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Ever realized how the top one percent seems to have a gravitational pull on wealth, like black holes sucking in every stray dollar in their vicinity? The rich get richer, while the rest of us get a graph to show for it!
The elephant graph, for those not in the know, is a rather peculiar representation of global income growth from 1988 to 2008. It’s called an elephant graph because, well, it looks like an elephant. Sort of. If you squint hard enough and have a vivid imagination. The graph shows the percentage change in real income for each percentile of the global income distribution.
The graph first came to broader attention thanks to economists Christoph Lakner and Branko Milanovic, who in 2013 used World Bank data to plot changes in real income during a period of globalization. It was a revelation—not because we didn’t know that inequality was a thing (thank you, Occupy Wall Street), but because it showed us how unevenly the benefits of globalization were distributed.
Here’s the gist
The x-axis of the graph represents the global income distribution, from the poorest to the richest. The y-axis shows how much real income growth each segment of the population experienced during the period. Now, imagine an elephant raising its trunk; the base represents the world’s poorest, the hump in the middle is the global middle class, mostly in emerging economies, and the rising trunk? That’s the global top one percent.
Why should we care?
Well, for starters, it means that globalization has been a mixed bag. The graph reveals a rather inconvenient truth: while the middle segments (think burgeoning middle classes in China and India) saw significant income growth, those around the 80th to 90th percentile (which includes the poorer folks in rich countries) barely saw their income budge. And the top one per cent?
Their incomes skyrocketed, because, of course, they did. These people live in a different economic reality – think private jets, mega-yachts, and probably using small countries as golf courses (or how about a certain billionaire using African countries as their personal lithium piggy banks to fuel their EV empire?).
Some argue that the elephant graph doesn’t tell the whole story – that it doesn’t account for changes in household size, for example, or the fact that many people in the Western middle class have benefited from cheaper consumer goods thanks to globalization. Others notice that the data ends in 2008 and a lot has changed since then; we’ve had a global financial crisis, the rise of populist movements, and even a pandemic.
And then there are those of us who just see a funny-looking elephant.