Poverty and Economy

Poverty and Economy
Kiyoshi is Japanese and has been homeless for six years. He and hundreds of others in Tokyo live on the street and earn less than 10 dollars per day. Due to the financial collapse that occurred in the 1990s, many people lost their jobs and live in parks or tents in the middle of the city. Japans situation is an important example of how financial crisis can destroy a country and how difficult it is to recover from it.
The loose lending that occurred in 1990 was followed by collapse of property and shared prices. The banks started to go bust and only the 400 dollars that were spend on a governmental bail-out helped the economy to stabilize in 2003. Although the economy started to recover, the situation in Japan had changed. The income inequality increased, the long term jobs were replaced by part time jobs and the street crime spread. In the year of 2003, 25,000 homeless were counted, and although the government tried to build temporary houses, this only caused more problems. Today, Japan is in a better economic situation, but Kyoshi is still homeless, and so are many others.
Melissa John
The legacy of depression
L-shaped poverty lines
Oct 16th 2008 TOKYO
From The Economist print edition

Pasted from <http://www.economist.com/finance/displaystory.cfm?story_id=12437739>

One World?

One World?
Globalization hasn’t suddenly appeared in the past 10 years, it has reappeared. Even before WWI there were attempts of globalization, but with WWI and II and the Great Depression, it was only in the 1970s with the collapse of the Bretton Wood system, that determined that fixed exchange rates, that a rebirth of the capital market appeared. Two forces drove the increased flows of goods and money; the improvements in technology, where costs of communication and computing fell rapidly, and liberalization, which, also due to GATT, almost all countries are more open to foreign trade. Suddenly, there is a clear worldwide trend in globalization. As cross-borders flows of trade, national economies become more integrated, there’s an increase in investment and financial capital, and consumers buy more goods. This globalization buzz can be viewed from two sides. The positive view shows the boost in productivity and the rise in living standards. The division of labor between countries is better and firms can exploit bigger economies of scale. Critics argue however that jobs will be destroyed and wages will be pushed down due to the increases competition from developing low-wage countries that they predict for the future. They see a “race to the bottom” in the pressure of businesses to compete. In the end, there is no right or wrong, but there is the big question whether globalization can be reversed a second time.
http://moodle.zis.ch/mod/resource/view.php?id=15411

Globalization Definitions

Definitions of Globalization

Globalization: a movement in which our livelihoods, through businesses and economies, become interdependent. The increasing trade between nations, the growing market for the selling of products, and the cheapest manufacturing of products are all effects of globalization.

Economies of scale: theory that states that it is better to produce at large quantities and sell it all than to sell everything of a smaller quantity of goods. Production should be cheaper and the products should be sold to more customers.

Footprint: Refers to the different countries a company works/is located in to maximize the area and gain economic stability.

Multinational corporations: These are businesses and companies that originated in the 20th century and manufacture and sell in multiple foreign countries. They often develop the products in their native country and then manufacture them in other, mostly Third World, countries where production is cheaper. These corporations exert power over other businesses or even the government, and are viewed as employment opportunities and technology improvers by proponents, while critics see them as exploiters of developing countries and a reason for the losses of many jobs.

Conglomerate: corporations which merge with another corporation, their products however are largely unrelated, bringing the corporation growth and profit. This vertical integration emerged in the 1960s and back then was very common among investors whose stock prices then rose.

Merger: Merging is the coming together, fusing of two or more companies. The property is transferred to one corporation, who absorbed the others. There are three different types of mergers; vertical, horizontal and extensional. Vertical mergers combine different businesses, such as a car and a clothing company. Horizontal mergers integrate related businesses such as two beer companies. Extensional mergers bring together two businesses that then go into a new market. From this, a hostile takeover happens, where, against its will, one weaker business is swallows by a stronger one.

Competition: the rivalry between businesses in supply and demand, where businesses compete against one another to supply and gain an economic service. A major theme in competition is monopoly, since monopoly endangers the entire concept of competition.

Monopoly: when on the market one seller exerts power and controls the market by being the only seller of a certain commodity. Oligopoly is a situation in which a few sellers control the market, mostly two or three. This is not uncommon nowadays, whereas there are many attempts to avoid monopoly, since it eradicates a free market and market competition.

Cartel: cartels are national or international groups of sellers and manufacturers who come together to fix prices, divide markets or split profits in order to become stronger and stand a chance against the greater, more powerful corporations on the market. Cartels are mainly forbidden, by the outset of WWII, Germany had many cartels, which were closely watched and controlled by the government. Opponents claim that cartels drive out competition, while supporters say that they are merely a protection for weaker firms.
http://moodle.zis.ch/mod/resource/view.php?id=15410

The Theory of Poverty

Air-conditioning, cold freezers and electronic scanning: when we go shopping, we take all of those things for granted, since we are used to them. But facing the truth, all those factors are luxuries, at least compared to the 986 million people (in 2007) in the world who live in poverty. This number has already decreased since 2005, when the poverty rate was 1.4 billion, but this is not due to more food or money, but because the subject of poverty is better understood in the world.
According to the World Bank, the cost of living was underestimated in many countries, since it was much steeper than expected. After the "poor" were recounted in the world, the poverty line was drawn equivalent to someone living on 1.25 dollars a day in America in 2005. Critics of this approach argued that the cost of living estimates are based on the a normal representative household, but according to critics, the poor are not representative. After this, the Asian Development Bank made a study of the prices in many Asian countries, and the results showed that the poor in 9/16 countries pay less. Therefore, the theory of poverty has to be reviewed. Now the World Bank hopes for an even lower poverty rate in the next years.

