led global economy has produced an enormous

improvement in human welfare.

Since 1981, the proportion of the world's

population living in extreme poverty on less than

a $1.90

per day has fallen from 42 percent ,to 10 percent.

But in countries with advanced economies,

inequality of income and wealth has surged.

And nowhere has it surged more than in the U.S.

where reliance on free market forces has been

strongest. That magnifies rewards for those at

the top and leaves most others behind.

The trend helps those with higher levels of

education and hurts the less educated.

It lifts residents of major cities while leaving

those in small towns behind.

For growing numbers of Americans it's just harder

to get ahead.

Why is this happened and what are the

consequences? Here are five causes.

The digital revolution creates enormous wealth for

those with the skills and preparation to take

advantage. But it eliminates what economists call

"middle-skill jobs."

Computer software and industrial machines now

fill roles from clerical tasks to routine

manufacturing that once produced middle class

incomes for workers without college degrees.

One of those forces is technological progress that

has increased the value of an abstract problem

solving, interpersonal communication or

organizational skills.

Things that highly educated workers tend to be

very capable of and has simultaneously devalued a

lot of cognitively intensive but repetitive tasks

in offices and production lines and so kind of

hollowed out the set of job activities available

to non-college workers and sort of pushed them

arguably downward into personal services, food

services, cleaning, security, transportation,

repair where their skills are more

interchangeable with other workers and where

there is less of a return to experience over the

lifecycle.

And so that has contributed downward pressure and

wage pressure and economic insecurity for the

less educated.

So it's really kind of created a great world for

the highly educated and a much less economically

secure and inviting world for people who don't

have high levels of education.

Competition from emerging economies like China's

combined with reduced trade barriers have further

reduced prospects for workers without advanced

skills. That's had devastating consequences in

sectors such as textiles and furniture and

leather goods.

The biggest economic story of really of the

century and certainly of the last 50 years has

been China's rise.

China going from a poor and backward country in

perpetual political and economic crisis to a

frontier manufacturer with pretty well-educated,

highly available skilled labor using modern

technology. So China marched up the productivity

technology frontier between 1980 and the present

at a rate almost unseen in history and because it

was so vast, because it had so many people, so

many resources, so much land, it could become you

know a manufacturer for now at this point more

than 20 percent of all world manufacturing value

added. And that's not just a function.

That's not a function of trade deals.

That's primarily a function of internal

developments in China.

The decision to allow free mobility of labour to

adopt Western technology and foreign direct

investment and to start trading with the world.

And that had a big effect on United States even

in the 90s.

But when China joined in 2001 that further opened

the floodgates.

And that had a dramatic accelerant effect on the

rate at which competition entered the U.S.

market for manufactured goods.

And the rate of decline of U.S.

manufacturing employment as a result of that.

Over the course of just seven years about 20

percent of all U.S.

manufacturing jobs disappeared.

And then they fell it fell by another cumulative

eleven percentage points during the Great

Recession. So effectively one-in-three

manufacturing jobs no longer existed that had

existed around 2000.

Breakthrough firms such as Apple and Amazon now

attract revenue across the world, which produces

immense jackpots for the executives who lead

them. And for the American cities they call home.

You create the innovation and you have the global

product market.

You're going to have much larger earnings than in

a previous generation.

There is increasingly divergence and economic

growth and economic outcomes across

places in the U.S..

And so there are just you know along with these

superstar workers and these superstar firms when

you have superstar cities in our increasingly

winner take all economy.

Meanwhile, the share of workers represented by

labor unions has dropped by half, shrinking their

power. The lowest paid workers have seen the

buying power of the minimum wage drop as the

government has not increased it to keep pace with

inflation.

Fewer than 70 percent of men with a high school

degree or less are working.

The eroded value of the minimum wage in many

cases, the decline in unionization, things that

have otherwise sort of hurt workers bargaining

power in ways that amplified their weakened

bargaining power are just coming from these

external forces where they were already competing

with technology or workers from lower wage

countries for example.

The shifting power balance has rewarded the

wealthiest even more through policies in

government and private institutions.

From tax changes that increased their income to

college admissions procedures that opened doors

for their children above others.

Actresses Felicity Huffman and Lori Loughlin are

headed from the red carpet to federal court.

13 parents and one coach who have pled pleaded

guilty.

The market incentives inequality creates for hard

work and risk taking helps make America's economy

dynamic but it also imposes costs.

You need some inequality.

The problem is when that dynamism at a point in

time gives rise to dynasticism such that the

next generation doesn't get an equal footing. Such

that kids of affluent parents even if there are

mediocre talent get to go to the best schools and

get access to the you know the most after school

investment, the most training and so on.

And you know talented kids from less affluent

families don't get to go to these schools.

They don't get invested in in the same way.

And that's a loss for all of us.

That's not just a loss for them.

That means our society will be less productive.

And it fuels the nonstop turmoil in American

politics. Voters have thrown out the party in

control of the White House or one chamber of

Congress in six of the past seven national

elections.

2020 promises to be just as contentious.

I think we're seeing that loud and clearly in the

sort of politics of the past few years.

People are increasingly likely to report that

they believe the system is rigged against them.

This is damaging both for the functioning of our

democracy. But I actually think also for the

functioning of our economy.

We're going to see people in increasing numbers

sort of dropping out of our mainstream climb to

economic success and so we've got this economic

malaise. And now we have this social malaise

going along with it.

And and it's leaving the political I mean large,

loud political cries for completely, I think,

upending our capitalist system.