A Growing Chorus of Support for a post-COVID-19 Wealth Tax and Increasingly Stern Warnings of Potential Unrest if Inequality not Addressed

Six weeks ago, I posted an article highlighting the risk of a social revolution if we fail to address the inequalities laid bare by COVID-19. I called for a Social Solidarity (i.e., Wealth) Tax to Recover from COVID-19. I posted a first update two weeks ago and, this morning after a night of protest in thirty American cities against the murder of George Floyd, I provide a further update.

Continued evidence of COVID-19's unequal impact on the poor, disadvantaged, women, ...

COVID job losses disproportionately concentrated in low-wage jobs, with disadvantaged groups suffering even greater losses than others in similar jobs. The researchers conclude “it will be important for policymakers to pay particular attention to these disadvantaged groups, who were not only more likely to be in a constrained economic situation before the pandemic, but have also been disproportionately likely to be impacted by it.”

According to mobility data from cell phones, "high-income residential movement decreased by 90% from normal trends; in low-income areas, it only decreased 60-80%. Evidence suggests that this is the result of more flexibility among high-income populations, who are more likely to be able to work from home and access basic needs like employment, childcare and food nearby."

Infection rates in Los Angeles diverging by income and race with high poverty neighborhoods experiencing 3.5 times the infection rate of those with low poverty.

@NBER working paper shows job losses highest in low income areas and those with highest income inequality.

@edpilkington @guardianus summarizes the income, racial, gender and informational dimensions of COVID-19's unequal impact.

@LexyTopping @guardian highlights research from "The Institute for Fiscal Studies and the UCL Institute of Education found this week that mothers were 47% more likely to have permanently lost their job or quit, and 14% were more likely to have been furloughed." She notes further that "Reports suggest that lockdowns across the globe have resulted in a huge increase in violence against women. Refuge, which runs the national domestic abuse helpline in the UK, has had a 10-fold increase in visits to its website in the past two weeks, and two-thirds of survivors responding to a Women’s Aid survey in April said violence had escalated under lockdown." Further evidence of gender inequality of COVID impacts from across Europe in this @guardian article

Highly unequal income distribution, poor public health systems and indecisive governments have turned Latin America into the next COVID-19 hotspot.

@UNDP The United Nations forecasts the first ever annual recorded decline in human development with 60 million more people in extreme poverty. Developing countries and those in crisis-mode were expected to suffer the most, along with the already vulnerable. That includes those that rely on the informal economy, women, those living with disabilities, refugees, people that have been displaced and those that suffer from stigma. “The world has seen many crises over the past 30 years, including the Global Financial Crisis of 2007-09. Each has hit human development hard but, overall, development gains accrued globally year-on-year,” the UNDP’s Achim Steiner said. “Covid-19 — with its triple hit to health, education, and income — may change this trend,” he added.

A Growing Chorus of Forecasts for a Post-COVID Future

Cause for concern

@DaphneEwingChow @Forbes draws attention to the historical and current correlation between infectious disease and racial bias, race related hostilities and violence warning that COVID-19 could trigger a pandemic of racism.

@KeeangaYamahtta @nytimes writes "If there were ever questions about whether poor and working-class African-Americans were disposable, there can be none now. It’s clear that state violence is not solely the preserve of the police." She goes on to chillingly warn "What are the alternatives to protest when the state cannot perform its basic tasks and when lawless police officers rarely get even a slap on the wrist for crimes that would result in years of prison for regular citizens? If you cannot attain justice by engaging the system, then you must seek other means of changing it. That’s not a wish; it’s a premonition."

George Packer @theAtlantic diagnoses the US's underlying condition as a "failed state" “The crisis demanded a response that was swift, rational, and collective, The United States reacted instead like Pakistan or Belarus — like a country with shoddy infrastructure and a dysfunctional government whose leaders were too corrupt or stupid to head off mass suffering.” So who to blame? Donald Trump makes an obvious and deserving target. But the failures of our ruling order predate his troubled and reckless administration. Our “chronic ills” — everything from “a corrupt political class” to a “heartless economy” — have gone, Packer points out, “untreated for years.”

@reuters notes that "Violence has the potential to make the country’s already large wealth and income gaps even worse, and push the American economy into a vicious circle."

Former Dean of the Wharton School, President of the University of Delaware and current Federal Reserve Bank of Philadelphia President Patrick Harker noted  “American inequality is a moral and ethical challenge to our country’s founding creed,” added the Fed official. “As this crisis continues, we must redouble our efforts to redress some of the great underlying challenges to our society.”

@mandeep_tiwana1 @civicusalliance warns that desperation could boil over into unrest if action was not taken.

@Anandwrites in a @VICE MBA graduation address argues "Strategies taught in business school like maximizing shareholder value, forming just-in-time supply chains, and outsourcing low-end work have led to massive income inequality and an inability to handle crises like the coronavirus pandemic...“You will need to desert the tools responsible for our plight,” he urges business school grads. “You will need to forget the frameworks that have been drilled into you at business school in the hope that you would sustain for another generation the habit of running corporations in ways that run people and communities and the planet into the ground.”

@davidcicilline Congressman from Rhode Island's 1st District warns "Our democracy will not survive if it continues to fail a majority of its people. We need to undertake serious structural change in this country to once again make America a nation of real opportunity. This task is urgent and requires us to work together like never before."

Dr. Irfan Raja @LeedsUni7 sees a risk of race riots in the European Union.

@RebeccaReCap at Harvard Business School warns "If we don't grab this opportunity, we risk getting stuck back in our old patterns of behavior,'" she said. "And that I'm afraid will take us to a radically destabilized society."

