SEMINARIO DI STORIA ECONOMICA
PROFESSOR DOUGLAS DOWD
A.S. 2009/2010, Lingue e Culture Europee
Maria Laura Turci
Global inequality has grown dramatically over the last 300 years. At the end of the Twentieth Century global income inequality was greater than ever before.
As we prosper through time, inequality is slowly less evident. A lot of people don’t realize that although things are improving with time, inequality is still prominent in our society. The people that are failing to realize that there still is inequality, are the fortunate ones. That is becasue they are above the poverty line, and usually live relatively economically easy lives. They are the people who are supplied with our society’s benefits. The people that are in pursuit of social change, and constantly bring attention to issues of equal rights and privileges, are often the people that do not have them. They are the ones who suffer daily from different levels of inequality.
Lower classes of stratification are not given the same opportunities as higher classes. Lower classes have ascribed statuses that are difficult to rise up from.
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For example, if an individual is born in a family where the children are forced to work to support the family, these children have less opportunity to prosper. They have the status of a worker, and have little of achieving a more successful status in life. If the individual’s family suffers a great deal of inequality, and the individual wishes to pursue extended levels of education for greater career opportunities, because of their ascribed circumstances they may not have the opportunity.
Society is a complex system characterized by inequality and conflict, which generate social change. Power and privilege are distributed unequally by social class, race, gender and age. These inequalities are often reinforced in societal institutions.
social inequality is different from economic inequality, though the two are linked. economic inequality refers to disparities in the distribution of economic assets and income. While economic inequality is caused by the unequal distribution of wealth, social inequality exists because the lack of wealth in certain areas prohibits these people from obtaining the same housing, health care, etc. as the wealthy, in societies where access to these social goods depends on wealth.
Social inequality is linked to racial inequality and wealth inequality. The way people behave socially, through racism and other forms of discrimination, tends to trickle down and affect the opportunities and wealth individuals can generate for themselves. Social inequality is different from economic inequality, though the two are linked. Economic inequality refers to disparities in the distribution of economic assets and income. While economic inequality is caused by the unequal distribution of wealth, social inequality exists because the lack of wealth in certain areas prohibits these people from obtaining the same housing, health care, etc. as the wealthy, in societies where access to these social goods depends on wealth.
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Race, status, and class are one of the main reasons for inequality.
In the following paper I will explain what inequality is and why it occurs. Further more I will describe different types of inequality.
Inequality in the distribution of desirables exists as device for ensuring that the most qualified people fill the most important positions. Certain jobs are more important than others are, and those jobs require special skill and talent.
The cycle of unequal opportunity is constantly growing and probably with globalisation, this condition will keep worsening in the next decades.
It is logical to assume that for as long as human beings have existed in organized societies, inequality has presented itself within these societies.
Karl Marx, Emile Durkheim, and Max Weber each explore in their writings the origins and functions of the social inequality that had grown in the modern, industrial, and capitalist society of the 1800s. The class struggle throughout the industrializing world had, by the middle of the nineteenth century, begun to deepen and widen.
The resulting ideas reveal very different approaches for dealing with social inequality. Whether revolutionary or reformist, each of these three thinkers has left an indelible mark on those that have since sought to understand human society and its functions
The effects of inequality have also received a good deal of attention in recent years. Interest has been fueled by the rise in inequality between and within countries, evident since at least the 1980s.
In particular, economists became increasingly concerned with understanding the implications for development and growth. findings of that research are inconclusive. Some results show,for example, that equality has a positive effect on economic growth. Support for that stance
is not unanimous, and it has been shown that under some conditions, inequality is a stimulus to growth—or has no effect.
It is a general belief that the unequal distribution of wealth and resources can produce conflict within society. Inequality has been prevalent for many years but was generally not considered a social problem. People around the world are becoming more and more aware of the gap between the rich and the poor. With the assistance of the government, by creating tax breaks, the rich seem to be getting richer while the poor are remaining poor therefore widening the gap. Economic inequality seems to be at the heart of all societies. As the economy changes, whether gradually or suddenly, it seems to have an effect on all classes of people. I feel that it would be crazy to think that true economic equality will ever occur, despite the many attempts, due to the many factors which are dependent on one each other in one way or another. If we are lucky enough to be born into a wealthy family we may have better chances in life than others who are not.
