Who are the Winners and Losers of Globalization?

Summary

The video script discusses the evolution of globalization and its impact on economic growth and inequality. It highlights a significant shift in the late 1700s-early 1800s, leading to a surge in quality of life in Western Europe and North America. The 'elephant chart' by economist Branko Milanovic is used to illustrate the winners and losers since the 1980s. Point A represents the rising middle class in Asia, particularly in India and China, who have experienced significant improvements in living standards. Point B depicts the working class in rich countries like Japan, Germany, and the U.S., who, despite earning more than the global average, have seen no income growth, making them the relative losers. This has fueled right-wing populism and protectionist sentiments. Point C focuses on the global 1 percent, whose incomes have dramatically increased, leading to left-wing populism and movements like Occupy Wall Street. The script warns of the political consequences of not addressing wealth distribution and inequality.

Takeaways

• 🌍 The movement of goods, services, money, people, and ideas across national borders is a key aspect of globalization.
• 📈 Prior to the late 1700s-early 1800s, global economic growth was relatively flat, with a significant surge occurring afterwards.
• 💡 The quality of life in Western Europe and North America improved remarkably, while the rest of the world did not experience the same growth initially.
• 🐘 The 'Elephant Chart' by Branko Milanovic illustrates global inequality and the winners and losers since the late 1980s.
• 🇨🇳 Point A on the Elephant Chart represents the rising middle class in emerging economies, particularly in Asia, who have experienced significant improvements in living standards.
• 📉 Point B indicates the working class in rich countries like Japan, Germany, and the United States, who have seen little to no income growth.
• 🤔 The stagnation of income for the working class in rich countries has led to resentment towards emerging economies and immigrants, contributing to the rise of right-wing populism.
• 🧱 The phrase 'Build that wall!' symbolizes the sentiment of closing borders, which is a response to perceived economic threats from globalization.
• 💰 Point C on the Elephant Chart signifies the global 1 percent, whose incomes have seen a substantial increase, leading to left-wing populism movements like Occupy Wall Street.
• 👥 The super-rich are viewed with angst by those in the lower half of rich countries, reflecting a growing concern over wealth inequality.
• ⚠️ Experts have warned that if wealth distribution and inequality are not addressed, political upheaval is likely, which is now evident in the rise of populism on both the left and right.

Q & A

What does the term 'globalization' refer to in the context of the script?

Globalization refers to the movement of goods, services, money, people, and ideas across national borders, which has significantly impacted economic growth and the quality of life in different parts of the world.

Why was the economic growth relatively flat before the late 1700s-early 1800s?

The script does not provide a specific reason for the flat economic growth before the late 1700s-early 1800s, but it implies that a significant change or development post this period led to a surge in the quality of life, particularly in Western Europe and North America.

What is the 'elephant chart' and what does it represent?

The 'elephant chart' is a graphical representation developed by economist Branko Milanovic. It illustrates global inequality and shows the income distribution changes since the late 1980s, highlighting the winners and losers in the process of globalization.

What does point A on the elephant chart signify?

Point A represents the emerging economies and the rising middle class, predominantly in Asia. It signifies the improvement in living standards for people who have moved from rural areas to cities, gaining access to electricity, refrigeration, and better income.

Who are considered the 'relative losers' in the last generation according to point B on the elephant chart?

The 'relative losers' are the working class in rich countries like Japan, Germany, and the United States, specifically the lower half of these societies whose incomes have not improved despite still earning a fair amount compared to the rest of the world.

How does the perception of the working class in rich countries (point B) about the emerging economies (point A) contribute to political changes?

The perception that their losses have come at the expense of the emerging economies leads to dissatisfaction and fuels the rise of right-wing populism and protectionist policies, such as calls for building walls and raising barriers to immigration.

What group of people does point C on the elephant chart represent?

Point C represents the global 1 percent, the wealthiest individuals in the world, whose incomes have seen a significant surge during the period of globalization.

How does the rise in income for the global 1 percent (point C) affect public sentiment in rich countries?

The increased wealth of the global 1 percent has led to a sense of angst and resentment among the working class in rich countries (point B), which is reflected in social movements like Occupy Wall Street and political campaigns like that of Bernie Sanders.

What warning have experts been giving regarding the distribution of wealth and inequality?

Experts have been warning that if the issue of wealth distribution and inequality is not addressed, it could lead to significant political and social unrest, which the script suggests is already happening.

