By Jean-Marie Pottier from Les Inrockuptibles
Translated from French
Komorebi Post– The “elephant curve” imagined by economist Branko Milanovic, or in other words “Laffer Curve”; a chart designed on a restaurant tablecloth by an American economist close to the Republicans to defend the idea of lowering taxes. Global Inequality. A New Approach for the Age of Globalization, a book published in 2016.
In 2013, Milanovic, a researcher in the World Bank, who wrote with his colleague Christoph Lakner, a note on the global income evolution between the fall of the Berlin Wall and the financial crisis of 2008, a period of “intense globalization”. An the curve aroused the curiosity, of Paul Krugman, who won a Nobel Prize for Economics 2008 and New York Times popular chronicler, who saw “recent history in one chart“. the nickname the “elephant curve “quickly took over.
The richest form the trunk of the pachyderm
The original of the “elephant curve”. On the abscissa, the position of the person with the global “slices” of income. In ordinate, the total increase of its income between 1988 and 2008.
Over twenty years, the percentage increases in the incomes of seven billion people according to their position in the economic hierarchy.
The 50% of the poorest, who started from low, saw their incomes rise sharply, almost doubling for some: it is the plump body of the elephant, including the new middle class in China and in India. The 5% richest in the world don’t have to complain either: they form the trunk of the pachyderm, which rises very high since billionaires have seen their share of global income explode (to the extent that for some the elephant, seen closer, looks even more like a brontosaurus). On the other hand, the lowered head of the elephant is less well off: it corresponds to those who are richer than 80% of humanity but not to the point of belonging to the richest 5% to 10%, and who have seen their incomes virtually stagnate for twenty years. That is to say, roughly, the middle and popular classes of rich countries, including France.
“In June 2012, the first time I saw what would become the ‘elephant curve’, I was immediately struck, explained Branko Milanovic in 2017 at PBS. […] I thought it was exactly what we knew had happened. […] We knew that the Chinese and many Asians, who were not rich compared to the Americans, had done very well. That the popular and middle classes in the United States, Japan, Germany had not done very well. […] And that the richest 1% had done well. […] All the pieces of the puzzle were there, the novelty was to collect them and see them together in one image. “
An explanation of recent political disorders?
Its modeling has since been criticized but proves so effective that it has largely been used, from investment banks to world leaders, who have seen for some of them an explanation of recent political disorders: in the head of the elephant would cohabit the Pennsylvania worker who voted for Trump, the elector of Sunderland who chose the Brexit, the peri-urban inhabitant who occupies a roundabout, yellow vest on the back … All those who have the impression that world wealth is growing and that the better-off in their own country are getting better and better, but they are being left behind. A tendency which, if it continued for a long time, explains Milanovic, would bring us back (we are still far from it) in the nineteenth century, when it was more important to be born rich in one’s own country than to be born in a rich country, when the inequalities were stronger between French or Chinese than between French and Chinese.
According to Thomas Piketty, who signs the preface to the French edition of Global Inequality, “this curve is fundamental because it helps to better understand the deaf dialogue that sometimes characterizes the public debate on globalization“. A dialogue between those who believe that our planet is economically better (poverty is falling) and those who think that their country is getting worse and worse (inequality is increasing). Except that the political debate, and the elections in the first place, is above all at the level of countries, not of the planet: “Inasmuch as the world is not federated under the same government, it remains indispensable to ‘observe the particular situation of the nation-states,’ writes Milanovic, who, as early as autumn 2015, warned of the risk of ‘populist regimes that would give way to the frustrations of the middle classes’. It was even before Trump came to power as Republican candidate and the victory of the “Leave” in the United Kingdom. Before the elephant, as the bull, makes a sensational entrance into the china shop of our fragile democracies.