Poverty, Environment and the Global Economy.

us china gas cartoon (source)

We’ve all heard about global warming, heavy pollution and deforestation, but have we ever thought how this effects the global economy? And that maybe the reason some environmental issues are being struggled with have to do with the world economy? Population and poverty also weigh in significantly to the global economy and the environment.

Back in the early stages of industrial production air and water quality was found to be deteriorated, showing how economic growth might actually worsen environmental conditions in the short term (Dauvergne, 2011). This can be seen in countries like China and India who have “booming economies” and are the “planetary powers that are shaping the global biosphere” (BBC News, 2006). According a news article by the BBC (found here), the high economic growth that these countries had hid the heavy levels of pollution affecting it’s environment and the lives of it’s citizens.

O’Brien and Williams go to say that “conflicts arising from the international trade, pollution control, the preservation of biodiversity and sustainable development have all figured prominently on the international agenda” (2013, p. 253). The biggest issue between the global economy and trying to be environmentalists is that on one side, you have people who believe that opening up trade barriers will help, rather than hurt, environmental viability. But on the flip side there are those who think “…free trade promotes unsustainable patterns of production consumption” (O’Brien & Williams, 2013, p. 256).

Economic growth and corporate globalization could be blamed for the “global environmental crisis” (Dauvergne, 2011, p. 462). While the rich get to continue to bathe in their wealth, the poor are left stuck in worsening environments. A crucial part of keeping a happy and healthy planet is striving for a world free of poverty. Of course, no one expects poverty to go away quickly, but we have been fighting it for quite some time now. Though, we also can’t expect the levels of poverty to diminish without doing something. Luckily, “…strong economies naturally tend to move away from heavy industry, and toward service and information industries” which means that this could help many get out poverty, and get stable jobs and lives.

P. Culver

References:

Dauvergne, P. (2011) Global Political Economy. New York: Oxford University Press.

O’Brien, R. & William, M. (2013) Global Political Economy. 4th Ed. Hampshire: Palgrave Macmillan.

BBC NEWS. (2006) Booming nations ‘threaten Earth.’ [Online] Available from: here. [Accessed 27th Nov 2015]

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The Big Bad Corporations.

mncs tree cartoon

(Find this picture along with others at this source)

Everywhere around us we see the giant corporations dominating global markets, whether it’s the Microsoft run laptops, the iPhone’s many of us rely so heavily on, or the slick Adidas trainers you saw that guy wearing on the train. Not many of us stop to think about the horde of multinational corporations (MNCs) we are all engulfed in. But where did these guys come from? How did companies such as Wal-Mart (known as ASDA in the United Kingdom), Apple, Nestlé, Coke, and McDonald’s get so big, powerful, and global? Does the US dollar have an effect over any of this?

A brief explanation of how these corporations got global and giant might be in order first. Corporations’ desire for raw materials they didn’t have at home is what originally drove them to look abroad. By the twentieth century, MNCs started setting up camp in “major foreign markets in order to escape protectionist trade barriers” (Thun, 2011, p. 369). This puts up difficulties and opportunities for developed and developing economies. Countries with developing economies, for example, might find that they are too small or not easily attainable. They’ll probably see that this put them in a more difficult situation than they were in before.

In developed economies, on the other hand, corporations seem to have a menu of sites for production; this allows them to make up for being held back at in the motherland without actually withdrawing completely from home (Thun, 2011, p. 369). Cantwell (1990) explains that “US manufacturing firms expanded their productive activities in Europe rapidly in the 1950s and 1960s…” and buy the 1970s the US was densely internationalized. Since then, many Japanese and European corporations have also quickly broadened their internationalization.

These corporations have it almost all figured out. Crouch (2011) says “they will mount marketing and advertising campaigns to create demand.” They’ve found ways to make us want what they sell, instead of selling what we demand, but they “have not liberated themselves fully from the market; they remain subject to it in order to buy and sell successfully” (Crouch, 2011, p. 52). So, uh, that’s good.

In the case of the US dollar, O’Brien and Williams (2013) points out that “many products traded on the international market are priced in US dollars — the most important of these is oil.” They go on to discuss how the US dollar has been the world’s reserve currency for quite some time just because some random people back in the 1940s thought the American economy would work out better than any of the other countries . But has it been on top for too long? The US relies heavily on their currency being what people want to trade and buy in. Right now America has it pretty good with being able to price things, such as oil, in dollars; it leaves them immune from price swings. If everyone abandoned the dollar the United States would be “[challenged] to reduce consumption, restore fiscal balance, and invest in infrastructure and human capital to become more competitive” (O’Brien & Williams, 2013, p. 175).

