Defining poverty. Most people think of poverty in terms of deprivation lack of food, shelter, and clothing.

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1 Poverty and Wealth

2 Outline for today Poverty and inequality Types of economic systems and views on poverty (capitalism, socialism, mixed economies) Poverty and environmental degradation Overconsumption and environmental degradation Economic growth vs. quality of life Affluenza

3 Defining poverty Most people think of poverty in terms of deprivation lack of food, shelter, and clothing. But, does poverty exist in societies who may be deprived according to our standards, but everyone has access to the same amount of resources?

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5 Defining poverty Poverty does not only refer to the deprivation of resources, but also to the uneven distribution of resources. Social stratification: The ranking of people into a hierarchy in which valuable resources are unequally distributed.

6 Defining poverty Absolute definition of poverty: A fixed economic level is established, and people below that level are considered poor because they cannot obtain the basic necessities of life. Relative definition of poverty: People are poor relative to some standard, which is defined by the lifestyles of other citizens.

7 Percentage of population in developing countries earning less than $1 per day Zambia 85 Rwanda 46 Madagascar 72 Nicaragua 44 Uganda 69 Zimbabwe 41 Guatemala 53 Botswana 33 India 53 Mauritania 31 Kenya 50 Nigeria 31 Nepal 50 Ecuador 30 Honduras 47 Philippines 29 Ethiopia 46 Panama 26

8 Poverty and inequality Of the 4.4 people living in developing countries: 3/5 lack basic sanitation 1/3 have no access to clean water 1/4 lack adequate housing 1/5 have no access to modern health services

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11 Myths about poverty and inequality Poverty exists only in developing countries

12 Poverty rates in selected industrial nations (Sullivan 2003) England 21% United States 17% Canada 11% Australia 10% Spain 10% Germany 8% Italy 7%

13 Myths about poverty and inequality Poverty is poor people s fault! Actually, the majority of people living in poverty work for a living, but at low-paying jobs. 50% of poor people who do not work are either ill, disabled, retired, or have looked for work but could not find it. An additional 30% cannot work due to child obligations.

14 Types of economic systems and views on poverty

15 Capitalism (The Market Approach) 1. The means of economic production and distribution (e.g., labor, natural resources, technology, and capital) are privately held. 2. Trade and competition are free. 3. The profit motif is the primary force guiding people s economic behavior.

16 Capitalism (cont.) The pursuit of profits is considered appropriate because: Companies have the incentive to produce more and better goods and services. Entrepreneurs will develop new goods and services and market these to consumers. According to Adam Smith, the 18 th century economist, profit seeking and competition act as an invisible hand, which ensures that the supply of goods is equal to the demand for them.

17 Capitalism (cont.) The government should stand aside and let market forces operate The gov t should not interfere with regulating prices or wages. The role of the gov t should be limited to maintaining public order and protect people against foreign threats.

18 Capitalism (cont.) Proponents of capitalism: Believe that poverty is a result of high gov t interference. Point to the wealth of the United States and Western Europe, as examples of success.

19 Capitalism (cont.) Opponents of capitalism: Point to the fact that the prices of goods set by the market do not correspond to the true cost of those goods.

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21 Capitalism (cont.) Opponents of capitalism: Point to the fact that economic growth does not usually benefit the poorest of the poor. Point to the inequitable distribution of income in capitalist countries.

22 Capitalism (cont.) In the United States, the wealthiest 1% of the population possesses 40% of the nation s wealth. In Brazil, the wealthiest 20% of the population possesses 62% of aggregate income, while the poorest 20% possesses 3% of that income.

23 Socialism (The State Approach) 1. The means of production and distribution are collectively held, so that the goods and services people need are equitably distributed. 2. Production is based on human need, rather than human demand (as in capitalism). 3. The profit motif is not acceptable because it is viewed as an incentive to exploit others.

24 Socialism (cont.) The primary motivation for human activities is to achieve collective goals, such as a higher standard of living for all citizens. The economy is thus highly centralized, with decisions being made by national authorities.

25 Socialism (cont.) According to Karl Marx ( ), Society is dominated by a constant struggle between social classes over scarce resources. This results in an inequitable distribution of resources, which has little to do with rewarding talent or hard work. Desirable positions are gained through coercion, exploitation, or inheritance. Laws are made by the rich to benefit the rich (i.e., taxes, crime, etc.). The poor are convinced that their poverty is their fault, and can become affluent if they just work hard.

