Inequality and Globalization

Now I'm going to need to have this explained to me, simpleton that I am. From the Borjas Blog:

Since much of the increase in inequality has been concentrated at the very top of the income distribution, this basically means that those factors that have been emphasized by hundreds of studies--such as skill-biased technological change, immigration, international trade, the decline of unions, and a stagnant minimum wage--can't really be the "smoking gun."

Now I would read that single piece of evidence, that the increasing inequality in the US is because the top 1% (and if you look at Picketty etc, even the top 0.1% more so) are soaring away, and come to a very different conclusion. Note that the gap between the middle class and the poor isn't changing much, it really does seem to be that the top end is soaring away.

As I say, I would look at that and say that we can now identify the smoking gun (at least to some extent, how much, I agree, is arguable). Globalization, what the Professor describes as international trade.

Absent any trade at all, the top 1% ( or 0.1%, or 0.01%...and remember, that last percentage is a group as small as 10,000 to 20,000 people) are making whatever they're making by standing at the top of an economy of some 300 million people. Let's now have globalization, increased international trade.

So the Spielbergs and the Tigers, they're no longer getting 5 cents each from 300 million, they're getting 5 cents each from 6 billion. Yes, both the golfer and the film maker are indeed in at the very least that top 0.1%, perhaps even in the top 0.001% (from memory, their respective earnings last year were $250 million and $90 million. Top 1,000 of the US I would think?). And yes, globalization has improved their incomes massively.

As it has with certain captains of industry, Wall Street Princes and so on.

So let's look at the same evidence again, with a twist.

We would expect, in the case of those very rare talents that can actually bestride the globe, globalization to massively increase incomes to those special ones freed from the limitations of their home markets.

In the observable evidence of the changes in income we see that those able to bestride the globe have indeed massively increased their incomes, as globalization has allowed them to play on the world stage. Take those rare creatures out of our income figures and look at the middle and the poor and there's been little change in income disparities.

I would take that to mean that we've actually found our smoking gun.

So someone is going to have to explain to me why this isn't so, dullard that I am.