Chapter 2 & 3 - Socioeconomic Fault Lines Inequality, Poverty, and Development & Starving in the Shadow of Plenty.pdf

Chapter 2 & 3 - Socioeconomic Fault Lines: Inequality Development & Starving in the Shadow of Plenty Friday, September 13, 2024 2:28 PM What is Poverty? A state in which income is insufficient to provide the basic necessities: food, shelter, cloth Absolute poverty: The insufficiency is so...

Chapter 2 & 3 - Socioeconomic Fault Lines: Inequality Development & Starving in the Shadow of Plenty Friday, September 13, 2024 2:28 PM What is Poverty? A state in which income is insufficient to provide the basic necessities: food, shelter, cloth Absolute poverty: The insufficiency is so severe that it is life-threatening. Relative poverty: The insufficiency is substantially greater than that of most others in soc Poverty level: The minimum income level that Americans should have to live on, based on Agriculture's calculations of the cost of a basic diet called "the economy food plan.“ ○ By 2019, a family of four, two adults and two children, with an annual income less t officially poor. ○ The official poverty level uses a nutritionally inadequate food plan as a primary crit increases on the consumer price index, and maintains the ratio of food to nonfood The working poor. ○ People are not poor simply because of their unwillingness to work. ○ People who are poor include those who can't find a job, the disabled, the elderly, a would have to pay more for childcare than they would earn in the jobs available to The homeless. ○ Those who live in their cars or on the streets because they cannot afford any kind o ○ High rates of mental illness, addictions, and victimization exist among the homeless Social Structural Factors Political decision making. ○ The political structure is detrimental to the poor because of multiple decision-maki Class composition of government. ○ The work of interest groups and the middle-class composition of government make will greatly benefit or that the middle strata will be greatly hurt by government act Who benefits from government? ○ The middle and upper classes benefit more from government programs in compari the poor. ○ Corporations. Areas of Abuse in the American "Corporate Welfare State“ ○ Bailouts. ○ Resource depletion. ○ Taxpayer-funded research and development. ○ Subsidies to profit-making businesses. How Well does the Global Economy Function? y, Poverty, and hing, and medical care. ciety. n the Department of than 25,750 dollars was terion, bases any costs at one-third. and single parents who them. of housing. s. ing centers. e it unlikely that the poor tion. ison to the lower class and  ○ Bailouts. ○ Resource depletion. ○ Taxpayer-funded research and development. ○ Subsidies to profit-making businesses. How Well does the Global Economy Function? We can evaluate an institution by how well it fulfills its primary functions ○ An economy should procure, produce, and distribute adequate means of survival fo on it The relative position of individuals within societies impacts life chances Economic Inequality and Social Problems Defining Economic Inequality ○ Income or wealth gap is known as economic inequality. ○ Economic inequality differs from economic growth or contraction. ○ Societies are stratified into ranked groups. ○ Income inequality among regions § While there is sufficient income to give everyone sufficient life chances, inequ high § Growth has been uneven, while a few regions are converging with higher inco relatively stagnant or have declined § GNI per capita of low-income countries is only about one-sixtieth of high-inco Understanding Inequality Wealth inequality among regions ○ Whereas income is an amount received over a period of time, wealth is the net ass nonfinancial, minus debt § Wealth inequalities are greater than income inequalities § The more wealth in a region or country, the more it can invest in its people ○ In many countries, inequality is increasing to extreme levels Inequality of income within countries ○ Within rich societies, the main reason for the increase in inequality is the explosive § Super-managers are at the top of the pyramid ○ Productivity drives growth but productivity and worker compensation do not neces Impacts of Global Poverty and Inequality UN Development Program: measures and tracks indicators on which the quality of life an Foundation of life chances: good health, education, food, shelter, wealth, and income ○ Conditions that support the foundation: security, equality, a healthy environment, political community § These form the human development index Quality of Life along Levels of Development The bottom of the pyramid or the people dependent uality of life chances is ome countries, many are ome countries sets, both financial and e growth in income ssarily grow together nd life chances depend and a vibrant social and  ○ Conditions that support the foundation: security, equality, a healthy environment, political community § These form the human development index Quality of Life along Levels of Development The bottom of the pyramid ○ BoP: “the forgotten, the unorganized, but the indispensable units of economic pow 1932) § Referred to bankrupt farmers and workers at the bottom of the pyramid in th § Many politicians of the period proposed “top down” economic plans Roosevelt wanted to help the “little fellow” as much as possible ○ There is still a BoP in the United States Origins of Contemporary Inequality Among Nations Prior to the industrial revolution, all societies were poor ○ Aside from a small elite class, there was not a great deal of difference in how peopl There are three sectors of economic activity ○ Primary (agricultural) ○ Secondary (manufacturing) ○ Tertiary (service) There is a general argument that people are poor because they are lazy ○ These arguments are broadly false as is evident in examining “the bottom of the py § People in countries with low levels of development often work harder than p societies, but they work for less money § What people are paid for their work varies by the distribution of jobs in the o the society Factors Influencing Varying Levels of Development Extractive institutions and inequality ○ Extractive institutions neither supported long term development nor disappeared w colonization ○ In contrast, North America developed inclusive (direct rule) institutions ○ The type of institution a society developed made the biggest difference with respec Diversity and conflict ○ While many rich countries welcome diversity as a source of