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seeing inequality march 4.doc

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University of Toronto St. George
Political Science
Joseph Wong

seeing inequality prof wong disagregating economic growth... who gets what and why? Seeing Inequality • bearing witness • counting inequality (objective exercise?) - act of counting tells stories, - during mid 1990’s to 2000’s poverty rate decreased by 30%.. from 15% of population to just 9%! - we’ve reduced poverty! - but when you consider that 9% of the canadian population equals like 3 million people.. then this number should scare you - different perspectives - it is political how we count these numbers and what these numbers may mean in the end - 1$/day versus 2$ a day.. this is very low -in China, at a dollar a day, they boast that they have lifted hundreds of millions out of poverty Whither the Bottom Billion - in the aggregate, we’ve reduced the number of people living under 1.25$ a day, reduced this number - option 2.. in 1988, 93% of the world population lived in the poorest countries - in 2008, vast majority of poorest people live in middle income countries, indonesia china ex. - in SOME ways, we’ve solved the problem of growing aggregate problems... - inside these middle income countries, - countries have become richer but people in these countries have remained poor - not just about aggregate economic growth - increasingly a question of inequality within these countries - question of redistribution - growing levels of inequality and social economic injustice - while the aggregate economy continues to grow levels of inequality also continue to grow - world in which we have inherited Four Vignettes 4 cases - global inequality - the “work and welfare” state .. understand through the context of work, labor. and in so talking about some of the challenges globalization has reached - gendering social protection - local solutions Global Inequality - keynesian compromise and system of embedded liberalism seeing inequality prof wong .. mercantilism is no good.. undermines economic interdependence.. releases domestic instability keynes was a free marketer, also understood that markets were disciples. at times you needed limited government intervention in order to smooth process - bretton woods.. created things like IMF, allowed things like exchange rate management - part of this compromise was... GATT.. multilateral negotiative reduction in tarrifs - entailed european reconstruction.. creation of marshall plan by US - creation of regional institutions such as european economic community to facilitate creation of trust Golden Age of Global Growth - 1950’s to 1960’s - 1950’s. 60’s economic growth because of keynesian compromise and embedded liberalism .. after the golden age.. - beginning in 1980’s - economies begin to slow down by the 1980’s - aggregate slowing dwn of gloval economic growth - not only do we see in the aggregate economies slowing fown but much more inequal growth WHYY????????? do we see this robust period of eocnomic growth.. then why do we begin to see economies slow down.. and more uneven development between rich countries and poor counrties • globalization - embedded liberalism was a form of managed globalization.. all economies in the world could get together ad negotiate the terms to waht would bcome a more globalization economy.. tarrifs were negotiated multilaterally - 50’s and 60’s was a period of managed globalization... - 1970’s and 80’s// breakdown of bretton woods 50’s it worked because of american hegemony - economies begin to lose faith in american leadership - some economies in the world, mostly french, try to take a run on american hegemony.. - american president nixon.. “forget it” if you wanna manage own exchange rates then do it - 1950’s and 60’s people agreed to manage their exchange rates.... later collapse.. globalization of capital (money) starts zooming around global economy - we used to use money just to buy things.. now as a toold.. we invest in money.. trade - increased flow of capital contributed to economies breaking down • technological change - part of this financial globalization was facilitated by technology - everything was done on computers.. - tehnological changes affected workers.. affected labor - jobs that human beings sued to do could be done by machines.. could be automated • neo-liberal resurgence -insitutions like the world bank, IMF, rise or re-rise of private sector - decline of embedded liberalism • bad government policy - governments investing unwisely - governments not financing education - government corruption - beginning of 1970’s and 80s.. combo of neo liberal resurgence and governments making bad decisions... where rich stay rich and poor stay poor seeing inequality prof wong empirical basis.. - absolute gap.. rich countries are getting richer.. poor are staying poor.. even poor countries with high growth rates.. ex. botswana with huge growth.. will however still take 44 years to close the gap.. - congo, extremely slow growth rate.. would take 1054 years to close the gap -relative gap.. as well - global levels of inequality today were a function of poor governmet policy?? - data shows that rich are becoming relatively richer and poor becoming RELATIVELy poorer - quite simply very rich countries in an absolute sense and very poor countries in an absolute sense Vignette2-Domestic re-distribution kuznets curve - argues that we should expect inequality to rise as countries go from being poor to richer - as a country becomes richer over the time.,, we should expect levels of inequality to rise? - as they mature from being low income countries to high income countries.. we expect this curve to come back down - as economies begin to grow, inequality rises but as they mature and become high income countries then it drops again - WHY does inequality decrease over time??? HOW?? how do politics allow this part of explanation is the emergence of the welfarestate ex. over time being 1950;s into 1980’s significant increase across major rich countries, major increase in welfare stat e(income security, repensions etc) not just about spending.. also a political logic of welfare state the political economy of the welfare state • industrial capitalism (what is the logic) - as capitalism and industry matures.. it is only natural as the working clas begins to grow then societies begin to care fo thsoe more vulnerable - at the beginning these issues are not as major.. but as industrial capital e=increases.. we see expasnsion of welfare state • unionization of labor - work and welfare - significant correlation btwn unionazation rates and social welfare spending - the societies in which union rates increase most rapidly is where social spending - as unions mobilize and become more powerful then unions will collectively unionzise - unions play a crucial role in the expanson of the welfare state - rise
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