April 26, 2014

BUT WHAT DOES THE ACADEMY CARE ABOUT POOR AFRICANS?:

One More Thought On Thomas Piketty's Capital, Is Global Wealth Inequality Actually Rising? (Tim Worstall, 4/26/14, Forbes)

But leave that aside and instead look at what the late 19th and late 20th centuries also have in common: they're both periods of significant globalisation. In fact, they're the only two periods of significant globalisation that we have available for our study. And one of the things we know about globalisation is that we expect within country income inequality to increase during that process. We most especially expect to see what we do in fact see: an extreme rise in the incomes (an thus, subsequently, wealth) of the top 0.1%, the top 0.01%. For these are the very people that globalisation frees from the limits of earning in a purely national economy and allows them to earn from that global one. Only those very top competitors are going to be able to do this. And the 90%, 99%, are not only still going to be earning purely from that national economy they're also going to be facing competition from those billions of low cost workers entering the global economy.

As an example, think about the earnings of Tiger Woods. In a non-globalised world he'd still be just as good as a golf player. But he would be earning rather less, as his appeal as an image, as an endorser or advertiser, would be based upon his value as an image purely to US, or possibly North American, consumers. But with a globalised economy he's also used to sell golf clubs in Taiwan, watches in Germany and credit cards in South Africa (assuming those are the endorsements Woods actually has). So, while he might still be getting $1 each for his value in advertising to US golf fanatics he's also getting some amount, a $1 or 10 cents or whatever, for his value in advertising to all global golf fanatics. Wayne Rooney's vast income is similarly partly financed by Far Eastern Manchester United fans and the fortunes of Bill Gates and Larry Ellison, Jeff Bezos, rely on the fact that they created globally competitive forms, not ones just limited to the economy of the USA.

So, in a period of globalisation we would expect to see an increase in in-country income and wealth inequality. This is also something we do see.

But as the work of Branco Milanovic tells us we're not seeing, in this same period of globalisation, an increase in global income inequality. Quite the opposite: the process of globalisation itself is increasing in-country inequality and also reducing global income inequality. As those hundreds of millions, nay billions, climb up out of the $1 a day poverty of peasant destitution and join something approaching the global middle class.



Posted by at April 26, 2014 7:22 AM
  

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