JUDY WOODRUFF: But first: A key part of President
Trump's campaign was pledging to restore prosperity and to ease the anxiety for those left behind
by globalization. Income inequality was a problem during President
Obama's tenure, too. The trend began well before either took office. And the widening gap here is connected to
growth in other parts of the world. Our economics correspondent, Paul Solman,
has been exploring those trends, and it's the focus of his weekly segment, Making Sense. BRANKO MILANOVIC, City University of New York:
The good news is that people around this point A, like one third of the global population,
have done really quite well. PAUL SOLMAN: At the City University of New
York Graduate Center, economist Branko Milanovic and the hottest curve in economics right now,
charting the climb of a billion out of poverty, and explaining the rise of China, the rise
of populism in Europe, the rise of Donald Trump. And thanks to its pachydermal profile, and
Twitter, it has an almost unforgettable name: the Elephant Chart. BRANKO MILANOVIC: I remember in June 2012,
the first time that I saw what later became the Elephant Chart, I was immediately struck,
because I thought, well, that's exactly what we all knew. PAUL SOLMAN: And what is it that we knew? BRANKO MILANOVIC: Well, we knew that China
and large groups of people in Asia who were not very rich compared to Americans, who have
done very well. We knew that lower- and middle-class Americans
and Japanese and Germans have not done well, and then we also knew that the top 1 percent
in the rich countries have done well. PAUL SOLMAN: Now, at the risk of Dumbo-ing
this down, let's take the Elephant Chart from tail to tusk. For that, we have to head into the wild blue
yonder of my producer's basement. On the bottom, the horizontal axis is the
entire world population, arranged by their incomes back in 1988, poorest over here to
the left, the richest to the right. Just past the middle, at about the 55th percentile,
a family of four with $3,000 a year after-tax income. Middle-class U.S. family taking home $30,000
a year would land about here, at the 80th percentile. And in 1988, $160,000 of after-tax income
would've lifted you into the global 1 percent. On the vertical axis, going from bottom to
top, is how much income grew, in percentage terms, over 20 years, from 1988 to 2008. The two winning groups, the fabled 1 percent
and those in the middle of the income distribution. As for the poorest, they had about a 10 percent
rise. BRANKO MILANOVIC: If they started with like
$2 a day, now they have $2.3 a day. PAUL SOLMAN: But now what this story is telling
us is, here, at the middle of the income distribution globally, those people have almost doubled
their income in real terms after taxes. BRANKO MILANOVIC: Right. Right. After taxes, yes. And as you can see, this is not a small group
of people. So we are talking about people from the 40th
percentile to the 70th. So this is almost like one-third of the global
population who have done really quite well. PAUL SOLMAN: And who are we talking about
here? These are the Indians in Bangalore, the Brazilian
middle class, the South Koreans, the Chinese, who've flocked from the countryside to the
cities. BRANKO MILANOVIC: There was a large chunk
of people, two-and-a-half billion, who have done extremely well. PAUL SOLMAN: And those are the people up at
the top of the back of the elephant. BRANKO MILANOVIC: Top of the back of the elephant,
so basically what is called resurgent Asia. PAUL SOLMAN: Resurgent Asia, indeed. Now, you may have seen one of the most popular
Ted Talks of all time. HANS ROSLING, Swedish Academic: Income per
person on this axis, poor down here, rich up there. PAUL SOLMAN: The late great Hans Rosling depicting
this phenomenon in his own inimitably graphic way. HANS ROSLING: You see China under foreign
domination actually lowered their income and came down to the Indian level here, whereas
U.K. and United States is getting richer and richer, and after Second World War, United
States is richer than U.K. But independence is coming here. Growth is starting, economic reform. Growth is faster. PAUL SOLMAN: So, the good news is that income
inequality has, from a global perspective, gone down, as the incomes in the developing
world rise, catching up with incomes in the developed world. And that's a point the Elephant Chart is often
used to make. But perhaps the chart's most memorable message
of the moment is the crisis of inequality in the very well-developed world, the hollowing
out of the middle class in France, the United Kingdom and especially the United States of
America. Here, at incomes of about $20,000 to $100,000
a year, inflation-adjusted, there's been negligible income growth for decades. Once you get to the 70th percentile, so you're
the richest 30 percent of the world's income distribution, it falls off a cliff. BRANKO MILANOVIC: True. It was really people who are generally dissatisfied
with their economic position and who feel threatened by migration and who feel threatened
by lack of jobs or insecurity of jobs. And you look at actually who are voting for
Le Pen in France, who voted for Brexit, and then -- and Trump, we saw that this sort of
growth of right-wing populism is driven on one hand by this insecurity of jobs, which
is a result of globalization, and by migration, which is also part and parcel of globalization. PAUL SOLMAN: And globalization was supposed
to be win-win for everyone, wasn't it? BRANKO MILANOVIC: One thing was promised to
them essentially, with globalization, they would all get better off. And then gradually they see that their wages
are stagnant, and they have been stagnant for 25 years. PAUL SOLMAN: The rich getting richer, the
trunk of the elephant tilted skyward. And then, of course, you look backwards, and
then you see that these people might be catching up to you. BRANKO MILANOVIC: Yes, right, because they
actually are coming on the big tide, like a wave, and then really your relative position
is going to really slide down quite quickly. PAUL SOLMAN: And so we end with the jumbo
takeaway, that while a rising middle class in the developing world has been narrowing
global inequality for decades, the story has been just the opposite closer to home, and
fueling a reaction as radical as it is understandable. For the "PBS NewsHour," this is economics
correspondent Paul Solman, reporting from the City University of New York and my producer's
basement. JUDY WOODRUFF: And we're just glad you're
safe, Paul. And there's more of Paul's conversation with
economist Branko Milanovic on our Web site. You can find it at PBS.org/NewsHour.
