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♪ [music] ♪

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- [Narrator] Are there winners
and losers of globalization?

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That's a big question
you could tackle

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in a variety of ways.

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Are we talking about who's
making more or less money?

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Whether inequality
is better or worse?

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The environment?

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We'll tackle all these questions
in upcoming videos.

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Let's start with the question
of money --

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who's making more or less of it.

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It's a bit complicated,

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but with the help
of Tyler, Ian, and an elephant --

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yes, an elephant --
we'll get to the answer.

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- [Tyler] So I think globalization
has been good

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for virtually all groups,

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but the very biggest winners

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are the previously
quite poor people.

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Big winners have been
the wealthy and the very wealthy.

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People in the middle have gained,

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but, in percentage terms,
by not nearly as much.

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- [Narrator] What is Tyler
talking about?

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The elephant, of course.

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Let's take a look
at a chart so famous

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it got its own mascot.

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This chart looks
at the entire world,

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broken down by income.

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Over here, on the left,
are the poorest of the poor.

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Remember,
this is of the entire planet.

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Over here, on the right,
are the most wealthy.

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If you're poor
in a developed country,

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like the United States,
you're not here,

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not even close.

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You'd fall somewhere around here.

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On the vertical,
we're going to plot

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how much these people's
living standards grew in 20 years,

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from 1988 to 2008.

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1988 to 2008 are
the transformative years

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of the information revolution.

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1988 was still Globalization 2.0.

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The internet was tiny,
the domain of a select few nerds,

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and a mobile phone looked like this
and cost a fortune.

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The information revolution
exploded over the next two decades.

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By 2008, we had graduated
to Globalization 3.0.

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Companies leveraged this technology

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to slice and dice their factories
into global supply chains

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and automate tasks
with robots and software.

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The elephant visualizes the impact

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of this 20-year
technology transformation.

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Let's start with the tail
of the elephant.

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This is the poorest 5%
of the world,

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and we don't see much growth --

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only a 20% improvement
in living standards over 20 years.

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These people live in countries

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too remote or too violent
or too unpredictable

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to become integrated
into global supply chains.

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As we move to the right,

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we can see
the story changes quickly.

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There has been dramatic growth
of 50, 60, even 70%

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in just 20 years.

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This is the back
and the head of the elephant.

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Here we see the developing nations

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who were incorporated
into these supply chains --

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India, China, Mexico,
Brazil and the like.

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For people who study
the global economy,

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this development has been
both exciting and inspiring.

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- [Ian] That's been
the biggest development,

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not just in terms of globalization,
but the entire planet

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for the last 40 years,

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is that a whole bunch of countries

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that we used to call "third world" --

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they weren't even
on the same planet as us!

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- There's a village
in Mexico I visited many times.

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In that village,
people could starve

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if they didn't have
a good rain and a good harvest.

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They just grew corn,
and hoped each year

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that they could grow
enough corn to eat.

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People in that village, over time,

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they've diversified a way
from growing corn.

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One thing they do

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is they make pottery
and they paint pictures,

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and they sell these
pictures and pottery abroad.

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They use email.
They use Federal Express.

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And, every year,

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the income of that village
has climbed steadily.

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So, today, there's
a school in the village.

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No one in the village
dies of starvation.

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Life is much more comfortable.

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There's electricity.

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People are much happier.

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- [Narrator] This sort of rise
out of extreme poverty

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has been experienced
by 1.1 billion people

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in the past few decades.

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1.1 billion!

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That number is so big,
it's hard to wrap your head around.

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To get to 1.1 billion people

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you'd need all of the U.S.,
Mexico, and Canada... twice!

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Plus a side of France
and Saudi Arabia.

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Seriously.

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Of course, getting out
of extreme poverty

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isn't the ultimate goal,
but it's a good first step.

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Back to the elephant.

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If we keep moving to the right,
the story gets less rosy.

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Now we're moving
into the working and middle classes

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of developed countries
like the U.S., Canada,

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and Western Europe.

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As you can see,

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many of them have seen
low or even no growth

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in a generation's time.

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It doesn't go negative,
so, in that sense, on average,

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these people didn't lose money.

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But it's far below
what was expected.

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This is the trunk of the elephant.

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- These middle-class workers
in the developed economies,

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they're not only competing more
with cheaper labor abroad,

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but they're also competing more
against their own automations

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in their own countries,

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so this too has, to some extent,
held down wages

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for some classes of workers.

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- [Narrator] Does this mean
these workers make less

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than those in China,
Mexico, and Brazil?

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No.

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Remember, the vertical axis
doesn't compare income,

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but rather growth in income
over 20 years.

