- 01 Mar 2024 19:12
#15306038
How globalization & immigration result in more poverty & inequality - some thoughts
Trying to understand economic phenomena can be complicated and difficult for most people to understand, so sometimes it can be helpful to use simple analogies.
Many have the feeling that globalization is somehow "draining away" the United States' wealth, but cannot explain precisely how it is happening, in economic terms. And immigration from other parts of the world seems to be increasing poverty levels in the country, but again most who suspect that would have difficulty explaining the precise economics of how exactly it is causing that.
In science, there is the principle of gas pressure. If you have two chambers containing gasses of different pressure, and you open a valve to allow gas flow between those two chambers, very soon the air pressure between the two chambers will equalize. They might have started off different, but they will end up the same.
This is known as "equilibrium". There will always be some gas steadily flowing back and forth between the two chambers. But when one chamber has much more air pressure than the other, there will be a much stronger flow of gas going in one direction.
In the case of the United States, the country is much wealthier and has higher per person living standards than many other parts of the world.
That is why so many immigrants want to come to the United States, and that is why it is cheaper to move jobs that once were in the United States to other countries.
But there is also a saying that the rich get richer and the poor get poorer. Wealth tends to attract more wealth. If an individual is already wealthy, it is easier to get more wealth.
So this is like a competing phenomena, the opposite of the first.
We could maybe use the analogy of a black hole. A black hole is an immense and concentrated collection of mass. It sucks and pulls in more mass, growing bigger. And when it gets bigger, it then attracts matter with even more force than before.
So we have two competing forces. Wealth levels tend to equalize between two different economies, two different countries, or two different groups of people. But at the same time, there is a tendency for wealthier individuals to consolidate more wealth.
You might think these two different effects might just cancel each other out (and to a little extent they do) but it is not so simple as that.
What the combination of these two effects results in is an increased level of inequality in society.
Wealth is being drained away, and wage levels are going down, but at the same time individual persons with large amounts of money are benefitting.
It has been observed (or pointed out) that while Globalization may reduce the level of inequality between different countries, it increases the level of inequality within individual countries.
Trying to understand economic phenomena can be complicated and difficult for most people to understand, so sometimes it can be helpful to use simple analogies.
Many have the feeling that globalization is somehow "draining away" the United States' wealth, but cannot explain precisely how it is happening, in economic terms. And immigration from other parts of the world seems to be increasing poverty levels in the country, but again most who suspect that would have difficulty explaining the precise economics of how exactly it is causing that.
In science, there is the principle of gas pressure. If you have two chambers containing gasses of different pressure, and you open a valve to allow gas flow between those two chambers, very soon the air pressure between the two chambers will equalize. They might have started off different, but they will end up the same.
This is known as "equilibrium". There will always be some gas steadily flowing back and forth between the two chambers. But when one chamber has much more air pressure than the other, there will be a much stronger flow of gas going in one direction.
In the case of the United States, the country is much wealthier and has higher per person living standards than many other parts of the world.
That is why so many immigrants want to come to the United States, and that is why it is cheaper to move jobs that once were in the United States to other countries.
But there is also a saying that the rich get richer and the poor get poorer. Wealth tends to attract more wealth. If an individual is already wealthy, it is easier to get more wealth.
So this is like a competing phenomena, the opposite of the first.
We could maybe use the analogy of a black hole. A black hole is an immense and concentrated collection of mass. It sucks and pulls in more mass, growing bigger. And when it gets bigger, it then attracts matter with even more force than before.
So we have two competing forces. Wealth levels tend to equalize between two different economies, two different countries, or two different groups of people. But at the same time, there is a tendency for wealthier individuals to consolidate more wealth.
You might think these two different effects might just cancel each other out (and to a little extent they do) but it is not so simple as that.
What the combination of these two effects results in is an increased level of inequality in society.
Wealth is being drained away, and wage levels are going down, but at the same time individual persons with large amounts of money are benefitting.
It has been observed (or pointed out) that while Globalization may reduce the level of inequality between different countries, it increases the level of inequality within individual countries.
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