The Economist
The bottom 1.4 billion
Aug 28th 2008 DELHIFrom The Economist print edition
http://www.economist.com/finance/displaystory.cfm?story_id=12010733

Grunge and the Seattle Scene

In the mid 80s a new movement was developing in Seattle, Washington which is known as grunge and is largely due to bands such as Nirvana and Pearl Jam. It combined alternative music, which was largely underground rock bands, and grunge, bands that combined punk, guitar rock and metal. This scene happened in Seattle, which was in the mid 80s quite desolate, but due to the constant rain there people started to meet indoors and bands played their songs. Then in 1988 the record label Sub Pop created the Sub Pop Singles Club, and bands such as Nirvana became known in Seattle.
With the arrival of a British journalist who observed the scene, the grunge style suddenly got more attention. After Nirvanas second album “Nevermind” came out, MTV played Nirvana nonstop and suddenly everyone knew them. But as successful as they were, marketing such as the Vanity Fair magazine made a grunge fashion line, and the style became familiar, not rebellious and unique as it was intended. Rumors and gossip surrounded the new “celebrities” of grunge rock, and the unofficial spokesman of the grunge scene, Kurt Cobain from Nirvana, killed himself in 1994. The grunge music however is still with us today and fascinates many people worldwide.

No Logo Chapter 2

“Clothing has become an empty carrier of the logo itself” is what Naomi Klein expresses at the beginning of the second chapter of No Logo. The idea is that brands are getting bigger and embody not only a lifestyle but culture itself. In the mid 90’s some brands went a step further and started to sponsor cultural event, in order to add value to the brand. The brand is therefore directly connected to an event and fully embodies a lifestyle that everyone is familiar with and likes. An example of this is the Christmas decoration sponsored by Yves-Saint-Lauren, which was put up under the condition that their logo was printed onto the lights. Another idea introduced in the chapter was “co- branding”, the idea that celebrities are linked to a certain brand. Michael Jordan is connected to Nike, just like Roger Federer is. This allows the brand to expand and make it more popular. Advertisements through product placement in media or through music such as concerts were also successful and brands sold a lifestyle that was mirrored in events and famous people that the demographic looked up to.

Poverty in Somalia

Somalia
Hunger and terror
Sep 4th 2008 NAIROBI
From The Economist print edition

There has been no pause in the country’s relentless downward spiral
IT HAS been a long, dreadful summer for Somalia. The UN says that 3.2m Somalis (out of about 8m) now need aid just to stay alive: a 77% rise on last year. A sixth of Somali infants are at risk of starving to death. Due to what aid organisations call “intolerable insecurity”, almost all international charity workers have left. Offshore, Somali pirates are as bold as ever. They are holding around ten vessels, including three large tankers with 130 crewmen captured this week.
Foreign governments still wrangle over Africa’s worst humanitarian and political crisis. UN people working for a deal between Islamist insurgents and the weak Somali government want 8,000 peacekeeping troops to replace the few thousand beleaguered African Union and Ethiopian soldiers. But more senior people in the UN’s peacekeeping office, already failing to get enough troops into Darfur, rule that out. A multinational force would be the next best thing, but who would pay? Mooted Saudi cash has not materialised.
Optimists point out that Somalia’s transitional government has at least not collapsed altogether. The prime minister, Nur Adde Hussein, survived a vote of no confidence from the parliament this week. The president, Abdullahi Yusuf, is apparently no longer standing in the way of national reconciliation. Ethiopia’s prime minister, Meles Zenawi, whose forces invaded Somalia with American backing in 2006, has hinted he may withdraw them. Hardline Islamists of the Alliance for the Reliberation of Somalia (ARS) have joined with the more moderate Islamists of the Islamic Courts Union at peace negotiations in Djibouti. The rump of the ARS, led by the former Somali army colonel, Hassan Dahir Aweys, says it will sign a ceasefire only if the Ethiopians go.
Even then, the Islamic Courts’ former military wing, known as the Shabab (meaning Youth), would fight on. Its men have been radicalised by the insurgency and have grown in confidence (or fatalism) since being classified as a terrorist group by the American administration. One of its commanders, Mukhtar Robow, wants to merge it with al-Qaeda. Together with local clan factions, the Shabab took control of the southern port of Kismayo on August 24th. A video released on jihadist websites shows Saleh Ali Nabhan, an al-Qaeda man believed to responsible for the bombing of the American embassy in Nairobi in 1998 and now sheltered by the Shabab, appealing for African Muslims to fight a holy war in Somalia. Foreign fighters are unlikely to sway a new battle for Mogadishu, the capital. But a flow of Somalis into al-Qaeda would be bad news for global counter-terrorists.

Pasted from <http://www.economist.com/world/mideast-africa/displaystory.cfm?story_id=12059342>

The Death of Somalia
In the past year, poverty has increased in Somalia by 77%. Due to "intolerable insecurity", as it is described by aid organizations, all international charity workers leave the country, and the Somalis are left to themselves. This humanitarian crisis that is causing the deaths of many people seems to be directly linked to the political problems in the country, causing more negative than positive aspects.
UN plans like the exchanging of African Union soldiers in Somalia by 8000 peacekeeping troops, and the establishment of a multinational force are turned down due to expenses and failure of similar plans in Darfur. There are a few positive factors, such as that the transitional government is still standing and that the Ethiopian forces invading the land might withdraw. Moderate and hardline Islamists also try to establish peace treaties in Djibouti. But the shadow of all these "positive" events is that the military wing "Shabab" fights on. Classified by the American administration as terrorists, the fear of counter- terrorists is that they’ll merge with al-Qaeda. This tenses up the situation for the Somalis, and increase the poverty and killing in the country. The politics in Somalia are surely not the only reason why men, women and children die, but it is an influential contributor.

Melissa John