Globalization and Trade and Poverty: Crash Course Economics #16


Adriene: Welcome to Crash Course Economics,
I’m Adriene Hill. Jacob: And I’m Jacob Clifford, and today we’re
talking about poverty and extreme poverty, which are not easy problems to talk about,
and not easy problems to fix. Adriene: But just because the problem is
difficult doesn’t mean we shouldn’t try to
understand it. So let’s get into it. [Theme Music] Jacob: Back in the 1990’s the United Nations created 8
Millennium Development Goals, with a deadline of 2015. The goals included things like reducing child mortality,
promoting gender equality, and combating major diseases. But the first on the list was to eradicate
extreme poverty and hunger. Now, poverty means different things in different countries because there’s
different standards of living around the world. In the U.S. a person is officially living in poverty
if they make less than $11,770 a year, around $32 a day. This is called the “poverty line” or “poverty threshold”,
but we’re gonna focus on extreme poverty, which according to the U.N. is “a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information.” The U.N. defines “extreme” or “absolute poverty”
as living on less than $1.25 a day. The goals set by the U.N. was to reduce the number of
people living in extreme poverty by half. Well, it’s 2015, the results are in, and the U.N. reports
that 836 million people still live in extreme poverty. But that’s down from 1.9 billion, so success.
Or at least a lot of progress. And the World Bank predicts that by 2030 the number of people
living in extreme poverty could drop to less than 400 million. Of course, that assumes
everything will keep improving as it has. But there’s an asterisk here. Climate change is
a threat to these improvements in global poverty. Adriene: So we’re moving in the right direction,
but we’re talking about extreme poverty. Most people who’ve been lifted out of extreme poverty
are still poor. Really poor. And being poor comes with serious problems, from disease
to lack of water. Income inequality is rampant, and one in seven people still live without
electricity. So why is extreme poverty falling? The answer
to this is really complicated. A bunch of factors like better access to education, humanitarian
aid, and the policies of international organizations like the U.N. have made a difference. But
the greatest contributor is globalization and trade. The world’s economies and cultures
have become more interconnected and free trade has driven the growth of many developing economies. Let’s go to the Thought Bubble. World trade
has been growing since the end of the World War II. Free trade agreements and technological
advances in transportation and communication mean goods and services move around the world
more easily than ever. And we’re talking everything. From shoes and bananas, to innovations and
ideas. Take mobile phones. Mobile phones are pretty
much good for everything, including reducing poverty. According to economist Jeffrey Sachs,
mobile phones are the “single most transformative technology” when it comes to the developing
world. Phones give people access to banking and payment systems. Better access to education
and information. In some places mobile phones help farmers get information and get the best
price for the stuff they’re producing. Installing cell phone towers is also a lot cheaper than
running thousands of kilometers of telephone lines. Economists call this “leapfrogging”. The idea
that countries can skip straight to more efficient and cost effective technologies that weren’t
available in the past. International trade has also created new opportunities for people
to sell their products and labor in a global marketplace. There are some significant downsides
to globalized trade. But the statistician Hans Rosling made this point: “The one to
two billion poorest in the world, who don’t have food for the day, suffer from the worst
disease: globalization deficiency. The way globalization is occurring could be much better,
but the worst thing is not being part of it.” Jacob: Thanks, Thought Bubble. So globalization
is the result of companies trying to outmaneuver their competitors. While you search for the
cheapest place to buy shoes, companies search for the cheapest place to make those shoes.
They find the cheapest sources of leather, dye, rubber, and of course, labor. The end
result is that labor intensive products like shoes are often produced in countries with
the lowest wages, and the weakest regulations. This process creates winners and losers. The
winners include corporations and their stockholders, who earn more profit, but also consumers who
get products at a cheaper price. The losers are high wage workers who used to make those
shoes, their jobs moved overseas. But what about the low wage foreign workers? Are they
