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Lecture 9

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University of Toronto St. George
Sheldon Ungar

SOC: Social Stratification Part 2 – Lecture 9  Functionalist theory says that inequality is necessary for smooth functioning of society  Marx theory says the exact opposite: inequality is unnecessary and will one day cease to exist  Neither theories fit the facts well; a reasonable approach is Max Weber's view that social stratification is complex (not just about social classes; involves honour, prestige, power)  You can have different types of classes that are structured by these criteria and may be correlated: your economic position does not necessarily determine your power  One sphere of stratification may influence others o e.g. possible for a population to gain control over government and pass laws over distribution of wealth; this is turn affects who is wealthy and who isn't  How much inequality do we have in Canada? What is fair in terms of equality?  Inflation: too much money chasing too few goods and services o when prices go up over time, inflation takes place; in Canada, inflation goes up 2% per year  Hyperinflation: very high rates of inflation; the rate of inflation is the increase in the price of goods over time  Stats Canada does a monthly survey of consumer prices  In 1970, there was no computer or cellphone in the average basket of goods and services; today, we don't have buggy whips in our basket of goods and services, therefore our needs for goods and services change over time  Real dollars as opposed to nominal dollars: purchasing power of a standard basket will fall in periods of inflation; real dollars are nominal dollars minus inflation  Real dollars: original cost or price or amount  Nominal dollars: amount after inflation  Over time and on average between 1951 and 2004, Canadian families real purchasing power has improved  Purchasing power: amount of goods or services one can buy with their money o for example, if you had taken one dollar to a store in 1951, you would have been able to buy a greater number of items than you would in 2004, indicating that you would have had a greater purchasing power in 1951  In 1951, most families had only one person in the labour force (husband or father), but since then most families have two people in the paid labour force (husband/father and wife/mother)  People's purchasing power increased in the 1950's, 1960's, and 1970's; that curve flattened out in 1973  People's purchasing power fell as prices went up  In order to keep from prevent rebellion and to keep capitalism afloat, the Canadian government saved money for the lower class for employment insurance, welfare and health care programs, but this money that was saved very quickly ran out and Canada had to start borrowing money from other countries in order to fund these programs  Therefore, in the 1990s, Paul Martin (prime minister at the time) started cutting social programs like employment insurance and welfare in order to shrink the amount of money Canada owed to other countries (600 billion now with interest)  People’s families made less money and there was a flattening in standards of living  Improvements of standards of living and improvements in income happened to the rich and but the poor received a decline  There is more inequality than we realize; only 3.5% of individual Canadians earn more than 100K  Quintiles: a 20% group  Of all the money earned in Canada in a given year, how much was earned in each quintile? o the share of national income increased in the two top quintiles increased while the bottom quintile declined o the poorer got poorer in terms of percentage of income earned and the richer got richer  In absolute terms, everyone was better off over time, but in relative terms (share of national income) there was a deterioration  From the 1920's-80's, the government of Canada was redistributing income in such a way that the rich were being taxed more and more and that money was being distributed to the poor; since then, this has been reversed  On this basis, in relative terms, Canada is becoming a more unequal society  The idea of what constitutes inequality varies from one time period and society to another  Relative income does matter and we feel the effects of the growing gap of inequality (this is what sparked the Occupy Wall Street protests around the world)  Wealth is different than income o income: the salary or wage one makes as a result of being the paid labour force o wealth: the abundance of possessions or money  The real value of assets in the low quintile (the "poor") declined from 1984-2005  The top quintile (the rich, upper class) became 2/3 richer  Despite the fact that taxes are collected from all, the rich pay more than the poor  So how is that inequality of wealth increasing?
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