26 Socialism (cont.) Proponents of socialism believe that the root cause of poverty and social inequality is the world trade pattern. Historically, western European countries developed colonies to trade with. The core countries in the north became the manufacturing and commercial centers, while colonies in the periphery became the suppliers of food, minerals, and other natural resources.

27 Socialism (cont.) Even today, world trade benefits northern countries because the prices of products from the south remain low, while the prices of manufactured products from the north are increasing. Multinational corporations control world trade and drive small firms in developing countries out of business. 400 out of the world s 500 largest corporations belong to just 5 countries!

28 Socialism (cont.) Opponents of socialism: Point to the breakup of the Soviet Union. Point to the suppression of individual liberties, as a result of central planning and gov t bureaucracy. Point to the jobs created by multinational corporations in developing countries.

29 Mixed Economies Elements of both capitalism and socialism. Many industries are privately owned and oriented towards profit making. Other important industries are state owned (e.g., schools, hospitals, banks, communications, the media). High taxes and an elaborate welfare system are established.

30 The Civil Society Civil society is the space between the individual and the state (e.g., communities, voluntary groups, non-governmental organizations, grass-root movements). Civil society emphasizes social development rather than economic development. Civil society is based on the belief that neither markets nor governments can effectively reduce poverty and inequality.

31 The Civil Society (cont.) The Chipko Movement in India (1973). The Grameen Bank in Bangladesh (by Professor Muhammad Yunus). Grassroots movements against globalization, sweatshops, or wars.

32 Poverty, wealth, and environmental degradation

33 Carley and Spapens (1998)

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35 Who is responsible for environmental degradation? Sustainable development must address the issue of poverty, as poverty increases pressure on the environment (WCED 1987). People who live near [ecologically important] areas... generally tend to be among the poorest... [and their] actions, for better or worse, have enormous impacts on natural resources (Larson et al. 1998).

36 Who is responsible for environmental degradation? Parks are better supported by the public in countries with the affluence to experience them (Terborgh and Van Schaik 2002) It is an inconvenient but inescapable fact that most of the world s biodiversity, and the parks created to preserve it, are in developing countries, whereas many of the affluent people who contribute personal funds or tax dollars to support biodiversity conservation live thousands of kilometers away (Van Schaik et al. 2002).

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38 The Poverty Population Environment Stereotype (Chambers 1999) Poverty deepens Population increases Environment degrades

39 Recent studies have cast doubt on the poverty-environment stereotype

40 The unquiet woods: Ecological change and peasant resistance in the Himalaya (Guha 2000). ~ Sociological Study of the Chipko Movement

41 The Chipko Movement (Hug the Tree Movement) One of the largest social movements led by the rural poor, mainly women. Rural communities protested the exploitation of their environment by outsiders (i.e., logging companies). Rural women hugged the trees to prevent them from being cut.

42 Who is responsible for environmental degradation? The earth provides enough to satisfy every man s needs, but not every man s greed. Mahatma Gandhi ( )

43 . Overconsumption: Consumption that leads to the deterioration of natural resources, on which society depends upon.

44 Poverty vs. Overconsumption Current population % of world GNP % of world trade Food Consumption Transport and house technologies Consumption Consumer Societies 1.1 billion 82.7% 81.2% 50% of global grain production 92% have private cars 75% of world energy consumption Least developed countries 1.2 billion 1.4% 1.0% 800 mill. chronically undernourished No household electricity or telephones No adequate fuel * UNDP, World Resources Institute, Worldwatch Institute (1998)

45 Poverty vs. Overconsumption U.S.A. Switzerland China India Kenya Population 273 mill. 7 mill. 1.2 bill. 1.1 bill. 34 mill. Births/person Energy consumption /person/yr (gigajoule) % of world consumption 27% 11% 2% 1% 0.3% * The World Resources Institute

46 Affluenza: Anxiety and stress resulting from the pursuit of more things

47 Is more always better? Psychological studies have found that prosperity is often related to stress. In industrial societies people have many things, but complain about feeling empty inside. The greatest number of people in the U.S. reporting to be happy reached its peak in 1957.

48 Is more always better? Advertisements often tell people that buying certain products will make them become loved, accepted, and popular. People are in a treadmill of working harder and harder, to consume more things. Volunteerism and participation in civic organizations is decreasing.

49 Consumption vs. Quality of Life Quality of life Consumption of manufactured goods and services Carley and Spapens (1998)

50 Economic growth vs. quality of life Economic growth is measured by the Gross Domestic Product (GDP). But, GDP does not measure elements such as the state of the environment, education, volunteerism, crime, or social equality.