2014-03-19 — nytimes.com
This is astonishing progress. And although incomes of workers in the developed world didn't rise much as the Asian poor moved up the ladder, they didn't fall either: Globalization lifted all boats.
There are, however, powerful reasons to worry about this pattern of global development. "If there are hundreds of millions of people that were in abject poverty one generation ago and are not anymore, that is an important and positive thing," said Damon Silvers, policy director at the A.F.L.-C.I.O. "But I don't think we should accept radical inequality as a necessary corollary of equal development."
And indeed, the equalization of incomes between countries has been accompanied by growing income inequality within most nations, rich or poor. With wages growing more slowly than productivity, workers from China to Germany have been taking a dwindling share of the economic pie.
The economic catch-up by Asia's developing countries over the last 20 years relied on a wave of global prosperity that is unlikely to be repeated.
Exporting powerhouses were allowed to build up vast trade surpluses, while consumers in the United States used cheap foreign capital to maintain their standard of living on easy credit. Commodity exporters relied on a commodity boom. Poorer European countries relied on capital inflows set off by the euro.
"There was a lot of unsustainability building into the system, but for two decades everybody was doing relatively well," Mr. Rodrik said.
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