Stories of Social and Economic Change KMUN 2013

1. Stories of Social and Economic ChangeKMUN 2013 Dr. Peter Ibbott Associate Professor of Economics King’s University College at the University of Western Ontario May 16, 2013

2. Stories of Social and Economic Change • Is economic change accelerating? • Is economic change mostly good or mostly bad? • Can we manage change or will it destroy us?

3. Stories of Social Economic Change Is social change accelerating? • The paleontological record shows that for approximately 6,000,000 million years, humans were hunter gatherers • The historical and archeological record shows that for approximately 10,0000 years humans have existed in slowly changing agrarian societies • Over the last 300 years change has been accelerating. • Scientific Revolution/Industrial Revolution • Urban Society/Consumer Society/Globalization/Mass Extinction/Global Warming/Democracy

4. Stories of Social and Economic Change Accelerating Social Change: Air travel • 1903: Wright Flyer 11 kph • 1905: Wright Flyer III 60 kph • 1917: Sopwith Camel 190 kph • 1937: SupermarineSpitfire 594 kph • 1944: Me 262 (Swallow) 870 kph • 1953: Canadair F-86 Sabre 1,130 kph (sound-B) • 1964: McDonnell-Douglas F-4 Phantom II 2585 kph • 1976: Lockheed SR-71 Blackbird 3,529 kph • 1981: Space Shuttle 27,870 kph

5. Stories of Social and Economic Change Accelerating Social Change: Computing • 1951: UNIVAC I 0.002 MIPS • 1971: Intel 4004 0.092 MIPS • 1977: VAX-11/780 0.500 MIPS • 1982: Intel 286 2.66 MIPS • 1987: Motorola 68030 18MIPS • 1992: Intel 486DX2 54 MIPS • 1994: Intel Pentium 188 MIPS • 1996: Intel Pentium Pro 541 MIPS • 1998: Intel Pentium III 2,054 MIPS • 2003: Pentium 4 9,726 MIPS • 2006: Intel QX6700 (Quad core) 49,161 MIPS • 2008: Intel Core i7 920 (Quad core)82,300 MIPS • 2011: Intel Core i7 3960X (Hex core) 177,730 MIPS Moore’s Law: Number of components on an integrated circuit doubles every year (1965)

7. Stories of Social and Economic Change

8. Stories of Social and Economic Change Life Expectancy and Gross National Income

9. Stories of Social and Economic Change

10. Stories of Social and Economic Change Freedom 55? If any of these babies retires at 55 they will have to finance 65 years of retirement and the health costs of an extended life. OR, the state will have to. This is unsustainable We must re-imagine the future.

11. Stories of Social and Economic Change • Is change inevitable? Poverty Trap • Are the poorest doomed to poverty? China and India

12. Stories of Social and Economic Change • Just because we are getting richer and living longer does not mean that we are having better lives. • Development and Education • Development and Poverty • Development and Inequality: Kuznet’s Curve • Development and Child Labour

13. Stories of Social and Economic Change Have we sown the seeds of our own destruction? • The Population Bomb is ticking (Malthus and Ehrlich) • The collapse of Capitalism is imminent (Marx) • The collapse of the social order is increasing domestic crime and violence. (Conservatives) • Technological change has increased lethality of modern warfare so that Armageddon is imminent. • Global warming (Environmentalists) Moral Panic from unleashing forces we cannot control.

14. Stories of Social and Economic Change The Population Bomb is ticking very slowly.

15. Stories of Social and Economic Change The Population Bomb is ticking very slowly.

16. Stories of Social and Economic Change The Population Bomb is ticking very slowly.

17. Stories of Social and Economic Change The collapse of Capitalism is not imminent. • The Great Depression (US Real GDP per Capita)

18. Stories of Social and Economic Change The collapse of Capitalism is not imminent. • Are we facing a new Depression? • US Unemployment • G6 • PIGS

19. Stories of Social and Economic Change The collapse of Capitalism is not imminent. • Should the means of production be socialized? • China and India

20. Stories of Social and Economic Change The collapse of the social order is not increasing domestic crime and violence.

