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Andrew Culp, MA
PhD Student in the Departm
The Ohio State University ent of Comparative Studies
Overview
1. Divergent Trends
a. ‘smaller pie’
b. ‘average americans’ 40‐year paycut
c. rich still getting richer!
2. Global Poverty
a. worse than we thought
b. divergence (not convergence)
3. Three Histories
a. economic history
b. economics and race
c. global development
Divergent Trends, The Big Picture:
Total Wealth Decreasing
“Solution” to stagnation
Aggregate growth of
world GDP per capita:
1960s: 3.5%
1970s: 2.4%
1980s: 1.4%
1990s: 1.1%
Since 2000 the
aggregate growth rate
has barely reached 1%
Divergent Trends:
‘Average Americas’ 40-year Pay Cut
“According to estimates by the economists
Thomas Piketty and Emmanuel Saez‐‐confirmed
Real Wages have stayed
by data from the Congressional Budget Office‐‐ the same since 1970
between 1973 and 2000 the average
real income of the bottom 90 Why has spending gone up?
percent of American taxpayers
actually fell by 7 percent. Meanwhile, Debt via the invention of
the income of the top 1 percent rose by 148
percent, the income of the top 0.1 percent rose by
new financial instruments
343 percent and the income of the top 0.01 Credit Cards
percent rose 599 percent. (Those numbers
exclude capital gains, so they're not an artifact of
‘Second’ mortgages
the stock‐market bubble.) The distribution of
income in the United States has gone right back
to Gilded Age levels of inequality.”
Paul Krugman: The Death of Horatio Alger, The
Nation, Jan. 5, 2004
Divergent Trends:
‘Average Americas’ 40-year Pay Cut
And who is neo‐liberalization really benefiting?
“How rich, on average, are the richest 200 (or 400) families in
the United States? ... the data showed that back in 1980, they
had something like $680 million. In constant dollars it is
something like $2.8 billion. They have quadrupled their wealth in
the last twenty years and this is a familiar story not just in the
U.S but also globally. In Mexico, after neo‐liberalization, you see
the same thing. You see the same think happening in China and
in India.”
David Harvey ‐ “A Conversation with David Harvey” Logos 5.1,
Winter 2006
Example 3: Financialization
Divergent Trend: Rich are Getting Richer
Average income of top 0.01 percent of US families as a multiple of average income
of bottom 90 percent of US families
The greater the gap between the rich and everyone else, the more
dangerously unstable economies become. In 1928, a year before the
U.S. economy nose‐dived into depression the top one‐hundredth of
1 percent of US families averaged 892 time more income than
families in the bottom 90 percent.
Example 3: Financialization
In 2006, the top 0.01 percent averaged
976 times more income than America’s
bottom 90 percent.
In 1980, in the last pre‐Reagan year, families in the
bottom 90 percent averaged $30,446 in income, after
adjusting for inflation, $72 more than than $30,374
comparable families earned in 2006. The top 0.01
percent in 1980 took home an average $5.4 million,
less than one‐fifth the $29.6 million average income
the super‐rich in 2006.
Divergent Trend: Rich are Getting Richer
Global Poverty (1)
Worse than we thought...
“There is a lot more poverty in the world than previously thought. The World
Bank reported in August [2008] that in 2005, there were 1.4 billion people living
below the poverty line — that is, living on less than $1.25 a day. That is more
than a quarter of the developing world’s population and 430 million more
people living in extreme poverty than previously estimated. The World Bank
warned that the number is unlikely to drop below one billion before 2015.”
‐‐New York Times, An Even Poorer World, Editorial, Sept. 2, 2008
About 50,000 people die every day of starvation or preventable diseases
resulting from hunger, 34,000 of them are children.
‐‐National Association from the Prevention of Starvation, UN World Food
Program
Global Poverty (2)
Global Percentage of People living on $10 a day
Percentage of Developing World living on $10 a day
less than $10/day
80%
less than $10/day
95%
above $10/day
20% above $10/day
5%
above $10/day less than $10/day
above $10/day less than $10/day
Source: World Bank Development Indicators 2008
Global Poverty (3)
World Bank: “Over the past 20 years
the number of people living on less
than $1 a day has fallen by 200 million
after rising steadily for 200 years”
But...“the Bank’s figures contain a
large margin of error, and the errors
probably flatter the result in one
direction”
Actually, the decline in absolute
poverty is due to growth in China/
India
If China/India are excluded, the
evidence indicate an upward trend
in absolute poverty (# ppl globally)
Growth in India and China cannot
be attributed to neoliberal policies
Robert Wade – “Is Globalization Reducing Poverty and Inequality?”
