Pol 124 lecture 1 notes Inequality o between rich (high income) and poor (low income) states o Within

n states o related to o Geography o Gender o Race and other identities o Fighting poverty or reducing inequality? ? o Inequality as a problem Concerns about inequality Within states Resentment and crime Between states Resentment and cooperation Inequality and fairness Equality of opportunities Inequality and (political) participation Structural Inequality setting rules Liberalism o Meritocracy and hard work o Dis-embedding the economy to allow competition Laissez-faire o Competition benefitting all o Minimal state intervention Rules of the game Public goods (minimal) Adam Smith o Wealth of nations o Problems that need to be resolved : cooperation and coordination o The invisible hand Free competition: greed and selfishness Division of labor: efficiency and cooperation Demands meets supply: no intervention needed International division of labor o The night watchman : the state Competition, efficiency, and growth: rising tide, trickle down The role of the state: enforce rules of free and fair competition, provide public goods, take care of the poor Liberal perspective o Inequality is the inevitable result of free markets

o A necessary condition for efficiency o Fair competition o Public policy should remove extreme poverty and seek to make distribution of opportunities more equal Ideological debate o Marxist Inequality is inherent to a capitalist system Tends to reproduce itself Can be resolved only by joint ownership o State led/social democracy State has an important role in the economy Inequalities can be reduced Poverty is a collective action problem o Liberal Inequality is not necessarily a problem Poverty should be tackled Working with the system Convergence o Economic globalization stimulates growth o Openness and opportunities o Reduction of poverty and inequality o Doubts: inequality/poverty are growing or not changing Sachs approach to inequality o Differential diagnosis to different countries o Issues The extent of poverty (or inequality) Economic policy Fiscal framework Physical geography and geopolitics Governance State and society culture o why are some states doing better/worst than others? Exploitation Institutions States strong and weak Social capital Globalization Debt and the poverty trap o The Consequences of Inequality (or, why should we care?) Hunger Migration Violence and Terrorism

Environmental degradation o Solving Inequality Agency: states Welfare states Empowerment of people Foreign aid and debt relief Inequalities in wealth are much greater still, because the wealth of affluent people is typically greater than their annual income while the wealth of poor people is typically smaller than their annual income. Inequality is pervasive it concerns not merely some aspects of life, such as the climate or access to natural resources Inequality is avoidable: the better off can improve the circumstances of the worse off without becoming badly off themselves Success or failure of the third world depends on global factors Under the existing global rules, any person or group possessing effective power in a country is internationally recognized as entitled to sell the countrys resources and to borrow abroad, all it the name of the countrys people By being given the privilege to sell the countrys resources and to borrow in it name such rulers can acquire the money they need to pay for weapons and soldiers that help them stay in power Global rules allow for corruption and the ability to hide money in foreign banks The global institutional rules serve not the interests of the worlds poor, but the interests of rich corporations and individuals in affluent countries and also the interests of the ruling elites of the poorer countries. The more inequality grows the more affluent countries can shape the game in their favor