GT33M- Contemporary Issues in the Politics of Industrial Societies

GT33M- Contemporary Issues in the Politics of Industrial Societies.

Poverty/ Quality of Life.

Topic Six.

Lectures 12 & 13.

March 16, 2001.

Introduction: New thinking on poverty

The World Development Report 2000/01 defines poverty on three dimensions:

Opportunity: Expanding economic opportunity for poor people by stimulating growth, making markets work better for poor people, and working for their inclusion in building up assets such as land and education;

Empowerment: Strengthening their ability to make decisions that affect their lives and removing discrimination based on gender, race, ethnicity and social status;

Security: Reducing their vulnerability to illness, economic shocks, crop failure, unemployment, natural disasters and violence and helping them to cope when these occur.

In political terms it is about powerlessness and voicelessness. These lead to social exclusion from the benefits of a decent quality of life and the means to do something about it. Poverty is not just a material state of being but a political condition.

Liberal market democracies of the industrial societies promise to overcome poverty by two means: the market as the basis of material development and democracy as the politics of inclusion of all to affect the decisions about their lives and lifestyles.

Developed countries have a high standard of living but still have many problems with the quality of life. Rich countries do not automatically overcome quality of life problems such as political alienation, violence, racism, income insecurity, homelessness, crime, pollution, urban decay. This raises the question of how >development= is to be understood when we use the term >developed countries.= If it is defined in terms of macro-economic and political indicators of developed liberal democracy such as levels of freedom, GNP per capita, access to telephones, motor vehicles, literacy and education, life expectancy, etc., then the developed countries fit.

However, if development is defined as sustainable human development, on the basis of quality of life indicators, as the UNDP sees it, then there are critical problems that these countries still have to overcome. The UNDP says, ASustainable development is not only development that generates economic growth but distributes its benefits equitably; that regenerates the environment rather than destroying it; that empowers people rather than marginalizing them. It is development that gives priority to the poor, enlarging their choices and opportunities and providing for their participation in decisions that affect their lives. It is development that is pro-people, pro-nature, pro-jobs and pro-women.@ (HDR, 1994, p.iii).

There are two pictures of developed countries, a more positive standard of living and a more negative quality of life. Developed countries show a high standard of living in political, economic and social characteristics.

GNP per capita

Developed countries range from a high of $37,930 (Switzerland) to $9,320 (Portugal). The lower income developed countries are Portugal, New Zealand, Spain and Ireland, while at the top end, there are, the United States, Switzerland, Japan, Denmark, Norway.

Social indicators

Literacy rates range from 95% and above, life expectancy ranges from 76.4 (US, Ireland) to 79.9 (Japan). Infant mortality, 4-8, per 100,000; 4- Japan, Sweden, Finland; 8 - US.

Distribution of Income

Income distribution between the highest and lowest 20% of the population is such that the top 20% earn between 36% and 48% and the bottom 20% consume between 5% and 8%.

In the US in 1995, 20% of the population held only 4% of the national income and the wealthiest 20% held 11 times the wealth of the poorest 20%

There is income inequality in all countries. However, the bottom 20% of the population of the developed countries consume more than their counterparts in the middle and low income countries because their absolute income is higher, more of them are employed and GNP is higher. For example if one consumes 5% of GNP which is $20,000, one gets more than if one consumes 3% of GNP which is $7,000.

Other:

The developed countries have the highest percentage of populations with access to health care, safe water and the lowest levels of malnutrition. They have the highest levels of enrollment in primary, secondary and tertiary levels of education, and the highest levels of urbanisation.

Problems of development - The Quality of life

The standard of living of the developed countries does not translate equally well into a better quality of life for all. While the problems of underdevelopment in the developing countries are well known, problems persist in the developed countries.

Unemployment

Many developed countries are experiencing their highest levels of unemployment in 40 years, excepting the US which is experiencing its highest level in 30 years. Unemployment is especially high in the lower income developed countries like Spain (22%) and Ireland (13%), but it is also high in Finland (17%), and France (12%). It ranges from 8% to 10% in Australia, Belgium, Canada, Germany, Sweden, the UK.

