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Poverty and Inequality

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McGill University
Sociology (Arts)
SOCI 254
Uli Locher

th SOCI 254 13 September 2011 Poverty and Inequality Discussion on last times video: How do we measure development? 1. GDP and other economic measures 2. HDI GDP and the standard of living: • It is NOT a measure of the standard of living ○ It measures the totality of output (goods and services produced) • Why is it used for this purpose anyway? ○ All residents of an area will eventually benefit from the totality of goods and services produced ○ Advantage lies in the measurement  Measured frequently, widely, consistently  Measurement is available almost anywhere in the world  Allows us to compare one country to another (with limitations) • Legitimate use in sub-national unit comparisons Limitations of GDP and similar measures (Important): • Cannot determine inequality of equality of wealth distribution • Non-market transactions – unregistered contributions to national economy ○ E.g. Cash transactions which are not registered • Underground economy – unrecorded economic activity ○ E.g. Illegal trade • Asset value ○ GDP never takes into account the value of assets, the value of what you already have. ○ E.g. Primitive methods may be used to produce something in large amounts vs. expensive new machinery that may produce less. The primitive methods will have a much larger effect on GDP, but are not necessarily better. • Non-monetary economy • Quality improvement: new products • What is being produced? ○ E.g. After a disaster, your assets are destroyed. BUT, a lot of production goes into fixing damage. This shows on the GDP, but the destruction of assets doesn’t • Sustainability of growth th SOCI 254 13 September 2011 Poverty and Inequality ○ This pretty much encompasses everything above Human Development Index (HDI) • Composite measure • Ranks countries by levels of human development • 3 Components ○ Health: average life expectancy ○ Education: adult literacy and female literacy ○ Economic measure: GDP adjusted for PPP • Standard means of measuring well-being • Generally measured on national levels, but measured frequently on sub-national units as well: villages, towns etc. • HDI trends since 1975: ○ Every area in the world shows improvement in HDI ○ Except for sub-Saharan Africa, which shows improvement that is very minimal. Video: The Scramble for Africa • Focus on divide and conquer rule – playing off people’s ethnicity on one another. ○ This concept wasn’t new, but the colonial powers used it in new ways for various purposes Poverty and Inequality We live in an era of unprecedented prosperity • Western Europe, US, Canada - all have very high levels of well being as compared to the past, whatever the measurement indicator might be. • The Industrial Revolution (IR) was a great accelerator of change and great producer of wealth ○ Machines meant productivity gains ○ Transportation improvements just before the IR -> Britain and France installed canal systems • From 1820 – 1950 ○ Long century of growth with minor fluctuations ○ This is followed by another half century of growth –> 1960- 2010,
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