Graph of the day

Here is a very interesting graph on income growth by global income percentiles. In the last 20 years, two broad groups have done very poorly: (1) the global very poor and (2) the lower middle class in developed countries. The explanation for the former is very complex and likely context specific. The poor performance of the latter is driven primarily by globalization, automation, and de-unionization. 

In the same time frame, two broad groups have done very well: (1) the middle class in developing countries, especially driven by China and to a lesser extent India and (2) the global rich. The explanation for the former is primarily that India and China opened up to trade and capitalism and there has been a strong increase in the market prices for resources (which has helped resource rich developing countries like in Africa).  The explanation for the latter is complex but I would argue is partly due to the superstar effect in a time of globalization, de-regulation of many sectors, and regulatory capture. See more here.