creativity, diversity can countries § For example, colonizers imposed Christianity and Islam upon indigenous relig fault lines □ Diversity in these societies weakened rather than strengthened develo ○ Intra-social violence across ideological lines during the Cold War ravaged populatio Corruption ○ Endemic to inequality and underdevelopment § Poorest societies are the most corrupt § Excludes poor people from public services  and a vibrant social and wer” (Franklin Roosevelt, he United States le lived within societies yramid” people in wealthy occupational structure of with the end of ct to industrialization n inhibit many developing gions, creating religious opment ons  □ Diversity in these societies weakened rather than strengthened develo ○ Intra-social violence across ideological lines during the Cold War ravaged populatio Corruption ○ Endemic to inequality and underdevelopment § Poorest societies are the most corrupt § Excludes poor people from public services § Corrodes public trust and undermines the rule of the law □ Bribery is a common form of corruption □ Kleptocracy is not limited to the developing world (in fact it is rife in Am other institutional spheres) The resource curse ○ Ironically, many countries that are rich in a resource such as oil or precious metals a § While being resource rich should be a boon to growth, it can also inhibit grow □ One way this happens is through the “Dutch disease” ○ Resources are not always a curse § This depends on human agency § It also depends on the governance structure and how the benefits from the r Climate change ○ Climate change and pollution bear a cost to societies § Costs include: adapting agriculture, preventing and treating increases in vecto harm to trade and fisheries Climate change also contributes to violent conflict ○ Drought and food insecurity ○ Terrorist groups take advantage of drought conditions to control water supplies or ○ Munch (2016) found that urbanization forces specialization and integration ○ Government expenditures on public goods such as education and healthcare enhan Varying Pathways to Development Societies exist across the continuum of development ○ Developed countries diverged at the time of the Industrial Revolution § Others “took off” and are slowly growing § Not all of the most advanced countries took the “Western” route, yet they ad among the wealthiest societies □ Other countries showed rapid development yet stalled Slow growth or income traps? ○ The explosion of growth in the 2000s lifted many countries and people out of pove status ○ From 2001 to 2011, the poverty class shrank by 669 million people ○ Growth rates averaging about 6% a year in a few developing societies pushed peop threshold into low income § Although there has been mobility, most has been from poor to low income ○ There is no clear definition of a “middle income trap” § Using the term “trap” is misleading as countries can and do move up income opment ons merican political and are poor wth resources are used or-borne diseases, and to lure recruits nce human development dvanced and took place erty and into low-income ple over the poverty levels  ○ From 2001 to 2011, the poverty class shrank by 669 million people ○ Growth rates averaging about 6% a year in a few developing societies pushed peop threshold into low income § Although there has been mobility, most has been from poor to low income ○ There is no clear definition of a “middle income trap” § Using the term “trap” is misleading as countries can and do move up income □ Some move more rapidly and some more slowly □ Moving from middle to upper income is progressing more slowly since 1950–1980 Fighting Poverty and Inequality No one-size-fits-all answer to any global problem ○ Providing people with equal life chances is increasingly recognized as a human righ § This does not guarantee or mean equal results § It requires addressing the needs of the poor □ Programs and policies to spur development and combat inequality mus for inclusive and sustainable growth National governments play an important role in reducing inequality and poverty ○ Social welfare programs cover few of the poorest people in the poorest nations Economic growth is not the best measure of the health of the global nor a domestic econ ○ Economic growth needs to target incomes at the bottom of the pyramid Ensuring equal access to the tools of success is important for social justice and developm Recognizing the value of unpaid work could be a critical step in reducing poverty ○ Household production has a slight correlation to income Education is key ○ Competing in a global economy requires skills and knowledge ○ Lifelong learning and skill training need to be available to all people Intergovernmental and Non-governmental Aid Organizations ○ Third world debt has crippled many nations § Some as result of kleptocracy or crony capitalism ○ Foreign aid has a mixed record of success § Puts more money into poverty reduction efforts § Comes with conditionality § Transparency; Fragmentation; and Selectivity The private sector: secure financial services: microfinance ○ The poor do not have access to the same financial services as middle or upper class ○ Not everyone needs thousands of dollars to start a successful business § While most consider the poor too risky to offer loans to them, microlenders h close to 99% § Microloans range from about US$100–1500 The private sector: patient capitalism ○ Investment strategy developed by Jacqueline Novogratz § Founded the Acumen Fund in 2001 on the conviction that investing in worthw than fast cash that produced no value ple over the poverty levels 1980 than it did from ht st build an infrastructure nomy ment s have a repayment rate while projects was better  close to 99% § Microloans range from about US$100–1500 The private sector: patient capitalism ○ Investment strategy developed by Jacqueline Novogratz § Founded the Acumen Fund in 2001 on the conviction that investing in worthw than fast cash that produced no value § She looks for investments that will make a profit and contribute social value t § Investments range from about US$ 300,000 to 2.5 million Closing the gap through fair trade ○ Global trade has lifted many people out of poverty ○ Trade can bring societies into the global economy ○ Free trade is not always fair trade § The Fair Trade movement is essential for developing societies to thrive § The principles of fair trade are inclusive in ensuring all potential effects of tra while projects was better to communities ade are addressed