WHAT IS GLOBALIZATION?

Globalization can be described as a technological and institutional change.

Starting with technological change, it was important in the field of transportation and
communication.

Contrary to what is commonly believed, transportation has not gotten faster in terms of
technological speed. Simple ideas were the key to change: the main revolution on this field
was the invention of “the box” or “the container”, which allowed to transport goods across
long distances. It was invented during the 50s in the context of war in order to transport as
efficiently as possible heavy machinery; after the war it was put to other uses.

Thanks to the invention of the container, the costs of transportation sunk to virtually 0. It
facilitated a tremendous increase in international trade that beneficiated consumers as they
could access a larger number of goods, it also contributed to increase competition and
facilitated the emergence of transnational1 corporations (a firm whose activities are spread
around the world; different placement of distribution hub, logistic centre…)

The downside of this invention was that by contributing to increasing trade all around the
world, it contributed to the weakening of labour unions on the country. Also, it had a negative
impact reducing the industrial workforce.

The internet is the second major change that made globalization possible. All the pieces that
go into the internet were invented and put together in the period 1964-1982. The two
precursors were two small networks of computers: Arpanet and Usenet (unit within the
defence department US) - the defence department had its information on computers, and so
they tried to connect computers to access information. In the pre-internet age there were
many operating systems, and it was difficult to connect them with one another. Arpanet and
Usenet figured out ways of connecting these systems: they were both initially relatively small
and they developed at the same time.

Inventions that made this possible:

- Breakdown of information in little packages

- IMP: interface message processer – it translates information

- TCP/IP: set of rules that computer engineers developed to organise the sending of
those packages of information.

Why does the internet matter for globalization? Because it reduced to almost 0 the cost of
communicating across distance.

These technological changes would have been relatively inconsequential if it weren’t for
institutional change.

What was most important to the institutional change was the liberalization of trade: this is the
elimination of barriers for the movement of goods and capital

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Multinationals are NOT the same as transnationals, they preceded transnationals- they were
little replicas of a company in another country, but they did all the activities in that country
(like clones of an enterprise in different countries)

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There are two types of barriers:

- Tariff: the tax a good has to pay when it enters into another country. Because of the
profit-maximizing will, producers would raise the price of the good, but then they will
realise that they cannot compete with national producers, and so in the end, tariff is a
way of eliminating outside competition.

Also, after WWII, countries were concerned about peace, and they thought liberalization of
trade would help maintain political stability.

The creation of GATT and WTO was very important for the reduction of tariffs. GATT (General
Agreement on Tariffs and Trade; it was a legal agreement between many countries, whose
overall purpose was to promote international trade by reducing or eliminating trade barriers),
it later turned into WTO (world trade organization)

- Non- tariff: they may be intended or unintended. It is a law/rule/regulation on health,

environment, product… standards that a good in a particular country has to meet in
order to be sold. They are indirectly detrimental to trade because they force foreign
producers to adapt their production (this increases their cost). WTO has tried to
eliminate these non-tariff barriers but they are not making a lot of progress because
they are very conflicting.

EU policy about these barriers: the common market was launched in 1957 through the Treaty
of Rome in order to eliminate barriers between members of the European Community. It had
an economic goal but peace was at the centre of their goals; they wanted to avoid another
war. By 1986, all EU members had eliminated their tariff barriers. However, non-tariff barriers
remained and they were finally dismantled with the creation of the Single Market in 1996. It
was impossible for all countries to reach an agreement on standard requirements of health,
environment, etc. and so they stablished the principle of mutual recognition, which is
basically: if you think your rules are good, I think so too (if you trust me I trust you).

At the end of WWII people were not sure that allowing capital to flow from one place to
another would be positive for the economy, so they imposed barriers that made it very
difficult to move capital. Some countries wanted to move capital in a more liberal way, so they
created bilateral agreements on removing these barriers (UK - US, Japan – Germany). In the
1980s, a lot of countries started to push for the liberalization. France proposed liberalization
should take place worldwide and with a common set of rules followed by everybody (not
bilaterally). From 1997 to 2000, the “dotcom crisis” took place – there was an excessive
movement of capital.

All these factors put together facilitated the emergence of a global economy with intense
trade flows and transnational companies.

