Hollowing Out: Income inequality and income distribution

Today’s post is going to be short. The theme is income inequality. My thesis on this has been that globalization is a net transfer from the developed economy middle class to developed economy elites and the emerging market middle class. I have some evidence to support that thesis.
Imagine, it is 1975 and you are the owner of capital, paying your workers a decent wage. But then the economy goes global, with the availability of cheap labor in emerging market, and then the opening of China and the integration of the eastern bloc into global trade. You have a choice. You could continue to pay developed economy workers their salary or you could offshore some of those jobs, cut prices and keep whatever increased profits accrue from this strategy.
The key here is that, unlike in economic theory...


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