GEOG 1000 Lecture Notes - Lecture 10: Quaternary Sector Of The Economy, University Of Waterloo, Liberal Democracy
6 May 2018
School
Department
Course
Professor
GEOG 1000
October 18, 2017
Growing Inequality in the US and Canada
The meaning of inequality, the reasons it is seen as a problem, and two ways that we can
asses inequality (income and wealth).
What is Inequality?
● How resources are distributed across an entire society
● Concerned with how evenly resources are distributed, not just how many people are
poor.
● Interested in knowing:
○ What proportion of income do poor people have vs rich people?
○ How evenly is wealth spread amongst all members of society?
● Why does Mr. Broadbent think inequality is a problem?
○ Inequality seeks to undo what many of Canadians have fought for: affordable
health care, university fees many can afford, good paying jobs, etc.
○ When the gap between the rich and the poor becomes wider, we lose our
sense of community
○ Countries with large income inequality are: more violent, less healthy, and
less prosperous
○ The ones that are the hardest hit are those who have the least amount of
power.
● Alternative view on inequality:
○ Income inequality is actually falling, billions of those who were in poverty are
now much better off
○ The increase of income inequality in the US has actually led to the decrease
in income inequality worldwide
Significance of Inequality
● Linked to poverty
● The distribution of resources in a country affects the extent and depth of poverty
● Generally, countries with high levels of poverty also have high levels of inequality,
countries with low levels of inequality tend to have less poverty
● It is related to economic growth,
○ Sometimes inequality increases in times of economic growth, at least on an
international scale
○ Within individual states, such as the US, as inequality increases, economic
growth within the state tends to decline
● Inequality seems to threaten liberal democracy, civil unrest ensues
Assess Inequality
● Income
○ Earnings over fixed period of time
○ Includes:
■ Wages and salary
■ Investment returns
■ Pension payments
■ Unemployment, disability, and other government payments
● Wealth (can be negative):
○ Net worth
■ Value of assets minus debts
○ Includes:
■ Savings
■ All financial assets
■ Real Estate
■ Cars
■ Furnishings, clothing, jewellery
● Income inequality around the world is measured by an index
● Wealth inequality refers to how much of a nation’s wealth is held by the rich vs how
much is held by the poor.
○ 0.7% of the population (the wealthiest in the world) control 45.2% of the
wealth. Inequality in terms of wealth is very high.
Inequality Trends in Canada and USA
Wealth Inequality
● Wealth is very important and profoundly affects life chances
○ The average University student opportunity is very dependant on how their
family is able to support them financially
○ Affects health and education, and therefor has a profound economic impact
throughout your life
● In the US
○ 1% of America has 40% of the nation’s wealth
○ Top 5% own about 75% of all the nation’s wealth
○ Bottom 60% of people are in debt
● In Canada
○ 70% of all wealth belongs to the top 20%
○ Bottom 20% own less than 1% of the total wealth
○ Bottom 50% of Canadians own less that 6% of the wealth
○ 1% owns 20% of all the nation’s wealth
○ The richest 86 families own more than the bottom 11 million people combined
○ Bottom 10% are in debt
● In both countries the growth in wealth has been higher for the very wealthy
○ Rate of growth in wealth is higher in the US than Canada, the same is true for
income inequality
● Why is this happening?
○ The highly paid are earning more
■ At McDonald’s - the average employee makes $18.5k in a year, the
highest paid executive earns $8.8 million, 400 times as much
● Income inequality is higher in states that have had higher economic growth.
○ Alberta in Canada, California and Texas in US
● Influence by state and provincial policies concerning taxes and public services
○ States with lower taxes and fewer services have higher wealth inequality
Document Summary
The meaning of inequality, the reasons it is seen as a problem, and two ways that we can asses inequality (income and wealth). How resources are distributed across an entire society. Concerned with how evenly resources are distributed, not just how many people are poor. Inequality seeks to undo what many of canadians have fought for: affordable health care, university fees many can afford, good paying jobs, etc. When the gap between the rich and the poor becomes wider, we lose our sense of community. Countries with large income inequality are: more violent, less healthy, and less prosperous. The ones that are the hardest hit are those who have the least amount of power. Income inequality is actually falling, billions of those who were in poverty are now much better off. The increase of income inequality in the us has actually led to the decrease in income inequality worldwide.