I mean, it’s pretty unlikely that would ever happen since the euro has zero state backing and the Chinese renminbi has too much state backing it. O’Brien and Williams (2013) also suggest that these three currencies could share the role of ‘world reserve currency’. But that would require more coordination between the three countries when it comes to international money affairs. That would definitely be interesting to see how it would play out, but again, it’s unlikely for a whole variety of reasons (O’Brien & Williams, 2013).

P. Culver

References:

Thun, E. (2011) Global Political Economy. 3rd Ed. New York: Oxford University Press.

O’Brien, R. & Williams, M. (2013) Global Political Economy. 4th Ed. Hampshire: Palgrave Macmillan.

Cantwell, J. (1990) Structural Change in the World Economy. London: Routledge.

Crouch, C. (2011) The Strange Non-Death of Neoliberalism. Cambridge: Polity Press.

Development route that can’t work

indexDevelopment route that can’t work

The definition of what development is or requires cannot be defined on a particular definition as Gertzl says “there is no consensus as to what development means or requires” (Global political economy. P. 221)[1].

Most people who are from or have originally came from any of the developing countries will easily tell you they want their countries to be prospering and developing until they reach a point where poverty and war crimes are eradicated. So today, we see many of the developing countries experiencing some levels of “development” economically in the hopes of following the routes of countries such as China who have recently became a major world power economically. However, when I look at the routes some countries are currently following I see hopes without long term strategies. The reason for this is that some developing countries lack a complete control of how they want “development” in their own countries to go about; the problems with the international development is that they do not understand that in order for development, income class equality to be achieved, getting rid of poverty must be the most significant aim, there are many ways which that can be done.

I have always been critical of how the international development works but I have never seen any of people who work for them coming forward to admit that it does not work until I read a blog posted by Michael Hobbes who worked at international development w

ho admits that although it can work it just does not work and that they have been unsuccessful of achieving their Millennium development goals. Around one billion people are still living on less than $1.25 a day – the World Bank measure of poverty – and some 800 million people don’t have enough to eat. So isn’t it time rethink the current policy on poverty reduction. Current approaches are based on macroeconomic policies and development goals aimed directly to the poor and we have seen that they don’t work especially countries in African and Latin America.

We must understand poverty and the causes of it and only the people of the land will be able to understand that because they are living there and they must do anything to get rid of that. So a fight to reduce poverty must be the number one agenda of

any development work because that would create employment and that will create better living standards in both rural and urban areas; however to do so, conflicts will have to be stopped and again this cannot be done by outsiders because they just don’t understand not matter how much knowledge they have; it will just make things worse.

I read a blog post written by George Monbiot he explains the importance of protecting national trade and I more or less agreed with his analysis. When a country is in control of their economy it enables plans them to put proper plans in place and provide protectionism for private business in order to create job opportunities and invest in public sectors. He talked about how the majority of developed countries have got to where they are today as a result of careful planning with good protectionism from their own government.

The type of development that we have witnessed has only done more damages than good; the gap between the rich and the poor seem to be increasing, drilling machines, pollution out of cars and factories are certainly not helping the cleanliness of the environment. If we are to achieve great development or eradicate poverty equal treatment and protectionism to both humanity and the environment is essentially required.

Abdifatah Haji

References:

Robert O’Brien, 2013. Global Political Economy: Evolution and Dynamics. Fourth Edition, New edition Edition. Palgrave Macmillan.

http://www.monbiot.com. 2008. Protect and Survive 9th September 2008 . [ONLINE] Available at: http://www.monbiot.com/2008/09/09/protect-and-survive/. [Accessed 23 November 15].

http://www.ogfj.com/articles/print/volume-10/issue-4/features/fws-plan-could-have-negative-impact.html

 

Paradox of Choice in Neoliberal Age

I suppose, many people from the west would say that we live in the wonderful times because we are freer than ever, democratic values are fostered in many countries, people have freedom of speech, freedom of religion, freedom of choice… wait… choice? Let’s talk about it.

The choice is one of the core democratic values. It describes an individual’s opportunity and independence to make a decision unconstrained by external factors (Bavetta and Navarra, 2011). However, with the help of neoliberal thinkers, corporations’ activities undermine it.

