Rich Poor War Quiz 2
what is the point of the current "doha round" of negotiations in regards to the WTO?
Attempt to make WTO more inclusive (e.g. by cutting subsidies; blocking dumping) No agreement reached
Non-consumables
Bedding Eating utensils Items to do Laundry Basic Tools Education
dr. ruth rosenbaum's definition of clothing in basic needs
Clothing, whether new or used, needs to be sufficient for cleanliness and appropriateness for school..." "...work..." "...and social activities." "One on, one off, and one for good."
basic needs
Housing Clothing Food and Water Transportation Health Care Non-Consumables
Basic education facts
There are about 1 billion non-literate adults worldwide. 98% of non-literate adults live in developing countries. 2/3 of the non-literate adults are women.
poverty guidelines for one person, 2018
annual income: 12k gross monthly income: 1,012 hourly wage: 5.84
poverty guidelines for family of four, 2018
annual income: 25,100 gross monthly income: 2092 hourly wage: 12.07
some argue the federal poverty guidelines in the US are too high. why?
argue we need to take into account supplemental programs/income from social spending
CST's take on SAP's
devaluing currency just lowers purchasing power of the poor . this is where social expenditures might come in, but SAPs cut those too even if everything worked as planned, you're impoverishing people during the lag. moreover, you're just making people less productive. the 3rd provision about privatizing enterprises is a case by case basis.
what should we take away from real family income statistics before 1973?
each quintile bracket of income was growing at the same/similar rates
depth of poverty
refers to how far a person's income dips below the poverty line. depth of poverty is worse for the young, and the black & hispanic
Some depressing facts about notre dame
we play a role in dampening intergenerational mobility/promoting inequality from generation to generation we have more students from the top 1 percent than the bottom 60 percent
what is purchasing power parity in our case?
what the per capita GNI will buy in U.S. dollars
dr. ruth rosenbaum's definition of transportation in basic needs
"For workers, transportation is crucial...Proximity to transportation also affects their ability to purchase needed items at the best price...They may have to rely on the smaller, closer stores where prices are higher than the supermarket." he gives the example of food deserts, and Martin's/SB locations
dr. ruth rosenbaum's definition of nutrition in basic needs
"Nutrition includes adequate..." "...protein..." "...fruits and vegetables..." "carbohydrates" "...and potable water." Rosenbaum distinction: food and water is not just about caloric intake, but proper nutrients
Main outcroppings of the Bretton Woods agreement
"what led to WWII was an unstable economy" International Monetary Fund: stabilize exchange rates World Bank: provide loans for capital programs (efforts first focused on Europe/Japan) World Trade Organization: supervise and liberalize international trade (before the 1990s: GATT)
criticisms of the WTO
- Inconsiderate to the needs of developing countries - Biased in favor of the US and the interests of the European Union (EU) - Poor sometimes cannot afford trade representatives, thus their negotiations are thought to favor rich countries. ********************************* Common Good/Participation: Not really one country, one vote No votes, only "consensus" "Green Room" negotiations *********************************** Option for the Poor: Still subsidies for developed countries, therefore still dumping Still high import duties on some items for developed countries Uneven impact of TRIPs, especially on medicines
what are the explanations offered for 1973-1996 era?
-1973-74 oil shortage (shock to aggregate supply), influx of (work inexperienced) baby boomers into the market, government regulations impede market efficiency
racial differences in wealth? (where they come from, past stats, current stats)
-Accounts more for racial differences in well-being (how the legacy of slavery, discrimination and low incomes impacts present conditions, including income). In 1998, the average wealth of white families was 5.5 times more than average wealth of African-American families (Wolff, Top Heavy). 2011: Whites net worth 20 times that of blacks Following Year (2012): 22 Times
why might wealth inequality be worse than income inequality?
