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Global Inequality keeps getting Worse Each Year with Globalization and Specialization

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Global Inequality

Global inequality is getting worse each year in almost every country as globalization is leading to a deflation in the prices of low to medium skilled labor, while increasing the prices of specialized and highly skilled labor. Globalization has meant that common services and manufacturing have continued to see a decline in prices even as the costs of essential commodities such as food and energy are going up. Ben Bernake’s QE insanity has led to a sharp increase in assets prices around the globe, even as the economy has continued to flounder. The rich class has benefited as they own the majority of the assets. Wages for low and medium skilled labor have declined as the global supply keeps increasing. Increased automation and IT has meant that routine and repetitive jobs are getting decimated. The Indian IT industry will see the lowest addition in 5-6 years as improved technology is leading to automation of voice based support and other functions.

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Investment in Non Traditional Assets

On the other hand, the prices of food and energy are increasing at a faster pace as supply fails to keep up with the growing worldwide demand. The influx of investor money into commodity funds has led to a faster appreciation of commodity prices with many investors questioning the high prices of crude oil given the low economic growth. Zero interest rates have forced investors to get into commodities and other non-traditional investment assets leading to greater than normalized prices of assets. Housing prices in most places in the world continue to be extremely high. This can be seen in countries such as Congo and Myanmar. Stock prices in India have become a function of US Fed statements with fundamentals playing little role.


Increase in inequality will reach a tipping point some time soon in my view. The current trend is not sustainable with 21% unemployment amongst the poorest USA income segment. Note this class is the least able to afford unemployment but it is facing the highest unemployment since the Great Depression. On the other hand, the richest class at >$150,000 is facing very low unemployment. This trend is not isolated to USA but being seen in other countries such as India and China as well. Huge protests as well as regime overthrows have already been seen in a number of countries including USA (Wall Street). Though these protests have mostly died down, the underlying causes have only become greater by each passing day. One just hopes that the democratic governments are able to neutralize these trends before they are reversed through violent means.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

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