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 CONVERGENCE AND DIVERGENCE

Nowadays, there is a debate regarding whether globalization is making society smaller or

contributing to diversification. When globalization was first noticed in the early 80s, the first
insight for social scientists was to see the homogenization effects of globalization, in the
thoughts that globalization would increase homogenization. (convergence refers to the
process, homogenization the outcome)

Industrial producers started to apply scientific method in the production of industrial goods,
searching for time and cost efficiency. Soon, this approach was copied throughout the whole
industry. The most important part of this approach was the assembling line.

The main exponent was Ritzer, who developed the McDonalization thesis: globalization would
increase and intensify competition, and competition would lead towards convergence in how
products are made and delivered to the consumer. He based his study on McDonalds because
it used a similar method to the assembling line, hence it was a perfect illustration about time
and cost efficiency. Ritzer in the 1980s came to the conclusion that what had happened with
the industry would spread to every branch of the process.

Ritzer’s implicit assumption is the idea that there is an efficient optimum for virtually any
given service or good, and competition is what leads producers to reach this optimum: this is
why convergence should take place. Examples of rationalization, this road towards time and
cost-saving efficiency can be appreciated in every extent of society; e.g. in higher education
(development of standardized curricula, plan Bolonia, concentration of student in campus).

A second theory would be the World Society model, developed by Meyer: this theory states
that with globalization, all kinds of international and supranational bodies are created. These
organisations spread ideas about the world and about how things should be done.
Convergence takes place because a great majority of the states are members of this
associations, therefore they share their beliefs. These beliefs about how the world works are
called scripts. Another important actor in spreading scripts are international scientific
associations.

States are particularly important in producing this convergence. The fact that the world is
organised around states is very important because it facilitates the imitation by states of what
other states are doing.

Imitation, Norms (if you want to be part of an organisation, you must aby certain norms;
however, most of these norms lack coercive power) and Force are the main mechanisms of
homogenization.

A third theory is what we call The Survival of the Fittest and the End of History, developed by
Fukuyama: with globalization, competition between the two main blocks of the post-world era
came to an end, and ended with the victory of capitalism over communism. Capitalism won
because of its advantage in adaptation to service economy and its military power. What
Fukuyama is saying is that with globalization and the increase of competition, only the fittest
survive, and that was the capitalist system. He predicted that from then on, there would not
be any debate about which is the best system and capitalism would be the only system.

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After a decade of assumptions that globalization brought homogenization, critics rose
advocating there had not been such convergence but divergence had taken place instead. The
main critique of Ritzer’s McDonalization was led by Guillen, who took question Ritzer’s implicit
assumption of the optimum of efficient: what is efficient in one context may not be so in
another one, and because of that convergence should not be expected. Since there is no
overall optimum, competition promotes the pursuit of differentiation by taking advantage of
those things that the context provides advantageously (natural resources, way of life,
workforce, set of values…). What firms ought to do is try to borrow selectively what they see
around and fit it in their context with their constraints and advantages.

Many other authors have criticised the World Society model, highlighting Wimmer. The scripts
that international organisations spread are very general, so they can be understood in many
different ways; e.g. the concept of democracy: it is a condition to enter many organisations but
there is no common set of principles of rules for democracy, there are differences: there is
only a superficial homogenization. On the other hand, they cannot be too specific because
they would not be accepted. Secondly, there can be a resistance to adopt these scripts, not
everybody believes in the same; to the extent that these scripts are resisted there is not going
to be as much convergence.

The third critique would be that world scripts may contradict each other (e.g. religious
international organisations & economic international organisations) if two world scripts
contradict each other, it is up to those who receive them to decide which to adopt; this
prevents convergence from taking place. Sometimes, even within the same organization there
can be contradictory scripts.

Most authors today basically say that globalization does not lead to homogenization or
permanent difference, it leads to major changes in consumption, beliefs, in how people do
things, but these changes lead to the emergence of new hybrid forms where the global and the
local converge; the authors use words such as hybridization or globalization to describe these
processes.

This belief takes three assumptions:

a. Competition is not the only motivational force, there are other value priorities,
many different ways of seeing the world, resource constraints…
b. Global actors and scripts are not omnipotent; they can rarely resort to
coercion in order to force another actor to follow their lead. Also, many scripts
are polysemic, they can be interpreted in different ways.
c. Emphasis on the power of local actors (resistance to world scripts, selective
borrowing).
We may expect more homogenization in certain spheres than others, in more institutionalized
areas it is harder to achieve homogenization.

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 FLOWS: GOODS, CAPITAL AND TRADITIONAL MIGRATION

TRADE FLOWS

- Exports have increased a lot since 2000.

