Beyond the devastating effect of COVID-19 on human life and livelihoods, there is a desire for something better to emerge from this crisis. For some, like Chris Chatteris, it is a more equitable society. He argues that this is only possible by means of redistribution of wealth that gives the poor a greater share in the goods that many of us take for granted. As we celebrate Laudato Si week, this article serves as reflection to Pope Francis’ “appeal for renewed dialogue about how we are shaping the future of our planet.”
Some economic historians believe that greater equality was one of the outcomes of the catastrophic bubonic plague of the 14th century. This was because the ordinary people had died off in their millions, labour was scarce and the survivors were in a strong bargaining position vis-à-vis landlords who were eager to re-start agricultural production.
The discussion has already begun about whether there will be a similar outcome after the COVID-19 pandemic. The casualty rate of COVID-19 looks set to be miniscule compared to the bubonic plague, both absolutely and as a proportion of the total population.
Further, COVID-19 mostly tends to kill the retired and infirm rather than the young and active. In other words, it doesn’t look as if it is going to significantly reduce the labour force, unless of course it returns in a seriously mutated form.
The value of essential services
But our response to the lockdown and other measures limiting social interaction has had a massive effect on the global and local economies. COVID-19 hasn’t reduced the labour force, but it has shown up the relative value of the different types of labour. The phrase “essential services” encapsulates this.
We have come to realise that some of our less well-paid workers – nurses, farm labourers, garbage collectors – are essential; we cannot live without them. On the other hand, some of our more ridiculously paid people – I hesitate to name them/us… let’s leave it as a kind of self-reflection exercise! Well, no one has died for lack of them.
Essential workers have been lauded and applauded for their courage and dedication, and everyone agrees that they should really be better paid. Parents have realised just how difficult teaching is.
These would be small but significant areas of redistribution potentially leading to some reduction of inequality. But I would guess that once the pandemic has passed, some of these fine sentiments will fade from our minds as we struggle with the economic problems left in the disease’s wake.
There will be dogfights for whatever limited government money is available to kickstart businesses, whether they are essential or non-essential. The loudest voice and the greatest access to the politically powerful will most likely count more than how essential you are. Private finance is likely to go to those businesses most able to produce a return. Whether private financiers will distinguish between the essential and non-essential sectors of the economy is yet to be seen.
Politicians need quick results to win elections. Having an unemployed and starving population is not a good recipe for holding onto power. Political incumbents are already trying to get things back to the status quo ante as quickly as possible. We need only look at Donald Trump who has promised fabulous sums to airlines and oil companies, both areas in which bankruptcies are certain. The rush to get back to “normal” will see some spectacular financial meltdowns and “normal” will be postponed until we work out what “normal” looks like in our reduced circumstances.
Here in South Africa, the economic situation was extremely grave even before the advent of COVID-19, lockdown, masks and hand sanitiser. The unemployment projections are horrendous, one suggesting that we could hit 50%. If that happens we are in uncharted waters with regard to social instability. The looting that look place during lockdown would be but a tiny foretaste.
Redistribution is on the cards
An ANC government faced by such a crisis will have to find ways of redistributing enough resources to the desperate to forestall a revolution or an election loss to Julius Malema, and it might not be possible to tell the difference. The increase in the social grant and the use of the Unemployment Insurance Fund (UIF) to bolster wages during the lockdown are clues to the way government will probably have to go. Redistribution. Redistribution means taking from the rich and the middle class through taxation and passing it onto the poor. There’s no glossing over it.
The knee-jerk reaction to this prospect is to say that it could never work. History suggests otherwise. The Dutch historian, Rutger Bregman, (the man who famously told the shell-shocked, super-rich at Davos that they should pay more tax), reminds us that back in the 1950s (when arguably America was much “greater” than it is today), people like Donald Trump would have been paying much higher income tax than today. After World War II the Western economies were stimulated by putting money into the hands of the populace through high levels of redistribution, and the West prospered under this policy, eventually practically eliminating unemployment. I can remember a moment in the 1960s when the unemployment in the UK was 220,000 (representing about 3 percent of the population), and that was considered to be rather high.
People under lockdown have learnt to think the unthinkable. A recent article in The Conversation argues strongly for a one-off wealth tax in South Africa to help pay for the coronavirus stimulus package of R500 billion announced by Finance Minister Mboweni. Worldwide, there is talk of the adoption of a basic income grant (BIG).
Would such redistribution measures prompt the super-rich, the rich and the middle classes who have managed to preserve their wealth to move their money and/or themselves out of the country? The angels of their better nature would ask them to consider the fact that it is the poor who have borne the brutal brunt of the lockdown for the sake of the common good and this should be acknowledged by a concrete response from their better off compatriots. It will also help if the Government takes more concrete measures to assure taxpayers that the epic-scale corruption of the Zuma era is a thing of the past.
Those who ignore their better angels might not find it so easy to hide money away post COVID-19. Many governments will be wanting to shake down their wealthier citizens for increased taxation. Hence it should be possible to get more international cooperation on tax avoidance and the closing down of tax havens. As Bregman points out, the USA is powerful enough to bend puny places like Panama and the Cayman Islands to its will if it wants to. With 30 million Americans unemployed and rising, even the USA might find itself tempted by a limited return to 1950s’ redistribution levels.
Is all this just a dream? Maybe, but dream we must. One of the things I dream of is being able to wake up one day in a country which is not labeled “the most unequal society on earth” but is a model of sharing and solidarity. I do hope this dream is shared by fellow-citizens with large hearts and deep pockets!Republish