globalization test 1
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Questions and Answers

According to the information presented, what is a primary driver of increasing global wealth disparity?

  • Increased progressivity in income tax policies across OECD countries.
  • The rate of economic growth exceeding the rate of return on capital.
  • The rate of return on capital exceeding the rate of economic growth. (correct)
  • Decreasing rates of return on capital investments compared to economic growth.

Karl Marx's quote suggests a relationship between wealth accumulation and societal issues. Which of the following best describes this relationship?

  • Wealth accumulation is solely determined by individual effort and has no societal implications.
  • Wealth accumulation has no significant impact on the overall well-being of society.
  • Wealth accumulation leads to overall societal well-being and reduced inequality.
  • Wealth accumulation at one end is accompanied by negative consequences like misery and degradation at the other end. (correct)

Based on the data, how have top income tax rates changed in OECD countries since 1980?

  • Top income tax rates have fluctuated, showing no clear trend.
  • Top income tax rates have increased significantly.
  • Top income tax rates have remained the same.
  • Top income tax rates have generally decreased. (correct)

Which of the following can be inferred about the taxation of capital gains versus income from work, based on the information provided?

<p>Capital gains are generally taxed at a lower rate than income from work. (D)</p> Signup and view all the answers

What does the mention of Microsoft's offshore accounts suggest in the context of a discussion about wealth and taxation?

<p>Corporations may utilize offshore accounts to minimize their tax liabilities. (C)</p> Signup and view all the answers

According to the data presented, what is a significant trend regarding wealth distribution?

<p>A consistent increase in wealth disparity, with the richest accumulating wealth at a disproportionate rate. (B)</p> Signup and view all the answers

If the "Make Billionaires Pay Act" had been implemented during the pandemic, what potential impact is suggested?

<p>It would have generated substantial tax revenue, potentially funding universal healthcare. (B)</p> Signup and view all the answers

The RAND Corporation's study suggests which of the following regarding income distribution since the mid-1970s?

<p>The aggregate annual income of Americans below the 90th percentile would have been significantly higher if earlier, more equitable distributions had been maintained. (A)</p> Signup and view all the answers

Based on the data, how has the percentage of global personal wealth owned by the top 1% changed between 2020 and 2021?

<p>It increased from 45.8% to 47.8%. (A)</p> Signup and view all the answers

What was the approximate average value of assets held by each billionaire according to Forbes?

<p>$4.75 billion (B)</p> Signup and view all the answers

What was the approximate aggregate annual income Americans earning below the 90th percentile would have had in 2018 if the income distributions of 1945-1974 had held steady?

<p>$2.5 trillion (C)</p> Signup and view all the answers

What approximate percentage of all wealth is owned by the top 13%?

<p>86% (D)</p> Signup and view all the answers

How many ultra-high net worth (UHNW) people were there approximately in the world in 2021, according to Credit Suisse?

<p>218,200 (D)</p> Signup and view all the answers

According to Thomas Hungerford's analysis, what is the apparent relationship between top marginal tax rates and income distribution in the United States since 1945?

<p>Lower top tax rates are associated with greater income disparities. (A)</p> Signup and view all the answers

What was Adair Turner's criticism regarding certain financial activities?

<p>Certain financial activities are 'socially useless' as they avoid taxation and do not contribute to public resources. (B)</p> Signup and view all the answers

What did Gabriel Zucman and Emmanuel Saez find regarding the tax rates paid by the wealthiest Americans?

<p>The 400 richest Americans pay a lower tax rate than every other income group. (B)</p> Signup and view all the answers

What was the central claim regarding the impact of tax cuts for the wealthy, as highlighted by the Bloomberg article?

<p>Tax cuts for the wealthy primarily benefit the rich, without significantly benefiting broader society. (B)</p> Signup and view all the answers

Which of the following best describes the IRS's claim against Microsoft?

<p>Microsoft owes billions in unpaid taxes due to a plan violating transfer pricing laws. (A)</p> Signup and view all the answers

How might tax policy potentially affect income disparities, according to the Congressional Research Service?

<p>Tax policy could influence how the economic pie is sliced, with lower top tax rates potentially associated with greater income disparities. (B)</p> Signup and view all the answers

Consider a hypothetical scenario: A country significantly lowers its corporate tax rate. Based on the economic trends described, what is a likely consequence?

<p>Potential increase in income concentration at the top, with less revenue for public services. (D)</p> Signup and view all the answers

If a government aims to reduce income inequality through tax policy, which action would be most aligned with the information provided?

<p>Increasing top marginal tax rates and ensuring corporations pay their fair share to fund public services. (A)</p> Signup and view all the answers

According to modernization theory, what is the ultimate stage of economic growth?

<p>A Western liberal capitalist democracy. (B)</p> Signup and view all the answers

What was a primary criticism leveled against modernization theory by anthropologists and other theorists?