Income insecurity

Among the employed there is still a problem of income insecurity. In the European Union, 28% of the workforce or about 44 million people receive less than half the average income of their country. Minority groups, indigenous people (the US, Canada, Australia, New Zealand) and the disabled have much less income security.

Migrant workers earn even less. In Germany, Turkish workers earn on average only 73% as much as German workers. (In 1995, some 26-30 million migrants lived in Europe).

In the UK, almost half of the working women do not earn enough to afford the rent of a one-bedroom flat.

In 1998, about 35 million people were unemployed in the OECD countries. In the UK, some 25% of all jobs were part-time in 1997. (WDR, 2000, 40). In Australia it was 30% and Switzerland, it was 25% (1998). It is usually more than twice as high for women. (WDR, 2000, 241). Part-time employment provides less income security than full-time work.

Poverty

In both the US and the EU, nearly 15% of the population live below the poverty line. In Germany it is about 11% but for foreign born residents, it is 24%. The figure is about one-third for the developing countries. It is highest in Ireland, Spain, and the US.

Child poverty

Poverty is greatest amongst the most vulnerable - the aged and children. Among adults, it is highest among single women over 65 where over 50% live below the poverty line, and children in one-parent homes (over 60%). Britain has the highest level of unmarried teenage motherhood in the industrialised countries. Of children born to mothers aged 15-19, 87% were born outside of marriage in Britain in 1994, 62% in the US, compared to 10% in Japan.

Single-parent families are poorer than two-parent working families and single-parent families are increasing. In 1980, 77% of children lived in two-parent families. In 1996, this declined to 64%. In Black families, this is only 36% compared to 76% for white children. (www.childstats.gov/ac1999/heirel.asp).

The number of poor children living in poverty are: US (26.3); UK (21.3); Italy (21.2), Australia (17.1), Canada (16), Germany (11.6), France (9.8), Switzerland (6.3) according to UNICEF (www.lanka.net)

One in six of the 47 million children in OECD countries live below the accepted level of poverty.

The US and UK are at the bottom of 23 industrialised countries on child poverty. In the UK, It is twice as great as France or Holland and five times greater than in the Nordic countries. (www.findarticles.com)

Homelessness.

Homelessness is a major problem. Three million people in 15 EU countries are homeless and three-quarter million in the US. In major cities such as Toronto there are 5,600 homeless, 10,000 in Paris, 250,000 in New York and 400,000 in London. Homelessness leads to despair. A 1995 study in the US showed that a quarter of young people in emergency shelters and a third of street people had made at least one suicide attempt.

Illiteracy

Eighteen percent of adults in 12 European countries and North America have such low levels of skills that they cannot meet the most basic reading requirements of modern society.(hdrc.undp.org.in/undpscripts.htm)

Seventeen percent of Irish young adults, 16-23 are functionally illiterate, compared to 3% in Sweden and 5% in Germany.

Illiteracy rates range from 18% to 22% in Belgium, New Zealand, Ireland, the UK and the US.

Personal security- crime.

Poverty is related to personal insecurity since poor people live in more crime-prone areas and are generally more vulnerable and can less afford the costs of crime. In 1992, the number of crimes reported in the US was 14 million costing the society $425 billion.

This is related to the growth in drug crimes. Drug-related crimes have doubled in Denmark and Norway but increased by 30 times in Japan. The growth of drug crimes is also quite high in Australia.

Drug consumption per capita is highest in the US and Canada. In the US, consumer spending on drugs is thought to exceed the combined GDP of 80 developing countries. Drug addiction might be a sign of alienation from society, found more among the poor and the costs of addiction are also heavier among the poor and help to create poverty.

Other violence.

Other forms of violence also affect the poorer members of society. Industrial accidents and harassment are other problems. In 1992, in the US more than 2 million workers were physically attacked at their workplace, 6.5 million threatened with violence and 16 million harassed. Millions are killed or injured in industrial accidents at the workplace.

In 1993, 150,000 cases of rape were reported in the US, where it is highest among developed countries. Nearly 3 million children were reported to be victims of neglect and abuse and in 1992, some 7,000 American children died from gunshot wounds.

