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THE headline on the Wall Street Journal's story on Wednesday, reporting the relationship between globalisation and inequality in the IMF's new World Economic Outlook report, was "IMF Fuels Critics of Globalization". This is not an informative headline. Critics of globalisation being what they are, one suspects the discovery that the speading web of global trade brings health and happiness to all it touches would inspire bold claims about how death gives us perspective and happiness makes us deplorably weak. So it is no great surprise that the IMF's finding that globalisation has increased income inequality in most nations should do likewise. However, those of us not deranged by opposition to human co-operation across political boundaries will ask: What's the problem?
An ideological fixation on inequality is especially perverse when it comes to less-developed nations. In these cases, we must be most concerned with increasing absolute standards of living across the income scale, and especially at the bottom. According to the Journal:
In the great majority of countries, the income of lower-income workers has risen in the past two decades, but at a slower pace than for higher-skilled workers.
So, as we should expect, globalisation is improving life for poorer workers around the world.And that's about all we need know to get four-square behind expanding global trade.
Now, it is certainly interesting to explain the difference in rates of wage increase -- once we have firmly grasped that there is increase across the board. The IMF study finds that trade alone brings up the bottom and tends to reduce inequality. However, technology transfer and foreign investment, which tends to be tech ...