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Lecture 18

POL101 Lecture 18

9 Pages
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Department
Political Science
Course Code
POL101Y1
Professor
Jeffrey Kopstein

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Lecture 18
Paper due date pushed back a week - March 21st
Proposals still due week of March 7th; will be graded & returned during office hours, week
of March 14th (peer reviewed as well)
` basically a three-week sequence
Seeing Inequality .wma
Audio recording started: 12:22 PM February-28-11
Essentially been looking at how economies grow; but today, we'll be looking @
distributive qualities of growth; & why? (political/economic forces behind it)
Seeing Inequality
1.Bearing witness
2.Counting inequality
3.$1/day versus $2/day
4.Seeing inequality (in person vs. second-hand)
5.Seeing data - numbers, quantified
` look @ this data in the aggregate (e.g. Growing at 10% a year, 5% a year, etc.)
` but when we disaggregate the data, look @ through a different set of lenses, we see a
different story
` by look at it differently, we see a different story (e.g. 10% of Canadians living below
the poverty line vs. 3 million Canadians living below the poverty line)
~ the wage gap between immigrant & non-immigrant families is growing
6.e.g. This dollar/day - the bare minimum you need to survive (according to
international standards) - the global poverty line - politically important
` by these standards, hundreds of millions of Chinese have exceed this in the last few
decades -> however, once you increase the threshold from $1/day to $2/day, stats show
that ~45% of Chinese still live below that threshold (approximately 600 million people;
almost 20x the population of Canada)
7.How you see the data will tell you different stories
Four Vignettes
8.4 Cases
oGlobal inequality
oThe "work & welfare" state
oGendering social protection
oLocal solutions
9.Why rich countries are getting richer & poor countries getting poorer
10.The wonderful successes of the welfare state, as well as some of its limitations
(especially as it pertains to idea of work)
11.Spin on the welfare state -> inequality thereof through the lens of gender
12.Solutions beyond the nation-state
www.notesolution.com
(I) Global Inequality
13.Keynesian Compromise & Embedded Liberalism
oBretton Woods
oGATT
oEuropean Reconstruction
14.Global economic system was to be primarily free-trade, but gov'ts had some
latitude to create policies to stabilize both their own & global economies
15.Bretton Woods -> International Monetary Fund (which would lend to
countries in financial trouble), fixed exchange rate system (to avoid repeat of what
happened in 1930s), American-backed system (US dollar was going to effectively be
currency of global economics)
16.GATT - General Agreement on Trade & Tariffs - a multilateral agreement to
gradually reduce tariffs to create a freer international trading system
17.Effort to reconstruct Europe - installation of democracy in Germany,
institutional origins of the European Union, the Marshall Plan (a foreign aid plan,
backed by US, to help reconstruct European economies)
18.Led to golden age of global growth
19.The most rapid economic growth in last hundred years was in the immediate
post-war period - this occurred on the global scale - growing @ unprecedented rates
After the Golden Age
Even in the Golden Age of economic growth, it was uneven growth. Countries in South
& Southeast Asia, Africa, Latin America, were growing at a much slower rate than
other countries (once deaggregated, can see data as more uneven)
From tail-end of 1970s, still see moderate economic growth in East Asia, Middle East &
Europe, but even negative growth in South/SE Asia, Africa & Latin America.
Regressing - ppl losing jobs, income declining, unable to purchase amenities that the
rest of the world is able to enjoy
1970s & 1980s
20.Decline of Keynesian Compromise
21.OPEC price spikes
22.Breakdown of Bretton Woods
23.Globalization
24.Debt Crises
25.Structural Adjustment Programs (SAPs)
26.Energy is lifeblood of economy; need to energy for economic development
` once prices started to rise, saw inflationary pressures on energy prices (become more
expensive); especially acute effects on less - developed countries; how do you expect
them to keep growing if can't afford?
27.America decided didn't want to back global economy; a lot of pressure (that
entire world is backed by / depends on) US dollar; Americans begin to pull back
(because was vulnerable)
28.Exchange rates were allowed to fluctuate again; the stability of Bretton
Woods was beginning to unravel
www.notesolution.com
29.Rapid increase in flow of cash, circulating in global economy in uncontrolled
ways
` in 1983, amount of money in gov'ts was 3x greater than amount of money traded
globally; gov'ts in control of flow of money
` by 1998, it was the opposite; central banks only controlled one quarter of the world's
money
` the rest is circulating without government control
` by 1998, 2 trillion dollars are circulating every day -> instability -> debt crises
30. In 1980s, led to massive debt crises in the developing world (Argentina,
Korea, Taiwan, etc.) - effectively set their economies back ten or fifteen years
` international community suggested SAPs -> "you screwed up, not managing debt well;
to get out of, this is what you need to do... Basically adopt Adam Smith's model of neo-
Liberal free trade"
- iow, unlearn all those lessons that East Asian countries gave you; adopt these SAPs;
move away from embedded Liberalism; it doesn't work -> what matters most is neo-
Liberal free trade system
The Absolute Gap, 1960-1993
31.Was growing
32. If looking @ absolute gap between countries
33.Narrowing absolute gap impossible? -> e.g. 1,000 years for Congo to catch up
to average rich countries
The Relative Gap, 1960-1993
% of GDP per capital of rich countries (index 100)
34.Rich countries are becoming richer, poor countries poorer; not in a marginal
sense -> extremes of very rich or very poor
(II) Economic Re-distribution
Kuznets Curve
As countries become richer, in the middle stage, inequality increases (think positive
parabola curve, y=-x^2
35.Optimistic observation -> just a hump that you've got to get over
36.This graph is based on income (per capita)
37.Expected that income inequality will increase (as economies move from
mostly agricultural to industrial, there's going to be some inequality) -> always some
uneven development
` how do we get onto the right side? How do we reduce inequality? If given that
inequality will rise as economies grow
38.Part of the answer is the welfare state
The Welfare State
39.Health, unemployment, pensions, social assistance, housing
40.Over time, countries (developed) spend more on the welfare state, more on
social welfare (see above)
www.notesolution.com