winning or losing? Well, a lot of workers are thrown into hazardous working conditions,
but it’s also true that many workers in developing countries are at least making more money. These jobs pay above average wages. People
want these jobs and although the pay would be unacceptable in developed countries, they’re
often the best alternative. And the multiplier effect means that more money is being spent
on local businesses, so these jobs create jobs. According to the economist Paul Krugman
“The Bangladeshi apparel industry is going to consist of what we would consider sweatshops,
or it wouldn’t exist at all. And Bangladesh, in particular, really really needs its apparel industry; it’s
pretty much the only thing keeping its economy afloat.” Adriene: But not everyone agrees. Opponents
of globalization called outsourcing of jobs “exploitation and oppression”, a form of economic
colonialism that put profits before people. A few call for protectionist policies like
higher tariffs and limitations on outsourcing. But others focus on the foreign workers
themselves by demanding they receive higher wages
and more protections. The root of many arguments against globalization
is that companies don’t have to follow the same rules they do in developed countries.
Some developing countries have no minimum wage laws. They don’t have regulations that
provide safe working conditions, or protect the environment. And although nearly every country
bans child labor, those laws are not always enforced. But in the absence of regulation, it’s still
possible workers won’t be horribly mistreated. First, public awareness is growing, along
with pressure from the international community to take steps to protect workers. For example,
the U.S. produces an annual publication called “The List of Goods Produced by Child Labor
or Forced Labor”. If a company is buying products from that list, they’re likely to get blasted
by officials and the media. So awareness is the first step to improvement.
The second step comes from those that support globalization. The pro-globalization set argued
that as developing economies grow there are more opportunities for workers, which leads
to more competition for labor, and higher wages. Jacob: Perhaps the strongest argument against
globalization is its lack of sustainability. Many experts don’t think the planet can sustain
a growing global economy. Deforestation, pollution, and climate change aren’t gonna fix themselves.
Especially if increases in living standards lead people to demand more consumer goods
like cars, and meat, and smartphones. Globalization has helped millions of people
get out of extreme poverty, but the challenge of the future is to lift up the poor while
at the same time keeping the planet livable. Adriene: One of the best ways to help those
in extreme poverty is to enable them to participate in the economy. This applies to developing
countries in the global marketplace, but also to individuals at the local level. A perfect example is microcredit. In 2006
a Bangladeshi professor named Muhammad Yunus won the Nobel Peace Prize for implementing
a simple idea. He gave small loans, on average around $100, to low-income people in rural
areas. The borrowers, who are mostly female, often used the money to fund plans that could raise their
income. For example, they started small businesses. “Microcredit was a success and has since spread
to developing countries throughout the world. Private lenders, governments, and nonprofit
organizations have jumped onboard to loan billions of dollars to the world’s most disadvantaged.” By itself, microcredit isn’t going to solve
the problem of extreme poverty, but it supports the idea that enabling people to participate
in the economy can make their lives better. Yunus explains “In my experience, poor people
are the world’s greatest entrepreneurs. Every day, they must innovate in order to survive.
They remain poor because they do not have the opportunities to turn their creativity
into sustainable income.” Microcredit, when it works, allows people
to improve their lives by participating in the economy on their own terms. But we can’t
forget, a lot of people who participate in the global economy aren’t doing it on their
own terms. Many of the people who emerged from extreme poverty in the last 25 years
have jobs, wages, and working conditions that would be unthinkable in the developed world. Economists say that’s okay, it’s progress,
but it’s progress that’s awfully hard to stomach. Thanks for watching, we’ll see you next week. Jacob: Crash Course Economics was made with
the help of all these nice people. You can support Crash Course at Patreon, where you
can help keep Crash Course free for everyone forever, and get great rewards. Thanks for
watching, and DFTBA.

