Income inequality has been talked about and written about for decades, but while universally decried as a bad thing and steadily getting worse, its causes and consequences were widely misunderstood or lost in a miasma of economic jargon.
The most glaringly absent piece of this puzzle was the powerful connection between income inequality and globalization.
Globalization- itself a complex phenomenon- has been commonly represented as a good thing that through the efficiencies of technology and the virtues of multilateral cooperation would over time greatly benefit workers and consumers alike. The reality however – exposed by economic calamities from the Financial Crisis of 2008 to the Pandemic of 2020- has been starkly different.
Far from being the sunny face of an inevitable and always forward-marching progress globalization has now been revealed as a façade concealing the greatest transfer of wealth and income in human history with but marginal benefit to consumers and for workers- excepting the 1 % and their enablers- untold economic devastation and personal misery.
Not all were blind to the rising perils caused by globalization. Prominent among credible voices once dismissed as alarmists but now seen as mainstream is Dr. Dani Rodrik currently Ford Foundation Professor of International Political Economy at the Harvard Kennedy School.
Through over two decades of research at Harvard and earlier Columbia, and Princeton’s Institute for Advanced Study, Rodrik conclusively demonstrated that essentially globalization allowed multinational corporations to create a worldwide system for the express purpose of escaping the constraints of taxation, regulation, unions, environmental laws, and most especially accountability to democratically elected governments.
In books such as Has Globalization Gone Too Far (1997) and The Globalization Paradox (2011) he detailed how globalization not only destroyed millions of jobs held by a once-prosperous Western working class but also did even greater damage to poor countries in Latin America and sub-Saharan Africa, in some of which economic output collapsed entirely.
Sometimes reality can be obscured when viewed through a too-wide global lens, but gains great clarity when seen in the microcosm of a single country. Such is the case of a remarkable book by French sociologist Christophe Guilluy: Twilight of the Elites: Prosperity, the Periphery, and the Future of France, published in translation by Yale University Press (2019).
The book won extraordinary acclaim throughout the English-speaking world: “Disturbing and affecting…something profound that extends well beyond the border of France (New York Times); “How the gulf between France’s metropolitan elites and its working classes is tearing the country apart” (The Guardian); “This book will make you fret and question your moral integrity” (Financial Times – London).
Guilluy persuasively asserts that the old dichotomy of liberal/conservative is no longer relevant. Instead, he sees a new chasm in society dividing those who are winners in globalization’s New Economic Order and those who are losers.
The elites are not just the traditional upper classes but also the professional classes that support them, without whom this social and economic transformation could not have occurred.
The elites, he writes, “capture most of the benefits of offshore production and free trade” while the working classes are excluded and “condemned to live out their lives as second-class citizens”.
Guilluy’s data also surprisingly demonstrates that the dispossessed working class is actually a majority of the country’s population (60%) and younger owing to a higher birth rate than the elites, who are increasingly having fewer children—facts suggesting considerable political ramifications for France’s future.
Accordingly, among the political class as well as cultural leaders, intellectuals, and journalists there is a palpable sense of alarm that “a new form of class conflict long assumed not to exist is now plain for all to see.”
The stunning growth of income inequality, and the historically unprecedented transfer of wealth it entailed can be most graphically seen by examining income-distribution data for the United States from 1970 to 2007, the very same period in which globalization was fastening a grip on the world economy.
In 1970 the income share of the top 1 percent of households was 9%; in 2007 24%. In a similar vein the average income of the top 1 % in 1978 was ten times that of the remaining 99%; in 2007 it was thirty times greater.
Not for nothing is economics known as the “dismal science.” Yet however difficult to convey or comprehend, these statistics make abundantly clear that profound and ominous changes have overtaken our country and the world and they do not bode well for the future.
Dr. William Moloney is a Fellow in Conservative thought at Colorado Christian University’s Centennial Institute who studied at Oxford and the University of London. He is a former Colorado Commissioner of Education