{"id":6315,"date":"2016-07-05T23:20:52","date_gmt":"2016-07-05T23:20:52","guid":{"rendered":"http:\/\/www.rationalargumentator.com\/index\/?p=6315"},"modified":"2016-07-05T23:20:52","modified_gmt":"2016-07-05T23:20:52","slug":"globalizations-so-called-winners-and-loser","status":"publish","type":"post","link":"https:\/\/www.rationalargumentator.com\/index\/blog\/2016\/07\/globalizations-so-called-winners-and-loser\/","title":{"rendered":"Globalization\u2019s So-Called Winners and Losers – Article by Chelsea Follett"},"content":{"rendered":"
<\/div>\n
\n
\"The<\/a>Chelsea Follett<\/span>
\n<\/big><\/big><\/strong><\/div>\n<\/div>\n
******************************<\/div>\n
\n

A recent Washington Post\u00a0analysis<\/a>\u00a0has argued that political events as diverse as the Brexit and the rise of Donald Trump can be explained by a \u201crevolt\u201d\u00a0of the world\u2019s economic \u201closers.\u201d<\/p>\n

Before proceeding, it is important to keep in mind that all income groups in the world have seen gains in real income over the last few decades. That said, some have gained more than others. Between 1988 and 2008, for example, the lowest gains were made by people whose incomes fit beteen the world\u2019s 75th to 90th income percentiles. That includes much of the middle and working class in rich countries.<\/p>\n

The Washington Post calls the people in this group the bitter \u201closers\u201d of globalization. But, are they?<\/p>\n

\"follett1\"<\/a>There are at least two problems with characterizing such people as \u201closers.\u201d First, it seems to suggest that income growth rate matters more than absolute income level. Yet a person in the 80th income percentile globally would not want to trade places with or envy someone in the bottom 10th percentile, despite the latter\u2019s much higher income growth rate.<\/p>\n

Consider real GDP per person, adjusted for differences in purchasing power<\/a>, in China and the United States. Between 1988 and 2008, China\u2019s per person GDP grew by over 340 percent. America\u2019s per person\u00a0GDP, in contrast, grew by \u201conly\u201d 40 percent. China may be making gains more quickly, but it would be wrong to argue that the United States was a \u201closer,\u201d for American GDP per person in 2008 was $52,704 and China\u2019s $8,104.<\/p>\n

\"chinagrowth\"<\/a><\/p>\n

Poor countries are seeing faster income gains partially because their starting point is so much lower\u2014it\u2019s a lot easier to double per person GDP from $1,000 to $2,000 than from $40,000 to $80,000.<\/p>\n

The second problem is that the Washington Post<\/em>\u00a0piece suggests that the incredible escape from poverty<\/a> that has occurred in poor countries\u00a0during my lifetime<\/a> has come\u00a0at the expense<\/em>\u00a0of the middle classes in the developed world. (This is a fascinating reversal of the more popular, but equally inaccurate, opinion that the Western riches came at the expense of poor countries).<\/p>\n

Thus, the Washington Post piece claims, \u201cglobal capitalism didn\u2019t always work so well for workers in the United States and Europe even as\u2014or, in some cases, because<\/em>\u00a0[emphasis mine]\u2014it pulled hundreds of millions of people out of poverty everywhere else.\u201d<\/p>\n

Fortunately, prosperity is\u00a0not a zero sum game<\/a>.<\/p>\n

When trying to understand the \u201cwinners\u201d and \u201closers\u201d of globalization, it is important that we do not compare income growth rates over the last few decades with some imagined ideal<\/em>. Instead, we should compare income growth to what would have happened in\u00a0a world without globalized trade<\/a>. In such a world, hundreds of millions of people would have remained in extreme poverty. And the middle class of the developed world would also have made fewer<\/em> gains. Just look at the amazing reduction in price of consumer goods that we have collected at\u00a0HumanProgress<\/a>.<\/p>\n

A few individuals in select industries would benefit from protectionism, like the U.S. sugar industry does now. But on average everyone would be poorer, just as in 2013 Americans collectively paid<\/a> 1.4 billion dollars more for sugar than they would have without protectionism. (The U.S. manufacturing industry, it may be worth noting, would not be among the \u201cselect industries\u201d to benefit\u2014most manufacturing job losses have\u00a0come from<\/a>\u00a0mechanization rather than outsourcing, and have been\u00a0offset<\/a> by new jobs in other sectors).<\/p>\n

Thanks to trade and exchange, people in all income percentiles have made\u00a0real gains<\/a>, and living standards for the middle class in advanced economies have\u00a0soared in ways not captured by looking at income alone<\/a>. America\u2019s middle class\u00a0is <\/em>getting richer<\/a>, and the people in the world\u2019s 75th to 90th income percentiles are also\u00a0winners<\/a>.<\/p>\n<\/div>\n

Chelsea Follett is the Managing Editor of HumanProgress.org<\/a>, a project of the Cato Institute which seeks to educate the public on the global improvements in well-being by providing free empirical data on long-term developments. Her writing has been published in the Wall Street Journal<\/em>, Newsweek<\/em>, and Global Policy Journal<\/em>. She earned a Bachelor of Arts in Government and English from the College of William & Mary, as well as a Master of Arts degree in Foreign Affairs from the University of Virginia, where she focused on international relations and political theory.<\/strong><\/p>\n

This work by Cato Institute<\/a> is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Chelsea Follett ****************************** A recent Washington Post\u00a0analysis\u00a0has argued that political events as diverse as the Brexit and the rise of Donald Trump can be explained by a \u201crevolt\u201d\u00a0of the world\u2019s economic \u201closers.\u201d Before proceeding, it is important to keep in mind that all income groups in the world have seen gains in real income over the last few decades. That said, some have gained more than others. Between 1988 and 2008, for example, the lowest gains were made by people…<\/p>\n

Read More Read More<\/span><\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[419,7],"tags":[4742,712,4192,4741,1142,752,1200,4743,1147,4745,2483,4482,4744,322,1188,25,4746],"class_list":["post-6315","post","type-post","status-publish","format-standard","hentry","category-business-2","category-economics","tag-brexit","tag-capitalism","tag-cato-institute","tag-chelsea-follett","tag-china","tag-development","tag-free-trade","tag-globalism","tag-globalization","tag-international-economics","tag-mercantilism","tag-middle-class","tag-outsourcing","tag-prosperity","tag-protectionism","tag-united-states","tag-working-class"],"_links":{"self":[{"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/posts\/6315","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/comments?post=6315"}],"version-history":[{"count":1,"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/posts\/6315\/revisions"}],"predecessor-version":[{"id":6319,"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/posts\/6315\/revisions\/6319"}],"wp:attachment":[{"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/media?parent=6315"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/categories?post=6315"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.rationalargumentator.com\/index\/wp-json\/wp\/v2\/tags?post=6315"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}