The following chart was created by Branko Milanovic (Visiting Presidential Professor, Graduate Center, City University of New York and Senior Scholar, Luxumberg Income Centre) and by Christoph Lakner (Economist in the Development Research Group at the World Bank.
It is known as the “elephant graph” because, well, it kind of looks like an elephant. The trunk is on the right.
What it shows is global cumulative real income growth from 1988 to 2008 for every percentile around the world.
The trunk on the right is the world’s 1%. Their income is up.
The 50-60th percentile range is also up. These are people in the developing world who started making a bit of money as a result of industrialization. In percentage terms things look good, but in absolute terms they’re not making a lot of money. Still, they are becoming better off.
Where things fall apart is in the 75-90th percentile range. These are essentially the lowest income folks in the developed world. Their incomes haven’t been growing at the same rate and, in some cases, their incomes decreased in real terms. They are falling behind.
Kaila Colbin wrote a Medium post about this graph and asks whether the exponential growth in technology that we are seeing today, will end up creating more jobs than it eliminates – as it did before in the past.
She also wonders whether the dip we are seeing in the 75-90th percentile range could spread left as automation eliminates jobs for those folks in the developing world.
These are important questions.
Albert Wenger is currently in the process of writing a book called World After Capital. The book isn’t finished yet. It still exists in a crude rough draft form. But already he has made it freely available online. You’re also welcome to comment and contribute to the book as he works on it.
Why has he done it this way?
Because this format of publishing is in line with where he believes the world is heading. He believes we are headed towards a world where new forms of surplus – brought about by technological innovation – will create greater levels of freedom: economic freedom, informational freedom, and psychological freedom.
His overall thesis is that the world has been moving through a series of scarcities. As hunter and gathers, the scarcity was food. In our agricultural period, we learned how to create food surpluses (which freed up more of our time), but it then produced land scarcity. Once the industrial revolution hit we once again freed up more of our time through surpluses, but then the scarcity became centered around capital. We also started to negatively impact the environment. Today, as we clearly move away from the industrial economy towards a knowledge and information economy, Albert believes the new scarcity is attention. (I wrote a related post about a month ago.)
If you’re interested in this topic and don’t feel like diving into his book, I suggest you watch this 23 minute presentation by Albert Wenger. I watched it this morning and he talks about everything I mention above.
Here’s one of his slides that I felt was important to share:
Why it’s interesting to think about this shift is because there will inevitably be positive and negative outcomes associated with it; there will inevitably be groups who, probably because of self-interest, would rather cling to the past; and because there are pressing global issues that we need to be focusing our attention on – issues such as climate change.
I can’t help but wonder about all the ways this shift could reverberate through the economy and our cities. Earlier this week I wrote a post about architecture as a tool for capital. But with our current fixation on “starchitecture”, one could argue that we have already transformed architecture into a new tool – a tool for grabbing attention. If you believe that attention is the new scarcity, then this makes perfect sense.
I’m listening to The Foreign Desk this morning while I have my coffee. Steve Bloomfield is interviewing two different politicians: one who believes Britain should remain in the EU and one who believes Britain should leave the EU.
(Each interview is about 15 minutes short.)
The back and forth is largely centered around two things: the economy and immigration. Will the British economy be better off in or out of the EU? And on the immigration front, will “in” translate into millions of Turks flooding into Britain should Turkey join the EU?
For those of you who haven’t been following, Britain will be holding a referendum on June 23rd (2016) to decide whether they stay or go.
My general view is that a strong economy should trump concerns over foreigners. But I don’t feel as if I know enough about this precise topic to take a firm position.
Regardless, I very much enjoyed The Foreign Desk episode this morning and I would be open to discussing this issue in the comments below if any of you are also interested.