<p>Its disregard for local cultures, values, and traditions. (B)</p> Signup and view all the answers

Theorists like Alexander Gerschonkron argued against Rostow's stages of growth model by suggesting what?

<p>Linear development does not accurately describe European history, let alone global dynamics. (C)</p> Signup and view all the answers

What role did the 'Chicago Boys' and 'Berkeley Mafia' play in the context of development economics after WWII?

<p>They played a crucial role in constructing and dispersing social scientific thinking and policy knowledge about political and economic development. (B)</p> Signup and view all the answers

Why did some development theorists in the Global South object to the approaches of economists from institutions like MIT and the University of Chicago?

<p>Because they saw the economists' approach as an imperialistic discipline focused on narrow number-crunching. (B)</p> Signup and view all the answers

What did the economists who adhered to modernization theory despise?

<p>Public sector input and 'collectivism'. (D)</p> Signup and view all the answers

What accusation does the author make regarding the 'Chicago Boys' and 'Berkeley Mafia'?

<p>They bear a responsibility for the growing impoverishment of poor countries and the increasing gap between rich and poor countries. (B)</p> Signup and view all the answers

What is the paradox mentioned in the text regarding the measurement of progress?

<p>Deepening poverty amidst increasing economic growth. (B)</p> Signup and view all the answers

According to the content, what is the most effective way to morally evaluate social progress?

<p>Comparing current trends against what is <em>feasible</em> given the current capacity for poverty reduction. (C)</p> Signup and view all the answers

Which factor does the content suggest is a significant contributor to the underestimation of hunger?

<p>Failure to account for vitamin deficiencies and food price spikes. (C)</p> Signup and view all the answers

According to the content, how does the World Bank's poverty line in Mexico compare to Mexico's national poverty line?

<p>The World Bank's poverty line is significantly lower than Mexico's national poverty line. (D)</p> Signup and view all the answers

What is a key limitation of using the International Poverty Line (IPL) to measure global poverty?

<p>It is based on the national poverty lines of some of the <em>poorest</em> countries, which may be underestimated. (D)</p> Signup and view all the answers

What is a significant factor contributing to the slow progress in global poverty reduction?

<p>An unequal distribution of global wealth, with an increasing share accruing to the richest. (C)</p> Signup and view all the answers

What trend is observed in the poorest countries regarding poverty rate decline?

<p>Poverty rate decline has <em>stopped</em> in the poorest countries. (C)</p> Signup and view all the answers

How does the content suggest that hunger metrics are often made conservative?

<p>By using a conservative estimate of caloric needs for a sedentary lifestyle. (B)</p> Signup and view all the answers

According to Hickel, where should the ethical poverty line be set?

<p>At what is required to meet the normal or average life expectancy. (D)</p> Signup and view all the answers

According to Policy Planning Study 23 (PPS23), what was a primary concern for the US in maintaining its 'position of disparity'?

<p>Finding ways to sustain the supply of cheap raw materials from producing countries to support the Western world's economy. (D)</p> Signup and view all the answers

What role did the World Bank and IMF play in the global South, particularly starting in the 1980s?

<p>They imposed structural adjustment programs that reorganized Southern economies around exports to the North while depressing wages and commodity prices. (A)</p> Signup and view all the answers

What was the effect of the 'structural adjustment programmes' on commodity exports and revenues in the South during the 1980s?

<p>The quantity of commodities exported increased, while the total revenues on this trade declined. (B)</p> Signup and view all the answers

What was a significant fear of US officials regarding leaders in the Global South?

<p>That they would embrace socialist ideals and view capitalism as an extension of colonialism. (A)</p> Signup and view all the answers

How did the Global South respond economically in attempts to counter perceived exploitation?

<p>By collectively attempting independent state-led development, forming regional trading blocs, or supporting Chinese or Soviet models of industrialization. (B)</p> Signup and view all the answers

What impact did Stalin's Five-Year Plans have on global perceptions following the market crash of the 1930s?

<p>They captured widespread attention by providing a credible alternative path to modernity, particularly among intellectuals. (A)</p> Signup and view all the answers

How was the image of the US perceived in the Global South during this period?

<p>As a society tarnished by segregation and racism, undermining its claim as leader of the 'free world'. (A)</p> Signup and view all the answers

What analogy did Adolf Berle draw concerning the US's emerging global role?

<p>The US would need to take on responsibilities equivalent to those of Great Britain's empire. (B)</p> Signup and view all the answers

Flashcards

"Make Billionaires Pay Act"

A proposed law that would tax billionaires' increased wealth during a specific period.

Wealth inequality

The wealthiest 1% of the global population holds a disproportionately large share of all personal wealth worldwide.

Ultra-high net worth (UHNW)

Individuals with exceptionally high net worth.