The issue goes around the market economy. The basic understanding was that the market economy has to be competitive in order to maximize the variety of products, thus widening the spectrum of choice of the consumers which make consumers happier. To make it work, it was necessary that market would be open that smaller firms could compete with each other. Although, antitrust law was developed in the 20th century in order to set the limits to corporations that they wouldn’t dominate the market and thus protect smaller market shareholders,  the new theory of economics emerged which still prevails. Neoliberalism let corporations to monopolize the market and take over the smaller firms which in turns led to disturbance of the competition and thus the narrower spectrum of choice (Crouch, 2011).

The shift from competitive market economy to the market economy dominated by large corporations has caused a change of attitudes towards consumer choice. Neoliberal theorists argue that the market should work not for the wider choice but rather for more efficiency (Crouch, 2011). Therefore, Consumer choice became less important and instead of it, consumer welfare has been taken into account. As Crouch (2011) explains, both are crucially different: to prefer consumer choice means to leave decisions to consumer themselves which is a democratic concept, whereas consumer welfare is technocratic one, which means to let judges and economists decide what is good. Therefore, the problem is that the market is not working in a democratic way undermining the freedom of choice. As Hayek (1944) pointed out: “Our freedom of choice in a competitive society rests on the fact that, if one person refuses to satisfy our wishes, we can turn to another. But if we face a monopolist we are at his mercy“(Hayek, 1994, p. 69). Another problem which is even worse is that our sacrifices of choice do not necessary bring us any good. As Crouch (2011) illustrates, “if having inadequate information makes customers more likely to purchase a product, there will be an increase in profits, therefore in overall wealth, and therefore in consumers welfare itself” (Courch, 2012, p. 56). Hence, the issue is that consumers are destined to choose not the best option.

Furthermore, large corporations distort people’s choice. According to Crouch (2011), large corporations are not fully subjected by consumers’ sovereignty and in fact, it can be opposite – consumers can be subjected by corporations. It can happen by the creation of demand by corporations as their enormous share of the market enables them to affect consumers in various ways. As Crouch (2012) argues, large corporations have an ability to shape market and consumers desires by marketing and advertising superiority. For example, one of the most obvious cases is McDonalds. One of their main targets is children. They attract the most vulnerable through television, activities in school and happy meals (Morran, 2015), thus creating artificial demand for their production and distorting people’s choice.

All in all, nowadays we can see plenty of examples of giant corporations dominating in the market which are to be blamed that they control our perceptions and desires by advertising and marketing which mean that we don’t really have a choice in many cases. However, corporations are not bad. Policy makers are! Because they let this to happen by implementing market policies which contradicts the core principles of healthy capitalism and democracy.

 

Renatas Makarovas

References:

Crouch, C. (2011) The Strange Non-Death of Neoliberalism. Cambridge: Polity press. p. 49-62

Hayek, F. A. (1944) The Road to Serfdom. London: Routledge, 1944. p. 69

Bavetta and Navarra (2011) Economic Freedom and the Pursuit of Happiness. p. 65. Available online: http://thf_media.s3.amazonaws.com/index/pdf/2011/Index2011_Chapter5.pdf [Accessed: 2015-11-21]

Morran, C. (2015) How McDonald’s Markets To Kids Through Moms and Teachers. Available online: http://consumerist.com/2015/03/20/how-mcdonalds-markets-to-kids-through-moms-teachers/ [Accessed: 2015-11-21]

STOP INEQUALITY AND REDUCE PAY BETWEEN THE RICH AND THE POOR

(http://sevenpillarsinstitute.org/wp-content/uploads/2015/02/Income-Inequality.jpg)