Racist violence is also on the increase. It increased by 25% in Germany in 1997 and offences by the extreme right increased by 34%.

Environmental pollution.

The poor are also less protected from environmental pollution. About 60% of Europe=s commercial forests suffer damaging levels of sulphur dioxide. In Sweden, 20,000 lakes and in Canada, 48,000 lakes have dangerous acidic levels. Increased radiation in the atmosphere has led to a growth of skin cancer by 80% in the US between 1982 and 1989. The US is the world=s biggest producer releasing 1,300 million tonnes of carbon dioxide in the air each year.

Environmental problems cause lung disease. The UK has the highest number of cases of childhood asthma in the world, affecting 1 million children.

(HDR, 1994, pp.30-37).

Comparative Poverty.

In the EU in 2000, 40 million persons were suffering from poverty, marginalisation and exclusion. In Spain, some 20% of the population are excluded.

Social exclusion has become a key way of defining poverty and applies to a situation where people=s material, cultural and social resources are so limited that they are excluded from the minimum standard of living expected in that society.

Sweden has the lowest level of poverty (6.8), followed by the Netherlands and Germany. At the highest end are the US (16.5), Ireland (15.2%) and the UK (15%).

Poverty has little to do with a country=s average level of income, but rather its distribution - equity. The US has the highest per capita income of 17 industrialised countries, but has the highest poverty index. Sweden with the lowest poverty index ranks 13 in per capita income. The Netherlands and UK, with the same average income have different poverty indices (8.5 and 15%, respectively).

In the industrialised countries, 100 million people suffer from monetary poverty, that is, have 50% of average disposable income. This affects children, the aged, and single-parent families, especially those headed by women, the most. In countries with strong welfare states, this makes a major difference. In Belgium, the rate of monetary poverty is 6%, whereas without welfare it would have been 28%.

Order of poverty (UNDP, 1998)

In descending order, the level of poverty among industrial countries is: Sweden, Holland, Germany, Norway, Italy, Finland, France, Denmark, Canada, Japan, Belgium, Australia, New Zealand, Spain, UK, Ireland, US.

The US is the poorest country, but on GDP, it is the richest country.

Country Poverty Index GDP Illiteracy % below

US 16.5 (17) 32,184 20.7 19.1

Germany 10.5 (3) 23,010 14.4 5.9

France 11.8 (7) 21,132 ND 7.5

Sweden 6.8 (1) 21,079 7.5 6.7

Denmark 12.0 (10) 25,459 ND 7.5

Holland 8.2 (2) 24,141 10.5 6.7

Canada 12.0 (10) 25,179 16.6 11.7

Italy 11.6 (5) 21,531 ND 6.5

Japan 12.0 (10) 24, 075 ND 11.8

Belgium 12.4 (11) 23,677 18.4 5.5

Norway 11.3 (4) 27,391 ND 6.6

Australia 12.5 (12) 24,192 17 12.9

Finland 11.8 (7) 21,833 ND 6.2

N. Zealand 12.6 (13) 17, 597 18.4 9.2

Spain 13.1 (14) 17,223 ND 10.4

Ireland 15.2 (16) 23,194 22.6 11.1

UK 15.0 (15) 21,673 21.6 13.5

Market democracy and Welfare democracy.

Why is it that the United States with the highest GDP of all the industrial countries, show the greatest proportion of citizens and children living below the poverty line and ranked last on the human poverty index with the United Kingdom coming in next?

In contrast, continental European countries do better.

One explanation is that the US and UK have traditionally practiced a free market capitalist democracy while Europe has followed a welfare model of capitalist democracy. The welfare model does better in providing opportunity, empowerment and security.

For instance:

- In Europe, unemployed workers receive unemployment benefits up to 90 percent of their last earned net income for long periods, sometimes more than four years. In the US they receive 50% for a month shorter time, about six months.

