Globalization fuels inequality

The argument

Globalization opens national economies to one another, and proponents of this argument accept that it raises wages, but only for some. In highly developed nations the gains concentrate in the hi-tech manufacturing sector and in the services sector. These are industries that trade on expertise rather than on cost, and opening world markets to them enlarges the pool of customers for what they sell without enlarging the pool of people able to supply it. Demand rises against a constrained supply of qualified labour, and wages follow. The people who receive those gains are not spread evenly across society. These sectors are dominated by highly skilled, college-educated workers, and such workers are already drawn from the wealthiest segments of a population, since the education that qualifies them is itself unevenly available. The benefit therefore lands where advantage already sits. The same opening has the opposite effect further down. Poorer, lower-educated workers sell unskilled labour, and unskilled labour is the input most easily sourced from elsewhere. Once borders are open to trade and production can be relocated, these workers are placed in direct competition with workers in lower-cost countries. Their wages cannot rise without pricing their work out of the market altogether; to compete, those wages must be kept low. What integration does for the skilled by widening the market for what they sell, it does in reverse for the unskilled by widening the market of those who would replace them. Put together, the two movements run in opposite directions from a single cause. Globalization raises the incomes of the wealthiest sections of a developed society while holding down those of the poorest, so the gap between them widens as a direct consequence of integration, leaving the poorer segments worse off. On this view the distributional record is not incidental to globalization but produced by it, and that is why globalization is bad.

Context

Globalization leads to increased manufactured goods imports in developed countries with high-skilled labour and increased high-value tech and service exports. Therefore, it creates more opportunities in developed countries within the hi-tech, high-skilled sectors.

Premises

Counter-arguments

On a global scale, globalization reduces inequality. It provides developing nations with increased economic opportunities. Unbridled global trade has led to the emergence of China, Brazil and India and improved living standards among the populations of developing nations. By bolstering the economies of developing nations, globalization reduces international inequality, even if it contributes to inequality on a domestic level.

Rejecting the premises

[Rejecting P4] On an international level, under these conditions inequality decreases.