Lecture outline Oct 24
Page history last edited by aileen.y03 2 weeks ago
These notes are made available courtesy of Elena Goracinova. Feel free to add points and
relevant links and resources to the note. (Click on the edit tab above, make the additions, and be
sure to click "Save" at the bottom of the page when finished)
Prof. Judith Tiechman - Poverty and Inequality: A political Perspective
- Poverty and inequality are linked to international and domestic power inequalities
- Alteration in existing power realities is a necessary, but not sufficient condition for
improved social welfare over the long term.
What is needed in addition to altering existing power realities?
- Employment-generating industrial policy
- Appropriate social policies (they have to have a distributive impact)
- In many countries of the Global south, the wealth goes to the limited section of the people.
- No policies that only address the very poor, but not the relatively poor people.
Why we need economic growth and appropriate social policy?
- Economic Reason:
Employment generating policies leads to the ability of people to pay taxes, which can later be
used to provide social services
- What are the political reasons for economic growth and redistributive policies working
1) Avoiding a political backlash- if you want to have a social welfare infrastructure
that will lead to redistribution, you can’t just have middle and upper class people pay
taxes because it will probably upset this section of the population. (Eg. Latin America: economic growth -> poors became better off -> middle & upper class lose $$$ -> get
angry and call in military)
- There are examples where redistributive policies didn’t require economic growth (Kerala);
the land-owners weren’t happy, but they could move to other states of India.
2) Avoid political unrest stemming from lack of opportunity. If people get education and then
have no access to jobs, political problems will arise because people will be dissatisfied. It doesn’t
follow that because you can improve your educational system, that you will increase access to
- Power inequalities at the international level – between industrialized nations and countries
from the south.
- Who supports the industrialized countries? There are very important interests especially
multinational corporations. However, national companies in China are becoming more important
on the global stage.
When the debt crisis hit in the 1980, developing countries adopted structural adjustment and
neoliberal reform: privatization of public companies (involved firing many people and
flexibilizing the labor system), stabilization (drastic cut backs in social expenditures in
education, health), open up trade regimes. Hegemonic vision of what was appropriate
economic policies. There were no social concerns; they just wanted countries from the South to
pay back their debts to the big banks in the North.
World Trade Regime- if you belong to the World trade organization, the latitude that you have in
terms of the employment generating economic growth is enormously restricted. There are a lot of
things you can’t do. You can’t prevent goods from entering your country, you can’t have
preferential directed loans to sectors you want to stimulate, you can’t copy technology from
wealthy countries and you can’t have subsidies. There is some leeway for the least developed
countries, but very restricted. This system increases power inequalities between less and more
developed countries and needs to addressed.
What are the sources of domestic poverty and inequalities? (Power inequalities within countries
that contribute to poverty)
- Legacy of entrenched social compartmentalization
- Latin America was conquered by Spain, Portugal. Distinct social categories were
established. At the bottom of the pyramid, there was an indigenous population, above it was a
mixed blood population and at the top of the socio-economic pyramid were the descendants of
the Spanish/ Portuguese conquerors. This is an oversimplification because there are different numbers of people in the different levels of the pyramid, but there is a stratification based on
class and race. It is very difficult to go up the pyramid, but not impossible
- The people at the top of the pyramid have historically and continue to have most of the
power: they own the land, the mines and have the highest income. They also control the state. If
we go back to Latin American history, it is littered by oligarchic rule, through which the few
controlled the state. They were able to structure profound inequalities in society.
- One of the sources of poverty and inequality is that historically and currently there hasn’t
been sufficient public spending in rural areas. Most of the emphasis has been on secondary and
tertiary education, and not on primary education. The poor that do not have access to education
are not able to achieve upward social mobility.
- Groups are compartmentalized and individuals in these categories lack knowledge of
individuals in the other categories.
- Political elites make policies for people in rural areas although they might not have
even been in a rural or a shanty area.
Problem of state weakness
- It is important to have an activist state (state intervention). However, we need to ask how
able the state is to reduce poverty and inequalities.
- Property interests have direct access to the state. In the propertied elite: Reducing poverty is
probably not the most important thing on their minds.
- Mexican Bank rescue operation- government bailed out the bankers who were close to the
then president. The amount of liabilities that accrued as a result of this equaled 19 percent of the
domestic product. These funds were not available for poverty reduction, but went on to private
accounts, probably offshore.
- Debt crisis of 1980’s increased the power of the elites. When government privatized
companies, the owners were usually their close friends in the private sector.
Challenges: Legacy of unequal social provisioning
- Global South Countries- a small proportion of the people have access to social security.
One has to have a formal job in order to get access to these privileges. Over history, government
put a lot of money in social provisioning because they wanted the support of the middle classes
and upper classes. This skewed public spending and now it goes to social security funds, which
usually go to middle class people. - Conditional Cash Transfer Programs- these arose because countries of the Global South
wanted to keep their spending in check and they needed social provisioning that was cheap.
Business didn’t want to spend on social security. The middle classes didn’t want to give up their
privileges coming from social security. Now, there are small amounts of cash given to poor
people on the condition that they send their kids to school for instance. Conditional Cast Transfer
programs are a very small part of spending and are not a panacea, but they do have some positive
- Trade Unions are now very week and are busy in looking after the interests of their
What do countries do to meet the challenges of poverty and Inequality?
- This isn’t just a situation of empowerment. We need to think about it in terms of
disempowerment as well. Power flows and can change hands. This is very tricky because who
wants to lose power.
- If one starts to talk about redistributive policies, propertied interests can start working
against you. That’s why you need economic growth.
- Hugo Chavez School of Reform- angry the people so they will go against the upper classes
or Be careful with the rhetoric (don’t be really noisy about the changes you want to make; there
needs to be a rhetoric aroung redistribution that doesn’t frighten people)
- Where does electoral democracy come in?
- The election of left-center leaders has led so some benefits in Latin America
- Electoral democracy can’t do it all. Economic industrial policies are not the rallying point in
elections, while issues about health and education spending are.
- Key to economic growth- support of small and medium enterprises? This might not be the
key step because they not so important on the political sphere.
- Civil Society organizations are often not concerned with poverty and inequality, but those
that are concerned with it are good at it but are not concerned in employment generation. They
don’t get into issues of industrial policy. - It is important to build alliances with powerful groups, although it is not easy. Case of
South Korea – it has always had low levels of poverty and inequality. It did this largely through a