The pandemic hits the poor hardest when inequality increases

The pandemic hits the poor hardest when inequality increases

“This virus is the big balance,” New York governor Andrew Cuomo tweeted in March after finding out his brother tested positive for coronavirus. It was well meant but wrong.

There is historical resonance in the notion that a pandemic – killing indiscriminately and turning economies into upheaval – could be brutally effective in redressing social inequalities.

When the Black Death swept Europe in the 14th century, killing roughly half the population, it sparked a permanent decline in inequalities in income and wealth – because unskilled workers were able to earn higher wages and shop their way into a barrage of properties sold by Nobles on the market came families who had been hit.

We are really not all together. For some it is far worse than for others

So far, however, the current crisis has had the opposite effect. Despite hopes that the shock of the coronavirus could lead to a more egalitarian society, all evidence suggests that instead existing divisions are widening – between generations and regions, genders and races, and especially between remote workers and those who belong to them Work can only be done face to face.

“We are really not all together. For some it is far worse than for others, ”said Gertjan Vlieghe, a policy maker with the Bank of England, in a recent speech. He highlighted the extraordinary degree of divergence between economic sectors – far greater than in previous recessions – as spending on activities such as travel and nightlife declines while streaming services, online dealers and used car dealers thrive.

This is the natural result of voluntary and forced social distancing. This means that those who cannot work remotely – disproportionately likely to be poorly paid, young or ethnic minority – are far more affected by the virus in terms of both health outcomes and health outcomes, in terms of job and income loss .

A suspected Covid-19 patient will be moved from home to an isolation facility in Manila earlier this year. © Getty Images

You can see that the low skilled, women and younger people are much more affected. . . This will have cross-generational consequences

Meanwhile, school closings – particularly in the US – have displaced women from the workforce, while poor children, who are less likely to have access to online learning, could permanently damage their education and lifelong incomes.

“We see that inequality within countries is increasing. You can see that the low skilled are much more affected, women are much more affected and younger people are much more affected than others, ”said Gita Gopinath, economic advisor at the International Monetary Fund, in October. “This will have cross-generational consequences.”

This is bad enough in developed countries, where governments have somewhat reduced the shock to low-wage workers through vacation programs and more generous benefits.

The rich stopped spending on bare necessities while the low-wage earners stopped working. . . The latter don’t have a lot of non-essential consumption to fall back on

In the UK, household income has fallen by roughly the same proportion across the income spectrum, although the low-wage earners have borne the brunt of the job loss – but as Torsten Bell, director of the Resolution Foundation notes, that doesn’t mean the pain has been shared equally.

“One way to understand the economics of this crisis is that the rich have stopped spending on essentials while the low wage earners have stopped working. . . The latter don’t have a lot of non-essential consumption to fall back on, ”he said.

The effects in developing and emerging countries, where far more people work informally and without a safety net, were worse.

The pandemic is taking a heavy toll on the poor in the Brazilian state of Sao Paulo. © Fernando Marron / AFP via Getty Images

“We see worldwide that poorer countries are heading for a worse future than advanced economies,” said Gopinath. The IMF warned that the number of people in extreme poverty is likely to increase significantly this year for the first time in 20 years, as income inequality between emerging and developing countries rises to the level last seen in 2008, reversing any gains made since then could be the global financial crisis.

The huge expansion of quantitative easing. . . Benefits for the wealthy, but there are no quick ways for developing countries to reverse the sudden decline in their sales to consumers in advanced economies

“The rich countries had the resources to protect their citizens to an extent that many developing countries have not,” World Bank President David Malpass said in October.

He argued that the huge expansion of quantitative easing by the major central banks “benefits the affluent and those with guaranteed pensions, especially in the rich world,” but that there are “no quick ways for developing countries to reverse the sudden reduction.” in their sales to consumers in advanced economies or the almost overnight collapse of tourism and remittances from family members working overseas. “

Policy makers still have time to stave off this rise in inequalities within and between countries. But a historical precedent – apart from the Black Death – is not promising, according to Guido Alfani, professor at Bocconi University.

Subsequent outbreaks of plague and cholera have almost always hit the health of poorer people hardest without undermining inequality. In a recent paper, he argued that if Covid-19 led to an increase in health and economic inequalities, it would lead to an improvement in health and economic inequality in the pattern of previous pandemics.

“You have targeted it [poverty], made it worse and only managed to (temporarily) reduce its extent when they proved lethal enough to kill large cohorts of the poor. “