There is so much inequality between the rich and the poor and as a result gap keeps getting wider and wider. Organisations have great people that are talented and this makes a great difference if the organisation can attract the best cultures of people who include men and women that are talented and are used to the full. This usually happens when people start to divide themselves into class e.g., the area they live in, the school they went to, their social circles, race, colour and gender. This can also related to the Marxists theory of class.
The UK’s rising “inequality has grown from 0.331 in 2004 up to 0.345 in 2009, with a short drop in inequality to 0.341 in 2010. Again, the fact that inequality was continually rising well before the economic crash in 2008 serves a strong reminder that nascent economic recovery may not necessarily be a fair and equal recovery.” (Living Wage Commission, 2013)
“Aronowitz’s critique of mass culture and his analysis of important relations between this culture and the life of the workplace is a stimulating contribution to the literature on the American labour as his discussion off the multiple hierarchical categories of labour (i.e. occupational skill, race sex etc) as an explanation f the weakness of working-class consciousness in the United States”. (Aronowitz, S 1973 p465).
The drop in living standards and wage stagnation across income distribution affects the bottom majority of the poorest households who have the smallest elasticity in their budgets and hold their feet closer to the fire when living costs increase.
In most households with low pay, it means that the family will have the worst diet which will lead to obesity which is a higher risk to health problems, more debt, and children attaining poor grades at school at every stage of their education life. This means that pay has a particular importance to gender, equality. Sex and race as majority paid workers are women, Eastern Europeans and Asians.
When trapped in a low pay, it usually means that it is a life- long existence that is passed on from generation to generation. “Brown and Lauder (1999: 50), writes on increase on income inequalities in the USA and UK between low and high skilled jobs, and so the answer must be to ‘give’ unskilled workers the skills they require in order to compete for a pool of skilled positions”. (Moore. P (2012) p153)
Most of the people in the world live on a dollar a day as they produce goods for big organisations such as Gap, Cadbury, H and M, Primark and the conditions they work in are so appalling and risk their lives in order to produce goods for the Developed countries who sale them for a very big profit margin. The poor will always be poor as inequality grows between greedy organisations that contract their work to developing countries without taking into consideration the working conditions nor pay structures in place. The state should be able to do more in order to protect its citizens.

REFERENCES:
Aronowiz. S (1973) The Shaping of American Working Class Consciousness, McGraw-Hill Company, 465 pp.
Moore. P (2012) Globalisation and Labour Struggle in Asia
The Smith Institute/Living wage Commission. The Living wage: Context and key issues ( September 2013)

SHIRLEY CHANDA

Structural Inequalities Increase Violence against Women.

 

"We can do it!" poster - pregnancy photoshoot from Sun Newspaper
(Source: Sun Newspaper)

Women..who needs them? Oh yeah only the WORLD. It’s rather a shame how we live in a society with such structured inequality going on, right under our noses. People are constantly bombarded with the whole history of how far women have come since being treated like second class citizens like nearly a century ago e.g. getting the right to vote, wearing skirts in public blah blah blah, but what about today? What about women in relation to global production? Are we fully aware about how the political economy is treating women? Should we even care? OBVIOUSLY YES, for humans that bring life into this world, at least treat us with a bit of dignity.

It has been argued that gendered inequalities that fuel the violence against women are rooted in structures and processes of political economy that are increasingly globalised however, it has created some (fairly few) new opportunities for advancing women’s economic independence and gender equality (True,J).

Government reactions to the financial crisis have unjustly affected women compared with men. The stimulus package given by the government straightaway after the collapse of credit and global trade protectionism were swiftly replaced by initiatives to reduce government expenditure by cutting public services. For example, In Britain 65% of public sector workers are female which meant that two-thirds of the 130,000 jobs were lost in local authorities (Hill 2011) you think that’s bad? It gets worse. Also because half of workers on temporary contracts are women and 42% of women work part time, which means that they unfortunately, have restricted employment rights and less access to redundancy pay than men (Rake 2009). Therefore many argue (including myself) that these proportions are likely to upsurge as the burden of recession does its damage, especially if in Britain, 90% of single parent households are led single mothers and 43% of children living in poverty come from single-parent families (Rake 2009).  Adding to this misery, other evidence already suggests a pattern of increases of violence against women, just as the world experienced it in the 1930s great depression which was a result of economic shock and austerity (Warner 2010). Thus in the context of economic hardship brought about recession violence against women is being accentuated rather than eliminated (True, J,)

Contrary to the purpose of campaigns worldwide, it’s unusual how key actors in the global political economy fail to make linkages between the effects of financial crises and macroeconomic policies to women’s vulnerability and violence against women. For example, how can the UN not explicitly identify the connection between structural inequalities in its millennium development goals, and just brush off violence against women as a separate goal, without even acknowledging the fact that there may be linkages between them, nor do their UN development program indexes contain indicators of violence when following the development of women and examining the patterns of gender inequality. This is clearly a worry, because, if one does not contextualise violence within the gendered structures of economic impoverishment and absence of opportunity the problems will not be appropriately addressed therefore this may disconnect the problem with its underlying cause.

By Fahima Hamid

Hill, Amelia. 2011 “Women’s Equality: Clock is Turning as Back as Cuts Bite, says Fawcett Society”.  The Guardian, November 4.

Rake, Katherine. 2009. Are Women Bearing the Burden of the Recession? London: Fawcett Society.

