SOCI 2510 Chapter Notes - Chapter 12: Per Capita Income, Warren Buffett, Carlos Slim
10 Sep 2018
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Global Stratification
➢ The greatest social inequality is not within nations but between them.
➢ Global stratification is the patterns of social inequality in the world as a whole.
GLOBAL STRATIFICATION: AN OVERVIEW
➢ Canadians with income below the government's poverty line live far better than the majority
of the earth's people. People who earn an average income in a rich nation like Canada are
extremely well-off by world standards.
➢ The richest 20 percent of the world's adult population owns about 84 percent of the planet's
wealth.
➢ About half of all wealth is owned by less than 5 percent of the world's adult population; about
30 percent of all wealth is owned by the richest 1 percent.
➢ The poorest half of the world's adults own barely 3 percent of all global wealth.
○ About half the world's families have less than $8600 in total wealth.
➢ Carlos Slim Helé, Bill Gates, and Warren Buffett individually have personal wealth that
exceeds the total economic output of more than 100 of the world's countries.
A WORD ABOUT TERMINOLOGY
➢ One model, developed after World War II, labelled the rich industrial countries the “First
World,” less is industrialized socialist countries the “Second World,” and nonindustrialized
poor countries the “Third World.”
○ The “three worlds” model is now less useful. It was a product of Cold War politics by
which the capitalist West faced off against the socialist East, while other nations
remained more or less on the sidelines.
○ The “three worlds” model lumped together more than 100 countries as the Third
World.
➢ The 72 high income countries are defined as the nations with the highest overall standards
of living.
○ These nations have a per capita gross domestic product (GDP) greater than $12 000.
➢ The world's 70 middle income countries are not as rich; they are nations with a standard of
living about average for the world as a whole.
○ Their per capita GDP is less than $12 000 but more than $2500.
➢ The remaining 53 low income countries are nations with a low standard of living in which
most people are poor.
○ In these nations, per capita GDP is less than $2500.
➢ This model focuses on economic development rather than whether societies are capitalist or
socialist.
➢ It gives a better picture of the relative economic development of various countries because it
does not lump together all lower income nations into a single “Third World.”
➢ There is social stratification within every nation.
HIGH INCOME COUNTRIES
➢ In nations where the Industrial Revolution took place, productivity increased more than a
hundredfold.
➢ The high income nations of the world include Canada, the United States, Mexico, Argentina,
Chile, the nations of Western Europe, Israel, Saudi Arabia, Singapore, Hong Kong, Japan,
South Korea, the Russian Federation, Malaysia, Australia, and New Zealand.
○ These counties cover roughly 47 ,percent of the earth's land area, including parts of 5
continents, and they lie mostly in the northern hemisphere.
○ In 2010, the total population of these nations was about 1.6 billion, or about 23
percent of the world's people.
○ Close to three fourths of the people in high income countries live in or near cities.
➢ Per capita income ranges from about $12 000 annually to more than $45 000 annually. People
in high income countries enjoy 78 percent of the world's total income.
MIDDLE INCOME COUNTRIES
➢ Middle income countries have a per capita income of between $2500 and $12 000, close to
the median ($8000) for the world's nations.
➢ About 52 percent of the people in middle income countries live in or near cities, and industrial
jobs are common.
➢ At the high end are Venezuela, Bulgaria, and Kazakhstan, where annual income is about
$11000. At the lower end are Nicaragua, Cape Verde, and Vietnam, with roughly $3000
annually in per capita income.
➢ Middle income countries that used to be part of the Second World, until 1989 to 1991, include
Ukraine, Uzbekistan, Georgia, and Turkmenistan.
➢ Other middle-income nations include Peru and Brazil, and Namibia and South Africa. India
and the People’s Republic of China have entered the middle-income category.
➢ Middle-income countries span roughly 36 percent of Earth’s land area and are home to about
4.2 billion people, or about 61 percent of humanity.
LOW-INCOME COUNTRIES
➢ Low-income countries, where most people are very poor, are mostly agrarian societies with
some industry.
➢ Fifty-three low-income countries are spread across Central and East Africa and Asia.
➢ Low-income countries cover 17 percent of the planet’s land area and are home to about 1
billion people, or 17 percent of humanity.
○ Population density is generally high, although it is greater in Asian countries than in
Central African nations.
➢ In poor countries, one-third of the people live in cities; most inhabit villages and farms as
their ancestors have done for centuries.
○ With limited industrial technology, they cannot be very productive, one reason that
many suffer severe poverty.
➢ Hunger, disease, and unsafe housing shape the lives of the world’s poorest people.
GLOBAL WEALTH AND POVERTY
➢ Low-income nations are home to a few rich and many poor people.
➢ People who lived with incomes of just a few hundred dollars a year suffer a greater burden of
poverty than the poor of North America.
THE SEVERITY OF POVERTY
➢ Poverty in poor countries is more severe than it is in rich countries.
➢ Economic productivity is lowest in the regions where population growth is the highest.
➢ In high-income countries, 78 percent of global income supports 23 percent of humanity. In
middle-income nations, 61 percent of the world’s people earn 21 percent of global income. In
low-income countries, 17 percent of the population earn just 1 percent of global income.
➢ Gross domestic product, or GDP, is the value of all goods and services produced by a
country’s economy within its borders in a given year.
○ In 2009, the United States had a GDP of more than $14 trillion; Japan’s GDP
approached $5 trillion; Canada’s was $1.3 trillion.
➢ The world’s richest nations are thousands of times more productive than the poorest countries.
➢ The per capita GDP for rich countries exceeds $35000. For middle-income countries, the
figures range from about $3000 to more than $11000. In the world’s low-income countries,
per capita GDP is just $1000 or $2000.
➢ Quality of life is based on income, education and longevity.
○ Norwegians enjoy the highest quality of life, with Americans and Canadians close
behind. At the other extreme, people in Niger have the lowest quality of life.
RELATIVE VERSUS ABSOLUTE POVERTY
➢ People living in rich countries generally focus on relative poverty, meaning that some people
lack resources taken for granted by others.
➢ Absolute poverty is a lack of resources that is life-threatening. Human beings in absolute
poverty lack the nutrition necessary for healthy and long-term survival.
○ Such poverty strikes only a very small proportion of our population. In low-income
countries, one-third or more of the people are in desperate need.
➢ People in low-income nations face an elevated risk of dying young.
➢ In rich societies, more than 85 percent of people reach the age of 65. In the world’s poorest
countries, the odds of living to age 65 are less than one in three, and two in ten children do
not survive to the age of five.
THE EXTENT OF POVERTY
➢ In 2009, the Canadian government officially classified 9.3 percent of the population as poor.
➢ Absolute poverty is greatest in the countries of sub-Saharan Africa, where more than one-
fourth of the population is malnourished.
➢ In the world as a whole, 13 percent of the people suffer from chronic hunger, which leaves
them less able to work and puts them at high risk of disease.
