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Covid is worsening inequalities of wealth and income

The pandemic’s unequal burden could leave us with disparities unseen since before the late 19th century

Photo: PTIPremium
Photo: PTI

As the covid pandemic looks set to extend into autumn, and with even many advanced nations preparing for a second wave of infections, it is becoming increasingly clear that the crisis has taken its worst toll on the poor, disadvantaged and marginalized.

In the United States, the burden of disease has fallen disproportionately on people of colour, minorities and women. In India, studies suggest that minority communities, Dalits and Adivasis have fallen deeper into debt and economic deprivation, disproportionately so compared to others. And, in all countries, the economic burden resulting from both the disease and public policy response—usually involving a partial or total lockdown—has most badly affected those least able to cope.

Some of this differential burden of the disease follows from the fact that well-to-do, “white collar" workers are more easily able to self-isolate, physically distance, and even work from home for months on end. Famously, when covid struck, the New York rich decamped from their high-rise apartment buildings in Manhattan to their summer homes in resort communities, such as The Hamptons, where wide open spaces and the sparse population density greatly decreased the danger of infection.

In Mumbai, one has heard of the super-rich boarding private jets to fly off to (relative) safety in Dubai or London. Even in egalitarian Canada and Scandinavia, many who had the option spent large chunks of time away at mountain or lakeside cottages and chalets, far away from cities with their much higher infection burden.

Meanwhile, in all countries, “blue collar" workers—janitors, drivers, kitchen staff, shop assistants, and others whose occupation is tied to a physical activity that cannot be done from home, and, of course, front-line medical workers, all faced the double whammy of greater exposure to contracting the virus as well as a large economic hit if they were fired, laid off, or chose to stay away from work for safety’s sake.

Other differential impacts are subtler but equally pervasive and important. One of the responses to the crisis in most advanced and some emerging economies has been unloading the twin bazookas of fiscal and monetary policy largesse. While new fiscal spending does help those in need—such as supplementary unemployment insurance for those laid off or furloughed on account of covid—unleashing an additional big dose of unconventional monetary policy has ensured that interest rates stay close to zero.

Paradoxically, this benefits big-time investors, who can invest in riskier but higher-yielding investments, including in emerging economies. This has fuelled asset price bubbles such as those preceding and following the global financial crisis. Meanwhile, small savers, who rely on a savings account at a commercial bank, earn little interest on their savings, and still pay high interest rates on borrowing such as through lines of credit or credit cards. Another subtle enabler of worsening inequality is the differential access to the perquisites of high-quality private education, especially, but not exclusively, in the US. Thus, while most large public institutions of higher learning in most countries have opted for online-only teaching for the foreseeable future, many top private universities in the US, which charge their students top dollar in tuition fees, have opted for at least some face-to-face teaching on campus.

Thus, while most access educational content on their computers and mobile devices, and get none of the university experience, a few have the privilege of interpersonal interaction and networking, which are the value additions of attending a prestigious university. These few, already privileged, will be in positions of power, wealth and influence, 5, 10 or 20 years later.

Of course, in India, the poorest and most vulnerable have faced a triple whammy of the disease, loss of livelihoods, and the disorderly and sudden return-migration of many to their villages, worsened by a draconian and sudden lockdown, as argued in this column on numerous occasions. This group’s prospects remain bleak if and when there is a return to normalcy.

Without doubt, covid and the response to it have already worsened existing economic and social cleavages, and will worsen them further. What is more, this is occurring at a time when wealth and income inequalities were already high and rising throughout the world, in both advanced and emerging economies. When all is said and done, global inequality may well end up at a peak unseen since before the advent of the modern welfare state in the late 19th century.

An unprecedented global crisis tells us a lot about what a society is made of, not just on the surface, but much deeper down. In this regard, it seems to me that the countries of northern Europe, especially Germany, have been exemplary in the public policy response to the crisis—not just with economic and financial support, but with efforts to improve the quality of life for all citizens. This includes the reopening of theatres, concert halls and museums that were shuttered during the crisis. Not only does this generate income for artists and performers—among the worst hit during the pandemic—but it gives people a glimpse of a reality that may lie beyond the immediate crisis. As Beethoven wrote in his Ninth Symphony, Ode to Joy, “Alle Menschen werden Brüder". All men (and women) become brothers (and sisters).

Vivek Dehejia is a Mint columnist

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Updated: 20 Sep 2020, 08:52 PM IST
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