3. Economic Transformation

A single graph can be worth a thousand words.

The economic transformation brought on by globalization has been deep. Some professions all but disappeared; others moved overseas, as economies became more interdependent and hence more specialized. In developing economies, embracing market reform and free trade has led to the greatest upward socioeconomic move in history — with millions pulled out of poverty, many eventually finding their way into a new middle class. This is most visible in large economies such as China and India, but can also been seen in Turkey, South-East Asia, and many African nations.

But while poor countries caught up with the rich world, lifting millions out of poverty and onto the economic ladder, the differences between the richest individuals and the poorest individuals in the world increased with an ever widening gap.

While billions of people were lifted out of poverty outside the West, billions of dollars flowed to fewer and fewer Western capitalists. As German economics professor Christian Kreiß renders it — so long we have compound interest and no cap on personal wealth, we will always end up with a situation where more and more capital flows to less and less people. The trend is only increasing.

Who was left out? Closer examination of the dramatic graph above reveals much needed nuance, but the point stands that while everyone’s income grew, this growth was uneven. While the lower middle class in most developed economies are not, in absolute terms, doing worse, it could seem that everyone else has been doing far better. A demographic that was once confident in economic progress, and trusted that every new generation will do better than the previous one, now feels anxious about its future.

Those who had benefited from a previous economic order now see themselves as victims of change. For a time, the world seemed to be tailor fit for them — but now, they have to contend with a new, unfamiliar world which feels unfair and in which they feel unsafe. Political leverage depends not upon absolute power but relative power. To the previously privileged, equality feels like a step down — and given the confluence of other trends and factors, the white working class voted with their ethnicity.

In 2014, Nick Hanauer, an American venture capitalist and a self-described “0.01 percenter”, gave a sinister warning; “If we don’t do something to fix the glaring inequities in this economy, the pitchforks are going to come for us”. And on November 8th, 2016, we saw what it looks like when the pitchforks come.”

Menu:
Introduction
#1 The Triumph of Globalization
#2 The Loss of Anchors (Previous Section)
#3 Economic Transformation (You are here)
#4 Obsolete Nationalism
#5 Political Failure
#6 Social Media Broke our Public Sphere
#7 The Unravelling of the Middle-East
Conclusion: The Trump Effect

This article is also available as a single page here.