21. Stories of Social and Economic Change

22. Stories of Social and Economic Change

23. Stories of Social and Economic Change

24. Stories of Social and Economic Change Armageddon?

25. Stories of Social and Economic Change

26. Stories of Social and Economic Change

27. Stories of Social and Economic Change Global Warming is real but there has been very little real progress in reducing CO2

28. Stories of Social and Economic Change • Perhaps we need a more radical approach. • Some have suggested that we need to confront our culture of excess consumption, and develop an ethos of deep ecological consciousness. (Deep Ecology Movement) • Can we re-educate human nature? • There are much simpler solutions: • Carbon Tax • Cap and Trade

29. Stories of Social and Economic Change • There is no political will to implement these solutions. • Even with sufficient political will this global problem needs a global solution. We have the mechanism through the UN to make change. •  Intergovernmental Panel on Climate Change (IPCC) • United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol • Success is possible under the UN system: The Montreal protocol on Substances that deplete the Ozone Layer (1989).

30. Stories of Social and Economic Change • We are in the middle of the most rapid period of economic and social change in human history. • China and India are growing so rapidly that: • the global balance of power is shifting back to its traditional balance. • The middle class in China and India are the new engines of demand in the world economy. • Rural-Urban migration is creating a tidal wave of change to the social fabric • living standards are rapidly converging around the world • Change is not restricted to India and China. The same forces are driving : • Arab Spring • Accelerating growth in Africa and Latin America. • No one seems interested in developing a deep ecological consciousness.

31. Stories of Social and Economic Change • Change is not restricted to India and China. The same forces are driving : • Arab Spring • Accelerating growth in Africa and Latin America. • No one seems interested in developing a deep ecological consciousness. What should be done? • Develop an understanding of the social forces reshaping our world. • Develop policy instruments that will help us steer our society and the world economy towards a just and sustainable future. This is the business of the Social Sciences.

32. Stories of Social and Economic Change • Unfortunately there is insufficient time thoroughly examine these social forces how to control them. • Instead I propose that we Examine China as a case study of a modern industrial revolution. This allows us to examine the: • Causes of China’s growth? • Benefits from China’s growth? • Risks and Challenges posed by China’s growth?

33. Shanghai: Bund

34. Shanghai: Pudong

35. Stories of Social and Economic Change Causes of Chinese Economic Growth: • 1949-58: Mao consolidated power and encouraged families to have more children. China’s first five year plan introduced the Soviet development model in which large state monopoly firms pursue heavy industrial development. • 1958-61: In the second five year plan the soviet industrial model was replaced with a focus on rural development. Under “The Great Leap Forward” small rural agricultural collectives were merged into large, rural “People’s Communes” in order to better exploit the gains from the division of labor. The peoples communes were tasked with: • Banning all private holdings/gardens • Introducing new farming techniques that would turn China into a grain exporter • Accelerating the construction of state infrastructure, • Increasing steel production by using backyard furnaces.

36. The Chinese Economic Miracle Causes of Chinese Economic Growth: • 1962: The result was the “Great Chinese Famine”. Estimates of up to 45 million died of starvation, while 200 million suffered from serious malnutrition. During this time China exported grain. Mao is forced by the party to change direction and Deng Xiaoping and others take over economic planning. • 1966: Mao introduces the Cultural Revolution and uses it to purge Deng Xiaoping and other leaders of the CPC who had earlier opposed him.

37. Stories of Social and Economic Change Causes of Chinese Economic Growth: • Mao dies in 1976, Gang of Four arrested • Deng Xiaoping seizes power from Mao's anointed successor Hua Guofeng • In 1978 Deng introduces significant economic reforms aimed at introducing market socialism

38. Stories of Social and Economic Change Chinese Economic Growth: Stage 1 (1978-84) • De-collectivization of agriculture, and the introduction of the “household responsibility system”. Farmers are granted long term leases and allowed to privately farm and sell their produce in new private markets. • Special Economic Zones were created that permitted foreign investment and encouraged local entrepreneurs to start up businesses. • But: most industry remained state-owned.

