This exposes the truism that there is always a standard of living continuum in society. In a different era there were Kings and Lords and Peasants. Now we have Europeans and Americans and Chinese and Indians.
If globalization can succeed at improving the standard of living for those at the bottom of the continuum, it will have to be at the expense of those at the top. It's a zero sum game.
Let me expand upon my one line explanation. I apologize for being terse last time.
Let's say the stock market increases at 10% per year. This growth is driven by more capital being invested in the market each year. That means everyone in the market earns 10% interest every year, right? Well, in reality, that's not the case. Some people earn 30% and some people lose 20%. In fact, if anyone earns over 10%, that means that someone else must be earning less than 10%. So, maybe it's a 10-sum game, but most people still use the term "zero-sum game" to describe the situation.
Distribution of wealth and standard of living work the same way. Everyone's standard of living is increasing at 10 moon units per year. This growth is primarily driven by technology. However, if people in emerging markets are to have their standard of living increase at 15 moon units per year (which it is, and that's great), then someone else will have their standard of living increase at less than 10 moon units per year. That doesn't mean that our standard of living will decrease (although I wouldn't rule that out); it just won't increase as rapidly.
This is only true if the bar is rising at a pace regardless of increase in participants.
In reality, increases in trade raises the bar faster for everyone, often so much that it offsets the drop from the increased competition.
So say both country A and country B are increasing at 10 moon units per year. Country B trades as a net exporter with country A, and takes 1 moon unit per year from country A. However, the increase in economic activity boosts 2 moon units per year for everyone. Now country A is increasing at 11 moon units per year, and country B is increasing at 13 units per year.
> "In fact, if anyone earns over 10%, that means that someone else must be earning less than 10%. So, maybe it's a 10-sum game, but most people still use the term "zero-sum game" to describe the situation."
You fixed the rate of increase. Jesus. Obviously it'll look zero-sum under those circumstances. The point is, the more efficiently the stock market's played, the faster it grows overall (in theory). It's not zero-sum.
In game theory and economic theory, zero-sum describes a situation in which a participant's gain or loss is exactly balanced by the losses or gains of the other participant(s). If the total gains of the participants are added up, and the total losses are subtracted, they will sum to zero.
Just look at the stock market as an example. Many people speak of the stock market in terms of a zero-sum game, because on any given transaction if one person makes money the other loses money. However, every day more and more money gets pumped into the stock market, so that, on aggregate, everyone makes positive interest.
The same is true of our standard of living. The standard of living index, so to speak, has been increasing for a long time (forever, maybe?), and it will continue to do so for the foreseeable future. Everyone's standard of living will increase, in aggregate.
However, if people in poorer parts of the world start commanding higher salaries, people in more affluent areas won't be able to buy things as inexpensively as they do now. That's exactly what FSJ is pointing out here. I don't understand why I'm being down-modded for echoing it.
There was a time when Kings built huge castles and palaces. Those times are behind us now, because the standard of living is more evenly distributed. It's only going to continue to become more so.
Actually, globalization does improve the standard of living for those at the bottom, to the benefit of those on top. People work in sweatshops (which sucks from the point of view of rich Westerners), but they voluntarily chose to do so because it was an improvement on their previous standard of living. So their standard of living improves, and so does the standard of living for those of us who buy manufactured goods at lower prices.
The Chinese make the technology we do. But we make new stuff. So, the race is on. (That said - go to your local research university's Bioengineering department and tally up the various races. China's going to pwn us. Bad.)
If globalization can succeed at improving the standard of living for those at the bottom of the continuum, it will have to be at the expense of those at the top. It's a zero sum game.