-Assets like housing and consumer durables like automobiles provide services directly to owner. Those who have them experience higher levels of well-being than those who do not, even with same income. -Wealth is more secure than income. -Wealth, more than income, is a source of other forms of social power (for instance, political dynasties). he gives the bloomberg example: you think he could have just run for president otherwise?
big takeaways from the 1973-1996 era, especially when it comes to real household income statistics
1. economic growth slowed tremendously for everyone, but 2. higher proportion of wealth that remains foes to high incomes (both highest quintile and top 5%)
How does the cost of basic needs/the living wage differ from the poverty line
1. what it takes to live varies from place to place 2. it is significantly above the poverty line
Periods of World Bank
1944-1968: Loans to Europe (Marshall Plan) 1968-1980: Loans to Developing Countries 1980-1989: Structural Adjustment Programs (SAPs) 1990s: "The Washington Consensus" 2005: Debt Relief
Quality of Life and Right to Life:Income/Wealth Gap >>Life Gap
1970: 1.2 years 2001: 5.8 years 2016: 14 years -- New York Times, February 12, 2016 --
ND's Ranking in overall mobility:
2,114th of 2,137.
ND's Ranking in terms number and percentage of students who move from the economic bottom 40% to the top 40% as a result of going to a school
2,190th out of 2395
ND's ranking in terms of admitting and enrolling students in the bottom economic quintile
2,383rd of 2,395 schools measured.
basic housing fact about sanitation
2.4 billion people live without adequate sanitation.
ND's Ranking in terms of financial success of those poorer students Notre Dame does admit
23rd out of 2395! relates to the "velvet rope" economy
general poverty counts by region
383 Million in Africa 327 Million in Asia 19 Million in South America 13 Million in North America 2.5 Million in Oceania 0.7 Million in Europe
The national housing wage for a modest one-bedroom apartment is $17.90. What's the federal minimum wage? What does this mean for a min-wage worker that wants a modest one bedroom apartment in most of the US?
7.25 A minimum-wage worker needs 2.5 full-time jobs to afford a one-bedroom apartment in most of the US (June 2018)
How does gender play a role in world poverty?
70% of those in absolute poverty are women.
HIPC
Begun in 1996 Reduce or cancel debt Sets political and economic criteria Debt unsustainable despite bilateral relief (debt to exports 150%; debt to government revenues > 250%) 35 of 40 countries met criteria
Why Jubilee?
Biblical basis: forgiveness of debt Economic justice: irresponsible loans to dictators contributed to a situation where the poor never saw the money Economic sense: the best way to establish the economic vibrancy of underdeveloped and developing countries. In the long run it serves the common good.
Criticism of HIPC
Conditions produce worse effects (still requires structural adjustment/privitization of utilities>>> Necessity of Poverty Reduction Strategy Paper with local input 2005: Multilateral Debt Relief Initiative No debt relief until all conditions met>>> "Floating completion point" and interim debt relief
rich and poor at notre dame: initial example
Cost for a pod of 8 of the "best" seats in the stadium: $3.4 million ($1 million opening donation plus $120,000 annual donation for twenty years.) Buyout for Charlie Weis: ~$19 million ($2.1 million/year for 10 years) Starting salary for the buildings and grounds crew (2016) that prepares for games and cleans up afterwards: $17,539 and $18,943. (Both salaries below the poverty line for a family of three).
three elements of Structural Adjustment Programs (SAPs)
Devalue currency: profit margins less, but more exported internationally Cut social expenditures: free up investment into businesses, etc (more in ppl's pockets) Privatize state-owned enterprises: why use tax $? let ppl keep more in their pockets....
Some big highlights from this section
Economic recovery from 2008 has been concentrated among those with high incomes Income and wealth inequality has risen, is near the levels before the great depression Wage growth has been relatively lackluster/nonexistent, and hasn't tracked productivity like it did for most of the 20th century
Dean foods example for inequality in compensation
Executive pay: -1970s: $1 million in 2011 dollars -2011: $10 million Workers' salary declines by 9% in real terms (June 18, 2011: Washington Post)
Where does inequality of wealth follow from?
Follows from general tendency of wealth/power to concentrate
upshot from rich and poor at ND
Given the importance of education for a person's future social and economic mobility, Notre Dame's policy institutionally contributes not only to maintaining, but to widening both the income and wealth gaps between rich and poor.
where is world poverty most concentrated?