Warner, Judith. 2010. “What the Great Recession Has Done to Family life”. New York Times, August 6.

True, Jacqui. The Political Economy Of Violence Against Women. New York, NY: Oxford University Press, 2012.

DEREGULATION: The ecstasy of Capitalism

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Adams Smiths invisible hand theory has ruffled may unanticipated feathers in our Global economy. Inflation, inequality pollution, the list never ends. Not to mention the huge increase in financial failure and crises over the last 40 years. It is quite clear that the invisible hand has been handing over power a bit too much power to the unsustainable and unreliable source. The free market.

The engine of Capitalism has been steaming its way through time since the early 1900’s, where the flow of capital between firms was regulated and taxed appropriately. The need for more fair competition and lower price rates arrived and many states began to deregulate their financial institutions in order to make them more efficient. Thinkers like Hayek began to flesh out the idea of deregulation and stated that “The best the state can do with respect to money is to provide a framework of legal rules within which the people can develop the monetary institutions that suit them best.”(Hayek 1976).

Unfortunately, this did not account for the negative externalities which deregulation caused. The Debt crisis of 1980 where latin America was forced to default on its debts. The Mexican crisis in 1994, the Asian crisis in 1997, the Russian crisis in 1998, the Brazilian crisis in 1999, the Argentine crisis in 2002, etc. [In addition, we had big EMS currency crises in Europe in 1992 and 1993 but their characteristics were different.] Banks, nonbanks and corporations over borrowed, and foreign banks and private investors overlent'(Grips 2014). This was the result of the free market fighting its grip on he world markets.

Similarly, deregulation caused inequality to increase as it became easier for the middle class to manipulate the market for their benefit. As shown in Figure 4 (Oxfam 2011) the more regulation occurred the more unequal America became. US_Oxfam_Jan_2014_Fig_4

This became the common occurrence of non-regulation by governments and has caused more crisis in the last 10 years than it has in the last 2 centuries. This is due to deregulation of financial markets which made the markets much more lucrative and risk much more worthwhile by banks and investors. Burnham suggests that this is perpetuated by deregulated and globally integrated financial markets replete with new ‘financial instruments’ such as ‘derivatives’ swaps, options, futures not based on the trade in physical products'( Burnham,2010).These have been the reason for the ever increasing risk in our capitalist society.

Although deregulation sought out to make the system more competitive it instead caused local business’s and local company’s to dwindle. This is because of the high barriers to entry the Global market has presented with globalisation. This has therefore created the same problem governments want to fix.

What we need to do is regulate. Before the banks relegate us.

Hayek, F.A. (1976). Choice In Currency: A Way To Stop Inflation. Institute Of Economic Affairs pg22

Burnham, P. (2010). Class, Capital and Crisis: A Returnto Fundamentals. Political Studies review. 8 (1), 27-29.

Hepp, R. (2013). Debt Crisis of the 1980s. Grips. 9 (12), pg 12.

Kuttner, R. (2007). The Bubble Economy. Available: http://prospect.org/article/bubble-economy. Last accessed 18 Nov 2015.

 

http://object.cato.org/sites/cato.org/files/serials/files/cato-journal/1993/11/cj13n2-1.pdf

http://www.cepr.net/documents/publications/dereg-timeline-2009-07.pdf

 

The culture of surveillance in the era of globalisation

Following the end of Cold War and the fall of communism Fukuyama argued emphatically that what we were witnessing at the time was the end of history. To use his own words, he argued in his work that “What we may be witnessing is not just the end of the Cold War, or the passing of a particular period of post-war history, but the end of history as such: that is, the end point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government”. Following more than two decades after what he proclaimed as the end of history it is indeed difficult to argue whether he was right or wrong and in the literature one can find arguments both in favour and against. Yet, to paraphrase his thesis one could talk of the end of privacy; a development directly linked to the prevalence of liberalism.