- Before 1900 the line is constant (flat) and the increase of exports after 1950 is
astonishing. Moreover, we have very little data for the period before 1990s.
- It can be seen that there is a small decline in exports during WWI while there is
a bigger gap during WWII and the post-war period.
- When institutions that promoted free trade such as IMF were created, there
was an increase in the volume of exports
- This increase was not linear as there was a decrease in the 1970s because of
the oil crisis – the cause of this crisis is that oil owners decided to increase
prices so it produced unemployment, inflation… governments tried to sort it
out, however, at the end of the 1970s, they had no solution so they started to
use neoliberal tools.
- After 1973, USA and UK created the bank budget effect and all the countries
started to copy them. Thus, exports rose again.
- There was another recession which affected mainly the US, the crisis of 1991-
93. There was a big effort to remove tariffs in order to liberalize trade and as a
consequences exports continued growing until the crisis of 2008, when there
was an enormous drop.

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 - 2008 experienced the first major economic crisis so exports fell again. Even
though exports recovered they level in the following year, the future is
uncertain.

𝐸𝑋𝑃𝑂𝑅𝑇𝑆+𝐼𝑀𝑃𝑂𝑅𝑇𝑆
This is a chart based on the formula. This measure shows trade
𝐺𝐷𝑃
openness and it is more accurate. It reflects the volume of exports related to the
wealth of the world (when looking at country level, imports+exports/gdp is a more
practical formula). This formula eliminates the growth and it just considers how
opened is the world to trade.
As it can be seen in the chart, it happens the same than in the previous chart. In the
early 1980s there was recession as a result of more protectionist governments. After
this, trade increased again until 2008 thanks to institutions and the changes in
transportations and communications.

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 Analysts make a distinction between
trading goods and trading services. In
the period 2000-2015, trading goods is
more important than trading services,
and the gap continues to increase.
Moreover, financial crisis affected more
the trade in goods.

1980-1999: onset of the second globalization wave. This chart shows the importance of
different world regions as trade blocs. The world’s biggest trade bloc is Western
Europe as a result of the creation of the Single Market (1993), the second one is Asia
and North America comes first.
It can also be observed that Japan was the unique country to account more than the
10% of the world’s trade by the 1990s. That is why Japan was a model to admire by
other countries. In 1993, as Europe created the Single Market that eliminated the all-
tariff barriers; Mexico, USA and Canada created the NAFTA which also eliminated
barriers. We do not see so much change, we cannot appreciate a great growth. Why?
Asia is the only world region whose share really increases in this period. This increase
had to do mainly with the rise of what was known as the Asian tigers: Singapore,
Korea, Taiwan). Even today, Europe remains the world’s largest trading block. Asia
continues increasing its influence: China plays the major role and is the main variable
in the change. Nonetheless, this situation ended in 1997 with the .COM crisis.

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 This graph shows the merchandising
trade of WTO members by regions
from 2000 to 2015. Europe remains
at the largest trading bloc; Asia
continues growing because of the
major role played by China. As a
result, Europe share declines.
Our professor points out that we
could say that Globalization is the
result of Europeanization plus China.

Economies by size of merchandise trade, 2015: the top ten merchandise traders
accounted for 52% of the world’s total trade. Developing economies had a 42% share
in world merchandise trade. This reflects a massive inequality in the trade of goods. If
we take a look at services, these are more equally distributed although the inequality
persists.

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This are trade flows across regions. The size of the arrows shows the relations while
the size of the circles shows the trade size. the biggest trade flows are Europe-Europe,
East Asia- East Asia, East Asia- Europe, East Asia – North America.

Trade from a macroeconomic perspective it is not so important, but it is an instrument

used by politics to justify protectionism.
The first map only represents the trade balance while the second one divides it by
GDP. The world’s largest trade deficits are in the US and in the UK, and it explains
(partly) why the US is always on the brink of passing protectionist legislation. The huge
trade deficit in the US does not mean much in terms of its GDP, it produces so much
that the value of the goods compensates the deficit. The UK maintains a very firm
position pro-trade. What gives the export power to Germany? Both the euro and the
pound are very strong currencies; but Germany exports high quality products. Also,
they import very little because they consume very little, they save a lot.

