The Morning Economic Report
10:07 pm
Wed April 2, 2014

Globalization - 4/3/14

There are many among us who do not view globalization favorably.  As pointed out by writer Eduardo Porter, globalization is now often perceived as a leading driver of rampant inequality and wage stagnation.  This view is hardly universal despite the fact that in an American context globalization may have contributed to a stalling of middle class incomes and a surge of income growth among the top 1 percent.  If the world were viewed as a single nation, income inequality has in fact declined and middle class incomes have expanded more rapidly than those at the top.  

This is largely because globalization has improved the economic circumstances of hundreds of millions of people in China, India and other parts of the emerging world.  According to global development expert Branko Milanovic, during the late 1980s, workers in the middle of China’s urban income distribution made 56 percent of median American income.  By 2008, that figure has risen to 71 percent.  What’s perhaps most interesting about all of this is that the greater equalization of incomes between nations has been accompanied by expanding income inequality within most nations whether wealthy or poor.  Workers from China to Germany have been taking home a dwindling share of the respective nation’s economic pie.