In the USA, as the rich got richer and the poor stagnated, globalisation has been blamed – contributing to the rise of Donald Trump. Evidence from elsewhere is that it ain’t necessarily so. This graph shows that in stark contrast to the US, in the Netherlands, it was the poorest households that saw the strongest growth in income.
In yesterday’s election, the Dutch electorate saw off the threat from their own yellow haired anti-immigrant populist politician. No co-incidence?
The graph above is included in a December 2016 paper by Torsten Bell and Adam Corlett for the Hans van Mierlo Stichting, arguing that the adverse impact of globalisation on poorer Americans (and British?) implied by the “elephant curve” is not inevitable, but the result of poor policy decisions.
Read the full article.
The globalisation debate too often gets simplified into a claim that working people in Western countries have seen their incomes stagnate in recent decades. But the evidence doesn’t support this simplistic case against globalisation. Yes, trade and migration bring with them challenges, but a more equal distribution of growth also depends on domestic policy choices.
The primary focus of an important article at Harvard Business Review is of course, “business”. However, all business operates inside a social context. The context for this analysis, is globalisation. This has been of immense value to richer people in the developed world, and to Asian and other developing world middle classes. One group that has not benefited particularly, and by falling back in relative terms, is the working class in Western developed countries. (This is very clearly shown in the frequently cited “elephant graph”
Our global narrative of progress, the implicit case for embracing change in exchange for its fruits, is being increasingly called into question by economically marginalized groups and populist politicians across the globe. This narrative has rested on three propositions: that globalization is a major driver of growth and prosperity; that technological progress enriches our lives; and that shareholder returns reflect businesses’ contributions to societal progress.
Those who question the continued applicability of this narrative have a case. While globalization has increased aggregate prosperity and reduced inequality across nations, it has also created winners and losers within nations
This uneven distribution of benefits has consequences, for those who have been left behind – and for both business, and for political conditions. In the UK, and the USA, we have seen the result in the rise of Donald Trump, and the June vote against the EU. Elsewhere in Europe, there’s been a widely reported rise in support for populist parties.
This is sharply illustrated by what the HBR refers to as a “trust gap”. HBR includes a graph that shows the widening of this trust gap between 2012 and 2016. Note that although it is the USA that has seen the most dramatic impact of this in electoral politics, the widening is even greater in the UK and in France.