10 January 2014 Reading 2.2: Pg. 33- What is the key assertion (statement of fact) made by the authors?

o Class- the assertion that the U.S. is a classless society o Mobility o Uneven distribution of wealth- those who are better off benefit more from the economy than those who are less of o Before WW2 it was easy to move up and down the economic ladder because everyone benefited, but now economics only benefit those at the time rather than those in the middle and bottom too Neo-liberalism

1948

1960

1970

1980
Economy works for few (Top 1%)

1990

Current

High Social Mobility- economy worked for many

Given our discussion on Friday, find the line on pg. 33 where neo-liberalism is referenced o Its not as if the post-1970s transformation of our economy has gone unnoticed Are the set of changes (economic, political, social = Neo-liberalism) just? Economy works for few (Top 1%): Is this true? The prosperity received from WW2 was widely distributed to everyone vs. most of the gains of economic growth since the 1970s have gone precisely to the top 1%

STRATIFICATION- a system by which a society ranks categories of people in a hierarchy (the layering of society) Hierarchy in terms of differential access to some resource of value (i.e. money, education, consumer goods, political power) Class, Race, Ethnicity, Gender, Age, Sexual Orientation, etc. (these complicate things)

OPEN VS. CLOSED SYSTEM: Social Mobility- access a person has to climbing the socioeconomic ladder; some classes have higher social mobility than others (same for certain instances in history) Social Mobility The U.S. From 1979-2000 (Kiester, 2005) Adult Standing 2000 55% no mobility 80% no mobility 45% no mobility

Childhood Standing in 1979 Richest 20% Richest 40% Poorest 20%

Poorest 40% Poorest 40%

69% no mobility 15% mobility to richest 20%

Most social mobility in the U.S. has occurred in the middle classes and has been relatively small moves up or down The American Dream? Over the last century, social mobility has been fairly high, and on the aggregate, upward However, since the 1970s mobility has been uneven, often downward

Trends in US Wealth and Poverty Overall income and wealth inequality has increased on the US over the past several decades. Consider several measures. o Percentage share of wealth owned by the richest 1% of Americans has increased from 22% in 970 to 33% in 2007. While the top 20% held 81.3% o Percentage share of total U.S. income earned by the top 20% of income earners grew from 43.7% to 50.4% *** 1980 through 2005 o The ratio of CEO pay to average worker pay in 1980 was 42:1, in 2005 it was 411:1 o Loss of Manufactoring Jobs = 43% of total US jobs in 1950/18% of total US jobs in 2010 o The real value of the minimum wage in 1978 was approximately $6.75, while *** He is posting the rest of the notes on Blackboard!!*** 12 January 2014 Scenario A: A rising tide lifts all ships; a change over time in which growth in the economy allows people at the bottom and top becoming better; Evidence: Average income of the poor rose 10%, average inflation of middle quintile rose 21%, top 1% after-tax income increased nearly 260% -------------------------- 2010 Top 20% wealth 1979 Where people? (Onion dome- shaped) ----------------------- 1979- Neo-liberal Economic Policy 1979 ----------------------------- 2010 1979

-----------------------

Scenario B: The rich get richer and the poor get poorer OPERATIONALIZATION- of a variable; Y1 = Economic well-being; Evidence: a shift overall from singleearner households to dual-earner households/ hours worked (Are people better off or are we just working more? Is it worth it? Are they giving enough attention to the intangible things in their life?)