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Although there are several ways to measure inequality, income is the most widely used within our society. The higher the income the more advantages one has such a better housing, health care, power, higher material levels along with higher educational attainment. Educational attainment is also used to measure inequality but the level to which one attends college is generally dependent on the amount of income available. High levels of inequality put quality education and training out of reach for the lower income people while people who have higher incomes can attain these easier. It is realized that most people can attend college, but the elite colleges are out of financial reach for the majority of the population.
The government aids businesses so they can have a better chance of surviving but when assistance is given to people who are desperately in need, society often deems them to be a problem.
Types of inequality
Inequality can be mainly be categorized and defined in different ways, nevertheless even thought these may be diverse, they can often be linked.
The main categories of unusuality can be :
1. Social inequality
2. Economic inequality
3. Education inequality
4. Geographical inequality
5. Racial inequality
6. Gender inequality
Social Inequality occurs when ideology and power combine in such a way as to make one group superior or inferior to another group.
Age discrimination, discrimination based on nationality, physical limitations and other factors can be considered social inequality as well.
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Racial discrimination can be considered in some ways social inequality because for many years, in the western world, the common ideology combined with the fact that the majority of power (political and monetary) were held by white people so that black people were made to be inferior in many aspects. Although economic growth and development are similar in meaning, they have some essential differences. Economic growth refers to the increasing ability of a nation to produce more goods and services. Economic development basically implies that individuals of that nation will be better off and takes into account changes in economic and social structures that will reduce or eliminate poverty.
Research has shown a link between income inequality and social cohesion. In more equal societies, people are much more likely to trust each other, measures of social capital suggest greater community involvement, and homicide rates are consistently lower.
Economic inequality refers to the distribution of economic assets and wealth, while social inequality is a consequence. In fact it exists because the lack of wealth in certain areas prohibits the population from obtaining the same advantages. This occurs particularly in societies where the access to a better life depends on wealth and money.
Therefore, social inequality is linked to racial inequality and wealth inequality. The way people behave socially, tends to affect the opportunities individuals can generate for themselves.
Economic inequality (or “wealth and income differences”) comprises all disparities in the distribution of economic assets and income. The term typically refers to inequality among individuals and groups within a society, but can also refer to inequality among countries. Economic Inequality generally refers to equality of outcome, and is related to the idea of equality of opportunity. It is a contested issue whether economic inequality is a positive or negative phenomenon, both on utilitarian and moral grounds. Economic inequality has existed in a wide range of societies and historical periods; its nature, cause and importance are open to broad debate. A country’s economic structure or system (for example, capitalism or socialism), ongoing or past wars, and differences in individuals’ abilities to create wealth are all involved in the creation of economic inequality.
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There are many reasons for economic inequality within societies. These causes are often inter-related. Acknowledged factors that impact economic inequality include the labor market, innate ability, education, race, gender, culture, wealth condensation, development patterns and personal preference for work, leisure and risk.
Economic development can be measured in a number of different ways including the Human Development Index, a Gender Empowerment Measure, a Human Poverty Index and a Human Freedom Index. All of these measures were developed by the United Nations Development Program. The World Bank also has its own indicator called the World Bank Development Indicator. Globalisation can have both negative affects on a nation. It can impact on the levels of economic growth a country may experience, impact on levels of unemployment or it may impact on a country’s quality of life. Social Stratification has been an essential issue in our environment since the beginning of time because it places an individual in this form of a social latter that identifies where that being stands in his or her society. One of the primary focuses of stratification is social inequality. Apart from the working definition, the causes, effects, and types of social inequality are the main focal point within social stratification. Different forms of social inequality cling to our environment, many of which include income, race, and gender inequality.