Convergence?
Convergence:
the theory that “developed” and “developing” economies will
converge through specialization in the production of goods and
services in which countries are most efficient.
Uneven Development:
But specialization
increasing concentration of
presupposes open
capital enhances accumulation
competition in the global in some regions while
marketplace... undermining it elsewhere.
Resulting in:
Commodity chains and capital flows
International Division of Labor
Concentration of power in the hands of the few
0
5
10
15
Latin America & Caribbean 20
East Asia
1990
2000
South East Asia
South Asia
1995
2002
European Union
Source: ILO, Global Unemployment Trends 2002
USA
Open Unemployment, By Region
Japan
Sub‐Saharan Africa
Middle East and North Africa
International Division of Labor (2)
According to the CIA, by the late 1990s one billion workers – one third of the world’s labour force
– mostly located in the South were unemployed or underemployed.
The majority operate in the informal economy – “there is no official scenario for the
reincorporation of this vast mass of surplus labour into the mainstream of the world economy”.
‐‐Mike Davis, Planet of Slums
One Billion Global Slum Dwellers
Other
6% South Asia
Latin America & Caribbean
28%
13%
Africa
22%
Rest of Asia
31%
Concentration of Economic Power
multi‐national global institutions
corporations International Monetary Fund, World Bank,
Of the top hundred World Trade Organization (and now G8/G20)
biggest economies, leaders appointed behind closed doors
51 are corporations, decisions are made in secret
not countries. Structural Adjustment Programs (SAPs): the
1970: 7,000 MNCs; main tool of the IMF/WB
2000: 61,000 MNCs forces countries to neo‐liberalize
Power concentrated give short‐/long‐term loans to countries
at top of MNCs requires ‘austerity’ programs to privatize
Top 100 companies resources and redistribute wealth
control: impact is questionable – note the string
of crashes: Mexico, 1995 – East Asia, 1997
14% sales
– Brazil, 1999 – Argentina, 2001
12% assets
13% employment
Global Inequality (1)
And the result...
90%
82.7%
67.5%
Income received
45%
22.5%
11.7%
Source: UNDP, Human Development Report 1992
Global Inequality (2)
Income Distribution
Source: World Bank Development Indicators 2008
Global Inequality (3)
2%
22%
77%
World's poorest 20% consume
World's middle 60% consume
World's richest 20% consume
Global Inequality (4)
Distance between Richest & Poorest 20% Distance between Richest & Poorest Countries
90%
90% 83.4% 97% 98% 99%
69.5% 70%
75.4% As a ratio: 100%
As a ratio: 91%
Richest 20%
Poorest 20% Richest
Poorest
Source: 1965‐90, Roberto P. Korzeniewicz & Timothy P. Moran,
1997, “World Economic Trends in the Distribution of Income,
1965‐1992.” American Journal of Sociology 102 (4): 1000‐1039;
1997, Wayne Elwood, 2001, No Nonsense Guide to
Globalization, p. 101.
Source: UNDP, Human Development Report 1999
Histories of Neo-Liberalism
1. Economic History of the U.S.
2. Economics and Race
3. Global Development
Economic History
The American Picture: 1980’s:
Post‐WWI Keynesianism AKA ‘Embedded Inequality grows for the first time since the
Liberalism’ 1920’s
1944: The Bretton Woods Agreement (IMF, WB, Cold War deficit spending skyrockets
WTO) spending so high, transforms US from
Late 1960’s world’s largest international creditor
4% growth experienced in 50s/60s to largest debtor
disappears Beginning of financialization
War in Vietnam (guns vs butter) causes the Savings and Loan Crisis
Deindustrialization sets in many lose big, a few win big ($500 bil
Prints dollars, inflation ‐‐> stagflation ‐‐> bailout)
global stagflation in the 70’s Slashing of social programs
1970’s: 1990’s:
Abandon the dollar peg, consequences NAFTA & The Washington Consensus
outside the US, volatile global financial Workfare and the ‘New Economy’
trading Tech Boom + Telecom De‐reg
1973 OPEC oil embargo Massive Oligopolies formed
Upper‐class income/assets stressed ‐‐> class Financialization continues
revolt 2000’s:
1979 Interest Rate Hike ‐‐> mass 2000 Bubble Burst of the ‘New Economy’
unemployment 2006‐10+ Global Financial Crisis
Investors and banks bailed out
Many people lose their homes, jobs, etc
Real Wages stagnant since 1980’s
Neo-Liberalism and Race in America
Founding of United States is a
classic case of “accumulation
by dispossession.”