Half of the extreme poor live in Sub-Saharan Africa. The number of poor in the region fell only by 4 million with 389 million people living on less than US$1.90 a day in 2013, more than all the other regions combined. in general, the world bank reports that south Asia and sub Saharan Africa are the most afflicted by income poverty
progress in world poverty?
In 2013, 10.7 percent of the world's population lived on less than US$1.90 a day, compared to 12.4 percent in 2012. That's down from 35 percent in 1990.
Causes on high end of increased income inequality
Increased compensation (up 16% on Wall Street in 2003, according to The Wall Street Journal) Economic recovery benefits the well-off in the form of stock dividends (According to The Wall Street Journal, corporate profits are up 42% since the last quarter of 2001) Tax breaks disproportionately favor the top quintile (Dean Maki, economist of J.P. Morgan Chase and former Federal Reserve reports: The top quintile got 77% of the benefit of the 2003 tax cuts and 50% of the 2001 cuts).
what is his counterexample to corporations with huge internal inequality?
Jim Senegal and Costco: $76 billion, 2010 -$3.5 million rather than $9.3 million -No rise in health care premiums for workers -Modest office
what largely characterizes the post WWII era? (1947-1973) What does is suggest and why is that somewhat remarkable?
Large income growth, consistent income inequality. He describes the increases in GDP as pent up supply and demand that released after the war. ***-Suggests that all families sharing in growth of economy*** -Despite social upheavals: Korean War, Vietnam War, Civil Rights movement, major cultural shifts
From Income to Wealth Inequality:Legacy Admissions
Legacy Admissions // Wealth: Serve as assets that one does not presently earn. Perpetuates previous structure (versus affirmative action). Legacy admissions: Harvard: 16%. Cornell: 16%. Notre Dame: 24%-25%.
Long-term factors of rising income inequality
Market change from industrial to post-industrial economy with shift to high-tech jobs (which require more education than manufacturing jobs) and service industry (which pays less than manufacturing jobs). Change in family structure (more single parent families; though there are also more two-parent working households, which holds inequality lower than it would otherwise be). General tendency of power/wealth to concentrate: the "haves" have also more ability to get more.
basic nutrition facts
More than 840 million people in the world are malnourished. 6 million children under the age of five die every year as a result of malnourishment. 12 million people die annually from lack of water.
WTO Principles
Non-discrimination Reciprocity Binding and enforceable commitments Transparency Safety Valves (e.g. "fair competition")
WSJ talked about how after the recession, we could saliently see how gains were going to top because of luxury purchases going up and regular purchases barely budging. how do those stats look now?
Nordstrom: waiting list for $9,000 coat Neiman Marcus: Selling out of $775 shoes Mercedes-Benz: highest sales in five years -August 11, 2011, New York Times
Causes on the low end of the increase inequality
Overall economic recovery (productivity is up) is not matched by wage increases or job creation (the least well-off benefiting last or not at all). Declining health benefits covered by employer for many workers (Wall Street Journal: from 2000-2003, average out of pocket medical expenses rose 49% to $2,412)
Rich and Poor at Notre Dame:Admissions
Percentage of admitted students from the economic top 1%: 15.4% Percentage of admitted students in the economic bottom 60%: 10%
GDI Per Capita (PPP)and Poverty Rates (<$1.25 & <$2) in 2010
Qatar: $88,222 (statistically insignificant) United States: $47,140 (s.i.) United Kingdom: $38,540 (s.i.) Angola: $3,960 (54.3; 70.2) Democratic Republic of Congo: $180 (59.2; 79.6) Somalia: No data available
Comparison to Other Prestigious Schools
Ranking for students from the bottom economic quintile: 63rd of 65. Ranking for overall mobility: 58th of 64
what largely characterizes the era for post stock market drop and 9/11? what are the key features of this era?
Recession and the beginnings of recovery -Continued increase in inequality 12% increase in productivity Real wages stagnant and even declining (Wall Street Journal reports: wages up 1.9%, but consumer price index up 3.3%) From 2000-2003, the median household income fell by $1,500 (3.4%)
Briefly describe the WTO. where did it come from, etc?