Other examples of social inequality include sexism, which can be categorized with gender inequality. The definition for gender inequality arises from reading of various social sciences literature, including economics. It manifests itself as hierarchical genders relations, with men above women, and women being regarded as inferior and less valuable solely by virtue of their sex.
For many years, women did not have the right to own property or vote. They were essentially considered to be possessions of their husbands or fathers and were therefore inferior to the superior males within society.
In many parts of the world, women have few resources or rights and little opportunity to improve their lives. They are restricted in terms of education, ownership of property, monetary return for their work, financial opportunities, and opportunities to influence decision-making at the level of the family and society. Country by country, the lack of resources and opportunities open to women is strongly associated with society-wide poverty or lack of development.Racism and gender inequality are still two of the most controversial topics in today’s society.
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Globalization and inequality
Globalization has evolved in fits and starts since Columbus and de Gama sailed from Europe more than 500 years ago. Recent work has documented a dramatic divergence in incomes around the globe over the past two centuries. Furthermore, all of this work shows that the divergence was driven overwhelmingly by the rise of between-nation inequality, not by the rise of inequality within nations.
We start by decomposing these five centuries into four distinct globalization epochs. Two of these were pro-global, and two were anti-global. We then explore whether the two pro-global epochs – one being our own history since 1950 – made the world more unequal.
Evidence of an increase in inequality since the 1970s has motivated research on its relationship to growth and development. The findings of that research are contradictory and inconclusive. One source of these divergent results is that researchers rely on different group measures of inequality. Inequality by gender, household, class, and ethnicity may produce divergent effects on growth since they operate on macroeconomic outcomes via alternative pathways. Further, even within groups, the effect of inequality on growth depends on the measure used. For example, inequalities in education and health may operate differently on growth than inequality in monetary income.
The effects of economic inequality have received a good deal of attention from development and macroeconomists in recent years. Interest has been fueled by the rise in inequality between and within countries, evident since at least the 1980s with economists concerned to understand the implications for development and growth. A good deal of ink has been spilled on this topic, but the findings of that research are inconclusive. Some results show, for example, that equality has a positive effect on economic growth. Support for that stance is not unanimous, and it has been shown that under some conditions, inequality is a stimulus to growth—or has no effect.
While one school of thought maintains that globalization results in growing income between all the sections of the society and even low-income groups have emerged as winners, the second school of thought propose that globalization may increase total incomes but the advantages are not equally distributed among the national population, indicating clear losers. Moreover the ever-increasing social disputes not only increase the welfare and social issues but also restrict the factors of growth due to the lesser utilization of prospects opened by globalization. The extensive backing up by the citizens is the major factor for the sustainability of globalization, which could be negatively influenced by growing social inequality.
The research data recommends that the income inequality has increased across the nations over the last twenty years and at the same time the average real incomes of the weaker sections of the society has elevated. The evaluations reveal that growing business and economic globalization have had equal and opposite effects on income distribution pattern. The factors which are connected with lower income inequality are liberalization of business and export growth, whereas higher inequality is associated with growing economic openness.
Rising inequality is one of the most problematic aspects that accompany the current wave of globalization. While there is still much heated debate on how, and whether, globalization causes greater economic and social differences, some broad trends bring the issue onto the agenda: for example in past decades of globalization have coincided with increasing inequality within countries and so far globalization has often increased the gap between rich and poor countries. However the debate around this will be solved, many people readily associate globalization with inequitable social outcomes and oppose it precisely for this reason; the antiglobalization movement builds on the feeling that the prevailing patterns are unjust and morally “bad”. As it is argued in the initial inventory of issues, inequality is therefore an issue that needs to be addressed and managed if globalization is to be politically sustainable.
If it is true that opposition to globalization and opposition to inequality are closely linked, the tolerance of inequality becomes a key factor in the political calculus. In this case, globalization could be pushed ahead regardless of its social consequences. But if people resist rising income inequality, any policy that ignores this would run into increasing difficulties.
