I had thought globalization was a good idea. The developed world was rich, and it seemed as though outsourcing was going to diminish the wealth discrepancy between the rich and poor, decreasing the slope of the wealth line between the USA and the developing world.

 

 

Globalization (Intended)

This is more or less what happened, actually. China and India are indeed richer.

But, what went wrong, in the USA and other parts of the west, seems to have been the following. If you look recursively at the USA? in the chart above, you see that the slope of the wealth line between the rich and poor within the outsourcing USA actually increased.

 

Globalization (Actual)

The slope of the wealth line? increased even as the slope of the world’s wealth line decreased.

How it got that way is a big part of the current problem. When the slope within a country becomes too large, the country itself becomes unstable, which, nowadays, makes the whole world unstable.