Neo-Liberalism and Race in America
“As New Deal politicians began constructing government programs to deal
with welfare, work, and war in the 1930s and 1940s, they deliberately
excluded or treated differently the vast majority of African Americans.”
Deal between White Progressives and White Segregationists
During the Great Depression:
Share‐cropping dominant form of Black employment
65 percent of African Americans were denied access to social security
benefits, government grants, elderly poor assistance, and
unemployment insurance.
Industrial Labor:
National Labor Relations Act (1935) and the Fair Labor Standards Act
(1938)
When black industrial jobs opened up from World War II, politicians
abandoned labor reform and pass Taft‐Hartley Act (1947)
Mississippi ex, 86 percent of the skilled and semiskilled jobs were
filled by whites, 92 percent of the unskilled ones by blacks.
Military Segregation
Denied access to Selective Service Readjustment Act (1944) ($95
billion to 16 million soldiers)
Paid Mortgages
GI‐Bill/ College Education
''Written under Southern auspices, the law was deliberately designed
to accommodate Jim Crow.''
One 1940's study concluded that it was ''as though the G.I. Bill had Enclave
been earmarked 'For White Veterans Only.' ''
Accumulation
Neo-Liberalism and Race in America
Civil Rights Movement & Enclave
Accumulation Examples:
Civil Rights Movement enclave accumulation by other means
access to public resources (previously Suburbanization
used to only benefit whites) Private Schools/ ‘School Choice’
Destruction of 1980s Black
against “separate but equal” of Entrepreneurship
Plessy v. Furgeson & Jim Crow laws
Neo‐Liberalism as: myth of the Welfare Queen
Enclave Accumulation By Made up by Reagan
Other Means Less than 5% fraud
Payments far under poverty line
Increasing income equality isn’t translating into wealth equality
the wealth gap between African‐American families and white 90’s “workfare” Clinton
families
increased over four times, from $20,000 in 1984 to Prison‐industrial‐complex
$95,000 in 2007. [Institute on Assets and Social Policy, 1920: 110,000
Brandeis University] 1970: 338,000
The three reasons? Now: > 2,000,000
Housing (POC first to be cut out of conventional Deindustrialization
mortgage loans, ex: recent housing crisis [“Paying More for the Privatization
American Dream IV: The Decline of Prime Mortgage Lending in Communities of Color.”]
Lending (red‐lining, predatory lending, improper
financial regulation)
Labor (social division of labor)
Neo-Liberalism and Race in America
Example 1:
The Black Middle Class
From the 1960s to 1980, the Black middle class more than doubled, becoming 1/3 of the black population
Wealth (not Income)
Downward Mobility
68% of White children will make more than parents
31% of Black children [Pew Research Center]
Cycle of Poverty
“set of factors or events by which poverty, once started, is likely to continue unless
there is outside intervention”
Two moments:
1980’s Black Entrepreneurship
In 1993, 3.7 percent of Blacks were self‐employed, compared to 9 percent of
Whites (Conley 1999).