Supporters of the anti-globalization movement argue that “globalization has dramatically increased inequality between and within nations” , and in particular that it has marginalized the poor in developing countries and left behind the poorest countries. Meanwhile, more moderate mainstream politicians argue that the poor must invest in education to take advantage of globalization. Under a simple model, globalization should benefit the poor in poor countries and reduce inequality in poor countries, and within the developing world the poorest countries and least educated workers should have the greatest opportunity to benefit from globalization.
In reality instead, we live in a world where 400 highest income earners from the United States earn as much money annually as the total population of 20 African countries.
Global inequalities exist at astounding levels. Reserching the data from the International Monetary Fund, I discovered that ten percent of the richest global population is 117 times higher than the poorest ten percent. This is a massive increase from the percentage in 1980, when the earnings of the 10 percent of richest population was around 79 times greater than 10 percent of the poorest population.
Nevertheless despite of these numbers, there is a debate among economic analysts about whether the entire global disparity is increasing in the time of corporate globalization. That is mainly because of the impact of China and India, nations which have been developing while most of the developing economies have been decreasing financially and most of the developed economies have been growing slowly.
Inequality in the Unites States of America
The case of the USA is probably the most interesting because regardless of the general notion of the country itself, it is statistically more unequal than any other advanced industrial country.
The American population owns about 38 percent of all wealth, while Great Britain which is ranked second owns 22 or 23 percent, but it has not always been so.
Until the early 1970s, the U.S. actually had lower wealth inequality than Great Britain, and even more than Sweden. But the numbers have changed completely over the course of the last 25 or 30 years. In fact, a lot of countries have experienced lessening wealth inequality over time.
Americans are proud of their economic system, believing it provides opportunities for all citizens to have good lives. However, it is a fact that poverty persists in many parts of the country. Government anti-poverty efforts have made some progress but have not been able to eliminate the problem. Similarly, periods of strong economic growth, which bring more jobs and higher salaries, have helped reduce poverty but have not eliminated it entirely.
Some analysts have suggested that the official poverty figures do not reflect the real extent of poverty because they consider only cash income and exclude certain government assistance programs such as Food Stamps, health care, and public housing.However, many others demonstrate that these programs rarely cover all of a family’s food or health care needs and that there is a shortage of public housing.
Despite the generally prosperous American economy as a whole, concerns about inequality continued during the 1980s and 1990s.
In the years from 2000 to 2003, there were some signs these patterns were reversing, as wage gains accelerated especially among poorer workers. But at the end of the decade, it is still too early to determine whether this trend would continue.
How can we resolve social inequality?
I personally believe social inequality begins mainly with Education and Culture. Education is what establishes your ability to become self sufficient. The better the education the more opportunities open up for you to have options in life. These options can provide a lot of things, like money and security, and better choices to choose from. Culture is another a very important issue. Some cultures refuse to learn the modern ways of science and technology, and even languages. They believe it’s a bad thing to move forward from the old ways and develop new traditions and practices. While the rest of the world moves on and forward as you sit still and watch because of cultural or, economic, or education deficiencies, will result in social inequality.
The first reason why social inequality is an issue and must be resolved is basically a moral or ethical position, in other words, it is not acceptable that wide disparities exist in a society.
The second reason is that inequality is actually harmful to the well-being of a society. There is now a lot of evidence that more unequal societies actually have lower rates of economic growth. The divisions that result from large disparities in income and wealth, can actually be reflected in poorer economic performance of a country.
Typically when countries are more equal, educational achievement and benefits are more equally distributed in the country. In a country like the United States, there are still huge disparities in resources going to education, so quality of schooling and schooling performance are unequal. If you have a society with large concentrations of poor families, average school achievement is usually a lot lower than where you have a much more homogenous middle class population, as you find in most Western European countries.
As a result, you get a labor force that is less educated on average than in a country like the Netherlands, Germany or even France. So the high level of inequality results in less human capital being developed in this country, which ultimately affects economic performance.