39. Stories of Social and Economic Change Chinese Economic Growth: Stage 2(1985-2010) • privatization and contracting out of much state-owned industry • lifting of price controls, protectionist policies, and regulations, • But: state monopolies in sectors such as banking and petroleum remained. • But: The conservative Hu Jintao Administration more heavily regulated and controlled the economy after 2005, reversing some reforms.

40. Stories of Social and Economic Change Benefits of Chinese Economic Growth: • Agricultural output growth dramatically accelerated to 8.2% a year, agricultural prices fell, meat and vegetable production rose dramatically. • Overall the reforms unleashed economic growth that is unprecedented in human history • GDP Growth rate of 9.5% a year • China's economy became the second largest after the United States. • More than 500 million people lifted out of poverty • Now the world’s largest exporter and manufacturer • In transition from middle-income to high-income status.

42. China and India Compared

43. 2011 Nominal GDP in US$ billions (Source: IMF)

44. Stories of Social and Economic Change Benefits of Chinese Economic Growth: Improvements to Basic Education • 1950: 20% over age 15 are literate • 2007: 93.3% over age 15 are literate while 99% of 15-24 year olds are literate • 2009, PISA (Program for International Student Assessment) international rankings of 15 year olds placed Shanghai students first in the world in mathematics, science and literacy

45. Stories of Social and Economic Change Benefits of Chinese Economic Growth: Improvements to Health • 1949: Average Life Expectancy of 35 years • 2012: Average Life Expectancy of 74.8 years • But life expectancy would be much higher if respiratory illnesses (cigarettes, air pollution) could be reduced, water quality improved and food safety increased. • Improvements to public health should provide huge gains in life expectancy.

46. Stories of Social and Economic Change Benefits of Chinese Economic Growth: Middle class lifestyle: • Car (already world’s largest automobile market) • TV, Internet, Music, Movies, Mobile phones • http://www.youtube.com/watch?v=9bZkp7q19f0 • Consumer goods • Global brands are coveted • Status recreational activities • Quality Education in the Arts and Science • Home ownership

47. Stories of Social and Economic Change Risks and Challenges of Chinese Economic Growth: • Pollution • Corruption • Consumerism • Endless pursuit of status goods • Rising Search for spiritual alternative (Christianity is growing very fast) • Vice (drugs, gambling, prostitution) is a rising menace. • Congestion

48. 100-km Chinese traffic jam enters Day 9 Last Updated: Monday, August 23, 2010 | 1:43 PM ET  CBC News External Links Xinhua: Highway jam enters its 9th day, spans 100km (Note: CBC does not endorse and is not responsible for the content of external sites - links will open in new window) (David Gray/Reuters) A nine-day traffic jam in China is now more than 100 kilometres long and could last for weeks, state media reported Monday. Thousands of trucks en route to Beijing from Huai'an in the southeast have been backed up since Aug. 14, making the National Expressway100 impassable, Xinhua News reported. A spokesman for the Beijing Traffic Management Bureau reportedly told China's Global Times newspaper that the backup was due to "insufficient traffic capacity … caused by maintenance construction.“ The construction is scheduled to last until Sept. 13.Stranded drivers appear to have few options when it comes to dealing with the jam. At least some drivers have complained that roadside vendors have increased their prices to take advantage of the traffic jam. One truck driver said he bought instant noodles from one vendor for four times the original price.

49. Stories of Social and Economic Change Risks and Challenges of Chinese Economic Growth: • Failure to introduce meaningful political and legal reform. • Tiananmen Square Protests of 1989 • Internet and press are subject to heavy handed censorship • Courts and police are corrupt and serve interests of the party • Despite this, the government is having difficulty resisting change: • Failure to introduce national history curriculum in Hong Kong • Need for legal reform to sustain investment • Inequality • Chinese market socialism has failed to deliver distributive justice. • Japan, Singapore, Taiwan and Korea have managed growth without such high inequality by making careful policy choices.