Indeed, if the 1990s was a decade characterised by the strengthening of the globalisation forces and the spread of capitalism the 2000s has been a decade heavily influenced by the spreading of a culture of surveillance. Examining for instance the financial crises that erupted in the West one sees how financial institutions such as the IMF, the World Bank and rating agencies such as Standards and Poors, Moodys, Fitch act as economic surveillance agencies.  Foucault argued in his work The Birth of Biopolitics that “political economy’ as it evolved in the Eighteenth Century onwards was specifically related to the ways in which government should act towards the market, with the replacement of mercantilism by capitalism. As the economy has become globalized, actors and practices of control are both spread and rescaled, and the existing global economic order is based on monitoring, data gathering and processing. Surveillance has emerged as a powerful mechanism and process that enhances economic globalisation and neoliberal economic governance. According to Gill, surveillance has become institutionalised and nation states are now under constant monitoring and are in a sense forced to “provide effective accounting techniques and data about fiscal and other economic policies partly as a means of ensuring that they finance their debts and obligations to foreign investors” (Gill 2008, 185). In the context of the global neo-liberal economy the monitoring of both the state and the individual serve as control mechanisms that facilitate not just the discipline of the state (e.g. fiscal discipline) and of the individual (e.g. CCTVs in the working environment) but also safeguard the continued compliance of the state and the citizen with the norms and logic of neoliberal competition.

Surveillance has become an efficient mechanism of ordering through a series of socio-technical developments. In particular, Lyon (2007) refers in his work to the importance of technology, telecommunications, computing, networking and data gathering. The new technological instruments and processes serve the collecting and analysis of data, the production of categories of risk and profitability and the rise of a culture of control and anticipation (i.e based on the data, the future can be anticipated and constructed (Graham and Wood 2003).

It should be noted, however, that this culture of surveillance has benefits as well in many different spheres, from health (i.e. monitoring health indicators) to security (CCTVs in public spaces). What this article suggests is that there should be a balance between surveillance and individual freedom and in some cases, especially in the realm of the economy, there is no balance. Yet, what is even more worrisome is that we, ourselves, are not simply the victims as often without realising it we participate and facilitate our own surveillance and the surveillance of other people. Movies such as “The life of others”, “The Truman show” have beautifully shown how easy it is to violate the boundaries and become not the victim, but the villain. Facebook, google search twitter, apps all these brilliant, nevertheless, devices have created temptations for monitoring and in many cases many people seem to ignore and violate the boundaries of privacy and individualism. If we want the state and other agents to make better use of surveillance (i.e. for purposes of common good such as addressing climate change for example), then we have to think first of how we make use of it.

Laman Jabbarova

References

Foucault, Michel. 2008 [2004]. The Birth of Biopolitics. Lectures at the College de France, 1979- 1980. New York: Picador.

Gill, Stephen. 2003. Power and Resistance in the New World Order. Basingstoke UK: Palgrave Macmillan.

Lyon, D. (2007). Surveillance Studies: An Overview. Cambridge: Polity Press.

Ericson, R.V. and K.D. Haggerty (1997). Policing the Risk Society. Toronto: University of Toronto Press.

Graham, S. and Wood, D. (2003). ‘Digitising Surveillance: categorisation, space and inequality’, Critical Social Policy, 23, pp. 227-248.

Inequality as the biggest threat to the world: opportunities vs. outcomes

In 2013 in the World Economic Forum (WEF) in Davos various leaders from all over the world identified inequality as one of the most persistent dangers the world faces today. It might be ironic that it was the plutocrats that identified this as a key issue in the global agenda but the bitter truth is that they were right. According to the report published in the WEF the widening income gap, chronic fiscal imbalances and greenhouse gas emissions were presented as the three most likely threats to emerge over the coming decade. Even more importantly the prevailing mood was that there is no progress and that state leadership does not seem to be in a position to tackle the dangers that derive from inequality.

Disparities in wealth are less visible in the western world today than they were a century ago and nowadays even poor people can afford to have a car, a tv-set and an iPhone. Yet, images can be deceiving as both technological progress and democratisation have hidden the rising concentration of incomes. According to a special report published by the Economist, the share of national income going to the richest 1% of Americans has doubled since 1980, from 10% to 20%, the share going to the top 0.01% has quadrupled, from just over 1% to almost 5% (Economist, 2013).

This is an extraordinary phenomenon and it is not limited to the US. Many countries have seen a rise in the share of national income taken by the top 1% but it should be also noted that the level of inequality differs widely around the world. Emerging economies are more unequal than rich ones whereas Scandinavian countries have the smallest income disparities.

Overall, the majority of the people on the planet live in countries where inequalities are bigger than they were a generation ago. This does not mean, however, that the world as a whole has become more unequal. Global inequality has been reduced as poorer countries catch up with richer ones. In this regard, the planet as a whole seems to becoming a fairer place to live.

Furthermore, what is promising is that although inequality has been on the rise for three decades, its political relevance has increased. Before the financial crisis, growing disparities were hardly at the top of the politicians’ agenda but in today’s economic environment, more inequality often means that people at the bottom and even in the middle of the income distribution are falling behind not just in relative but also in absolute terms.

