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Grade 12 Global Issues - Global Wealth and Power

Grade 12 Global Issues - Global Wealth and Power

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Published by bgeller4936
Resource guide for Grade 12 Global Issues-Global Wealth and Power course
Resource guide for Grade 12 Global Issues-Global Wealth and Power course

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Published by: bgeller4936 on Jul 07, 2013
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Draft Global Issues Pilot August 2011 1
Area of Inquiry – Poverty, Wealth and Power
Introduction and key concepts
Wealth, power: these are two things most people aspire to. They are also the hallmarks of prosperousnations and successful corporate entities.
Wealth is – simply put – an accumulation of resources.
Awealthy (or rich) individual, community, or nation has more resources than a poor one.
Power is theability to exert control over one’s environment
or other entities, which both constrains and enables.Both are intimately tied to societal structures.In Canada, most people have wealth unimaginable to the rest of the world.Canada's net worth per capita came in at $70,916 US in 2006, the same yearthe United Nations Millennium Development Goals were put in place tosupport basic needs for the poorest individuals in the world. In contrast,Ethiopia had per-capita wealth of $193 and Congo had $180.
1% of adults areestimated to hold 40% of world wealth.
The bulk of the wealthiest adults(almost 90 per cent) are concentrated in North America, Europe and Japan.The richest 10 per cent of adults in the world had $61,000 US in assets. In contrast, globally, 50 per centof adults owned barely one per cent of the household wealth. Having assets worth just above $2,200 USwould be enough to put an adult into the top half of the world's wealth distribution.
1
 There is a widening gap between rich and poor; however this is not a simple question of extreme wealthin developed countries and extreme poverty in developing countries. Using data, European researcherHans Rosling shows how
wealth and poverty have been shifting over time.
Countries defy ourexpectations, e.g. Botswana in Africa is richer than Albania. Also, now the countries with very unequallydistributed incomes are mostly found in Latin America and parts of Sub-Saharan Africa. Incomes areoften more evenly distributed in “the West,” Asia and the Middle East.
2
 Further, the overall trend ispositive. The UN estimates that between 1990 and 2002, the number of people living in extremepoverty fell by 130 million;
the average overall incomes around the world increased by 21 per cent.
And this translates into better quality of life, including healthier populations. For example, childmortality rates fell from 103 deaths per 1,000 live births to 88.This last statistic shares something more about wealth (and its opposite, poverty).
Often defined inpurely economic terms, wealth relates to one’s capacity to engage easily and productively in society.
 This means having enough money to fulfill basic needs: food, adequate shelter, basic healthcare andeducation. Economic security is connected to employment. Having access to adequate paying and stablework makes for security. With this security come many privileges that people in developed countriessometimes take for granted, such as access to credit and loans. Without secure work, most banks andcredit companies will not provide services.
3
 
This same access to credit and loans can lead to the opposite of wealth: debt.
The debt load at anindividual and country level can be paralyzing and it impacts on decision-making, limiting choices. At anindividual level, there is an interesting paradox around wealth for the North. If – as it often is - wealth is
1
Excerpted fromhttp://www.cbc.ca/news/business/story/2006/12/05/globalwealth.html 
2
Gapminder.org
3
Excerpted fromhttp://www.un.org/cyberschoolbus/poverty2000/work.asp 
 
 Almost 90% of the wealthiest adults are inNorth America,Europe and  Japan.
 
Draft Global Issues Pilot August 2011 2defined as the value of physical and financial assets minus debts, then paradoxically, high incomecountries have some of the poorest people in the world in terms of household wealth because of theirlarge debts, often for mortgages. In a report for the Canadian Centre for Policy Alternatives, SteveKerstetter finds that only those with above-average wealth have assets beyond housing that can be usedin the event of a financial crisis.
4
 At a macro-level, debts and deficits are common. Many countries have crippling debts which impact ontheir ability to deliver, for example, social services. Even in Canada, cuts in social spending have beennoted including to reduce the deficit. And these hit women and children the hardest. Globally, womencomprise 70% of the world's poor (UNDP). In Canada, the poverty rate for women in general is 20%, forwomen of colour is 37% and for aboriginal women 43%. 41% of people using food banks are children,and there are over 1.2 million Canadian children living in poverty.
5
 
The impact of debt is more pronounced in developing countries, where the sums borrowed fromwealthier countries and international banks are staggering
and often come with terms attached (e.g..,structural adjustment). In Africa an estimated 500,000 more children died from the imposedrestructuring of their countries’ economies to ensure increased flows of money to external banks, whilespending on health care declined by 50 per cent and on education by 25 per cent since structuraladjustment programs began.
6
 