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So while these middle-class workers
in developed countries

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have seen much less income growth,

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because they had
a much higher income to begin with,

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they still make far more

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than most workers
in developing countries.

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What about the rest of the trunk?

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The higher you go
up the income distribution

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the better it gets.

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The very richest have seen
a 70% increase in their incomes

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over the span.

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Remember how "The Avengers"
made a billion dollars

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in just 11 days?

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Those who reach global markets

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reap unprecedented rewards.

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Take a highly successful company

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like Apple.

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On the one hand,
you have the designers,

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engineers, and marketers
who have seen their fortunes rise

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as Apple's products sell
across the globe.

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On the other hand,

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Apple products used to be
manufactured in the U.S.,

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but those jobs are gone --
either moved overseas or automated.

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When these middle-class workers
look around, they see prosperity

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for everyone but them.

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On one side are places
like China, India, and Mexico

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growing rapidly.

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On the other, they see
the wealthy getting much wealthier.

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- And that is the working
and middle class in rich countries --

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here in the United States,
and in Europe, Canada,

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Australia, even though no one
ever talks about them,

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but they're a whole damn continent.

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All of those people

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suddenly are not getting
the opportunities that they were.

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They believed that their lives
were going to get better,

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and yet over the last 40 years,

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on balance, they've made
no more money.

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And so as a consequence,

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you have a large number of people
living in the wealthy countries

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that are really angry
about globalization

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and free trade and open borders,

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and they're angry with that 1%,
the 0.1%, the 0.01%

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that were telling them
that globalization was great

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but that didn't actually
benefit them.

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Yeah, they still were able
to buy cheaper stuff,

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but if you no longer have a job

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and no one's making sure
that you still have opportunities,

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then why would you want
to support those people?

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And that's not just happening
in the United States,

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that's actually happening
all over the developed world today.

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- [Narrator] The natural question
is to ask, "What's next?"

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Is the next 20 years going to be
a repeat of the same elephant?

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Some other animal?

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Looking back, the story
was the information revolution.

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Looking forward,

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it appears to be one of robots
and artificial intelligence.

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- I talk to a lot of business people,

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and they all tell me
that if they need to,

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they can make more money
in the next ten years

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with fewer people,

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that almost every company
you can think of

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is getting transformed
by processes of automation

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that makes it easier for them
to get things done.

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And that's true with banks
that don't need as many tellers

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or as many financial analysts

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to determine where you should
and shouldn't put your money.

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It can be done
by algorithm and trading.

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Adidas has a new
big sneaker company in Germany

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that has almost no people in it,

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because they can make
all of these customized sneakers

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through a robotic process.

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Today, the vast majority
of manufacturing jobs

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in the United States that go away

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are not being stolen
by a cheaper worker in China.

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In fact, one estimate shows
almost 90%,

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88% of all manufacturing jobs
in the U.S. that are displaced

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are being displaced by robots.

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- [Robot] Reporting for duty.

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- [Narrator] The rise of automation
is a source of much consternation

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in places like the U.S. and Europe,

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but it might actually
impact those countries

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at the head of the elephant
more than anyone else.

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- [Ian] So a country like China,

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or like Brazil or Mexico,

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benefitting enormously from jobs
in the United States

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that went to them
in the last 40 years,

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suddenly will be more vulnerable
to the robots and the automation

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than the United States will be
over the coming 10 to 20 years.

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That's a really significant change

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in how we think
about globalization.

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- [Narrator] It's time
to say goodbye to our elephant.

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Aggregating the lives
of the entire planet

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into a single graph

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gives us a window
into which groups won big

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and which did not.

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However, trying to represent
hundreds of millions of lives

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with a single dot

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can feel disconnected
from what the real impacts are.

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- Globalization -- it's a big concept.

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And it's important to realize,
for any concept that big

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the correct way to think about it
will be highly complex,

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and there will be many negatives.

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But, overall, the ledger, I think,

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is strongly positive
on behalf of globalization.

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It's spread health improvements.

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It's given people longer lives,

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greater opportunities for children,

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overall higher wages.

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Many more countries
are democracies,

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and the world today,
largely because of globalization,

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is simply a much better,
richer, and freer place

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than the world
I initially grew up with.

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- [Narrator] In the next videos,
we'll go beyond money

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to talk about inequality,
the environment, and more.

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If you're a teacher,
you should check out

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our globalization curriculum
that incorporates this video.

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If you're a learner,
make sure this video sticks

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by taking a few
quick practice questions.

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Or, you can click
to go to the next episode

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in the series

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or check out
the entire series playlist.

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♪ [music] ♪