April 06, 2020
The feedback loop of Covid-19 and inequalities - part 10 of our series
The Covid-19 pandemic hits some more than others. It will take years to find out why Italy's mortality rate was so much higher. We might never find out why young people without pre-existing medical conditions died. But the risks are not only confined to the short term. How societies emerge from this crisis will bring up new divisions, and politics will need to address them.
In principle, the virus does not discriminate. It pushes people into critical health conditions no matter what their socio-economic status. But not everyone can protect themselves equally well against the virus. Masks and hand sanitisers were bought up quickly, leaving shop assistants, police officers and other workers unprotected while many white-collar employees can work safely from home. The Economist cites a study according to which about half of Britain’s highest-paid employees can work from home, but less than 10% of those in the four lowest-paid deciles can.
Socio-economic differences will also be a consequence of the lockdown. Mental stress and anxiety are likely to be higher in households where people are living cramped in small apartments without a secure income to go forward, or savings to fall back on. Low-paid employees in hotels, construction, restaurants or retail were the first to be let go in the lockdowns. They cannot work from home. How they will survive depends on the funding and design of government schemes, and on the length of the lockdowns. The entertainment sector will remain closed for an extended period, and travel will remain severely restricted. Leisure favourites like football games will be off for a long time.
Angus Deaton took a historical perspective on earlier pandemics, writing that even if the virus itself might not discriminate, the gap between the rich and the poor will widen again after the crisis. People living in deprived areas are already facing higher mortality rates due to the death by despair. Expect the rate of domestic violence to go up, together with alcohol and drug abuse. All these costs are difficult to measure up against the daily death count from Covid-19. But they will matter for our societies in the longer run.
Compared to the financial crisis, the policy response has been markedly different this time. Boris Johnson and Donald Trump are acutely aware that they cannot win elections without the poor people' vote. The trillion-dollar package that the US congress adopted nearly unanimously contained not only tax cuts but also health care for those who cannot afford it. Every country rolled out its own package of stimulus measures. We expect campaigning in the post-Covid-19 era to be very different from what it was before. The 2008/2009 crisis was all about villains, this time it is all about heroes. To call for more money to invest into the health care system will be a vote winner. Favours for nurses and those who kept the country going under lockdown will come up under election pledges. This is not the time for austerity.
The lockdown also unleashes structural changes for the economy, likely to the disadvantage the poor. While some countries have provided assistance to workers unable to perform tasks from home during the pandemic, certain categories of workers fall through the cracks of these programmes. There are also payment delays, for instance in Italy, meaning that people face a month or two without any income. This pushes casual workers into poverty and will leave huge scars in the tissue of the Italian economy.
After the crisis is over, more business and education are likely to continue virtually. Universities may even reconsider their teaching programmes. Experts already warn that school closures will increase inequality. Under lockdown, teaching happens in virtual classrooms. The material available online will benefit the ones who know how to use it.
All this will allow a new digital-savvy economy to emerge, to which the poorer people have less access to. Low-income households do not all have computers or high-speed broad band an the costs of internet services are non-negligible. Well-off people find it easier to adapt to this more digitised working world, which requires new skill sets. The gap between the poor and the rich is bound to widen.
So far the virus has hit mainly developed countries. Once the pandemic reaches the war zones in Syria or Libya or developing countries with high-density slums and poor health care systems, like India, we will see different impacts. EU countries have to prepare themselves to help developing countries by all means, including equipment and doctors. Otherwise they just pass the baton to China and Russia, both eager to show that they are there to help.