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Lecture

POL101Y1 Lecture Notes - Bermeo, Harmonious Society


Department
Political Science
Course Code
POL101Y1
Professor
Jeffrey Kopstein

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Political Science February 28th, 2011.
Seeing Inequality
Reading: Birdsall, Life is Unfair - Inequality in the World, pp.76-93
Bermeo, Does Electoral Democracy Boost Economic Equality, pp.21-35
Bearing witness
Seeing inequality in data, poorer countries growing at 1 or 2% per year
$1/day versus $2/day
Four Vignettes
4 Cases:
Global inequality – why rich countries getting richer, poorer countries getting
poorer
The “work & welfare state
Gendering social protection
Local solutions
(I)Global Inequality
Keynesian Compromise and Embedded Liberalism
Bretton Woods
-Created in post war era
-Under him created IMF
-Fixed exchange rates
-American back system, U.S. dollar would be currency of global economy
GATT
-Multilateral agreement by all countries to gradually reduce tariffs in order to
create freer economic trade system
European Reconstruction
-Installation of democracy in Germany
-Creation of EU
-Martial plan – foreign aid plan backed by U.S. to help reconstruct Europes
economy
1960s 1970s significant growth in East Asia, Middle east, Europe
However even in Golden Age, it was uneven growth
1980s/90s rapid, negative growth in East Asia
1970s and 1980s
Decline of Keynesianism Compromise
OPEC price spikes
-Breakdown of Bretton Woods
-Beginning 1970s American did not want to back global economy anymore; puts a
lot of pressure on US dollar/American treasury
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Political Science February 28th, 2011.
-Americans begin to pull back
-And fixed exchange rates begin to fall apart
-Stability of Bretton Woods beginning to unravel
Globalization
-Rapid flow of cash
-1983 amount of money in central banks of govts was 3X greater than amount
money traded globally, therefore some stability
-1998 opposite, central banks only controlled ¼ of all money in the world; 2 trillion
dollars circulating everyday, created stability and leading to…
Debt crises
-Exchange rates fluctuating, therefore harder to sell goods
-Capital flying through system and cannot be controlled
-Set al countries’ economies back 10/15 years
Structural Adjustment Programs (SAPs)
Said countries need to lower taxes, lower tariffs, adopt Adam Smiths System of
neoliberal free trade
Unlearn all lessons that East Asia gave you
Move away from embedded liberalism, doesnt work
(II)Domestic Re-distribution
Kuznets Curve
As countries become richer in middle stage, inequality increases
Therefore when countries are poorer, levels of inequality is lower
As counties continue to grow and become rich countries, inequality decreases
again
How do we reduce inequality? The Welfare State!
As countries become richer, economies spending more on social welfare over
time, e.g. health care
The Political Economy of the Welfare State
Industrial capitalism
Unionization of labour – work and welfare as size of working class increases,
rate of unionization increases; as unions form, they begin to vote
Social democratic political parties
Social citizenship and re-distribution
Value is based on the Gini coefficient
Richer countries better at redistributing income
Inequality in China
2009: top 10% to bottom 10% 23X
1998: top 10% to bottom 10% 7X
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