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This chart covers the period 2000-2015 and it shows the relevance that different
products have in their exports.
- Manufactured goods are the most traded
- Agricultural products are the less traded
First of all, most of the trade is made up by very simple products. The most traded
product is fertilizer.
China’s products are based on office telecommunication equipment; in the USA:
medicines, cars and agricultural products.
The main difference between Europe and USA is that the last one is self-sufficient in
oil.
TO SUM UP:
1. There has been a huge increase in trade since WWII, after 1980 the world
became more open to trade and there is uncertainty about whether this will
continue after 2008 crisis.
2. EU is the largest trade block, and more generally, world trade is concentrated in
Europe, Asia and North America
3. Trade in merchandise is far more important than trade in services
4. US and UK run the world’s largest trade deficits whereas Germany & China run
very large trade surpluses.
5. Most of the world’s trade is trade in manufactured products, and chemical
products, cars &office and telecom equipment are the most frequently traded
goods.

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Globalization has led to major economic transformation leading to increase/decline in
demand for particular skills or occupations; this has motivated people to move to
other countries searching for opportunities (push factors). The economic and
emotional cost of migration has diminished because of revolution in the sector of
transportation and telecommunications (huge decline in costs). All these factors
explain why migration has increased in the global age despite the fact that there are
still many barriers to the mobility of people.

TRADITIONAL MIGRATION
Traditional migration results from family and community-based strategies of survival;
it involves people moving to places where they already have family or people of the
same community; usually the most capable members are the ones who move. It can be
differentiated from non-traditional migration: mainly an individual based type of
migration, where the individual moves abroad on his own for personal reasons.
Both types of migration have increased in the global age but traditional migration is
still the most common one. When we look at this graph:

We can see that migrants represent a big % of the US population.

In the second graph, highly populated countries with oil are also important blocks of
migration (Japan is the clear outlier of the global trend developed countries).
The 3rd graph presents different lines which represent flows of migration. Most
migrants are called horizontal migrants, those who go from non-developed countries
to non-developed countries and from developed to developed. Nowadays, there are
similar numbers of migrants from the south to the north than from the south to the
south. North-north represents the new migration mobility. In absolute numbers, the
US has the largest number of migrants.

If we look at “sending countries” in absolute terms, the highest levels are achieved by
Bangladesh, Mexico, India and Philippines. If we study it in relative terms (relative to
the population), the top countries are: Hungary, Romania, Poland, Philippines,
Morocco, Bulgaria, Mexico, UK, Dominican Republic.
Types of migrants:
- Way of life (Nomads): nomads that want to change frequently their way of life
- Economic: permanent / seasonal & documented / undocumented.
- Political: Refugees / Asylum seekers

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Until 2014 the number of asylum seekers was really small but now has increased. The
important thing is that nothing seemed to happen in 2013 but in 2014 suddenly there
was an enormous wave of asylum seekers that EU was not prepared to receive. The
majority of those migrants went to Germany. It has been a miracle that Germany could
welcome 800.000 refugees.
The determinants of migration are
● Demography - overpopulated countries cannot assimilate so many young
people and at the same time other countries are experiencing a decline in
young people
● Economic
● Ethnic conflict
● Ecological deterioration: it is very recent and it is occurring in Africa because of
Climate Change as there are some areas which do not have water.

Soon, more than half of the European population will be in retirement age. The
advantage of migrants is that they arrive in the years in which they are more
productive; they contribute to social security and so they contribute to pay the
pensions, they are not a burden for health (they are young, better health) costs or
education costs (they do not usually bring children). Therefore, from an economic
point of view, it seems reasonable to admit that migrants are beneficial for highly
developed countries.

MODERN MOBILITY
As said before, there has been a reduction in the economic and emotional cost of
migration. Migration used to be an emotional tragedy, however nowadays you can
move but to some point feel you are at home thanks to the telecommunications.
Cheaper transportation means you do not have to cut your ties; you can visit more
often.
In some places in the world, the barriers to the mobility of people have been reduced
enormously- the best example is the EU. The liberalization of the economy plus the
technological change have made easier the creation and spread of transnational
corporations; this leads to intra-organizational migration.
There is another factor that is important to explain new mobility and it is the fact that
transnational companies have increased in number thanks to the elimination of
barriers. Since these organizations have spread around the world they need workers to
move around the world, too. Because of all these changer, highly educated people that
did not need to move in the past, bear in mind moving now and many of them do it.
They move not only for economic or political reasons but also searching adventures
(looking for love, too).