Wealth concentration

The top 13% of the world's population control a significant majority of global wealth.

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Wealth confiscation

A situation where resources flow upwards instead of downwards.

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Forbes list of richest

A global list that ranks the richest people in the world by their net worth.

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Gross domestic product (GDP)

The annual economic production of a country.

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Median Income

The amount earned by the person in the exact middle of the income distribution

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Global Wealth (2021)

Total global wealth reached $463.6 trillion by the end of 2021.

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Piketty's Observation

Over the past two centuries, wealth from assets (capital) has grown faster than income from labor.

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Marx's Observation

Concentration of wealth creates misery at the opposite end.

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Wealth Growth in 2021

Global wealth increased by 9.8% in 2021, surpassing the century's average annual rate.

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Tax Rate Decline

Average tax rate on the richest fell from 58% in 1980 to 42% in OECD countries.

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Financial Services Authority (FSA)

Former name of a UK regulatory authority, now replaced.

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"Socially Useless" Activities

Term used to describe activities in the financial sector that may generate profit but do not contribute to the overall well-being of society.

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Transfer Pricing

A legal strategy often used to minimize tax liability by shifting profits to subsidiaries in lower-tax jurisdictions.

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Top Tax Rate Reduction Effects

When high earners' tax rate gets reduced, it might not drive economic growth. There may be a link to greater income concentration at the top instead.

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"Trickle-Down" Economics

The idea that tax cuts for the wealthy will benefit everyone else in society through job creation and investment.

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Regressive Tax Outcome (for the Wealthiest)

Situation where the wealthiest individuals pay a smaller percentage of their income in taxes compared to other income groups.

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Tax Avoidance

The legally permissible reduction, deferral, or elimination of tax liabilities.

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Tax Evasion

The illegal evasion of taxes.

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Policy Planning Study 23 (PPS23)

A US State Department policy paper (1948) advocating for the US to maintain a position of global dominance.

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Pattern of Relationships

Maintaining colonial-era trade structures to ensure access to cheap raw materials.

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Burden of Leadership

The US taking on global leadership responsibilities, similar to those previously held by Great Britain.

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Structural Adjustment Programs

Economic policies imposed by the World Bank and IMF to reorganize economies of the Global South around exports to the North.

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Appropriation for Free

The Global South increasing commodity exports but experiencing a decline in total revenues.

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Alternative Paths to Modernity

Independent state-led development, regional trading blocs, and support for Soviet/Chinese industrialization models.

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Stalin's Five-Year Plans

Plans implemented by Joseph Stalin in the Soviet Union for rapid industrialization and economic development.

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Capitalism as Exploitation

Viewing capitalism as an exploitative continuation of colonialism.

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Morally evaluating social progress

Evaluating progress by comparing current trends to the feasible poverty reduction given current resources.

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Impact of food price spikes

Poor families spend a large portion of their income on food, making them vulnerable to price increases.

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Conservative hunger metrics

Estimates that may underestimate hunger by using minimum calorie needs for a sedentary lifestyle.

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Ethical poverty line

A poverty line based on what income is required to meet average life expectancy.

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International Poverty Line (IPL)

Poverty line based on national poverty lines of the 15 poorest countries.

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Inconsistent poverty lines

A scenario where better-off countries report higher poverty lines while the World Bank reports lower poverty.

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Poverty reduction caveats

Progress primarily due to gains in China using a poverty line that may undercount the poor.

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Global poverty trends

The rate of poverty reduction is slowing at a global level. The rate of decline between 2013 and 2023 has dropped.

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Rostow's Stages of Growth

A theory stating all countries progress through identical stages of economic expansion under a capitalist framework.

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Chicago Boys & Berkeley Mafia

Economists from MIT, Chicago, and Berkeley who championed modernization and a specific path of development post-WWII.

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Modernization Theory

The belief that private market approaches and Western liberal capitalist democracy are the ultimate goals of development.

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Criticisms of Economics' Imperialism

Disagreement among different development theorists about the narrow number-crunching approach from economics.

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Scarcity in Economics

The idea that resources are limited, which economics uses as a foundational concept.

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Paradox of Progress

Metrics used by economists that can reveal increased poverty despite economic growth.

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Role of "Chicago Boys" and "Berkeley Mafia"

The role these economists played in shaping social thoughts about political and economic development.

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Economists with Guns

A school who played a crucial role in creating policy knowledge.

