The Elephant Graph
We’re going through a startling change in society – and it’s brought us a whole world of upheaval. But, you might think that Brexit and Trump have got nothing to do with each other. You might think that nationalism is all about immigration. And you might not link these to Uber trialling its self-driving cars.
I think you may well be wrong about all of those things – and I’m going to try and explain why. Take a look at this “elephant” graph. It’s probably the most important chart you’ll see this year.
Along the bottom, the world’s population is divided up into equal bands of income. At the left-hand side are the global poor – the elephant’s tail. At the right-hand side are the super wealthy – the elephant’s trunk.
Up the left-hand side we can see the scale. It’s showing the real increase in wealth of the population over a 20-year timeframe (from 1988 to 2008). This particular version of the graph is a bit out of date – but that doesn’t matter. This is a long-term trend you’re looking at.
So, what’s this graph telling us?
Let’s say you’re a global middle earner, perhaps a junior accountant in Brazil. Your income has likely shot up in the past generation. You’re a huge gainer – right at the top of the elephant’s body. In fact, most people on this chart are huge gainers. This is an unprecedented era of growth and prosperity – for most people in the world.
But there’s something funny going on near the ends of the chart. What can this tell us?
There are two key segments of the population who’ve missed out on the benefits of globalisation. The first is at the extreme left-hand end. These people are the poorest of the poor. They’re predominantly subsistence farmers in the developing world, and others at the bottom of the economic pile. Here is the world of malnutrition, infant mortality and illiteracy. Globalisation has passed these people by – and capitalism and politics care little about them. They can rarely vote, and they have no other power.
The second anomaly on the chart is the huge relative dip around 80%. Who are these people? They are the Trump voters and the Brexiteers. They are the working class in the developed world. Their income has remained near-flat in real terms, while the rest of the world prospers around them.
When these people kick back at the economic system, it might be seen as racist, xenophobic or embittered. But the underlying story is typically not one of hatred, it’s one of economics. A huge swathe of the population in prosperous democracies has watched an explosion of global wealth for a generation – and they’ve not taken part in it. Relatively speaking, these people are backsliding. They see new prosperity all around them. They see the global super-rich – on their TVs and in the skylines of their cities. They see working-class migrants competing for their jobs at home. They see the middle class emerging in the developing world, as their industries are offshored. And they feel cheated. Older voters in this cohort remember a world where you could leave school without qualifications, get a respectable job and raise a family. You can’t do that anymore.
Unlike the global poor, these people vote. They vote in droves. This is the demographic that has upset the political apple cart. They’re voting for candidates and policies that would have been seen as extremist just a few decades ago.
Why has this happened?
A global transport and information system has subjected this working-class lifestyle to a two-pronged attack.
Firstly, there’s now a global market in goods – and to some extent in services. These people are the assembly workers, whose jobs have gone to China. They are the clerical and support workers, whose jobs have gone to India.
Secondly, there’s now an established pattern of global mass migration. There’s no doubt about it: migration increases prosperity. But that prosperity is not even: the rich benefit far more than the poor. If your family was used to unionised factory work a generation ago, you’ll likely be competing with immigrants on a zero-hours contract today. Your migrant competition may be happy to work two shifts a day, so they can keep sending money home. It’s unlikely you’ll be willing to keep up. That’s when it seems appealing to vote for a racist demagogue or an economic fantasist.
These trends aren’t going to reverse. Added to these, there’s a third one coming: robots. Self-driving vehicles are just one prominent example. The rise of Artificial Intelligence and driverless cars will render a huge section of the labour force unemployed at a stroke. It’s not impossible that many drivers will find other employment, but traditional jobs will fall like dominoes as robots take over.
Tomorrow, we’ll be hearing about a very interesting solution. So please, do check back – and send us your views in the meantime: email@example.com.
Category: Artificial Intelligence