Replaces GATT (1948: In place of lack of International Trade Organization) Founded 1995 Grew out of "Uruguay Round" (1986-1994) Now negotiating "Doha Round" (2001ff) Has 153 members
what largely characterizes the era from 1973-1996? what are the key features of this era?
Slowed income growth; increase in inequality. high unemployment, declining productivity growth, ongoing inflation, weak economic growth
Why political authority?
The market is legitimate, but within the context of other norms and institutions. The market is unable to guide itself according to these norms. It is "a headstrong and vehement power, which, if it is to prove beneficial to mankind, needs to be curbed strongly and ruled with prudence. It cannot, however, be curbed and governed by itself." - Pope Pius XI, Quadragesimo Anno, 88 -
what has largely driven decreases in world poverty?
The reduction in extreme poverty between 2012 and 2013 was mainly driven by East Asia and Pacific (71 million fewer poor) -notably China and Indonesia—and South Asia (37 million fewer poor) -notably India.
Where the profit from increased productivity goes (according to The Wall Street Journal)
The resulting two-tier recovery is showing up in vivid detail in the way Americans are spending money. Hotel revenue was up 11% at luxury and upscale chains, but just 3% at economy chains...At the five-star Broadmoor Hotel in Colorado Springs, $600-a-night suites are sold out every day through mid-October..." "...At high-end Bulgari stores, meanwhile, consumers are gobbling up $5,000 Astrale gold and diamond 'cocktail' rings made for the right hand...Revenue was up 22%...Neiman Marcus Group, Inc., flourishing on sales of pricey items like $500 Manolo Blahnik shoes, had a 13.5% year-over-year sales rise...At Payless Shoe-Source, which sells items like $10.99 pumps, June sales were 1% below a year earlier."
Integral Human Development
To help provide the social structures that are necessary so a person or group of people can reach their full potential in an atmosphere of peace, social justice, and human dignity. CST global orgs certainly need reform, but it makes sense to have world organizations as long as they are answerable to subsidiarity
T or F: the top 1%'s share of total US income in 2013 was on par with that in 1920s (around 23.9%). When was this share lowest?
True! 22% in 2013 8.9% in 1973 ish
T or F (according to prof): high inequality leads to instability and poor economic performance (aka it leads to recessions)
True. he references the fact that we have high inequality on par with before the great depression. Routinely says that we have more prosperity in the times where inequality is comparably lower (aka 20th century after great depression)
How does gender play a role in world work?
Women work 2/3 of the world's working hours, produce half of the world's food, but earn only 10% of the world's income and own less than 1% of the world's property.
Approaches to development
World Bank/IMF/WTO Economic measures dominant Centralized decision-making based on economic power Response to debt crisis: "structural adjustment programs" (SAPs) Catholic Teaching "Integral Development" U.N. political authority to guide economic decisions following subsidiarity Response to debt crisis: jubilee
basic world poverty data
World population: 7.183 billion. According to the World Bank, over 2.1 billion people, close to 30% of the world's population, lives on less than $3.10/day. 767 million (10.7%) lives on less than $1.90/day.
how does world poverty over time parallel US poverty?
World poverty parallels U.S. poverty in that it is becoming more concentrated in certain areas.
dr. ruth rosenbaum's definition of housing in basic needs
a house should provide: Shelter from the rain and extreme heat or cold..." "...with sufficient living space..." "...and protection from public exposure." A house should also provide sufficient sleeping spaces for all members of the family..." "...as well as a space for bathing." A house should provide running water for laundry, sanitary needs and the general washing of household items." A house should provide space for meeting sanitary needs so that there is no risk of contamination."
three approaches to world poverty
economic development integral human development grass-roots/self reliance
How do winners and losers from GATT/WTO compare?
gains from trade liberalization are mostly the countries that were already pretty well off. in africa, they suffered losses because of the liberalization of trade
grass-roots/self reliance approach
has level one of subsidiarity liberation theology believes in extending beyond first level of subsidiarity is inherently problematic global organizations are inherently bent towards the interests of powerful nations
components of the human development index
health, education, and living standards get at that with: life expectancy at birth, mean years of schooling, expected years of schooling, gross national income per capita
David Ricardo and Comparative Advantage. whats the problem?