If proportional gains were equal (same), what would it look like? Right now, some people are benefiting more than others 14 February 2014 Social Mobility: pg. 43 Alas, the evidence is overwhelming that upward social mobility (movement up or down in social classes) has NOT increased at the same time that inequality has skyrocketed. Levels of social mobility havent increased, but havent really decreased either (stagnant) If it has decreased, less people are moving down or up meaning that your position on the ladder is solidified o Can be problematic because people at the bottom (unemployed) arent contributing to the economy o The American Dream is no longer a reality (goes against our cultural claims)

Health Benefits/Security Retirement Benefits/Security

Risk Transference (from companies -> individuals)

Health Benefits/SecurityIn Kind Income- income of a certain kind (can be cash Defined Contribution- was the norm before neoliberalism; people getting retirement benefits from their workplace; pension- pay into it and when you retire have a defined set of benefits; this practice is more safe/secure; the company and the workers share the risks together IRA (Individual Retirement Accounts)- people now having to set themselves up for retirement; given money towards retirement from every may check that you can do whatever you want with; the individual is accountable for the risks on their own

Characteristics of Neo-Liberalism: Liberal Free-Market Economics Privatization Individualism (shift from collectivists ideals to individualistic) Regressive Taxation

17 February 2014 The Unholy Trinity International Trade (problems that have been identified with this and who are the actors within it) IMF- focuses on short term loans, World Bank- long term focused on development, WTO-sets rules for trade

Neo-Liberalism (late 1970s): Individualism Privatization Regressive Taxation

**Neo means new**

Classical Liberalism- a belief that all humans as individuals are born in a natural state of freedom (this concept freed the slaves) Connected to neo-liberalism in the sense that neo-liberalism is a new way of looking at the old ways Economics- attempts to liberate the economic transactions between people Adam Smith Wealth of Nations (published in 1776) Laissez-faire Capitalism

1776 Classical Liberalism

1850s Marx

Stock Market crashed 1929

Keynes 1979

Neo-Liberalism

Keynes- governments are important to economies and shouldnt let companies rule the economies because governments can ensure economies run smoothly; government is a needed to support/stabilize economic security (Obama is this when introducing the health care system, but isnt this when dealing with international trade); there is less income inequality here 19 February 2014 Structural Adjustments- pg. 55-56 Structural adjustment requires governments to do the following o Cut government spending on education, health care, the environment, and price subsidies for basic necessities such as food grains and cooking oils o Programs and policies imposed on nations (usually poorer nations in the South) by IMF: World Bank as conditions for loans (but you have to do these particular things to borrow the money examples listed on pg.55-56) Eliminate Tariffs (taxes on imports)- gets people to buy more imported products allowing other countries to make money; Disadvantage- may harm domestic businesses, businesses will have to outsell foreign competitors; Advantagemight get cheaper prices, access to goods you didnt have access to before; they are doing this to benefit the producers in the more developed countries (rigged

system); your economy wont actually grow, but you will become dependent on the IMF, WTO, World Bank Currency Devaluation (worth less)- when currency devalues, the cost of imported goods goes up Export-Led Growth- pg. 56; model for development; post WW2 applied to demolished European countries, but was expanded to the entire world; the best way to develop economies of was to increase the exports from the growing economies The International- National Connection -or- Linking the local to the global: o Deindustrialization- out-sourcing labor (getting rid of factories, etc.) in developed countries

21 February 2014 How does the de-industrialization of the U.S. economy fit into the broader context of Neoliberalism? (From 2000-present, US manufacturing jobs lost: about 2.7 million) o Profit Maximization- cutting jobs o Cheaper Labor o Tariff Elimination o Mechanized Production o Policies supported/promoted by WTO/IMF/World Bank as well as many governments have made it easier to trade between countries which have allowed producers to go places where they can find the cheapest labor and causes a massive loss of manufacturing jobs in developed countries as a result of an increase in manufacturing jobs in underdeveloped countries Why did jobs go overseas? Because of cheaper labor so what? It goes against what Rawls says about fairness If we eliminate tariffs, export led growth will occur more (in theory) o Export led growth will allow countries to develop and the only way to get that is to eliminate tariffs NAFTA- North America Free Trade Agreement; no tariffs between US, Mexico, Canada; signed in 1994 o We are going to link this to illegal immigration

24 February 2014 - Increase in COMMODITY CHAINS is a characteristic of Neoliberal Economic Globalization o Why are things produced the way they are (Ex. Use cotton grown in the U.S.)? Cheaper Labor Eliminating tariffs IMF/World Bank/WTO created policies to make trade easier between the countries involved