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Study Notes

  • Thomas Pogge undertakes an "institutional analysis" of the global order in Politics as Usual, focusing on institutions, regimes, organizations, and actors driving globalization
  • Pogge argues that institutional arrangements are not the result of free markets; there is nothing "free" about "free trade", "free markets" or "free enterprise"
  • Markets have always been creations of governments, protecting the rights of the "opulent minority," acquiring new markets through imperialist wars, and repressing labor
  • "Globalization" is just another word for neo-colonialism or imperialism

Wealth Transfer & Inequality

  • Analysis shows the global capitalist system deliberately transfers wealth from the Global South to the Global North
  • Oxfam reports that this system extracts wealth from the Global South to the super-rich 1% in the Global North at a rate of $30 million per hour
  • Oxfam also indicates that 84% of countries studied have reduced spending on education, health, and/or social protection
  • Progressive taxation, tax collection, and their impact on inequality have regressed in 81% of countries, and labor rights have worsened in 90% of countries

Human Flourishing & Institutional Order

  • The current institutional order stifles human flourishing and doesn't treat rich and poor with equal dignity or moral autonomy
  • A significant portion of the world's population lives a life deprived of the ability to develop their potentials
  • As Michael Manley said, “To know whose interests they serve, ask who set them up."

Dimensions of Globalization

  • Economic globalization involves removing barriers to the "free" flow of capital, goods, and services focusing on capital mobility
  • Key institutions such as the IMF, World Bank, WTO, and MNCs, and bilateral/multilateral trade treaties prioritize capital rights over labor, health, and environmental rights
  • Political globalization involves the increasing influence of supranational institutions which shift sovereignty upwards from states
  • Ideological globalization includes slogans like "TINA" (There is No Alternative to Capitalism), "end of history," and "markets know best"
  • Cultural globalization is the spread of "universal" (western) culture such as language and media, leading to the emergence of "McWorld"
  • Military globalization involves military alliances among countries of the Global North, especially NATO projecting US military power

Institutions of the Global North & Counter-Movements

  • Institutions include the G-7, G-20, OECD, MNCs, Bretton-Woods institutions, influential NGOs but also pro-business, pro-market think tanks
  • Organizations of the Global South include the Bandung Conference, UNCTAD, NIEO, G-77, and BRICs
  • The Bandung Conference in 1955 called for worldwide decolonization and consisted of "nonwhite and anti-imperialist" participants
  • The conference alarmed the United States as a challenge to its model of liberal capitalism
  • In 1974, Mexico drafted a Charter of Economic Rights and Duties of States, launching the NIEO to restructure relations between developed and developing countries
  • The UN General Assembly adopted the charter by a vote of 115 to 6 and was opposed by the US and allies

Principles of NIEO

  • Sovereign equality of all states, with non-interference, the right to self-determination regarding economic and social systems
  • Full sovereignty of each state over natural resources/economic activities, alongside regulation of transnational corporations
  • Establishment of a just and equitable relationship between the prices of raw materials and other goods exported by developing countries, versus those exported by developed countries
  • Strengthening of international assistance to promote industrialization in developing countries through financial resources and technology transfer

Globalization Discourse & Reality

  • The mainstream narrative views globalization as the world coming together with economic growth and international organizations bringing the world together
  • Critics argue that global institutional arrangements and decisions of powerful actors in the Global North negatively affect the Global South
  • Globalization transfers wealth from the Global South to the Global North, maintaining dependency
  • Post-WWII Bretton-Woods institutions perpetuate the hegemony of the North, behind which was American global hegemony

Bretton Woods

  • John Maynard Keynes criticized the US-dominated global institutional order
  • The new institutions were run by financial experts with support from the economics establishment
  • Wall Street influenced loans by the IBRD, requiring them to be based on "sound economics" and consistent with American foreign policy

Inequality & Moral Implications

  • Global reality includes increasing inequality, and more people living in poverty, with a widening gap between rich and poor
  • In 1960, the gap between rich and poor countries was 32 times and in 2000, that grew to 134 times
  • Those benefiting from global arrangements are mostly in the Global North and amorally implicated has give rise to a moral duty to oppose the current institutional order
  • The poor in the Global South have not consented to this order, many states are dictatorships kept in power by the Global North
  • Countries in the Global South have often been coerced into signing free trade agreements, rigging the global trade system in favor of the Global North
  • Even democratic regimes, by failing to protect social and economic rights at home and abroad, are complicit in maintaining this institutional order

Concentration of Wealth

  • The richest 1% capture nearly 25% of world GDP, which is more than the GDP of 169 countries combined
  • Three wealthiest people in the United States now own more wealth than the bottom half of the country combined
  • Tesla awarded Musk a pay package in 2018 that that is worth $50.9 billion today, so it to “incentivize and motivate" Musk.
  • Jeff Bezos is poised to save at least $610M in taxes by moving from Washington state to Florida
  • $42,800,000,000 more in taxes and everyone in America would have had healthcare as a right." had the "Make Billionaires Pay Act" been signed into law during the pandemic Bezos would have paid
  • Billionaire fortunes are increasing by $2.7 billion a day, even as inflation outpaces the wages of at least 1.7 billion workers
  • Total billionaire contributions by election cycle are $2,632,000,000

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