# We Took the Easier Road: Branko Milanovic on What Comes After Globalization
> Bloomberg Odd Lots hosts Branko Milanovic on his new book. He names the emerging order national market liberalism — only the international layer got dismantled. And the sharpest passage: facing a stagnating middle class, governments had two roads, and picked the politically easier one.
Published: 2026-08-04
Locale: en
Tags: odd-lots, podcast-notes, globalization, inequality, macro, english-finance-media
> *When you act and fall short,*
> *turn and look for the cause in yourself.*
> —— *Mencius* (4th c. BC)
## What this episode is about
The guest is **Branko Milanovic** — research professor at CUNY's Graduate Center, thirty years of work on global income distribution, and the man behind the elephant chart. His new book is *The Great Global Transformation: The United States, China and the Remaking of the World Economic Order*.
He says writing it was in some sense writing an autobiography, because he remembers **each of the orders personally**: the 1974 New International Economic Order and its failure; the unipolar moment when the US was dominant economically, militarily, politically and ideologically; neoliberal globalisation — **and now he is present at the birth of a fourth.**
**Original episode**: [Branko Milanovic on What Comes After Globalization](https://omny.fm/shows/odd-lots/branko-milanovic-on-what-comes-after-globalization)
## The notes I took
**He names the new order "national market liberalism."** Why still liberalism? Because **only the international layer was dismantled.**
Domestically, policy remains liberal: free pricing, competition; social policy still runs on equality of identity and affirmative action. The international layer — free trade, low tariffs, movement of capital and goods — **has been chopped off and replaced by something essentially mercantilist: beggar-thy-neighbour, zero sum, arguably negative sum.**
His observation from that angle: administrations like Trump's and Macron's are, domestically, **continuing neoliberal policy.**
**He's candid about a mistake.** In 1989 he ran into Jeffrey Sachs and described his work as **"trying to save socialism"** — his analogy being Keynes: inject a dose of socialism to preserve the capitalist framework, so introducing market mechanisms could preserve the socialist one.
Sachs looked at him and said: **"I'm trying to bury socialism."**
He concedes he was wrong. But he adds something lovely: maybe he was right after all — he was thinking about Eastern Europe and the Soviet Union, **and what actually happened was China.**
**Chinese growth now increases global inequality.** This is the thing he tells young Chinese audiences that they take almost as an insult.
The logic: from 1990 until a few years ago China was an **automatic reducer of global inequality** — a big country, still poor, growing fast, so its catch-up narrowed the global spread. **Not any more.** China pulling away from Sudan, Ethiopia and Congo now outweighs China converging with the US.
Their reaction: "So you're telling us we shouldn't grow?" His answer: **this is arithmetic, not a value judgment. Your country is becoming too rich.**
**The two-levels distinction is the most useful frame in the episode.**
- **The country level**: China's GDP, national weight — what all the news is about
- **The personal level**: for the first time in two centuries, **the lower parts of Western income distributions are sliding down the global ranking**
His example is concrete: someone in Italy's bottom decile isn't rich by Italian standards, but thirty years ago they sat around the **70th global percentile**; now they're at the **55th**.
And the illustration I love: **if Italy qualified for the World Cup, that Italian can no longer afford to travel and watch. Thirty years ago he could.**
So "China" operates on two levels at once: the abstract state-versus-state level, and **you versus that guy**.
**Then comes the sharpest passage in the episode.** The elephant chart says: Western middle classes grew about 1% per capita per year — poor; Western tops did very well (3%+ under Clinton); China did very well.
So a government sits there with **two available roads**:
1. **Look inward**: tax the rich, transfer, seriously reskill labour, put resources back into public education rather than the fancy schools bankrolled by billionaires
2. **Or say: look, China is beating us, so let's go after China. They're stealing IP, they're doing this and that.**
**Option two is what happened.**
Asked why, his answer is plain: **"Maybe politically it was easier."** He treats 2016 as the watershed — many of the China policies imposed then continued under Biden, executed more intelligently, and accelerated after.
Pressed on whether it could have gone the other way, he agrees completely: **it could have become a more social-democratic capitalism rather than this nationalist liberalism.**
**Homoploutia: a word he coined.** Roughly, "same wealth." It describes something new in the American top 10% (about thirty million people):
**A rising share of them are simultaneously in the top 10% by labour income and the top 10% by income from property.**
He stresses the novelty. The nineteenth century had its J.P. Morgans, but **they weren't technically labourers** — their income was capital income. Now there is a large upper middle class that is **rich in both ways at once.**
What makes this class distinctive is the combination it fuses: **the capitalist's defence of private property**, **the meritocrat's belief that the high salary was earned**, and **a hard-working ethos**. He argues that combination is new in the history of capitalism.
They also transmit those advantages to their children and believe the children deserve them too — producing an elite he describes as **hard to dislodge: when the stock market falls, they still have labour income.**
**"Folksy elites."** He notes this class loves to demonstrate that it isn't elite: emphasising the public university (which happens to be one of the best and wealthiest in the country), emphasising how hard they work. And the latter is genuinely true — **his data show hours worked rising with hourly wage.**
They do work hard, they did study hard, they do feel they deserve it. Joe takes it honestly in the moment: **"I feel like I'm part of that class. I worked really hard."** Then adds that his children don't deserve it, they're spoiled, they did nothing for the lifestyle they have — **"but I'll still do it, because nobody works against their own kids."**
**China's elite composition flipped completely in forty years.** These numbers floored me:
- **1988**: for the top 5% of China's urban population, **two-thirds of income came from state-owned enterprises, government jobs and Communist Party positions**
- **By 2018, and in 2023 data**: **exactly reversed** — two-thirds from private sector and professional jobs in private companies, one third from SOEs, the party and government
He compares this to Britain. Bob Allen's work on the growth of the capitalist class in England from 1688 to about 1900 shows the same shape — few at first, then many; relative income low at first, then catching up. **Britain took a hundred and fifty years. China took forty.**
**His read on Chinese soft power is interesting.** He argues China is culturally isolationist: Chinese economists and authors write almost exclusively about China, and his Chinese publisher told him **Chinese readers don't much want to read things that aren't about China**, so anything else is hard to sell.
