The world has seen two globalization booms over the past two centuries, and one burst. The first global century ended with World War I and the second started the end of World War II. Since the contemporary economics of globalization emphases on competition, capital investment, free trade, growth and market transformations (Welford, 2008). There would be of course some relatively middle class and mostly working class people who would be losers because companies were looking for ‘race for the bottom’ for their shareholders.
The advancement of technology and economic and structural inequalities has pushed society in unforeseen directions. In the past decades, the super rich have created vast fortunes at the top and hollow out the middle class in Western countries. This rising income inequality, according to Chrystia (2013) has a structural character, and is becoming a cultural and social issue, with consequences for social cohesion and social mobility.Freeland continue further and said ‘the rise of a new class of plutocrats’ [those who are extremely powerful because they are extremely wealthy], and suggest that globalization and new technology are actually fueling, rather than closing the global gap. Freeland lays out three causes of inequality.
The first one is ‘Political’- Low taxes, deregulation, particularly of financial services, privation, weak legal protections for the trade unions, all of these have factors contributed to more and more income going to the very top. These factors has created what she called ‘crony capitalism’ this is a system whereby a group of well-connected insiders benefits from political changes but don’t actually benefit the rest of the population.According to her getting rid of this system would be difficult. For example, after the 2008 financial crisis, most people were calling for the banks to be regulated but what we saw the government of the day didn’t do anything substantial to prevent another repeat of this scale again.
It is true that globalization has lifted a lot of people out of poverty in the emerging markets; (who are the winners) and on the other hand, it is also outsourcing a lot of jobs from developed economies (who are the losers) of this transformations. Since the late 1990s, increases in productivity have been decoupled from increases in wages and employment. That means that our countries are getting richer, and our companies are getting more efficient, but we are not creating jobs and we are not paying people, as a whole more.