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Description
Lecture 18 Paper due date pushed back a week - March 21st Proposals still due week of March 7th; will be graded & returned during office hours, week of March 14th (peer reviewed as well) basically a three-week sequence Seeing Inequality .wma Audio recording started: 12:22 PM February-28-11 Essentially been looking at how economies grow; but today, well be looking @ distributive qualities of growth; & why? (politicaleconomic forces behind it) Seeing Inequality 1. Bearing witness 2. Counting inequality 3. $1day versus $2day 4. Seeing inequality (in person vs. second-hand) 5. Seeing data - numbers, quantified look @this data in the aggregate (e.g. Growing at 10% a year, 5% a year, etc.) but when we disaggregate the data, look @through a different set of lenses, we see a different story by look at it differently, we see a different story (e.g. 10% of Canadians living below the poverty line vs. 3 million Canadians living below the poverty line) ~ the wage gap between immigrant & non-immigrant families is growing 6. e.g. This dollarday - the bare minimum you need to survive (according to international standards) - the global poverty line - politically important by these standards, hundreds of millions of Chinese have exceed this in the last few decades -> however, once you increase the threshold from $1day to $2day, stats show that ~45% of Chinese still live below that threshold (approximately 600 million people; almost 20x the population of Canada) 7. How you see the data will tell you different stories Four Vignettes 8. 4 Cases o Global inequality o The work & welfare state o Gendering social protection o Local solutions 9. Why rich countries are getting richer & poor countries getting poorer 10. The wonderful successes of the welfare state, as well as some of its limitations (especially as it pertains to idea of work) 11. Spin on the welfare state -> inequality thereof through the lens of gender 12. Solutions beyond the nation-state www.notesolution.com
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