People are making money at various stages of the process, but is it an efficient way of making the product? Who is/isnt benefiting from this? The people that arent benefiting are the ones who would normally be working in the manufacturing jobs that in this process is nonexistent The impact of Agricultural Subsidies in the developed world on Agricultural producers in the underdeveloped world. Claim- Neoliberal globalization wants increased trade between nations and everyone will benefit; Overarching goal- the more trade there is the more money that is made SUBSIDY- a government grant that doesnt have to be repaid Agricultural subsidies are seen as unfair by advocates of poorer countries High levels of Agricultural subsidies in developed countries- allows producers to lower the cost of their finished products (on average sell it for 30% below the cost of production); only subsidies allow this (profit is paid for by the government who is paid by the tax payers)

26 February 2014 - What is a subsidy? A government grant that doesnt have to be repaid - (ESSAY QUESTION) What is the effect of agricultural subsidies in developed countries on agricultural producers in less developed countries? The effect of agricultural subsidies in developed countries on producers in lesser developed countries is as follows: producers can sell their crops for lower prices than producers in lesser developed countries. - What would you say about how the reality of #2 relates to the ideals of Neo-liberalism? Promotes globalization through increased trade between developed countries, gives the US more trading partners, less developed countries are dependent on developed countries for goods and WTO/IMF/World Bank for short/long term loans, access to world trade network - WTO, IMF, World Bank? Will give subsidies to country in exchange for things in return that fall in their favor (eliminate tariffs, currency devaluation, etc.) - Market Distortion- the cost of goods will find their natural sense of equilibrium (subsidies distort this in theory) - Double Talk- saying one thing but doing another - Immigration- claims are immigrants are taking jobs, the citizenship process is too hard; all of this is caused by the troubling economic system between developed and underdeveloped countries 28 February 2014 Movie notes for Life and Debt - Violent protests in Jamaica - They wanted to make organizations work for the benefit of all - Tourists bags are not searched - IMF caused a declination in currency (resulting in some banks being closed) o Purpose: Have a bank they could turn to for short team borrowing - GATT- General Agreement on Trade and Tariffs (before IMF and WTO)

What we know as a third world didnt exist- European countries were war-torn, Jamaica was a colony After WW2, most of the powers were devastated causing colonies to get their independence (Jamaica from Great Britain) In order to see the interests the IMF are concerned about you must ask Who set it up? Colonies didnt have the economic strength to survive once they became independent, they needed time for an economy to evolve Go to the IMF when private banks wont give you a loan o They want to know who you owe money to and why you are in a bind and give you money for a short amount of time o They dont care that you will still be in a bind when you are done paying the money back Jamaica needed to expand exports and diminish imports They needed to make foreign currency more expensive which would make imports more expensive; Jamaicas currency being devalued would make things in Jamaica cheaper (Export led growth) The Jamaica we see now is different than the Jamaica that used to be because of the new global economy Jamaicans had to quit farming because the imports were cheaper (because of subsidies and the loans that Jamaicans have taken out with the IMF have structural adjustments that wont allow Jamaica to subsidize their own products) so everyone was buying the imports rather than locally grown crops

5 March 2014 Life and Debt: - Crops are going to waste - There are unable to produce and sell in their own home - The people that are on the trailer line get money while the farmers dont get any money; 1 person brings in a bounty of crops from America, while >1 people would be involved in growing the crops in Jamaica - Anything that led to more self-reliance was discouraged; The well-developed countries thrive on under-developed countries being dependent on them - Give us back our market and dont try to force your idea on us - FOOD SECURITY- the security of a nations ability to get food; milk powder will get its real price when it is no longer subsidized; it will be higher to consumers in Jamaica than Jamaicanproduced milk (which industry is collapsing); if timed right, people will be forced to buy milk powder that is more expensive then imported/Jamaican-produced milk and people are left without access to milk 7 March 2014- Ranger FTX Life and Debt: - Super markets are selling their imported goods for less than the local market - Anything that led to more self-reliance was discouraged