- In Europe, employment protection is strong, unions are influential, most workers are covered by collective bargaining agreements, and wage inequality is generally low. In the US, employment protection is weak and workers can be laid off at very short notice, union influence is much weaker and wage differentials are greater. For example, in the Netherlands, the top 10 percent of wage earners earn 2.5 times as much as the lowest 10 percent. In the US, the top 10 percent are paid 4.5 times as much as the bottom 10 percent.

- European welfare states, especially the Nordic countries (Sweden, Denmark, Iceland, Norway) but also the Netherlands and Austria have generous unemployment benefits, more organised labour movements, corporatist wage setting (between government, unions and business), high levels of social security, low wage inequality and high tax rates, while the US and the UK have lesser welfare systems and rely more on the market for individual benefits. In the United States, 40 million Americans have no life insurance, the highest uninsured population among industrial countries.

- Taxes are highest in the Nordic countries but these countries have the best welfare states and are best to live in if you are poor. The US has one of the lowest tax rates, which is good if you are rich.

- In the Nordic countries, all young children up to primary school are provided with generous subsidies and day care to allow mothers to go to work;

Welfare reforms threaten the poor.

Social security systems are providing less of a safety net for the poor. Between 1987 and 1990, the real benefits per pensioner declined by between 40% and 50% in many developed countries. In Germany, the government proceeded to cut unemployment and welfare payments by US$45 billion between 1994 and 1997. This was the largest cut in Germany=s post-war history. This is the result of attempts to reform welfare states by cutting back the role of the state in welfare.

In the US, Clinton had proposed to cut welfare entitlements after people have been on welfare for five years. But over one million children belonging to welfare dependent mothers would suffer.

These cuts in welfare were being proposed or undertaken when GNP in industrialized countries doubled between 1980-1995.

Welfare has become more costly.

- The elderly have pensions now making up 25% of state spending in industrialised countries, twice the figure of 25 years ago.

- In France taxes are higher than Germany and social spending higher than in Britain. Attempts to cut back state spending have caused street riots.

- in Britain when unemployment affected half a million people in the 1960's, social security transfers was 6 per cent of GDP. Now with unemployment over a million, these transfers are 12 % of GDP.

- OECD countries spend about 40% of GDP on state benefits. Unemployment benefits is affordable when unemployment is low but become expensive when it is high.

Welfare cuts are attractive to the middle class taxpayers and capitalists, both wanting lower taxes or personal security schemes in the market, e.g. Health, private schools.

- Attempts to reform the welfare state has caused more poverty. Britain has experienced the greatest rise in inequality in the past 20 years of all industrialised countries and 20-30% of the households receive less than half the national average income (used to define poverty), an increase of three times. Britain was 9 out of 11 EU countries on social expenditure spending in the 1990's.

The new welfare thinking:

Social democratic thinking accepts that:

- society has a responsibility to help people who are in genuine need and are unable to look after themselves;

- individuals have a responsibility to help provide for themselves when they are able to do so;

- work is the best route out of poverty for people who are able to work.

This leads to many complex questions in the debates between social democrats and conservatives:

- should there be full individual responsibility or what degree of collective responsibility should there be for unemployment, disabilities, old age, sickness.

- what benefits should be provided and what should be the basic, minimum level.

- should benefits be restricted to citizens.

- should benefits be means-tested and paid for out of taxation or be universal and paid for out of social insurance schemes.

- should benefits be redistributive and set at levels that reduce inequality or be restricted to meeting subsistence levels and relieving hardships.

-should benefits be increased in line with earnings or restricted to increased inflation.

Conclusion.

One of the contemporary issues for industrial societies is how to divide the responsibility for people=s welfare between the state, market, civil society (charities, churches etc.,) and individuals themselves. This is at the heart of the debate over welfare reforms. But these issues raise deep philosophical and practical questions which divide social democrats and conservatives. At risk in this debate is the fate of the poor. Social democratic parties are stronger in the governments of continental Europe than in the US or UK. In the US, the new Republican administration represents the greatest threat to the policies that support the poor at a time when the US economy is slowing badly.

In spite of their advanced industrial status, serious problems of poverty remain in the industrial countries. While they have resolved many of the economic and infrastructural problems of development, they still have to deal with critical human problems.