What is the relationship between the economic changes depicted in the elephant chart and the rise of populism?

The economic changes, particularly the stagnation of income for the working class in rich countries and the surge for the global 1 percent, have contributed to the rise of both right-wing and left-wing populism as reactions to perceived injustices and economic disparities.

How has globalization impacted the quality of life in Western Europe and North America compared to the rest of the world?

Globalization has led to a significant surge in the quality of life for people in Western Europe and North America, while the script suggests that not much happened in the rest of the world during the initial phase, leading to a widening economic gap.

What is the significance of the term 'globalization 2.0' in the script?

The term 'globalization 2.0' likely refers to a phase or version of globalization that is distinct from the earlier period mentioned. It is during this phase that the elephant chart becomes relevant, showing changes in global inequality and the rise of emerging economies.

Outlines

00:00

🌍 Globalization and Economic Growth

This paragraph discusses the historical context of economic movement across borders, including goods, services, money, people, and ideas. It highlights a significant change in economic growth post the late 1700s-early 1800s, particularly in Western Europe and North America. The paragraph also introduces the concept of 'globalization 2.0' and the 'elephant chart' by economist Branko Milanovic, which illustrates global inequality and identifies the winners and losers since the late 1980s.

🚀 Rise of Emerging Economies

Point A of the elephant chart is explored, focusing on the story of emerging economies and the rising middle class, predominantly in Asia. The narrative describes the transformation experienced by individuals in countries like India and China, who have moved from rural to urban areas, gaining access to electricity, refrigeration, and improved incomes, leading to better and longer lives.

📉 Stagnation of Working Class in Rich Countries

The paragraph examines point B of the elephant chart, representing the working class in wealthy nations like Japan, Germany, and the United States. Despite earning more than the global average, their incomes have seen little to no improvement, positioning them as the relative losers of the past generation. This stagnation fuels resentment towards the progress seen in emerging economies and contributes to the rise of right-wing populism and protectionist policies.

🔺 Surge of the Global 1 Percent

Point C on the elephant chart is analyzed, depicting the global 1 percent whose incomes have significantly increased, making them the economic elite. The paragraph discusses the perception of wealth redistribution towards this group and the resulting left-wing populism, as seen in movements like Occupy Wall Street and political campaigns such as Bernie Sanders'. It underscores the growing political and social unrest due to wealth inequality and the warnings from experts about the potential consequences of inaction on this issue.

Keywords

💡Globalization

Globalization refers to the increasing interconnectedness and interdependence of countries through the exchange of goods, services, and capital. In the video, it is central to understanding the economic shifts that have occurred since the late 1700s-early 1800s, leading to a surge in quality of life in Western Europe and North America.

💡Elephant Chart

The Elephant Chart is a graphical representation of global income inequality, named for its shape. It illustrates the income distribution and growth since the 1980s, showing the rise of the middle class in Asia (Point A), the stagnation of the working class in rich countries (Point B), and the surge in income for the global 1 percent (Point C).

💡Emerging Economies

Emerging economies are nations that have recently achieved rapid growth and are becoming significant global players. In the context of the video, the rise of the middle class in emerging economies like China and India is highlighted as a key change in the global economic landscape.

💡Working Class

The working class is a social group involved in manual or industrial labor. The video discusses how the working class in rich countries, such as Japan, Germany, and the United States, has seen little improvement in their incomes, making them 'relative losers' in the era of globalization.

💡Income Stagnation

Income stagnation describes a situation where income levels do not increase or grow over time. The video points out that the working class in developed countries has experienced this, contributing to a sense of loss and dissatisfaction among these groups.

💡Right-Wing Populism

Right-wing populism is a political stance that often includes anti-immigration and anti-globalization sentiments. The video connects the rise of right-wing populist politicians and movements, such as calls for building walls, to the perceived loss by the working class due to globalization.

💡Global 1 Percent

The global 1 percent refers to the highest-income individuals in the world, who constitute the top 1% of the global wealth distribution. The video discusses how this group has seen a significant surge in their incomes, leading to increased wealth inequality and social unrest.

💡Wealth Redistribution

Wealth redistribution is the process of transferring wealth from one economic group to another, often through taxes or social programs. The video suggests that there has been a significant redistribution of wealth to the top 1 percent, contributing to the rise of left-wing populism and movements like Occupy Wall Street.

