Who are the Winners and Losers of Globalization?

We’re talking about the movement of stuff across national borders. All kinds of stuff — things, services, money, people, ideas. Up until, say, the late 1700s-early 1800s, the world economically didn’t really grow that quickly. It was pretty flat, and then suddenly, something happened. And we have this great surge in the quality of life of people in Western Europe and North America. Their lives got remarkably better over the next century or so. Not much happened in the rest of the world. That was that chapter. Then it changes in globalization 2.0, which brings us to something called the elephant chart. It’s from an economist named Branko Milanovic, and it tells us a whole lot about global inequality and who the winners and losers have been since the late ‘80s. So it’s shaped like an elephant, and there are three dramatic points on this elephant chart. So let’s look at point A, which is the top of the elephant head, and this is the story of the emerging economies. This is the rising middle class, mostly in Asia. You might be in India or China and you’ve left the farm for the city. You have electricity, refrigeration, better income. You live longer. You live better. Now let’s look down at point B — the working class in Japan, in Germany, and the United States — the lower half of the rich countries. They still make a fair amount of money compared to the rest of the world, but their incomes have not improved. So they’re the relative losers of the last generation. If you’re at point B looking over your shoulder at all this progress of point A, you’re not happy about that. You might think that your losses have come at the expense of point A, of these emerging economies, of these foreigners, of these immigrants. And that helps us understand the rise of these politicians who want to raise the drawbridges in the Netherlands, and France, and the United States. “Build that wall! Build that wall!” Right-wing populism. And then there’s point C. That is the global 1 percent. Their incomes have surged. So those are the plutocrats, right? Those are the richest in the world. And if you look at who’s looking up at point C, it’s people in those same countries that are down at point B. This helps us understand the angst at the super rich: Occupy Wall Street, the Bernie Sanders campaign. “There has been a huge redistribution of wealth to the top 1 percent.” This is populism on the left. Left-wing populism. The experts have been warning us for decades that if you don’t do anything about this distribution issue, about this inequality, something’s bound to happen. Well, you know what? Politically, something is happening.

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