if states specialize production according to their comparative advantage and ***trade freely***, the increase in efficiency will lead to more absolute gains and minimize loss even Ricardo said that capital involved should be kept within countries and owned by these countries themselves moreover, balance of trade didn't apply in this case
why would economic inequality be a problem for CST? what is this a direct response to?
its not just one making more than another, but people living in different spheres of life. it promotes a lower sens of the common good, and a breakdown of relationships Responds to: Objection:Income inequality is not relevant; what matters is that the least well-off fare better than they did before, even if the improvement of the well-off is more both proportionately and in absolute terms. He also notes that even without CST considerations, high inequality correlates with high poverty rates
problem with specialization that arises from trade
lack of diversity, especially for agricultural economies, is a danger and is more risky
economic development approach
necessitates world/global scale institutions International Monetary Fund (IMF) World Bank GATT/World Trade Organization (WTO)
from 1947-1967, each quintile bracket of income was growing at the same/similar rates. does this mean that inequality was stagant?
no. inequality was still growing actually. even though growth rates were relatively similar, high and low ends of the distribution are starting at much different bases
from lowest to highest percent estimated as "poor", how do the official measure of poverty, the national academy of sciences measure, and the "relative measure" compare?
official measure, NAS, relative measure official measure: regardless of what other's make "don't go below this floor" relative threshold equals half the median household income in 2000. it gets at "participating in society"
The broad story of growth and inequality, post WWII to present
post WWII to 1973: high GDP growth, lower gaps, and shared growth in gains 1973 onwards: the growth there is is largely shared by high income groups. tax cuts are structured to add to this difference
trends in poverty in the US, 1951-2013
steadily decreased from a high of over 30% in 1951 until about 1965, after which the poverty rate stagnated between 10 and 15%
world bank: period of of loans to developing countries (1968-1980)
strongman leaders: pocketing loans, patronage cold war and choosing sides: we cared less about whether democracies were truly flourishing, and more about whether leaders supported our side loans were NOT broadly shared or invested in the common good
poverty trends throughout the world between 1990 and 2005. what's the general trend? where is it most pronounced? any weird ones?
the trend is down for nearly all regions sharpest decline in east asia/pacific outlier: europe and central asia increase
what is "SAPS 2.0"?
the washington consensus (1990s). like SAPs, they just contributed to greater indebtedness
Why "Integral Development": The Human Development Index
there isn't an AUTOMATIC link between income and human development
what is the big takeaway from SAPs
they increased indebtedness in developing countries BIG TIME, on top of the indebtedness that was already there because of World Bank loans During key years of the period, debt grew at an annual percentage rate of 20%
what were growth rates like under SAPs? was it enough?
they were pretty good! not enough though, too much debt example growth rates Growth rate in Uganda: 1980-1990: 2.87; 1990-2000: 6.88; 2000-2003: 5.51 Growth rate in Ethiopia 1980-1990: 2.18; 1990-2000: 4.07; 2000-2003: 2.10
T or F: the increase in income inequality we see is mirrored by other countries, like the UK, France, Japan, and Canada
this is kind of a trick question. ineq. has increased for all of these countries post 1975, but it is clearly the highest/fastest growing in the US
T or F: SAPs are problematic pragmatically and because of CST.
true "economic theory given the conditions just doesn't work"
T or F: top 1 percent's share of after tax income more than doubled between 1979 and 2006
true! source: CBO share went from 7.5% in 1979 to 16.3% in 2006
T or F: "safety valve" provision of the WTO presupposes that inherent disadvantages b/w countries were the exception, not the rule.
true. it's really the opposite especially poignant in terms of economies of scale/precedent of production in richer countries on top of this: dumping state subsidies to producers in rich countries
What is the decline in the middle class's share of income closely correlated with?
union membership rates
some argue the federal poverty guidelines in the US are too low. why?
when they were originally developed: they just did 3x the cost of food (in 50s, food was about a third of the average budget) the guidelines do not take into account geographic differences in cost of living costs of other parts of living (other than food) have grown much faster. think housing, healthcare. food is no longer 1/3 of the typical budget