100 thoughts on “Globalization and Trade and Poverty: Crash Course Economics #16

  1. The air in USA was much worse earlier. Even 100 years ago coal burning was a significant problem. Why is our air cleaner now? Because we are wealthy enough to care and spend the money for the clean air. and the enviroment in general. China is too poor for that still. Economic growth saved the air in USA. Sustainability is not a problem.

  2. Sustainability???, So in simpler words you are implying that, poor countries should remain poor because the world can't afford them living the life the Europeans and Americans have been living for last few centuries?

  3. THIS DUDE JACOB CLIFFORD TRYNA MAKE ME PAY FOR HIS PACKAGE NO I WILL BE THE FREE RIDER PROBLEM AND YOU CANT STOP ME

  4. It's not doable anymore at this pace. and with this corporations gaining on the skin of the poorest an weakest. sorry.

  5. we cant ignore the fact that all trending problems of world unemployment, climate change, migration are the outcome of globalization

  6. don't forget the climate change factor….discounted the rest of the video after that stunned comment

  7. FREE. TRADE. FIGHTS. GLOBAL. POVERTY.

    One of the worst things about 2016 is that the republican party forgot that.

  8. Up until now, they've done a great job of being neutral when it came to politics but to blame world poverty partly on a problem that's not even scientifically proven. But at least they acknowledged that the solution to "exploitation" is awareness and letting the market forces take care of it.

  9. This series has been great so far, but Adriene made one infuriating inaccurate comment today. Mobile phones are NOT the single best thing that can happen to poor people. I read a while back that today, more people have cell phones in poor countries than access to a toilet, and that is just WRONG! I don't have a mobile phone, and am perfectly content not being addicted to a piece of plastic imported from China all the time. The reality is that cell phones are NOT better than landlines. Landlines are higher quality, more reliable, regulated, and much better at doing what they were designed to do. Landlines problems are virtually nonexistent, if you have a good telephone company (easy in 1957 as we Americans had the Bell System at our disposal, hard in 2017). Landlines are not a "stop" on the way to "progress". Mobile phones and landlines serve different purposes entirely.

    Unfortunately, many poor people or people in poor, developing countries don't have access to landlines or can't afford them. Furthermore, in fact, mobile phones are not equated with development at all. People in poverty and poor people in general are more likely to only use cell phones and less likely to have a landline. Mobile phones are no longer a sign of status or wealth, landlines are: people who have a landline today are likely to be far more richer and live in a developed country. In reality, a country without adequate landline infrastructure cannot be considered "developed". The US was doing better in 1900 technologically wise than many developing countries today, as far as landlines are concerned. There are strong correlations between having a landline as well as wealth and success in life. People who don't have a landline are more likely to be drunk more often, take more frivolous risks, and are poorer.

    Yes, cell towers are easier to deploy than landlines to every single home. It's definitely cheaper for AT&T and Verizon to make higher profits on cell phones than on landlines, since costs are smaller. But quality suffers. So does health: the WHO classified RF radiation as a Class 2B carcinogen, and thousands of scientists and tens of thousands of studies show that today's "standards" are insufficient and that developed countries have very unsafe "standards" for exposure to this radiation. People who begin using cell phones before age 20 are five times more likely to develop malignant brain tumors throughout their lifetime. So yes, kids in Africa might be able to spends hours each day sending selfies to their friends, but that's not worth it. Some scary studies show humanity could become extinct within 150 years because too many men are putting cell phones in their pockets (too close to their testicles). This is no laughing matter.

    So stop dissing landlines. They don't get a lot of love anymore, but they should. Sooner or later, developing countries will need to get landline infrastructure in order to fully develop. And as far as social development goes, people without mobile phones interact with each other more in person, and that is far more meaningful than anything a mobile phone could ever provide. Landlines are the hallmark and sign of "real" development in this globalized era.

  10. “The dominant propaganda systems have appropriated the term 'globalisation' to refer to the specific version of international economic integration that they favor, which privileges the rights of investors and lenders, those of people being incidental. In accord with this usage, those who favor a different form of international integration, which privileges the rights of human beings, become 'anti-globalist.'”
    Noam Chomsky, Interview by Sniježana Matejčić, June 2005.

  11. okay i feel the need to give the other definition of globalization. Some words have 2 or more.
    globalization: one world government

  12. Free Market means free for those with most money. Any Questions? This word first used by the East India Company to the Chinese, wich wanted to protect their markets. Any Questions? It is a Propaganda Word

  13. Globalization stats don't talk about the ones that fell into poverty. Since globalization, China, India, many more, Now America abuses those same modern slaves for productivity. We still drop bombs and create wars in this proxy trade. This video is so inaccurate it makes my head hurt. This is exactly what Hitler want in he's Map of new world order. People are 2 stupid to see it.

