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These business decisions, shifting
activities and employment from one
part of the world to another, were
rational. In fact, they represented
the only way for an MNC to stay
competitive. Collectively, on a huge
scale over time, they contributed to
huge global progress by spreading
income and employment into new
markets. But this also inevitably
impacted the advanced economies
that had often been the original
homes of these now truly international
businesses. Already high levels of
unemployment in some communities
were further raised by increases
in automation, particularly in
manufacturing. Although the economic
engine was delivering as planned in
macro terms, this unemployment was a
sign that not everyone was benefiting
and all was not well.
Global Progress, Local
Disharmony
The Great Recession of the late
2000s exposed these weaknesses.
The financial crisis itself was less a
cause than an indicator, revealing a
misalignment within the system as
a whole that had been growing for
years. In a more globalized, technology-
enabled world, the recession’s impact
was felt at unparalleled speed.
The two primary indicators of success
for the previous 60 years, GDP at the
macro level and shareholder value at
the micro level, were now shown to be
problematic. GDP did not reflect the
negative effects of economic growth;
people who dropped out of the job
market, for example, were invisible
to it. The GDP figures showed great
global prosperity on average, while
significant portions of the population
were experiencing years of income
stagnation and decline. GDP also
ignored intangible factors such as
environmental degradation, the low
wage levels and insecurity associated
with many of the remaining jobs, and
the diminished quality of life in some
communities.
Research conducted by World Bank
economist Branko Milanović found
that big earners and those in the
bottom two-thirds of income levels
(on average, globally) received major
gains, but households in the 75th to
85th percentile of the global income
distribution were scarcely better off
economically in 2008 than they had
been 20 years before. This group
(represented by the dip in Exhibit 5)
includes most of the middle class in
industrialized countries.
The male labor force was particularly
hurt (see Exhibit 6). “Tracking the
Fortunes of the White Working
Class,” an Economist article published
in Feb. 2017, reported on a recent
study in which 41 percent of white
males with high school education or
less between the ages of 25 and 65
in the United States were found to
be unemployed, most no longer even
seeking work. This group represents
23 percent of the American male
workforce. In some communities
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