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Trajectories can be:
- Permanent
- Temporary
Types of temporary mobility
- Short-term.
- Commuting. Ex: a professor who teaches in Madrid but lives in Valencia
- Seasonal. Ex: poor farmers that migrate to participate in the harvest to
collect grapes or doctors who move from their countries to poor ones to
do voluntary job
- Scheduled: ex. Within international organizations or transnational
corporations, your mobility is already planned
New mobility calls new actors
- Professionals / managers
- Engineers / technicians
- Academics / scientists
- Entrepreneurs
- Students
- Retirees
Intra organizational international mobility is the largest share of migration. This type
of migration is very important; it is up to the 40 % of total migration. Germany receives
lots of posted workers while countries such as Poland and Slovenia are the countries
which are net senders.
Free-lance migration
It is the personal decision of one individual to move to a specific country, thus is a free
choice. The reduction in costs have made it easier for highly skilled people to move
abroad. The main barrier for the movement of this people is the fact that those skilled
have to be proved with credentials, and some time the credentials are not recognised
in other countries. However, recently there has been more homogenization in this field
to facilitate this.

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Barriers:
● Informal - are the fact that very often, the recognition takes a long time.
● Formal - training periods and skills learned are different. Also, there are specific
barriers for specific occupations.
● Social and cultural - These are probably the most important ones. They are
relevant both for traditional migrants and new movers (even greater). The
individual mover generally does not know anybody, and it is of vital importance
how many people you know and who you know to find a job, a school… This
“loneliness” puts him in a position of inferiority when compared to people who
know people there. Another cultural barrier is the language.

These high educated and skilled professionals legitimate their skills by academic
credential. Nonetheless, that credential sometimes may not be accepted in a foreign
country. In the last decades, this barrier of degrees obtained in a foreign country has
been partly removed as degrees from highly developed countries are accepted in
highly developed countries. The most serious formal barriers are the recognition of
credentials for people from poor countries. The fact that the individual mover does not
know anybody in the destination of place (Social Capital according to Sociology). This
lack of Social Capital makes the migrant to feel more inferior than the locals which
have the same level of education.

The role of the institutional environment: the EU as best-case scenario

Stages in the elimination of barriers to the movement of people
- EEC (1975-) – the European Economic Community eliminated mobility
barriers to workers. Much of this movements occurred because of this
agreement. There were lots of Spanish and Italian movers.
- 1970 ECJ decisions – The European Court of Justice extended the ability
to move to other types of workers such as self-employed, students and
- TEU (1990s)- the main step which eliminated all the barriers of
movement to the citizens came with the Trade European Union so
every citizen of the EU could move without barriers (regardless of its
status). The only condition is to show evidence that you have health
care in your own country.

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There are trends in Intra –EU Mobility since the 1990s
- Before enlargement (1993-2004) – It incorporated countries that were
relatively rich and had strong welfare states. If you are poor but have a
strong welfare state, you are not encouraged to move because you risk
losing the protection. Because of this, the main moves were highly-
skilled, new mobility.
- After enlargement (2004 - today)–things changed dramatically since the
enlargement. Masses of people taking advantage of the elimination of
barriers. Movement from less developed countries towards more
developed countries inside the European Union. New mobility
continued increasing but not as much as it could be expected (because
of cultural barriers).
- Unmet expectations among the highly-educated –

International tourism
Tourism has benefit tremendously from these movements and from the cheap and
quick transportation. In 2005 there were 700 million tourists in the world who were
making a trip in a foreign country. Europe and Asia are the regions which have
experienced a huge increased in tourism.
Tourism is highly concentrated in just a few destinations; Spain figures prominently in
this chart, being among the three countries that receive the largest number of tourists
of the world. Spain’s tourists arrive mainly from neighbour countries.
An interesting fact within the UE is that the liberalization of transportation has
benefited mainly older people and less educated people (when it was more expensive,
only the wealthy could be tourists).
Another type of mobility is student mobility. There are many US students abroad. In
Europe, Erasmus have increased the number of students abroad, being nowadays
similar to the number of US. This shows that globalization has provided incentives for
students to go abroad because international skills are demanded.
Another form of mobility is retires who are choosing to spend their retiring years in
other countries like Portugal, Spain or Italy either on a permanent basis or on a
seasonal one.

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 ECONOMIC INEQUALITY
The actual GDP should be high enough to have everybody out of poverty if it was well
distributed, however there are huge inequalities between countries and within
countries.