  14. Glad you actually had the balls to say free trade and capitalism have actually been the greatest factors in lifting people out of poverty. On microfinance, though, unfortunately, there's a substantial amount of evidence that now demonstrates it does little (if anything) to reduce poverty.

  15. Globalization is the process by which businesses or other organizations develop international influence or start operating on an international scale. Globalization brings lower costs on good, it also brings opportunities for production of international trade. A downside to globalization is that products used for trades are produced in very low income countries with hard laborers with little to no pay.

  16. What Is Globalization?
    Globalization is the trend of increasing interaction between people or companies due to advances in technology and transportation.
    Why do you think the way in which Globalization occurs today is both good and bad?
    It is good because it can help companies be more efficient in trading. It is bad because there are people who are poor and who don't have food and they suffer from globalization deficiency.

  17. What is Globalization and why do you think the way in which Globalization occurs today is both good and bad?

    Globalization is the result of companies trying to "outmanuver" their competition. I think that even though Globalization does help with many companies and the people who buy from the companies, there are still the workers and laborers to think about. They are sometimes overworked and underpaid.

  18. What is Globalization, and why do you think the way in which Globalization occurs today is both good and bad?

    Globalization is when businesses spread internationally. Globalization can be good for businesses and allow them to save money by outsourcing jobs to countries with lower wages. A way globalization can be bad is that anyone who worked for a business that outsourced its jobs now doesn't have a job. Working conditions for lower wage workers in other countries are not good.

  19. Globalization is when companies try to out do their customers. While we look for a bargin on items, companies are looking for bargins to make those items. Corporations are probably the only winners, along with their stockholders and of course the customers of the items.

    The workers
    are the losers.

    I think the way Globalization today is good because it has helped millions of people, all over the world get out of poverty. I also think it's bad because experts claim it is to blame for exploitation and oppression. For some workers, who have to work long hours with no regulations, it can be dangerous. Experts don't think the environment can take growth of Globalization. The damaging effects are Deforestation, pollution, and even climate change. The more people demand goods, the worst it will get.

  20. Almost by law full, and current 1/2 kashmir is of India, why map divided is out, you must chose map with LOC at least

  21. we have the highest standard of living in the world, why are a bunch of people that are much better off than many trying to talk to others with less? this is half hysterical.

  22. The problem is country’s are being mr. Nice guy with the United Nations and company are taking advantage of this. Their are 196 country’s if we continue our course their would be 1/2 as many countries and for globalization to work everyone needs to be apart of a supper power country. Then have a global currency.

  23. Interesting course. Thanks. One suggestion though-The music is a bit irritating, you might want to delete it-no need to be gimicky or cute. Thanks

  24. If all the billionaires weren't greedy self centered assholes then they would share their money to help the poor. We COULD have a free universal health care and low cost to free education. If we cut only 5% from military spending we could have better education and less poor people. Better Gov. Programs and services, improved QOL

  25. Comapnies who do this $>People
    GOP
    Donald Trump
    EA
    Food and health industries (entenpenuers agents businessmen not actual workers)
    And many many CEOs willing to do anything to gain more money despite not needing to make more bc they are already rich. Also Money Laundering is a huge issue that almost legally goes on with the stupid rules like testing s corporation as a person when taken to court

  26. Ok the pool get a hand ,the rich get filthy rich and the middle class gets taxed Into poverty. Our system is failing. So you want to make it global?

  27. As a Bangladeshi , I know how much the apparel industry contributes to our economy . Almost every poor people I know are dependent on this industry to make money .

  28. Ok, but why don't they talk about protectionism? subsidies? trade bariers? These limit globalisation and they ignore these phenomenons….

  29. Has the threshold of $1.25/ day for extreme poverty changed in recent years? Because if more people are now living over this threshold, it could just mean that due to inflation, more people are earning this amount but the real money is the same for these people.

