Margins/Berlin
MPPA-DL 452Session 5
Course Themes
• Dynamics: Globalization, Urbanization• Circuits: Transnationals, Diasporas• Centers: Agglomeration, Sprawl• Margins: New Inequalities• Ecologies: Sustainability• Architectures: A Sense of Place• Crises: Globalization in Reverse• Frontiers: Looking Ahead
Berlin, Germany
Berlin 1945
• November 2009 marked the 20th anniversary of the fall of the Berlin Wall and the beginning of German reunification.
• Begun in August 1961, the Berliner Mauer separated East Berlin from West Berlin for over twenty-eight years until November 9, 1989.
• “During this period the Wall stood as an ugly symbol of human isolation and cruelty, as about one hundred persons were killed by East German security forces while trying to cross the Wall into West Berlin.”
Source: George Mason University Libraries Special Collections and Archives
Source: Accessed at www.urban-age.net on 10/19/09
Source: Accessed at www.urban-age.net on 10/19/09
Source: Accessed at www.urban-age.net on 10/19/09
Source: Accessed at www.urban-age.net on 10/19/09
Source: Accessed at www.urban-age.net on 10/19/09
unemployment
Source: Statistisches Landesamt Berlin, accessed 10/19/09 at berlin.group.shef.ac.uk/berlin.html
Most of us make at least three important decisions in our lives: where to live, what to do, and with whom to do it.
Daniel Gilbert, Stumbling on Happiness
Civility means that the diversity of urban life becomes asource of mutual strength rather than a source ofestrangement and civic bitterness. In the past this issuehas been framed in terms of ethnicity or culture and in the current period of inequality I think it needs to beincreasingly framed in terms of economics.
Richard Sennett, Professor of Sociology, London School of Economics and Political Science and MIT
Margins: poverty and inequality
poverty is:
• lack of income• lack of drinking water• lack of access to health care• lack of protection against adverse shocks
• higher infant mortality• lower life expectancy
Country(in order of increasing GNP per capita)
% of Population below $1 a day
Bangladesh 29.1
Kenya 26.5
Sri Lanka 6.6
Indonesia 7.7
Philippines 14.6
Jamaica 3.2
Paraguay 19.5
Costa Rica 6.9
Malaysia <2
Brazil 9.0
poverty across countries
less and more poverty in the world
inequality across countriesCountry(in order of increasing GNP per capita)
Income share of lowest 40% of households
Ratio of highest 20% to lowest 20%
Bangladesh 22.9 4.0
Kenya 10.1 18.3
Sri Lanka 22.0 4.4
Indonesia 20.4 5.1
Philippines 15.5 8.4
Jamaica 16.0 8.2
Paraguay 8.2 27.1
Costa Rica 12.8 12.9
Malaysia 12.9 11.7
Brazil 8.2 25.7
United States 16.1 8.5
the more equal vs. less equal
Today there are more part-time and temporary jobs and generally fewer protections and fringe benefits for growing portions of the workforce. These changes in the employment relation have contributed to reshaping the sphere of social reproduction and consumption, which in turn has a feedback effect on economic organization and earnings…it reproduces growing income disparity, labor market casualization, and consumption restructuring along high- and low-end markets.
Saskia Sassen, Cities in a World Economy, p. 173
does inequality matter?
• poverty is a more pressing imperative than inequality– if we can improve living standards of the poor at the
cost of some inequality, it’s worth it• inequality reflects a “natural” distribution of
talents and capabilities, as well as effort• inequality is good because it creates incentives
for effort– efforts to overcome it (by taxes and redistribution) stifle
effort
skeptical view:
• extreme income inequality leads to inefficiency
• lack of access to credit leads to under-financing of good productive opportunities
• since the middle class has the highest average and marginal saving rates, income inequality leads to lower saving and investment
economic view:
does inequality matter?
• inequality in income and assets are associated with inequality in political power, which influences patterns of government spending and services
• extreme income inequality leads to political and social instability
• “the poor try revolution while the rich try corruption and rent-seeking to retain power”
• violates notions of fairness and justice
political and moral views:
does inequality matter?
the Lorenz curve
income distribution
Gini coefficient
Gini coefficient
total poverty gap
TPG = the amount relative to the poverty line that has to be transferred to poor households to bring their incomes up to the poverty threshold
income distribution
the Kuznets curve
time
the “Kuznets process”
• the economy comprises a low-inequality and poor (low-mean) rural sector, and a richer urban sector with higher inequality
• the migration process is such that a representative slice of the rural distribution is transformed into a representative slice of the urban distribution
absolute poverty will fall with urbanization; income inequality will rise up to some point then fall (inverted U)
Inequality
Urban population share
Total poverty
Rural poverty rate
Urban poverty rate
poverty and inequality under the Kuznets process
growth leads to less poverty
% poor has declined
drivers of economic growth
• investment• education• population• inflation• inequality• foreign aid• redistribution
+denotes a positive effect in the direction shown
?
–
+
+
–
–
–
Source: Gylfason and Zoega (2000)
Does urbanization reduce poverty?
rural poorer than urban
migration to cities
• jobs/income – more (agriculture diverse)• health care - better• education - available
• risks: – inequality– crime– political instability