💡Left-Wing Populism

Left-wing populism is a political ideology that advocates for the interests of the common people, often against the elite. The video connects the rise of left-wing populism to the growing discontent with the super-rich and the perceived unfairness in wealth distribution.

💡Inequality

Inequality refers to the unequal distribution of resources, wealth, or privileges among individuals or groups. The video emphasizes that the growing global inequality, as depicted by the Elephant Chart, is a major factor driving political and social changes.

💡Quality of Life

Quality of life encompasses the general well-being and standard of living of individuals, including factors like income, health, and living conditions. The video discusses the significant improvement in the quality of life for people in Western Europe and North America, contrasting with the stagnation experienced by the working class in those regions.

Highlights

Movement of goods, services, money, people, and ideas across national borders is the focus of the discussion.

Economic growth was relatively flat until the late 1700s-early 1800s.

A significant surge in quality of life occurred in Western Europe and North America around the 19th century.

The rest of the world did not experience the same level of growth during that period.

Globalization 2.0 introduced the concept of the 'elephant chart' by economist Branko Milanovic.

The elephant chart illustrates global inequality and identifies winners and losers since the late 1980s.

Point A on the chart represents the rising middle class in emerging economies, particularly in Asia.

Individuals in point A have experienced improvements in living standards, such as better income and longer life expectancy.

Point B represents the working class in rich countries like Japan, Germany, and the United States, who have seen no income improvement.

Point B individuals are considered relative losers of the last generation, leading to dissatisfaction.

The perceived loss by point B may be attributed to the progress of point A, fostering resentment towards foreigners and immigrants.

The rise of right-wing populism and calls for isolationist measures, such as building walls, is a reaction to these economic shifts.

Point C on the elephant chart signifies the global 1 percent whose incomes have significantly increased.

The global 1 percent are viewed as the plutocrats, the richest individuals in the world.

Individuals in point B are also looking up at point C with discontent, leading to movements like Occupy Wall Street.

The redistribution of wealth to the top 1 percent has caused left-wing populism and political movements like the Bernie Sanders campaign.

Experts have warned about the potential political consequences of not addressing wealth distribution and inequality.

Political changes are already occurring as a result of these economic disparities and social tensions.

Transcripts

We’re talking about the movement of stuff across national borders.

All kinds of stuff — things, services, money, people, ideas.

Up until, say, the late 1700s-early 1800s, the world economically didn’t really grow that quickly.

It was pretty flat, and then suddenly, something happened.

And we have this great surge in the quality of life of people in Western Europe and North America.

Their lives got remarkably better over the next century or so.

Not much happened in the rest of the world. That was that chapter.

Then it changes in globalization 2.0, which brings us to something called the elephant chart.

It’s from an economist named Branko Milanovic,

and it tells us a whole lot about global inequality and who the winners and losers have been since the late ‘80s.

So it’s shaped like an elephant, and there are three dramatic points on this elephant chart.

So let’s look at point A, which is the top of the elephant head,

and this is the story of the emerging economies. This is the rising middle class, mostly in Asia.

You might be in India or China and you’ve left the farm for the city.

You have electricity, refrigeration, better income. You live longer. You live better.

Now let’s look down at point B —

the working class in Japan, in Germany, and the United States — the lower half of the rich countries.

They still make a fair amount of money compared to the rest of the world, but their incomes have not improved.

So they’re the relative losers of the last generation.

If you’re at point B looking over your shoulder at all this progress of point A, you’re not happy about that.

You might think that your losses have come at the expense of point A,

of these emerging economies, of these foreigners, of these immigrants.

And that helps us understand the rise of these politicians who want to raise the drawbridges

in the Netherlands, and France, and the United States.

“Build that wall! Build that wall!”

Right-wing populism.

And then there’s point C. That is the global 1 percent.

Their incomes have surged. So those are the plutocrats, right? Those are the richest in the world.

And if you look at who’s looking up at point C, it’s people in those same countries that are down at point B.

This helps us understand the angst at the super rich: Occupy Wall Street, the Bernie Sanders campaign.

“There has been a huge redistribution of wealth to the top 1 percent.”

This is populism on the left. Left-wing populism.

The experts have been warning us for decades

that if you don’t do anything about this distribution issue, about this inequality, something’s bound to happen.

Well, you know what? Politically, something is happening.