Challenges associated with debt and deficit spending are compoundedby military spending.
The Stockholm International Peace Research Institute notes the increasingconcentration of military expenditure, i.e. that a small number of countries spend the largest sums. Thistrend carries on into 2009 spending. For example, the 15 countries with the highest spending accountfor over 82% of the total. The USA is responsible for 46.5 per cent of the world total, distantly followedby the China (6.6% of world share), France (4.2%), UK (3.8%), and Russia (3.5%).Debt relief is starting to come for the most heavily indebted poor countries (HIPC). In July 2005,Governments agreed to 100% cancellation of multilateral debts owed by HIPC countries to the WorldBank, IMF and African Development Bank. Debt relief must be tied to increased aid. However, despitethe fact that donor nations’ wealth increased from the 1990s to 2009, the level of aid (tied to thatgrowth) did not increase. In the 1990s, it actually fell. Aid for the poorest countries remained at a steadydollar amount in this period. Government donations are complemented by private aid or donationsthrough the charity of individual people and organizations. Americans privately give at least $34 billionoverseas — more than twice the US official foreign aid of $15 billion at that time - although this includesabout half that amount in remittances (OECD 2010; Globalissues.org; Aid and Comfort).What makes some people poor and others rich? It is common sense that wealth comes from hard work,from acquiring certain skill sets. Although there is truth to this, there are structural reasons why somepeople get richer and others do not. At a social level, there are insiders, boys’ clubs, Ivy League, “elite.”And it is also true that success breeds success. Although one learns more to be about the structurewherein one is operating, which can lead to a better or more nuanced strategy – paired with hard work.As Albert Einstein says, “You have to learn the rules of the game. And then you have to play better thananyone else.” In terms of the link between wealth and success, it is important to note that as oneaccrues wealth, it becomes easier to access credit to invest in start up costs. This means that one is able
4
Steve Kerstetter,
Rags and Riches: Wealth Inequality in Canada
, 2002, Canadian Centre for Policy Alternatives,http://www.policy.ca/policy-directory/Detailed/Rags-and-Riches_-Wealth-Inequality-in-Canada-1233.html 
5
Centre for Social Justice.
6
John McMurtry,
Unequal Freedoms; The Global Market as an Ethical System
(Kumarian Press, 1998)
 
Draft Global Issues Pilot August 2011 3to leverage more highly for higher (potential) success. Business loans, micro-credit and angel investorsare antidotes to this liquidity challenge but they will not replace the ability for those with significantassets to make their own decisions. At a higher scale, this can apply to provinces, parts of a population(e.g., aboriginal peoples), countries or regions. Ready access to resources (including an educated andhealthy population) strengthens the ability of these actors to be free in their decision-making.A framework that is useful in understanding how resources (wealth) can lead to enhanced autonomyand increased well-being is the capability approach. Through it, Nobel prize winner Amartya Sen arguesfor
five components in assessing capability
:1.
 
The importance of real freedoms in the assessment of a person's advantage2.
 
Individual differences in the ability to transform resources into valuable activities3.
 
The multi-variate nature of activities giving rise to happiness4.
 
A balance of materialistic and non-materialistic factors in evaluating human welfare5.
 
Concern for the distribution of opportunities within society
7
 His fifth point about a balance of materialistic and non-materialistic factors is a critical one. Beingwealthy is not the same as well-being, unless wealth is defined in terms beyond the purely economic.Indeed, “one of the most significant observations is that in industrialised nations, average happiness hasremained virtually static since the second world war, despite a considerable rise in averageincome…These days even hard-headed economists tend to agree that the key to making people happieris to shift from pure economic growth - which fuels a consumerist culture that is antithetical tohappiness - to personal growth.”
 
8
 
What structures set the parameters for wealth accrual and resource flow? At its heart, it is the modernsystem of free trade, free enterprise and market-based economies which emerged around 200 yearsago, as one of the main engines of development for the Industrial Revolution.
9
The economies of less-developed countries rely mostly on agriculture and related subsistence activities – people need food if nothing else.
As incomes increase, economies becomes industrialized, followed by growth in theservice sector, where industry and agriculture shrink.
This economic development pathway hastraditionally led to better living conditions and a healthier population – this was the case for many Asiancountries in the 50s and 60s. A recent World Bank report confirms, “Most countries…start out with arelatively high dependence on natural capital and those that progress most successfully manage theirassets for the long term and reinvest in human and social capital as well as in building strong institutionsand systems of governance.”
10
 However, development is not guaranteed – many nations have facedsetbacks to development, such as economic recessions, famines, and medical epidemics like HIV/AIDS.Some countries have leapfrogged over this development path and became wealthy by exporting their oilresources: oil continues to be a major source of wealth and power in today’s economy.The global trade and financial system affects every one of us, even if we don’t see it functioning on adaily basis. The goods we consume, the state of our corporations, our national security and our wealthas a country are all tied up in global wealth structures and our relationships with other countries.International trade decisions are often made in favour of countries that can do things cheaply and
7
Amartya K. Sen (1985).
Commodities and Capabilities
. Oxford: Oxford University Press.
8
Michael Bond, The Pursuit of Happiness, New Scientist vol 180 issue 2415 - 04 October 2003, page 40,http://matus1976.com/eudaemonists/articles%20essays/persuiofhappiness_1.htm
9
Globalissues.org
10
http://data.worldbank.org/news/the-changing-wealth-of-nations

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