@KarenGreenberg3 @FordhamLawNYC writes @theNation "With Covid-19, the very idea of American exceptionalism may have seen its last days. The virus has put the realities of wealth inequality, health insecurity, and poor work conditions under a high-powered microscope. Fading from sight are the days when this country’s engagement with the world could be touted as a triumph of leadership when it came to health, economic sustenance, democratic governance, and stability. Now, we are inside the community of nations in a grim new way—as fellow patients, grievers, and supplicants in search of food and shelter, in search, along with so much of humanity, of a more secure existence."

More optimistically

Nicholas Powers @truthout finds hope for democracy in the protests triggered by the murder or George Floyd "When the smoke in Minneapolis clears, and the protests against the police murder of George Floyd subside, a fact will remain: Sparks of hope for a renewed populist multiracial and class solidarity will be harder to extinguish after this outpouring of national outrage over Floyd pleading for air, and pleading that Black life matters. And the communal sacrifice that so many are undertaking to save each other from the coronavirus is also creating a kind of groundwork for the kindling of this hope. Together we must fight to ensure that when it comes time to take off our masks, it will be because finally it’s safe for everyone to breathe."

Concrete Policy Proposals

@CEP_LSE @Lem_exeter @s_machin call for a progressive wealth tax on top 1% as an element of their proposal to maintain social mobility for the COVID generation.

@DSMarkovits @YaleLawSch writes "It is time for a wealth tax. The medical and economic hardships produced by the coronavirus pandemic are falling most heavily on people who were already most disadvantaged. College-educated Americans are three times more likely to be able to work from home than workers with no education past high school, and those who make more than $80,000 per year are four times more likely to be able to work from home than those who make less than $33,000. This makes it unsurprising that the rich are socially isolating at much greater rates than the rest of America, and that both infections and deaths from the coronavirus are dramatically concentrated among poorer Americans, especially people of color. These same Americans are shouldering the burden of sustaining social and economic life in the face of the pandemic. The essential workers who are putting their health at risk while keeping society fed, collecting the trash, and providing a thousand other basic services are also among the lowest paid Americans. Further, a recent National Bureau of Economic Research working paper shows that during the pandemic, workers in the bottom 20 percent were three times more likely to have lost their jobs than those in the top 20 percent. Together, these patterns produce an unconscionable result. Those who are doing the most to keep the country afloat in the face of the disease simultaneously suffer its greatest evils."

Jamie Dimon @JPMorgan calls for a more rebuilding a more inclusive economy "It is my fervent hope that we use this crisis as a catalyst to rebuild an economy that creates and sustains opportunity for dramatically more people, especially those who have been left behind for too long. The last few months have laid bare the reality that, even before the pandemic hit, far too many people were living on the edge. Unfortunately, low-income communities and people of color are being hit the hardest, exacerbating the health and economic inequities that were already unacceptably pronounced before the virus took over. An inclusive economy – in which there is widespread access to opportunity – is a stronger, more resilient economy. This crisis must serve as a wake-up call and a call to action for business and government to think, act and invest for the common good and confront the structural obstacles that have inhibited inclusive economic growth for years. From the re-opening of small businesses to the rehiring of workers, let’s leverage this moment to think creatively about how we can mobilize to address so many issues that inhibit the creation of an inclusive economy and fray our social fabric."

@RussellGroup report Pathways for Potential: How universities, regulators and government can tackle educational inequality calls for concrete action to remedy the increased inequality in education exacerbated by COVID-19.

@Oxfam is calling for a global economic response of $2.5 trillion to address the crisis and poor countries especially need help, including cancellation of debt payments, increases in aid and progressive taxes, and emergency economic support from the International Monetary Fund (IMF) as well as support for various legislation to insure fiscal transparency and accountability.

@nelsonschwartz @nyt highlights that some companies are preserving jobs by cutting salaries with the support of their workforce.

@robernpalmer @taxjusticeUK calls for a wealth tax

Kavaljit Singh @MadhyamDelhi calls for a wealth tax in India noting the diffusion of the policy idea across Latin America. The same policy is supported by a host of activists and writers in a public letter to Prime Minister Narenda Modi.

@pnique @PODEMOS proposes a wealth tax in Spain "starting at 2% for net wealth over €1m – and concentrating most on the revenue of the 1,000 richest people... Inevitably, this will lead to aggressive attacks on us from the far right and from many wealthy and powerful people. So be it. The challenges our country faces are breathtaking, the welfare and prosperity of the Spanish people is at stake and what needs to be done needs to be done."

@benphillips76 supports a global wealth tax writing that "Tackling inequality is central to restore consumer demand, strengthen human capital, ensure collective health security and prevent societal breakdown. If we allow inequality to rise any higher, we will all be in danger – of an even more intensified economic crisis and of violent instability. For the rich to hide in bunkers, offends others’ dignity and their own, and is no way to truly thrive. Even before Covid-19, a multimillionaire whom I visited in Brazil could, when he looked out of his window, see only metal bars, as if he was caged in. ... The Covid-19 pandemic is revealing not only how unjust the world’s inequalities are, but also how these inequalities have been rooted in a fallacy that denied the reality of our interdependence. The difference between clinging to individualized and inward-looking approaches, and unleashing the power of collective action from the local to global, will be millions of lives saved and billions of lives improved. Higher taxes on very wealthy few, and on the biggest corporations, are crucial to restoring trust and to funding the common services we all need to thrive. Through this we can put the world back in business, and reconnect business with the world. It’s worth every penny. Even millionaires should back it."