Two Factors:
social scientists cite racial discrimination as a primary cause
asset accumulation
hard financial times are amplified in the black middle class (cycle of poverty)
2000’s Black Homeownership
“Sub‐prime lending was racially targeted and demolished decades of progress
made by America's most diligent and striving people of color” [American
Prospect, “The Assault on the Black Middle Class”, Aug 4 2009]
Neo-Liberalism and Race in America
Background: During the settlement of the colonies, immigrants arrived freely, limited
only by the cost of travel, diseases, and the harsh environment found in the colonies
Example 2: Forced migration through trans‐Atlantic slave trade
In 1882, Chinese Exclusion Act
Migrant Labor In 1942, California created the "Bracero Program," a Mexican labor program that
allowed California agricultural to temporarily contract with two million Mexican nationals
Civil Rights movement: end of “Bracero” in 1964
1939‐1954, INS deported 3,000,000 undocumented and documented Mexican
immigrants and U.S. citizens in “Operation Wetback”
Late 80s: Peso Devaluation, IMF‐US Bailout ‐‐> privatization (paving the way for NAFTA)
1994: North American Free Trade Agreement (NAFTA)
Crashed Mexican Corn Market (causing a wave of immigration)
Transformed Mexican manufacturing sector
Unemployment, destroyed unions
Led to the creation of Maquiladoras
FDI Mag: “Manufacturing exports virtually quadrupled between the first
five years of the 1990s and the first three years of the new decade to top
$113 billion”
$37 and $60 for every forty‐eight‐hour workweek (same as 1973)
Forced austerity on US manufacturing
Most migration to the U.S. goes back to the late‐80s crash/NAFTA
Partially an intentional strategy by US firms to undermine American Labor (Hurricane Katrina)
Division of Labor. Global Flows. FDI. Uneven Development.
Global Neo-Liberal Development
Colonialism and De‐Colonization
“New Imperialism”: 1830‐1914
“De‐colonization”: 1918‐Present
Newly industrializing countries
The ‘Third World’ (1945‐1989‐present)
Europe
National Independence (political)
Japan & United States
Economic Independence?
Africa, Asia, Middle East, Latin
America, Philippines
Still colonized peoples?
US: “White Man’s Burden”
Global Neo-Liberal Development
Global Justice Movement
Inter‐relation of social movements on a global scale Issues:
“Movement‐of‐Movements” Indigenous (sovereignty, land)
Social, Environmental, Economic, Political Financial/Economic Colonialism
Environmental Degradation
Actions: Democratic Representation
Large‐scale Global Protests & Days of Action Feminism and Women’s Rights
International Solidarity and Alliance‐Building Race and Racial Exploitation
‘World Social Forum’ Class and Economic Exploitation
Corporate Power
War
Global Neo-Liberal Development
Example #1: Bhopal, India
Union Carbide (UCIL) (now Dow Chemical)
“World’s Worst Industrial Catastrophe”
Night of Dec 2 1984
leak of methyl isocyanate
Killed over 15,000, injured over 500,000
Legal Action:
In June 2010, 7 ex‐employees, including
the former UCIL chairman, convicted and
sentenced to
2 years imprisonment and a fine of about
$2,000 each, (the maximum punishment
allowed by law)
An 8th former employee was also
convicted but died before judgment was
passed.
Global Neo-Liberal Development
Example #1: Bhopal, India
2004 Settlement Hoax
on the 20th anniversary of the
disaster
“Yes Men” activist was
interviewed on BBC, claiming
apology
clean up Fake Dow webpage
compensation
Dow's share price fell 4.2% in 23
minutes, for a loss of $2 billion
Global Neo-Liberal Development
Example #2: Chiapas, Mexico
Indigenous Group
Zapatista National Liberation Army (EZLN)
Declared war on Mexico the day NAFTA went
into effect
An estimated 3,000 armed Zapatista insurgents
seized towns and cities in Chiapas, including
Ocosingo, Las Margaritas, Huixtan, Oxchuc,
Rancho Nuevo, Altamirano, and Chanal.
Ceasefire on January 12, 1994
This sign reads, in Spanish: Top sign: "You are in
Zapatista rebel territory. Here the people command
and the government obeys." Bottom sign: "North
Zone. Council of Good Government. Trafficking in
weapons, planting of drugs, drug use, alcoholic
beverages, and illegal sales of wood are strictly
prohibited. No to the destruction of nature." Federal
Highway 307, Chiapas.
Global Neo-Liberal Development
Example #3: Seattle, 1999
WTO Round
Film:
‘perfect union’ of
This is What Democracy Looks Like
‘newest social movements’
Old Labor
Third World Resistance
Martial Law, police repression
Kills the WTO for over a decade