Globalization and Trade and Poverty: Crash Course Economics #16

Introduction

In this section, the hosts introduce the topic of poverty and extreme poverty and emphasize the importance of understanding and addressing these issues.

Poverty and Extreme Poverty

• Poverty is defined differently in different countries based on their standards of living.

• Extreme poverty, as defined by the United Nations (U.N.), refers to severe deprivation of basic human needs, including food, water, sanitation, health, shelter, education, and information.

• The U.N. set a goal to eradicate extreme poverty and hunger by reducing the number of people living in extreme poverty by half.

• As of 2015, there are still 836 million people living in extreme poverty worldwide.

• Globalization and trade have played a significant role in reducing extreme poverty.

Millennium Development Goals

This section discusses the Millennium Development Goals set by the United Nations in the 1990s.

Eradicating Extreme Poverty and Hunger

• The United Nations created eight Millennium Development Goals with a deadline of 2015.

• The first goal was to eradicate extreme poverty and hunger.

• Different countries have different standards for defining poverty.

• In the U.S., a person is considered living in poverty if they make less than $11,770 per year.

Definition of Extreme Poverty

This section explains how extreme poverty is defined by the United Nations.

Severe Deprivation of Basic Human Needs

• Extreme or absolute poverty is defined by the U.N. as living on less than $1.25 per day.

• It includes severe deprivation of basic human needs such as food, water, sanitation facilities, health care, shelter, education, and information.

Progress in Reducing Extreme Poverty

This section discusses the progress made in reducing extreme poverty.

Reduction in the Number of People Living in Extreme Poverty

• The U.N. reports that as of now, 836 million people still live in extreme poverty.

• However, this number has decreased from 1.9 billion, indicating progress.

• The World Bank predicts that by 2030, the number of people living in extreme poverty could drop to less than 400 million.

Challenges and Issues

This section highlights the challenges and issues associated with extreme poverty.

Persistent Problems for Those Lifted Out of Extreme Poverty

• Most people who have been lifted out of extreme poverty are still poor and face serious problems such as disease and lack of access to water.

• Income inequality is prevalent, and a significant portion of the population still lacks electricity.

Factors Contributing to the Reduction of Extreme Poverty

This section explores the factors contributing to the reduction of extreme poverty.

Role of Globalization and Trade

• Better access to education, humanitarian aid, and policies implemented by international organizations like the U.N. have made a difference.

• The greatest contributor to reducing extreme poverty is globalization and trade.

• Interconnected economies and free trade have driven the growth of many developing economies.

Impact of Globalization on Poverty Reduction

This section discusses how globalization has impacted poverty reduction.

Interconnected Economies through World Trade

• World trade has been growing since the end of World War II due to free trade agreements and advancements in transportation and communication technology.

• Mobile phones have played a transformative role in reducing poverty by providing access to banking systems, education, information, and market prices for farmers' produce.

• Globalized trade has created new opportunities for people to sell their products and labor globally.

Leapfrogging with Technology

This section explains the concept of leapfrogging and its impact on poverty reduction.

Skipping to More Efficient Technologies

• Leapfrogging refers to countries adopting more efficient and cost-effective technologies that were not available in the past.

• International trade has facilitated this leapfrogging process, allowing countries to skip outdated technologies.

• Installing cell phone towers is cheaper than running extensive telephone lines, enabling better communication access.

Winners and Losers of Globalized Trade

This section discusses the winners and losers of globalized trade.

Winners and Losers in Labor-Intensive Industries

• Companies search for the cheapest places to produce goods, resulting in labor-intensive products being manufactured in countries with low wages and weak regulations.

• The winners include corporations, stockholders, and consumers who benefit from lower prices.

• High-wage workers in developed countries may lose their jobs as production moves overseas.

• Low-wage foreign workers often earn above-average wages compared to other opportunities available to them.

Conclusion

The hosts conclude by summarizing the impact of globalization on poverty reduction.

