled that the stock market isn’t down more than it is and maybe this is part of the answer? The US share of spending on goods is down to 31%. Trump’s tariffs may be worse than Smoot-Hawley, but our exposure to them is much lower than it was in 1930.

Google AdWords will be cheaper, at least:

One early indicator of the impact of extreme tariffs on China is that Chinese shopping sites like Temu have stopped advertising in the US.

Some people have stopped visiting, too:

Foreign visitors to the US are sharply lower, likely in part because the tariff rhetoric is making people feel less sympathetic toward the US. Goldman Sachs estimates that lost tourism business will cost the US 0.3% of GDP in 2025, or $90 billion.

Shipping containers to the US are down even more:

If Adam Smith is right that trade makes us richer, this lack of trade will presumably make us poorer.

People have stopped buying dollars:

On a trade-weighted basis, the US dollar is a kind of shocking 9% off its recent highs. There are lots of possible takeaways from that, but The Economist believes it’s because the world is losing faith in how the US is governed: "A currency is only as good as the government that backs it."

Great Financial Crisis, Covid pandemic, Trump tariffs:

Joe Weisenthal notes that the Philly Fed Business outlook has only been this bad three times:  in 2008 and 2020 (twice). The difference this time, of course, is that the crisis is self-inflicted.

Good timing for the Oracle of Omaha:

I don’t think Warren anticipated a tariff-induced crash — stocks were just too expensive for him. But if it happens, he’ll be ready: "Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities," he wrote in his 2024 letter to investors.

Will the president notice?

Tariffs appear to be highly unpopular — if he’s serious about running for a third term, he might want to pivot back to tax cuts and deregulation.

Even non-partisan types are worried:

Consumer sentiment among political independents is lower than it was at any point during the Biden administration — including those dark days when gas prices were soaring and inflation hit 9%.

The long-term gain?

Proponents of tariffs say we have to endure short-term pain for long-term gain and maybe this is it: President Trump is inadvertently making free trade popular again.

That might be good news for the world’s prosperity, long-term.

But it surely would have been easier if we had just re-read our Adam Smith.

Have a great weekend, universally opulent readers.

— Byron Gilliam

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_{Brought to you by:}

ZKsync is accelerating institutional blockchain adoption and the rise of tokenization.

Institutions choose ZKsync to move tokenized assets securely across enterprises while preserving privacy and governance.

With gasless transactions, seamless onboarding, and scalable ZK infrastructure, enterprises can transfer financial products and data privately using ZK Stack — an open-source, trustless blockchain platform designed for speed, low costs, security, and interoperability without sacrificing control.