The Inequality of COVID-19 and the Need for Rebalancing

One month 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. What have we learned since?

United States and other OECD Countries

The wealthy are better able to self-isolate

• In Manhattan, one-third of the top 1% were able to leave the epicenter of the pandemic to the safety of their second homes or other locations. Of the bottom 80%, only 5% could do so.
• 71% of individuals in the top quintile of earnings (i.e., > $180,000) can work from home as compared to 41% in the bottom quintile (i.e., < $24,000).
• Median country income explains 65 percent of the variance in country-level death rates from COVID-19.
• Inequality in access to broadband internet puts online education out of reach for most vulnerable.

There exist massive racial disparities in the rate of infection and death from COVID-10

• In Pennsylvania, , African-Americans are 11.9% of the population but represent 30% of deaths and almost a third of infections.
• In Los Angeles, infection and death rates are twice as high for African Americans as for whites.
• In the UK, death rates among black men and women are double that of whites. Another study finds the rate 3.5 times as high.
• Long-standing environmental injustice is linked to current racial disparities as are long-standing structural inequalities in health care.

The economic consequences of the disease are also highly unequal

• CEOs cut millions of jobs amid coronavirus yet keep their lofty bonuses.
• As 26 million lost their jobs. billionaires increased their wealth by $282 billion from March 18 to April 10.
• Lower income women harmed disproportionately according to Marianne Bertrand at University of Chicago Booth.
• Milennials hit hard.
• 65% of Latinos surveyed have lost their jobs or a significant portion of their income.
• The spatial and geographic distribution of COVID deaths is correlated with the distribution of support to BREXIT suggesting a common correlate or economic despair and frustration.
• Gig workers devastated by the crisis are mobilizing and pledging to demand change.
• Six dimensions in which inequality made worse by COVD-19.
• Inequality similarly increasing due to COVID-19 in Australia, New Zealand, France, and Singapore,

Emerging Markets

40-60 million people will be pushed into extreme poverty by the pandemic.

A World Bank study finds a significant increase, in some cases a doubling, of domestic violence and murders of women and girls under COVID-19 stay-at-home orders in Latin America.

69% of low income households in Latin America experienced a job loss as compared to 26% of high income households. 62% of high income households could work from home as compared to 29% of low income households.

Neoliberal reforms to the health care systems of Ecuador and Georgia promoted by the World Bank and International Monetary Fund are alleged to have contributed to the severity of the COVID-19 outbreak in Guayaquil and Tbilisi.

Populism and nationalism are rising globally.

History

Prior pandemics have increased inequality and triggered social revolutions.

• Analysis of the Black Death and 1918 flu suggest pandemics can either undermine or reinforce existing power structures.
• The economic and social inequality caused by the Industrial Revolution was exacerbated by a cholera epidemic in 19th century France triggering a failed revolution against King Louis-Philippe memorialized in Les Miserables.

Social revolutions inspired by inequality not invading marauders led to the fall of Ugarit and Mycenae.

The possibility of such a repeat of post-pandemic social unrest is growing.

The Future

Calls for addressing these challenges and avoiding such unrest are emerging from diverse sources spanning civil society, government and the private sector.

• Helen Lewis at The Atlantic says its ok to politicize the virus.
• US anti-lockdown protests highlight societal risks of structural inequality exposed by COVID-19 according to @MVonRen The Hill. 
• Global capitalism to be changed forever according to Guggenheim Partners Scott Minerd.
• Oprah Winfrey called on the class of 2020 to "create a new and evolved normal" that addresses "vast systemic inequities."
• COVID-19 exposes two Americas according To @SarahGoldfeder Earnscliffe Strategy Group. "how much evidence do we need that a change is necessary? How much death will it take for us to understand that our fellow Americans are not living in our same America? And do we have the political and societal will to make that change happen. We fail each other time and time again. Social safety nets and equal access to the world-class health care that is available in America is critical. Not just for the success of our neighbors, but for the ideals that define our country."  
• Letter from The Leadership Conference on Civil and Human Rights highlights core elements of post-pandemic recovery. Post-pandemic America must have stronger civil and human rights.
• @KateArnoff at the New Republic calls on leaders to emulate Amsterdam or New Zealand's leaders in thinking beyond a return to normalcy but rather to building a more resilient social, economic and political society.
• @OpentoAllofUs calls condemns pandemic related racial injustice and calls on corporations to engage.
• @fromTGA Timothy Garton Ash asks whether a post-COVID world will be a dream, a nightmare or just more purgatory in the Guardian.
• John Cassidy in the New Yorker writes that "Creating a fairer, more inclusive economy is hard work, and it will inevitably encounter resistance. Concentrations of economic power have to be confronted. Workers’ rights and bargaining power have to be extended. Democratic freedoms have to be protected. Demagogues have to be defeated, during pandemics more than ever." 
• Sir Michael Marmot highlights that COVID-19 has only accelerated the "slow burn of inequality" and that, in the aftermath of the pandemic, we should look forward to the "kind of societies that we want."
• Joseph Stiglitz highlights the need for resilience including access to health care and other corrections to the neoliberal market economy.
• Paul Polman highlights "What Good Business Looks Like" in the aftermath of the pandemic @HBR.
• @mikehposner at NYU Stern's School of Business calls for ESG investors to place greater weight on how companies address economic inequality. As a step towards such progress, @paulrissman, Joanne Bauer and Delilah Rothenberg call for a Task Force on inequality-related financial disclosures.
• Lynn Forester de Rothschild @inclusivecap calls for greater transparency in US relief packages.
• Peruvian President Martin Vizcarra is calling for a wealth tax, prison reform, and labor reform to address long-standing structural inequality.
• Wealth taxes are under consideration in Guatemala, Ecuador, Paraguay, Argentina and Colombia.
• Indian academics and activists support a 2% tax on the top 1% in India.
• A growing number of UK and US economists and policymakers are calling for a wealth tax.
• Warren Buffet acknowledges his class is winning the class war and calls for a wealth tax as part of the solution.
• Thomas Piketty sees hope for a fairer tax system in the aftermath of COVID-19. He is also optimistic about the potential for social mobilization rather than social revolution to trigger needed policy change.
• @stefanwagstyl at the Financial Times notes that "the rich are often supporters of entrenched interests, as they tend to benefit from the status quo. But in the light of the pandemic, they should ask themselves how sustainable that status quo really is."
• Gary Stevenson, a trader who made millions betting on a gold price increase during the COVID-19 outbreak to build on the millions he made in the 2008-11 financial crisis, calls for a wealth tax. "At a time of crisis, when the richest will profit while so many struggle, it has never been more obviously needed."