To get a loan they had to lower subsidies and compete with them on an equal playing field FOOD SECURITY- milk powder will be more expensive than local milk; when the milk powder finds its true price, the milk industry will be collapsed; relative security of a country on how to get food Destruction of the poor is over poverty Milk and dairy industry is collapsing; they are shipping in powdered milk and the supermarkets are buying it Subsidies distort the market When milk finds its true cost, locally produced milk will not exist DUMPING- when a market floods a smaller market; against WTOs wishes **Read the Unholy Trinity** Lesser developed countries have a comparative advantage All the bananas go to the UK and thats their economy In Europe, guaranteed market tariff free Some former colonies have agreements to import their goods Puts tariffs on other places that sell bananas US doesnt like it, takes to WTO and claims market distortion; want the tariffs off all other bananas so Chiquita can be in the market No Jamaican bananas are sold to the US Some Chiquita workers went and strike and were forced with a gun to go back to work Nobody wants to invest in bananas because of the WTO ruling Competing against Chiquita and Dole Had 150 workers, now down to 15 or so on a plantation Parents cant help their children anymore Because of the fallout of bananas, violence has gone up Jobs available after milk/bananas go down, will go work at Sandals, fast food restaurant, or import/export none of which are Jamaican owned FREE ZONES came into America in the 1980s US paid for it to help out Jamaican areas (make shirts, etc.) Goods go into containers and never touch Jamaican ground so there is no tariff

10 March 2014 - Best way to study: condense all info from readings, notes, supplementary notes into one document - On Test: Readings 2.2, 2.3, The Unholy Trinity, Mexican Farmer Reading (optional) - Agricultural Subsidies: what, story, 30% below cost of production - Essay Question: What is the effect of agricultural subsidies in developed nations on agricultural produces in developed nations? o Lower sale price of 1st world products (include 30%) o 3rd world producers have no subsidies (must sell at whatever price works for them) = distorted markets, no food security o 1st world producers dominate 3rd world markets

o Icing: creates a sense of dependency for 3rd world countries on the IMF Neoliberalism (began in late 1970s), Structural adjustments (you can borrow this money, but you have to make sure you spend only certain amounts in certain areas in order to have enough left to may us back) Since the late 1970s, does everyone benefit from the economy or are the rich getting richer and poorer getting poorer? Are they actually getting richer/poorer? o The change over time in terms of income, has all classes income increasing; this was due to people working more and both parents working in the household; more hours more household = more money (is it really more money then?) Financial security- more of individual responsibility to prepare for retirement instead of the companies helping; prior to neoliberalism, the risk was shifted by the individual/company (pension), but with neoliberalism they shifted the risk to just the individual Reading 2.2- claimed lower classes have lost since the emergence of neoliberalism Distorted Markets- prices from 1st world countries are cheaper because of the subsidies they receive which outcompete the prices from 3rd world countries Export Led Growth Currency Devaluation- what it is, how it relates to export led growth; Money isnt worth as much as it was in relation to US dollars; imports become more expensive and exports will be cheaper because the cost to produce them will be cheaper; one of structural adjustments
Readings 2.2. 2.3 The Unholy Trinity Optional: NAFTA Mexico NeoLiberalismWhy can't Jamaica spend money on education? Regulations from the IMF or Structural Adjustments. The story or Essay Question: What is the effect of agricultural subsidies in developed on ag producers in less developed countries. 5-7 sentences. The diagram is on black board. 1. They allow producers in developed countries to sell 30% below cost of production. 2. Lower sale price of 1st. world products. 3. 3rd world producers do not have subsidies. 4. The market then as a result of all of this leads to a distorted market. 5. Food security goes away. There becomes a lack of third world producers.

House hold incomes have increased, but more hours are being worked. The spread of wealth has gotten wider and the rich have gotten much better off than the middle class.