His inference: **if you don't study others, don't write books about them, don't shape how they understand themselves, your soft power stays limited.** His counter-example is the Sovietologist Richard Pipes — treated as a giant when he visited in 1989, because **his books shaped how Russians saw their own history.**
**On Europe he is merciless.** Europe needs two things to prosper: cheap energy (the fuel of the last forty or fifty years of growth) and immigration (its population is declining).
What Europe chose: cut off Russian energy over the war and buy much more expensive American energy; and increasingly refuse immigration. **"They need people but don't want people. They need cheap energy and decided to cut the energy off."**
As for why European elites came round to Trump's view on China, his image is vivid: **many of them treat Trump like a tiger in a cage — you're in there with the tiger and you just want to survive until it leaves.** So you flatter it, without believing a word.
**He does offer an optimistic scenario.** If the wars in Ukraine and the Middle East can be stopped, you at least remove the possibility of a large war (once that happens, all bets are off). Then you could begin redesigning the system — **something like a new Bretton Woods** — with greater weight for China and India, and considerably less for Europe, since the current institutions reflect **1945**, when Europe was still a colonial power.
## What I took away
**1. Policy isn't chosen by what's optimal. It's chosen by the path of least political resistance.**
That two-roads passage is the most explanatory thing I've heard this year. Taxing the rich and rebuilding public education is **internal**, painful, and requires fighting your own country's most powerful people. Going after China is **external**, unifying, and electorally cheap.
**"Maybe politically it was easier" is the whole answer.**
I've filed it as a general prediction tool: **when forecasting how an organisation responds to pressure, don't ask which option is best — ask which faces the least internal resistance.** True of countries, of companies, and of me: my willingness to fix a tool is always far higher than my willingness to fix a habit.
**2. Keep the country level and the personal level apart, because they frequently move in opposite directions.**
The Italian example is sharp: Italy the country hasn't fallen that far in the global ranking, but **an Italian in the bottom decile went from the 70th to the 55th percentile globally.**
That resolves something I found contradictory: why political anger runs so hot in countries whose aggregate data look tolerable. **People don't live inside GDP; they live inside how they compare to everyone else** — and those two can diverge.
For investing, this is a frame for **where policy risk comes from**: not from the macro data, but from the person who lost fifteen percentiles.
**3. Homoploutia is the name for what I've been doing.**
That word landed on me. Holding labour income and capital income simultaneously isn't only a description of the rich — **it's the road I'm on**: working on professional judgment on one side, letting a capital position run on the other.
But the side effect Milanovic identifies is worth guarding against: the combination gives you **a capitalist's position and a meritocrat's self-image at the same time** — "I earned this, so I deserve it." That self-image makes structural factors invisible, **and it gets transmitted to the next generation.**
My version: when my investing goes well, I need to keep honestly separating what was judgment, what was market beta, and what was simply being born somewhere and somewhen that lets me buy US equities. **Fail at that separation and the next judgment comes out overconfident.**
**4. Forty years versus a hundred and fifty — the speed of that elite turnover is itself a risk variable.**
From "two-thirds via the system" to "two-thirds via the private sector" took Britain six generations and China two.
The investing implication isn't bullish or bearish. It's this: **when a society's elite composition turns over completely within two generations, its political preferences, risk tolerance and policy reflexes have no long history to extrapolate from.** Every historical analogy used to forecast it — like Japan, like postwar America, like the USSR — deserves a discount.
**5. Soft power comes from being willing to study others — which is a direct hit for anyone making content.**
He argues Chinese soft power is limited because it **doesn't study others, doesn't write about them, doesn't shape how they see themselves.** Pipes was revered because **he changed how Russians understood their own history.**
For someone who writes, that's a blunt reminder: **influence doesn't come from presenting your own material well. It comes from whether you can give other people a frame for understanding themselves.** These listening notes are worth something not for what they relay, but for whether they hand someone an angle they wouldn't have reached alone.
**6. The Europe passage is a textbook case of wanting two mutually exclusive things.**
Needing cheap energy and cutting it off; needing population and refusing immigration. That's not stupidity — it's **different constituencies each winning on a different issue**, summing to an internally inconsistent whole.
The same thing happens at a personal scale daily: I want high returns and no volatility, I want focus and to drop nothing. The only difference is that **a country's inconsistency takes decades to bill, and mine gets called next month.**
## Further reading
- The episode: [Odd Lots — Branko Milanovic on What Comes After Globalization](https://omny.fm/shows/odd-lots/branko-milanovic-on-what-comes-after-globalization)
- The book: Branko Milanovic, *The Great Global Transformation: The United States, China and the Remaking of the World Economic Order* (2026)
- A companion piece on risk migrating between institutions: [Hiding the Boat in the Ravine](https://blog.getrealpha.com/en/blog/oddlots-private-credit-insurance-backstop/)
- The lines from *Mencius* are my own footnote to the episode, not part of it
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**Disclaimer**: This is a listener's reflection and general education, **not investment advice, an offer, or a solicitation**, and not a judgment on any country or political position. Views and figures are relayed from the public episode and the guest's published work. Investing carries risk — judge for yourself against your own circumstances and consult a qualified professional if needed. Copyright in the original episode belongs to its producers; please go listen and support them.