Inequality in the pandemic

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By THOMAS PIKETTY*

the author of Capital in the XNUMXst century discusses the effects of the pandemic on economies, societies and globalization.

1.

The most pessimistic estimates of the eventual death toll from this pandemic – excluding any intervention – are around 40 million people worldwide. This corresponds, proportionally, to about a third of the number of deaths from the 1918 Spanish flu. What is missing from the models, however, is inequality: the fact that not all social groups - not even rich and the poor, what is more important – are affected in the same way.

This was revealed by the Spanish flu, when 0,5% to 1% of the population perished in the United States and Europe, compared to 6% in India. What is shocking about this pandemic is the very high levels of inequality it is revealing. We are also being confronted with the violence of this inequality, as the lockdown in a big apartment is not the same thing as a lockdown if you are homeless.

2.

It is true that inequality levels today are much lower than they were a century ago. The story I tell in my books is a story of learning, of long-term progress. This progress was due to political and intellectual movements that proposed to build systems of social security and progressive taxation, and to transform our property system.

Property was sacred in the XNUMXth century, but it was gradually desacralized. Today, we have a much better balance of landlord, worker, consumer and local government rights. This represents a complete transformation in our conception of property, and has been accompanied by increased access to health and education.

In my new book, Capital and ideology (Seuil), I argue that the two world wars were largely the result of the extreme inequality existing in European societies before World War I – both within those societies and internationally, due to their accumulation of colonial assets. This inequality was not sustainable and caused these societies to erupt, but they did so in different ways – the First War, the Russian revolutions, the 1918 pandemic. health care, and was exacerbated by the war. The result of these cumulative shocks was a reduction in inequality over the next half century.

There has long been a theory that the end of serfdom was more or less a consequence of the Black Death. The idea was that, with up to 50% of the population decimated in some regions, work became scarce and workers were therefore able to secure better rights and status for themselves, but things turned out to be more complicated than that. In some places, the Black Death actually enforced serfdom. Precisely because labor was scarce, it became more valuable to landowners, who were therefore more motivated to coerce it.

The main point, which is also relevant today, is that powerful shocks like wars, pandemics or financial meltdowns have an impact on society, but the nature of that impact depends on the conceptions that people hold about history, society, the balance of power – in a word, ideology – which varies from place to place. A great social and political mobilization is always necessary to lead societies in the direction of equality.

3.

The European Union began to break up with Brexit. Saying that the poor are nationalists explains very little about Brexit. The problem is that if you have free trade and a single currency with no social goals, you end up in a situation where free capital mobility benefits the richest and most versatile citizens, and excludes the middle and lower classes. If you want to maintain free movement, it needs to be accompanied by taxation and common social policies, which could include joint investments in health and education.

Here too, history is instructive. Building a Welfare State within a Nation-State was already an enormous challenge. It required rich and poor to come to terms with each other, and it stemmed from a huge political struggle. Doing this transnationally is possible, I think, but it will probably have to be done in a small number of countries first. Others may join later if they buy into the idea. I hope this can be done without dismantling the current European Union and that Britain can come back in the future.

4.

Globalization will be less in some strategic areas, such as medical supplies, just because we need to be better prepared for the next pandemic. There is a lot of work to be done to make this happen across the board. At the moment, our ideological decision is to have zero tariffs on international trade, because the fear is that if we start raising tariffs, we don't know where that will end.

This is similar to the XNUMXth century discussion of property redistribution. People preferred to defend extreme inequalities in property ownership – even slave ownership – rather than accept some redistribution, because they feared that, once unleashed, it would end in the expropriation of any and all property. This is the “dangerous path” argument – ​​the classic argument of conservatives throughout history.

Today, I think we have to get rid of this “zero tariff mentality”, if only to pay for global threats like climate change and pandemics, but that means inventing a new narrative about where we end up with tariffs. And again, as history shows, there is never just one solution.

5.

The correct reaction to this crisis would be to revitalize the welfare state in the global North and accelerate its development in the global South. This new welfare state would demand a fair tax system and create an international financial record that would enable it to incorporate the largest and richest companies into that system. The current regime of free movement of capital, erected in the 1980s and 1990s under the influence of the richest countries – especially in Europe – encourages tax evasion by millionaires and multinationals. This prevents poor countries from developing a fair tax system, which in turn undermines their ability to build a welfare state.

Pandemics, however, can have very contradictory effects on mobilization and political thinking. I believe that, at the very least, it will reinforce the legitimacy of public investment in health systems. But it could also have a completely different kind of impact. Historically, for example, pandemics have spurred xenophobia and caused nations to shut down. In France, far-right politician Marine Le Pen is saying we shouldn't go back too quickly to free movement in the European Union. Especially if the final death toll is very high in Europe compared to other regions, there is a risk that the anti-European narrative of Trump and Le Pen will gain traction.

When you reach a very high level of public debt, as with European nations and the United States, you have to find unorthodox solutions, as payment is simply too slow and stifling. History offers us enough examples of this. In the XNUMXth century, when Britain had to pay its debts from the Napoleonic period, it essentially taxed the lower and middle classes to pay upper-class bondholders. This worked because, at least in the early XNUMXth century, only the rich could vote.

Today, it would hardly work… On the other hand, after the Second World War Germany and Japan found a different and – in my opinion – better solution. They temporarily taxed the richest. This worked very well, allowing them, from the mid-1950s onwards, to begin rebuilding without any public debt. Necessity makes you creative. It may be that, to save the eurozone, for example, the European Central Bank needs to assume responsibility for a larger share of member states' debt.

*Thomas Piketty is a teacher at Paris School of Economics. Author, among other books, of The economics of inequality (Intrinsic).

Translation: André Campos Rocha

Originally published in the British newspaper The Guardian.

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