  30. The Brexit, French riots and Trump's presidency are somewhat related. The common thread is Globalization. Especially the movement of production of goods FROM the countries that consume the goods. Balanced Trade is OK but Free Trade ends with the family wage jobs drained out of the consuming countries.

  31. GLOBALIZATION IS BASICALLY WHEN SMART PANTS BUY CHEAP RAW MATERIALS FROM DUMB @#$$3$ THEN SELL EXPENSIVE PRODUCTS PRODUCED FROM THOSE CHEAP RAW MATERIALS…. HAHAHAHHA SO THE SMART GOT SURPLUS, THE DUMB GOT DEFICIT. WELCOME TO ECONOMY 101.

  32. All I got from this video is that nothing is perfect and nothing ever will, we kinda just have to try and do the best job and keep evolving.. life in a nutshell

  33. hi jacob and adriene, first of all congratulation to both of you and your whole team because you guys are doing wonderful job. i have enjoyed your video a lot and i have one request to make, could you please make videos on burning global economic issues like trade war etc and it's impact on various countries. i'd really be grateful to you guys.

  34. Vegans live longer and healthier on average, while animal-based diets correlate to 14/15 leading causes of death.

    A vegan diet is also the only diet shown to reverse heart disease, our number one killer. Check out sources to Cowspiracy for more info on environment, and Caldwell Esselstyn, Dean Ornish, Neal Barnard, Michael Greger, Joel Kahn, John McDougall, and various other experts on health.

    Bottom line, there's no justification to be consuming animals when it is such an unnecessary act of overlooked violence to the planet, our bodies, and most importantly the animals who get raped into existence by the billions and stabbed in the throat every second.

    We will put someone in jail for hurting animals for no good reason, yet here we are consuming meat and dairy simply because we won't give up the taste, or because of some endless list of easily debunked nonsense people rather believe first before a peer-reviewed, unbiased consensus: Meat and dairy suck for our bodies, while beans, legumes, nuts, seeds, grains, fruits and vegetables don't. No need to get sucked into corrupt "magazine miracle" diets. Healthiest people on earth = Beans, legumes, nuts, seeds, grains, fruits and vegetables.

    If you have any respect for the peaceful animals we exploit — fish, chicken and everything else — please go vegan.

  35. The problem of philippine economy are the value of own language, senate talks and debate spoke english while ordinary filipinos didnt understand them unlike japanese politics speaks their own language, hard labor workers like carpenters, constructions workers, mechanics, fishermen, farmers etc are uneducated, unlike norway atleast 2yr courses available in the country, poor family mostly have 10 children, lastly trade deficit

  36. there’s something wrong with an economic model where the top 8 richest people have more wealth than the bottom half. this can’t be the only way

  37. It's so sad so many people are still living in poverty. I'm definitely going to try to shop more sustainably; I don't want to be supporting sweatshops. No one should be treated like that.

  38. Highly recommend Professor Jeffery Sachs free online sustainable development course. I also bought his textbook. Really life changing.

  39. Globalization destroyed the Venezuelan economy.The fact that it was a Socialist regime made matters worse. World financial institutions exploit by means of cheap labor and debt. Leaders of these underdeveloped countries can either work to improve conditions in their countries since arguably they have the means and capability to provide the resources and tools to enable people to succeed or they can forego the labor intensive work necessary for progress and hoard the wealth and resources for themselves. Globalists take advantage of these conditions and cannot gaurantee gainful employment or prosperity in any region but their own which also requires loyalty. to their fellow countrymen. 1% and 99% Globally is more like it.

  40. For the deforestation (and poaching) aspect of things perhaps wealthy countries should pay for a UBI to the poor but environmentally rich countries to preserve those things call them global treasures, which is what they are, and pay out the otherwise uncalculated benefits they provide the rest of the globe. Brazil deforests for money, but that deforestation costs us -even financially so let's cut out the deforestation step and give them that money outright. However make it contingent on independently monitored goalposts of preservation. If a certain amount of forest or endangered animals are destroyed or killed, no money.

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