http://www.demos.org/blog/11/14/14/inco … -milanovic
Jay wrote:How is it a ponzi scheme? Global trade has lifted billions out of poverty and subsistence living. Rust belt Americans had skills that were made obsolete. It will correct itself among their kids. It's painful, but not permanent.
i think most analysis in the main suggests that growth and recovery for the 75th-99th percentile will not happen. that's most of the western advanced world. the wealth is being globally restructured and redistributed to emerging economies and cheaper hubs of production and manufacture. that's the global labour marketplace. couple that with technological automation and advances made from the other, 'top down' end of things, and the rustbelt worker communities aren't going anywhere fast. they're not all going to become advanced members of a new tertiary/quarternary sector. this is a myth that has been mis-sold (in the form of debt-heavy college educations, for a start) for the last 30 years.
I don't buy it. Global trade is not a zero-sum game and jobs aren't 1 for 1
Global inequality studies were made possible by two events that occurred at about the same time, in the mid-1980s. First, for the first time ever we had income distribution data for most of the countries in the world. Before, you didn't have household surveys from the Soviet Republics, China and most of Africa. That changed around mid 1980s/late 1980s.
The second thing that changed was, of course, globalization, the inclusion of China and formerly Communist countries in the world market, and thus much greater awareness of the large income gaps between countries and peoples, and of course greater competition.
It turns out that—depending on the year and how detailed your data are—some 50 to 60 percent of income differences between individuals in the world is due simply to the mean income differences between the countries where people live. In other words, if you want to be rich, you’d better be born in a rich country (or emigrate there). You can see that in the figure here, where very poorest people in the United States have an income level which is equal to that of the middle class in China or even upper middle class in India.
So that's very striking. At least half of your income is determined by where you live, which for most people is where you were born. Then about 20 percent is due to the income level of your parents. So, your citizenship plus your parental background explain around two-thirds or even 70 percent of your income.
Then, obviously, if I had data for gender, race, ethnicity and other things, which are similarly exogenously “given” to an individual, that percentage would go up, perhaps to more than 80 percent.
I am quite confident that if you were to add other things which, I underline, you did nothing to deserve or to be penalized for, you would go, probably, over 80 percent of your income being thus determined.
The lion’s share of that is due to citizenship, or for the individuals like myself who are just residents of rich countries and still get all the benefits, to the residency. This is what I call “the citizenship premium” or “citizenship rent.”
this is the basic structure that is flipping, in my opinion. this is the western 'growth' that is stagnating or recessing – the right to be paid (vastly) more to do the exact same job in one country rather than the other. the american worker isn't having to retrain from handling a plough to driving a tractor. they are finding that manufacturing and production wealth is leveraging an entirely new middle-class on the other side of the globe. it's far more drastic than any gradual technical advance, which has been analysed to death in the marxist critique of specialisation.
Last edited by uziq (2016-11-28 17:33:52)