Does globalisation mean that rising inequality is inevitable?

Answer 1

Absolutely not. It means rising equality, on a global scale, almost by definition.

In developed nations, the supply of highly educated workers to less skilled workers (I'm not trying to get bogged down in 'skill', but lets just say 'with education and experience that are in high demand in the labour market) is high, i.e. most of the workforce is 'skilled'. Because there are a fair number of jobs that require relatively low 'skill' levels, there is reasonable demand for unskilled workers, and at the same time a high supply of 'skilled' workers.

In developing countries, there are massive pools of low skill workers, and greater demand for 'skilled' workers. Consequently, income inequality is MUCH higher in developing countries.

With greater trade - in goods and services - developed skilled labour is able to work with devoloping lower skilled labour pools to increase the productivity of both. This reduces the demand for low skill labour in developing countries, but raises demand for high skill labour in developed countries and low skill labour in developing countries.

So what happens?

In the 'richer' countries, the rich may indeed get richer while the poor earn less (though costs of living also fall as products get cheaper. Everyone loves to complain about how companies like walmart pay low wages, but they _also_ provide a lot of product for low cost to low income earners).

In poorer countries, the poor get richer, as they have greater access to developed world managers, capital pools and markets.

Globally, I would say this certainly represents rising _equality_ since the poorest and most desparate individuals - the poor in _poor_ countries - benefit tremendously from globalization.

Fighting globalization is essentially calling for capital (ie factory equipment, financing) and management talent to be horded in rich countries while banning the poorest people on the globe from having decent jobs, in order to prop up wages in allready rich countries. I'm not sure whether people in favour of this are racist or confused, but I like to believe its the latter, since its more easily sorted out.

Answer 2

What kind of inequality are you talking about? Inequality between countries or inequality within countries?

For example, the globalization in software, pharmaceuticals, and financial services is single-handedly responsible for the fact that the gap in compensation between software developers, life scientists, and finance professionals in the U.S. and India is closing; it still exists, but it is significantly smaller than it was 20 years ago. At the same time, the gap between earnings of a college-educated Indian software developer and those of an illiterate Indian farmer has increased...

Standard economic theory predicts that wages in industries producing internationally tradable outputs will converge (in the long-run, the difference in wages will reflect only differences in productivity), while wages in industries producing non-tradable outputs will be determined by local market conditions.

Answer 3

Interesting question - and worthy of more detailed discussion than this space allows.

So far, globalisation seems to provide more opportunities for people in lower economic strata. It has certainly meant more financial possibility for people in India and Latin America. Whether than trend will continue - whether the "filter down" theory will apply in these places - too early to tell.

But at the moment, the argument could be made that globalization is perhaps the best avenue for reducing the increasing inerquality in resources and access to resources.

Answer 4

Well, in a way. The "natural" state of society is generally one that we would describe as poor.

Once these poor areas start spawning successful businesses, some people will get rich, and some people will become middle class.


A mixed-class society has more "Inequality" than one where everyone is poor.

But it is all relative.

Answer 5

" inevitable " ??? already here and here to stay. The world doesn't know what to do with 6 billion people let alone more. In some areas of the world, now, they are succumbing to rape, dismemberment, and murder. Talk about inequality.