Some societies are more concerned about equality of opportunity, others more about equality of outcome. Europeans tend to be more egalitarian, arguing that in a healthy society there should be no disparities that can affect a society’s cohesion. On the other hand, Americans and Chinese put more emphasis on equality of opportunity suggesting that a society with wide income gaps can still be fair. Furthermore, in terms of labour the world seems to be divided and one can discern certain hierarchical structures that demonstrate this inequality in terms of wages and income (Strauss, 2012: 141).

To conclude, when discussing inequality it is important to remember and refer to the following points. First, a key factor of today’s income distributions is government policy. Second, a significant part of the existing inequality is inefficient, especially in the most unequal countries. This mirrors market and government failures that have a negative impact on growth. Third, there is a reform agenda to reduce income disparities that makes sense whatever your attitude towards fairness. Inequality is shaped by complex forces often working in different directions. As Milanovic points out, “Inequality has increased between nations over the last half century (richer countries have generally grown faster than poorer countries). And yet the two most populous nations, China and India, have also grown fast. But over the past two decades inequality within countries has increased. As complex as reconciling these three data trends may be, it is clear: the inequality between the world’s individuals is staggering” (2011:3-4). It goes out without saying that the world will be a batter place when there is both an equality of opportunities and an equality of outcomes. It is easier said than done but at least it is worth trying.

Laman Jabbarova

References

BBC, The world’s inequality explained in 50 seconds, 5 February 2015.

Ghosh, J. “Inequality is the biggest threat to the world and needs to be tackled now” The Guardian, 20 February 2013.

Milanovic, M. Worlds Apart: Measuring International and Global Inequality. Princeton: Princeton University Press, 2011. Project MUSE. Web. 2 Nov. 2015.

O’Brien, R. and Marc Williams (2013) ‘Global Division of Labour’ in Global Political Economy: Evolution and Dynamics (Palgrave Macmillan 4th edition), pp. 182 – 199.

Strauss, K. (2012), ‘Coerced, forced and unfree labour: geographies of exploitation in contemporary labour markets’, Geography Compass 6(3): 137-148.

The Economist, Special Report on Inequality, October 2012.

 

POVERTY – AN ON GOING WORLD PROBLEM

poverty picPhoto taken from http://www.shutterstock.com.120482626

I will start by asking the question as follows: What is Poverty, what are the causes and is there a solution?

Poverty is when people lacks the following:- shelter, food, education, healthcare, clean drinking water, unemployment, disease, environmental changes, War etc. The poor who are mainly found in developing countries are not really poor. This is due to poor governance and misappropriate of resources which we will come to at a later stage.

Poverty is a worldwide problem that does not only affect a race or a gender or any one nation. It is a worldwide crisis. This problem is so great that they have been attempts by many people including well known organizations that have tried and continue to try to help people living in poverty around the world.

As Globalization is controversial, proponents argues that poor countries and their citizens should develop economically and raise their standards of living. While opponents of globalization claim that the creation of international free market has benefited multinational corporations in the Developed world at the expense of local cultures, common people and enterprises.

According to Adam Smith (1723-90) – “The Wealth of nations (1776), “not because he concerned that others may not have anything to eat, but because will gain from it. However, the equilibrating effects of the market (given equal exchange values) turn his individual pursuit into a contribution to the general wealth.” (Kees Van der Pijl, 2009 p2)

The gap between the rich and the poor is getting is widening by the day and this is due to poor governance, war, crime, inequality which if not dealt with lead to Poverty. Part of Millennium Sustainable Goals of the United nations was to eradicate poverty and here we are now towards the end of 2015, Poverty still exists in most of the Developing Countries. This is also caused by the fixing of prices by Developed nations that are paying unreasonable prices on goods such as Cocoa, Copper, Emeralds, Gold, Tobacco, Zinc etc and as the Developing world need the money, thy have to agree to these prices. Most often, Developing countries are forced to sell materials in their raw form and once processed in a developed country, they are sold at a much higher price which only a few can afford.
Developing Countries can improve their livelihood through education, good governance, development and anti- poverty programmes, acquiring machinery that will be used to convert raw materials into finished goods and products that way it will be sold at a profit to the developed countries and that will be beneficial to their own countries and their people as a whole. Developing nations also need to invest money obtained as Aid in infrastructures, such as hospital, schools, roads, clean water and sewerage system, food and good nutrition as these help in building a stronger nation, affordable health care, and good roads in in order to transport the goods to the port or markets.

