Social Institutions How do the institutions in society affect you?
Social Institutions • Structures to provide stability to social life as well as mechanisms to assert authority, power, and control. • Family • Education • Criminal Justice • Religion • Government • Economy
Things to think about • Be able to tell the difference between the World Bank, International Monetary Fund and World Trade Organization. • What were the policies of the IMF, and how did they affect Argentina? • How have the goals of the World Bank and IMF affected Nicaragua?
Global Political and Economic Institutions • World Bank (International Bank for Reconstruction and Development) • International Monetary Fund (IMF) • World Trade Organization (WTO)
Origins of the World Bank, IMF and WTO • These institutions arose out of the plans by the US to avoid financial crisis after WWII. • World Bank was to give loans to reconstruct Europe, but gave loans to poor countries instead. • IMF gives loans and advice for dealing with short term financial crisis. • Global Agreement on Tariffs and Trade (GATT) became World Trade Organization (WTO) in 1996.
Global Political and Economic Institutions • International Bank for Reconstruction and Development (World Bank) • Loans for “development” projects to encourage economic growth. • http://www.worldbank.org/ • International Monetary Fund (IMF) • Deals with short-term economic crisis through loans and restructuring a nation’s economy. • http://www.imf.org/external/index.htm • World Trade Organization (WTO) • Oversees trade between nations to encourage the free flow of goods and growth of economies • http://www.wto.org/
Goals of WB, IMF, WTO and Neoliberalism • Encourage economic growth through the removal of barriers to trade. • Reduce expenses on social and governmental expenditures • Sell off (privatize) state property such as natural resources, electricity and water to private companies • Cut social services and education (in some cases) • Cut health care expenditures and begin fees for care • Eliminate subsidies for basic foods • Encourage competition with global companies to “get prices right” • Focus your economy on “comparative advantage” • Produce one, or a few, products for export • Reduce tariffs and price subsidies on goods • Discourage unions
IMF Suggestions for Argentina • Cut Government Services • Privatized State Industries (electricity, etc.) • Reduced Social Services (unemployment etc.) • Cut Government Employees • Less Government Control and Regulation of Economy • Welcomed Global Corporations • Borrowed Billions from Foreign Banks • Encouraged Exports (Milk, Soy, Wheat) • Replaced Local Manufacturers • Purchase Daily Needs from Global Market
Results of IMF Policies • No More Government Properties to Sell Off • Defaulted on Debt and Economy Crashed • Relative Size of Argentina’s Economy (GDP) • Compared to the rest of the nations in the world • 1970 = 19th • 1980 = 25th • 1990 = 23rd • 2001 = 17th • 2006 = 31st
Nicaragua • Debt incurred by the dictators of Nicaragua still had to be repaid. • Country devastated by war with “contras” who were illegally supported by US. • Economic crisis arose from falling coffee prices and a bank scandal like US S&L crisis. • IMF imposed conditions that forced the country to focus on repaying debt to the wealthy in Nicaragua and eliminated pay increases for teachers and public employees.
Nicaragua • Nicaragua is now the poorest country in Latin America with the highest rate of debt per person. • It spends 2 and a half times more on debt repayment than on health and education combined. • Over half of the population live below the poverty line • Two fifths of poor children are malnourished • Three quarters of the poor live in rural areas, and half of these are extremely poor, unable to meet their daily food needs
Example of a Social Institution World Trade Organization
Goals of the WTO • Remove any barriers to trade to allow goods and money to flow more freely between countries • The WTO not only rules on trade barriers, but also "non-tariff" barriers to trade such as environmental regulations, food standards and intellectual property rights. • Countries must use the "least trade restrictive rule" when developing laws or standards according to the WTO.
Rulings of the WTO and GATT • Dolphin-safe tuna • Asbestos ban in France • Labeling of genetically engineered food