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POL101Y1 Lecture Notes - Structural Adjustment, Marshall Plan, General Agreement On Tariffs And Trade

Political Science
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Feb. 28th, 2011
Seeing Inequality
Looked at how economies grow in past lectures, todayโ€™s lecture will look at the
distributive consequences of growth ๎€ how the benefits of growth are distributed &
why, the economic & political forces behind this
1) Bearing Witness
2) Counting Inequality
๎€‚By disaggregating data differently, we see different outcomes
๎€‚For ex. More children of immigrant families go to university, but gap between
wages is growing
3) $1/day versus $2/day ๎€ global poverty line
๎€‚How you see inequality or the data will tell you a different story
4 Cases:
๎€‚Global inequality (why are rich countries getting richer, while others poorer?)
๎€‚The โ€œwork & welfareโ€ state (success & limitations of the welfare state as it
pertains to the idea of work & welfare)
๎€‚Gendering social protection (inequality of the welfare state through the lens of
๎€‚Local Solutions (solutions beyond the nation-state)
(I) Global Inequality
๎€‚Keynesian Compromise and Embedded Liberalism (global economic system to be
primarily a free system, however one in which governments had some latitude to
establish policies to stabilize economies)
๎€‚Bretton Woods (American backed system, the US dollar effectively to be the
currency of economics)
๎€‚GATT (General Agreement on Trade and Tariffs ๎€multilateral agreement to
reduce tariffs to establish a freer international economic system)
๎€‚European Reconstruction (installation of democracy in Germany, the EU, the
Marshall plan ๎€ a foreign aid plan backed by the US to help European
๎€‚Most rapid economic growth was in the immediate postwar period & was global in

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๎€‚However, even in the Golden Age, there was unequal growth ๎€ South/SE Asian,
African, & Latin American regions not growing as rapidly (disaggregation of data,
in the 1990โ€™s we see some economies regressing)
1970s & 1980s
๎€‚Decline of the Keynesian Compromise
๎€‚OPEC price spikes (nations need energy for growth, inflation on energy meant it
became more expensive, it was acute for countries that were already poor ๎€๎€ƒ
couldnโ€™t grow)
๎€‚Breakdown of Bretton Woods (US economy vulnerable do the world economy being
backed by the US dollar, the stability of Woods was beginning to unravel, foreign
exchange rates were allowed to fluctuate)
๎€‚Globalization (rapid increase in the flow of cash in uncontrollable ways in the
world economy, 3/4s of worldโ€™s money flowing without government regulation)
๎€‚Debt Crises (harder to sell goods, uncontrollable capital lead to mass debt crises
in the developing world which set their economies back 10-15 years; told to accept
๎€‚Structural Adjustment Programs (SAPs) ๎€ in order to get out of debt crises, taxes
& tariffs had to be lowered, spending cut, basically had to adopt Smithโ€™s model,
move away from embedded Liberalism because it doesnโ€™t work
๎€‚What does this mean? Gap between rich and poor countries is growing
๎€‚The Relative Gap, 1960-93: over time, rich countries are becoming richer, & poor
countries are becoming poorer
(II) Domestic Re-distribution
๎€‚As countries become richer, in the middle stage inequality increases
๎€‚When countries are poor, the levels of inequality are about the same
The Welfare State
๎€‚Economies are spending more on social welfare over time, as they become richer
they spend more on the welfare state
๎€‚Healthcare, education (particularly public), pensions, unemployment (ensure
social safety nets), housing
Political economy of the welfare state:
๎€‚Industrial Capitalism ๎€ as countries become richer they become capitalist
industrialist economies, & the size of the working class grows
๎€‚Unionization of labour ๎€ work & welfare
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