We also have projects run by the Red Cross, Oxfam, USAID, UNFAO, UNCEIF, UNDP and the World Bank with the Millennium Goals and again we will come to that at a later stage and see if anything has been achieved or is it just goal post shifting.

Issues of poverty have been around for a long time but they are other causes of poverty a person can be in complete control of and others not. Poverty is high in most developing countries and the most affected are children, women and girls this is very disturbing indeed.

Poverty is mistakenly classified as lack of money and money is not everything that creates a solid foundation of a healthy life. Citizens are always victims of poverty. This is due to the following of social and economic statuses that are prepared for them in order to cope with situations. Most theorists and I quote “agree that there are two factors that influence downward mobility. The rich and the poor move from one class to another and a number of changes that take place can be large or small.”

People do not realize that a little can add up to equal or a large change.

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Source: Development Initiatives based on DAC data and World Bank (2013).

According to the UN world millennium development goal on poverty, 14% of the world population does not have adequate access to food. As can been seen from the World Bank data map of 2015 immediate action is need it to meet the millennium goal. According to the World Bank report, ‘In 2010, an estimated 21% of people in the developing world lived at or below $1.24 a day…More than a billion people worldwide still live in extreme poverty, and many more experience huger and are vulnerable to environmental or price shocks…The World Bank is working with the international community to end extreme poverty in a generation and boost incomes for the bottom 40% in each country. With food security a vital part of this effort, the Bank Group is boosting agriculture financing to $8-10 billion a year and is working in multiple ways to build agricultural productivity.’ (World Bank, 2015)

“For example, the world trade to world GDP rose from a little under 30 per cent in 1970 to a little 60 percent in 2001, and this was according to the World Development Indicators” – Ravenhill, J – Forth Edition (2014).
During the recession of 2007-8, no one was spared from poverty. We say ques to Food Banks in the United Kingdom and the United States as no one was spared. Families relied on food vouchers in order to survive as the main bread earner in the family lost their jobs, properties and were working fewer hours as companies lay off their employees.

Families have to have more than one job in order to survive nowadays as one wage cannot provide food and pay bills for. We hear on the newspapers how young men and women are trafficked for prostitution to development countries due to them living in poverty in their homelands. Mostly trafficked are under 18’s who want to be footballers and want to play for big clubs in Europe. We also have your teenage girls who are trafficked and promised a good education in developing countries, and as soon they arrive in European, they were sold off as house servants, prostitutes, babysitters who do not even get paid nor have a chance to go to school or access any form of education or health care. As to football, FIFA need to do more by passing information to most of the developing countries that no child below the age of 18 should be in a football contract as stipulated in its regulations in order to avoid young to trafficked nor matter how talented they are.
For decades now, regions of people living in poverty has changed and this ca be seen in World Bank Report of 2002 and in the 2008 International Labour Report of the World Bank, capitalism has been linked to its matching statistics of the World Bank record (2008 International Labour Organization). Part of the World Bank Group on the Eradication of Poverty and Hunger by 2015 Programme, it was agreed that Poverty can be eradicated by investing in agriculture, creating jobs, expanding social safety nets, expanding nutrition programmes for children under the age of 2, universalizing education, promoting gender equality and protecting countries that are vulnerable during the crises. Up till now, not much has been achieved and hence moving the goal post to 2030 (The World Bank – Millennium Development Goals – Eradicate Extreme Poverty and Hunger by 2015).

REFERENCES

International Labour Organisation (2008) Global Wag Report 2008/09 Minimum Wages and Collective Bargaining. Towards Coherence Policy

Kees Van der Pijl (2009) ‘From Classical to Global Political Economy: A Survey of Global Political Economy’ (Version 2.1 Centre for Global Political Economy, University of Sussex) pp. 1 – 29. Available at http://www.sussex.ac.uk/ir/documents/091theories.pdf

Ravenhill, J (2011) ‘The Study of Global Political Economy’ Chapter 12 in Global Political Economy (OUP 4rd edition), pp. 307– 316.

The Levin Institute – The State University of New York Authorship (2015) “What Is Globalization?” at  http://www.globalization101.org/what-is-globalization/

The World Bank (2015)  World Bank Group: Working to End Extreme Poverty and Hunger in  “Goal 1: Eradicate Extreme Poverty and Hunger by 2015”. Available at: http://www.worldbank.org/mdgs/poverty_hunger.html

Shirley Chanda