On the worry that the least-skilled will fall further behind

Charles C. Mann notes in his insightful essay on the rhetoric and (in)action regarding climate change:

In the 3,600 years between 1800 B.C. and 1800 A.D., the economic historian Gregory Clark has calculated, there was “no sign of any improvement in material conditions” in Europe and Asia. Then came the Industrial Revolution.

The Industrial Revolution was one hell of a game-changer.  China and India, which at that point accounted for more than a half of the world's GDP, had no idea what lay ahead; no surprise that they are both terribly wounded civilizations that are even now trying to figure out what happened and why they are not the admired and prosperous lands, though China is in a hurry to reclaim its status.

In his book, his talks, his interviews, well, anywhere, Andrew McAfee stresses the importance of the Information Revolution by reminding us about the Industrial Revolution:

As historian Ian Morris writes in his fascinating book Why The West Rules — For Now, “the industrial revolution… made mockery of all that had gone before.”

If that changed the world in a hurry, then, as McAfee likes to point out, we ain't seen nothin' yet with respect to how much the next revolution (that is underway?) will completely overhaul everything.

That is not a new topic in this blog.  I keep coming back to it because of a deep concern that the vast middle class was perhaps a freakish accident in history, and that we will revert to conditions that prevailed throughout almost all of recorded history--the patricians and the plebeians.

The concern over the plebs is nothing but another way of saying that inequality is a troubling issue to me.  Not merely within the US, but across the world.  Now, I have quoted Branko Milanovic and others who have correctly noted that global inequality has narrowed, as this chart from an old post shows:

But, within countries, the gap is widening.

And even the Economist pitches in with "why globalisation is not reducing inequality within developing countries"

Economists are puzzled: the data contradict the predictions of David Ricardo, one of the founding fathers of their discipline. Countries, said Ricardo, export what they are relatively efficient at producing. Take America and Bangladesh now. In America the ratio of highly skilled to low-skilled workers is high. In Bangladesh it is low. So America focuses on products requiring highly skilled labour, such as financial services and software. Bangladesh focuses on downmarket products such as garments.
Comparative advantage predicts that when a poor country starts to trade globally, demand for low-skilled workers will rise disproportionately. That, in turn, should boost their wages relative to those of higher-skilled locals, and so push down income inequality within that country. The theory neatly explains the impact of the first wave of globalisation. In the 18th century, Europe had a high ratio of low-skilled workers relative to America. When Euro-American trade took off, European inequality duly tumbled

Any time the Economist or the Wall Street Journal runs such pieces, then I joke that it means it is time to say "holy shit!"

Anyway, what might be the story here?

[Eric Maskin's theory] relies on what he calls worker “matching”. Unskilled workers can be more productive when matched with skilled ones—that is, when they work together. Assigning a manager to a group of workers can do more for total output than just adding another worker. He places workers into four classes: skilled workers in rich countries (A); low-skilled workers in rich countries (B); high-skilled workers in poor countries (C); and low-skilled workers in poor countries (D). Crucially, he thinks low-skilled workers in rich countries (the Bs) are likely to be more productive than high-skilled workers in poor ones (the Cs).
Before the current wave of globalisation started in the 1980s, skilled and unskilled workers in developing countries—the Cs and Ds—worked together.

So, yes, globalization.  What happened?

The latest bout of globalisation has jumbled the pairings: high-skilled workers in poor countries can now work more easily with low-skilled workers in rich ones, leaving their poor neighbours in the lurch. ...
The Cs work with Bs and end up being more productive. The Ds are left by the wayside.

The Ds number in the hundreds of millions.   Which is why the Economist concludes with this thought:

 if he is right, he poses a challenge to globalisation’s advocates: figuring out how to reap its rewards without leaving the least-skilled in poor countries behind.

Well, hey, it might be a realization that is a tad too late.  But, better late than never, right?

There is one easy solution to this; can you guess what that is?  Hint: it cannot happen again, now that we are already here ;)