Impact of Globalization on Poverty Reduction

• Globalization has both positive and negative effects on poverty reduction.

• While there are downsides to globalized trade, being excluded from globalization can be even worse for those living in extreme poverty.

New Section

This section discusses the different perspectives on globalization and outsourcing, including arguments against it as exploitation and oppression, calls for protectionist policies, and demands for higher wages and protections for foreign workers.

Arguments Against Globalization

• Some opponents of globalization view outsourcing as a form of economic colonialism that prioritizes profits over people.

• Calls for protectionist policies such as higher tariffs and limitations on outsourcing are made by those who oppose globalization.

• Others focus on demanding higher wages and more protections for foreign workers.

New Section

This section explores the root causes of arguments against globalization, particularly the lack of regulations in developing countries compared to developed countries. It also highlights the issue of child labor laws not always being enforced.

Lack of Regulations in Developing Countries

• Companies operating in developing countries may not have to follow the same rules and regulations as they do in developed countries.

• Some developing countries lack minimum wage laws, safe working conditions regulations, and environmental protections.

• Although child labor is banned in most countries, enforcement of these laws is not consistent.

New Section

This section discusses how public awareness and pressure from the international community can lead to improvements in worker protection. It also highlights the argument made by supporters of globalization that it can lead to more opportunities for workers and higher wages.

Improvements through Public Awareness

• Growing public awareness about worker exploitation has led to increased pressure from the international community to protect workers.

• The U.S. publishes an annual list called "The List of Goods Produced by Child Labor or Forced Labor," which exposes companies buying products from this list to criticism from officials and media.

• Awareness is seen as the first step towards improving worker conditions.

Benefits of Globalization

• Supporters argue that as developing economies grow, there are more opportunities for workers, leading to increased competition for labor and higher wages.

New Section

This section addresses the sustainability concerns associated with globalization. It discusses the impact of deforestation, pollution, and climate change on the planet and how increasing living standards can lead to greater demand for consumer goods.

Sustainability Concerns

• Critics argue that globalization's lack of sustainability is a major drawback.

• The growing global economy contributes to issues such as deforestation, pollution, and climate change.

• Increasing living standards may lead to higher demands for consumer goods like cars, meat, and smartphones.

New Section

This section emphasizes the challenge of lifting people out of extreme poverty while ensuring environmental sustainability. It also highlights microcredit as a way to enable participation in the economy and improve lives.

Lifting People Out of Poverty

• Globalization has helped millions escape extreme poverty, but the challenge lies in simultaneously uplifting the poor while maintaining a livable planet.

• Enabling participation in the economy is crucial for helping those in extreme poverty.

• Microcredit is an example of enabling participation by providing small loans to low-income individuals for income-generating activities like starting small businesses.

New Section

This section further explores microcredit as a means to improve lives by allowing individuals to participate in the economy. It highlights its success and widespread adoption by private lenders, governments, and nonprofit organizations.

Microcredit as an Empowering Tool

• Microcredit involves giving small loans to low-income individuals who use them to fund income-raising activities like starting small businesses.

• The success of microcredit has led it to spread across developing countries worldwide.

• Private lenders, governments, and nonprofit organizations have invested billions of dollars into microcredit programs.

New Section

This section emphasizes the potential of enabling people to participate in the economy to improve their lives. It also acknowledges that not all participants in the global economy have control over their terms of participation.

Enabling Participation for Better Lives

• Microcredit, when successful, allows individuals to improve their lives by participating in the economy on their own terms.

• Poor people are seen as innovative entrepreneurs who lack opportunities to turn their creativity into sustainable income.

• While some benefit from participating in the global economy, many still face jobs, wages, and working conditions that are far below developed world standards.

New Section

This section concludes by acknowledging the progress made in lifting people out of extreme poverty but highlights the challenges and ethical concerns associated with it.

Progress and Challenges

• The progress made in reducing extreme poverty is recognized by economists, even though many still face difficult working conditions.

• The video ends by thanking viewers and announcing the next episode.

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