For a very large part of history, the largest share of production was represented by
India and China. After the industrial revolution, it became smaller but in the last part of
the XX century- early XXI century, China has been one of the great producers. It is also
important to highlight the rise of the US as one of the world’s largest wealth
producers- it starts to decline in 1950s. This decline has run parallel to the rise of
China. Another noticeable fact is that GER and UK increased their share of world GDP
in XIX century and early XX only to decline it later. Russia suffered a drastic decline in
the early 2000s. In the period corresponding to the decline of china and rise of the US,
is where we can find the biggest inequality.

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In the ratio of between country inequality(weighed)/within country inequality: btw
country inequality is a measure of how much inequality there is btw the average
incomes (GDP per capita) of all the countries in the world. What’s the meaning of
weighed? It means that when we are calculating these inequalities, we weigh them
with the population. Within country inequality is the average inequality we may find
across countries in the world (e.g. very high in Brazil, low in Sweden…).
We should take into account that there are many different measures of inequality.
For most history since XIX century, the ratio has been increasing, that is, average
differences in income between countries have increased more than average
differences between countries. Until about 1930-40, inequalities WITHIN-countries
were greater than inequalities between-countries. However, from this moment on,
differences between-countries started getting bigger than within-countries differences.
Nowadays, inequalities between countries are about 40% greater. Until about 1910 we
see that the ratio is rising. But it is rising in a context where both inequalities are
growing. Within-country inequalities increased in the developed world because
countries started industrialising and stopped being agrarian.
There is a point of inflexion where suddenly between-countries inequalities rise much
faster than within country inequalities. This is because between-countries inequalities
caused by colonization continued to increase but within-countries inequalities suffered
a dramatic decline caused by a combination of various factors such as the final

17
achievement of industrialization. The WWI and the depression of 1929 destroyed more
wealth for the wealthy than for the poor.
After WWII, the rise of between-countries inequalities continued for a while, within-
countries inequalities stabilized for this period. Then, there is a stabilization of the
ratio: between-countries inequalities stopped growing because of decolonization; this
liberated many countries and allowed for their industrialization. At the end of the
period, thanks to the rapid growth of many Asian countries (Taiwan, Korea, Singapore,
Hong Kong- Asian tigers) there is a drop in between-countries inequalities.

Concept 1 is a measure that does not take into account the relative weigh of each
country, and so it does not make much sense to employ this measure. It seems more
appropriate to study between-countries inequalities taking into account the weigh.
Any measure of world inequalities that is formed by both types of inequalities will be
deeply affected by changes in between-countries inequalities (World inequalities are by
far greater than any within country inequalities), this is why the rise of China (which
has a lot of weigh) has reduced economic inequalities on a great deal.
Nowadays, about 8% of the population in the actual world controls 50% of the actual
wealth.
There are reasons to believe that globalization on the whole, has decreased to some
extent inequalities at the world level. The four main factors are the following:
- The elimination of barriers (liberalization of trade) and china’s entry in the
world markets and subsequent industrialization (China accepted a more liberal
economy).
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 - Proliferation of transnational corporations and the internet: both these factors
have made it easier for technology to travel from high-income countries to low-
income countries (contribution to the diffusion of technology; this can either be
legal or illegal- hackers, pirates).
- Specialization of rich countries in service sector; there are many sectors in the
service sector where it is very hard to increase productivity, because of this
productivity increases in the service sector at a much slower pace than in the
industrial factors.
- Less developed countries are becoming “young” while more developed
countries are becoming “old”.
The ones benefited from globalization are those in the richest percentile of income
(the 1% has become richer than they ever were: their real income has increased by
60%). About 40% of the humanity is situated more or less in the middle of income
distribution have also benefited from globalization. Those are specially located in the
rising economies around the world: the rising middle classes.
The 10% of the population situated in the wealthy middle classes have even seen their
income drop.

Within-country inequalities are increasing all over the world.

- Less developed countries: transition from farming to industry causes
inequalities simply because industry pays more than farming.
- More developed countries: transition from industry to services (on average, a
less productive sector).

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What has happened in highly developed countries since the 1900s?
Within country inequalities in most western countries were higher than today (E.g.
France). The US is an exception to this. Btw 1900-1950s within country inequalities
declined for the reasons mentioned above. In Europe, other factors contributed
significantly to this decline (e.g. the fact that many of these countries were run by
progressive parties):
After 1970, within-countries inequalities started to increase in the west. Low
demographic growth; aging of the population has contributed to less growth.
Increase in US inequalities because of differences in salaries because of bonuses.

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