Concerned about income inequality? Globalization fuels it
Income inequality has been the subject of discussion and literature for decades, but although it is universally criticized as “a bad thing” and continues to worsen, its causes and consequences have been largely misunderstood or lost in a miasma of economic jargon. The most conspicuously missing piece from this puzzle was the powerful link between income inequality and globalization.
Globalization, itself a complex phenomenon, has been commonly presented as “a good thing” which, thanks to the efficiency of technology and the virtues of multilateral cooperation, would, over time, greatly benefit workers and workers alike. consumers. The reality, however – exposed by the economic calamities of the 2008 financial crisis to the 2020 pandemic – has been radically different.
Far from being the sunny side of inevitable progress and always moving forward, globalization has revealed itself as a facade concealing the greatest transfer of wealth and income in human history, with marginal benefit for consumers and, for workers – with the exception of the 1 percent and their catalysts – untold economic devastation and personal misery.
Not all have been blind to the growing dangers caused by globalization. Among the credible voices, once dismissed as fear-mongering but now seen as dominant, is Dr Dani Rodrik, currently professor of international political economy at Harvard Kennedy School. In more than two decades of research at Harvard, and earlier at Columbia and the Institute for Advanced Study in Princeton, NJ, Rodrik has conclusively demonstrated that globalization has essentially enabled multinational corporations to create a global system. for the express purpose of escaping the constraints of taxation, regulation, labor, environmental laws – and most notably, accountability to democratically elected governments.
In books such as “Has Globalization Gone Too Far” (1997) and “The Globalization Paradox” (2011), he explains how globalization has not only destroyed millions of jobs held by a once prosperous Western working class, but has also caused even greater damage to the poor. countries in Latin America and sub-Saharan Africa, in which economic production has completely collapsed.
Sometimes reality can be clouded when viewed through an overly broad global lens, but gains clarity when viewed in the microcosm of a single country. This is the case of a remarkable work by French sociologist Christophe Guilluy: “The twilight of the elites: prosperity, the periphery and the future of France” (2019). The book has been acclaimed in the English-speaking world: “Disturbing and affecting… something profound that extends far beyond the borders of France” (New York Times); “How the gulf between the French metropolitan elites and its working classes is tearing the country apart” (The Guardian); “This book will worry you and challenge your moral integrity” (Financial Times, London).
Guilluy convincingly asserts that the old liberal versus conservative dichotomy is no longer relevant. Instead, he sees a new gulf in society dividing those who are the winners of the “new economic order” of globalization and those who are the losers. The elites are not only the traditional upper classes but also the professional classes that support them, without which this social and economic transformation could not have taken place. The elites “capture most of the benefits of offshore production and free trade” while the working classes are excluded and “condemned to live their lives as second-class citizens,” says Guilluy.
His data surprisingly demonstrates that the dispossessed working class is in fact a majority of the country’s population (60%) and younger, due to a higher birth rate than the elites who have less and less. children – facts suggesting considerable political ramifications for the future of France. As a result, among some members of the political class, as well as some cultural leaders, intellectuals and journalists, there is a palpable sense of alarm that “a new form of class conflict long thought to be non-existent is now evident to all”.
The staggering growth in income inequality and the historically unprecedented transfer of wealth that it has brought about can be seen very graphically by examining income distribution data for the United States from 1970 to 2007, the same period during from which globalization took hold of the world economy. In 1970, the income share of the richest 1% of households was 9%; in 2007, it was 24 percent. Similarly, the average income of the richest 1% in 1978 was 10 times that of the remaining 99%; in 2007, it was 30 times higher.
It is not for nothing that economics is known as “gloomy science”. Yet as difficult to convey or understand, these statistics very clearly show that profound and disturbing changes have affected our country – and the world – and that they do not bode well for the future.
William Moloney, Ph.D., is a fellow of conservative thought at the Centennial Institute at Colorado Christian University and studied at Oxford and the University of London. He is a former Colorado education commissioner.