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Africa/Global: The Inequality Virus

AfricaFocus Bulletin
February 22, 2021 (2021-02-22)
(Reposted from sources cited below)

Mega-rich recoup COVID-losses in record-time yet billions will live in poverty for at least a decade

Press Release, Oxfam International, 25 January 2021

https://www.oxfam.org/en/press-releases/mega-rich-recoup-covid-losses-record-time-yet-billions-will-live-poverty-least

The 1,000 richest people on the planet recouped their COVID-19 losses within just nine months, but it could take more than a decade for the world’s poorest to recover from the economic impacts of the pandemic, reveals a new Oxfam report today. ‘The Inequality Virus’ is being published on the opening day of the World Economic Forum’s ‘Davos Agenda’.The report shows that COVID-19 has the potential to increase economic inequality in almost every country at once, the first time this has happened since records began over a century ago. Rising inequality means it could take at least 14 times longer for the number of people living in poverty to return to pre-pandemic levels than it took for the fortunes of the top 1,000, mostly White male, billionaires to bounce back. A new global survey of 295 economists from 79 countries, commissioned by Oxfam, reveals that 87 percent of respondents, including Jeffrey Sachs, Jayati Ghosh and Gabriel Zucman, expect an ‘increase’ or a ‘major increase’ in income inequality in their country as a result of the pandemic.

Oxfam’s report shows how the rigged economic system is enabling a super-rich elite to amass wealth in the middle of the worst recession since the Great Depression while billions of people are struggling to make ends meet. It reveals how the pandemic is deepening long-standing economic, racial and gender divides.

The recession is over for the richest. The world’s ten richest men have seen their combined wealth increase by half a trillion dollars since the pandemic began —more than enough to pay for a COVID-19 vaccine for everyone and to ensure no one is pushed into poverty by the pandemic. At the same time, the pandemic has ushered in the worst job crisis in over 90 years with hundreds of millions of people now underemployed or out of work.

Women are hardest hit, yet again. Globally, women are overrepresented in the low-paid precarious professions that have been hardest hit by the pandemic. If women were represented at the same rate as men in these sectors, 112 million women would no longer be at high risk of losing their incomes or jobs. Women also make up roughly 70 percent of the global health and social care workforce - essential but often poorly paid jobs that put them at greater risk from COVID-19.

Heba Shalan, a mother of five and nurse from the Jabalia Refugee camp in northern Gaza Strip, is putting her life on the line caring for patients with COVID-19 without adequate personal protective equipment and for very little pay. Photo: Marwas Sawaf/Oxfam

Inequality is costing lives. Afro-descendants in Brazil are 40 percent more likely to die of COVID-19 than White people, while nearly 22,000 Black and Hispanic people in the United States would still be alive if they experienced the same COVID-19 mortality rates as their White counterparts. Infection and mortality rates are higher in poorer areas of countries such as France, India, and Spain while England’s poorest regions experience mortality rates double that of the richest areas.

Fairer economies are the key to a rapid economic recovery from COVID-19. A temporary tax on excess profits made by the 32 global corporations that have gained the most during the pandemic could have raised $104 billion in 2020. This is enough to provide unemployment benefits for all workers and financial support for all children and elderly people in low- and middle-income countries.

Gabriela Bucher, Executive Director of Oxfam International, said:

"We stand to witness the greatest rise in inequality since records began. The deep divide between the rich and poor is proving as deadly as the virus.”

“Rigged economies are funnelling wealth to a rich elite who are riding out the pandemic in luxury, while those on the frontline of the pandemic —shop assistants, healthcare workers, and market vendors— are struggling to pay the bills and put food on the table.

“Women and marginalized racial and ethnic groups are bearing the brunt of this crisis. They are more likely to be pushed into poverty, more likely to go hungry, and more likely to be excluded from healthcare.”

Billionaires fortunes rebounded as stock markets recovered despite continued recession in the real economy. Their total wealth hit $11.95 trillion in December 2020, equivalent to G20 governments’ total COVID-19 recovery spending. The road to recovery will be much longer for people who were already struggling pre-COVID-19. When the virus struck over half of workers in poor countries were living in poverty, and three-quarters of workers globally had no access to social protections like sick pay or unemployment benefits.

“Extreme inequality is not inevitable, but a policy choice. Governments around the world must seize this opportunity to build more equal, more inclusive economies that end poverty and protect the planet,” added Bucher.

The fight against inequality must be at the heart of economic rescue and recovery efforts. Governments must ensure everyone has access to a COVID-19 vaccine and financial support if they lose their job. They must invest in public services and low carbon sectors to create millions of new jobs and ensure everyone has access to a decent education, health, and social care, and they must ensure the richest individuals and corporations contribute their fair share of tax to pay for it.

“These measures must not be band-aid solutions for desperate times but a ‘new normal’ in economies that work for the benefit of all people, not just the privileged few.”

Notes to editors

Download ‘The Inequality Virus’ report and summary, methodology document outlining how Oxfam calculated the statistics in the report, pictures, footage and case studies.

During the week of 25 January, the World Economic Forum (WEF) will digitally convene the ‘Davos Dialogues’, where key global leaders will share their views on the state of the world in 2021. Oxfam’s calculations are based on the most up-to-date and comprehensive data sources available. Figures on the very richest in society come from Forbes’ 2020 Billionaires List. Because data on wealth was very volatile in 2020, the Credit Suisse Research Institute has delayed the release of its annual report on the wealth of humanity until spring 2021. This means that we have not been able to compare the wealth of billionaires to that of the bottom half of humanity as in previous years.

According to Forbes the 10 richest people, as of December 31st 2020, have seen their fortunes grow by $540 billion dollars since 18 March 2020. The 10 richest men were listed as: Jeff Bezos, Elon Musk, Bernard Arnault and family, Bill Gates, Mark Zuckerberg, Larry Ellison, Warren Buffett, Zhong Shanshan, Larry Page, and Mukesh Ambani.

The oldest historical records of inequality trends are based on tax records that go back to the beginning of the 20th century.

The World Bank has simulated what the impact of an increase in inequality in almost every country at once would mean for global poverty. The Bank finds that if inequality (measured by the Gini coefficient) increases by 2 percentage points annually and global per capita GDP growth contracts by 8 percent, 501 million more people will still be living on less than $5.50 a day in 2030 compared with a scenario where there is no increase in inequality. As a result, global poverty levels would be higher in 2030 than they were before the pandemic struck, with 3.4 billion people still living on less than $5.50 a day. This is the Bank’s worst-case scenario, however projections for economic contraction across most of the developing world are in line with this scenario.

In the World Economic Outlook (October 2020), the International Monetary Fund’s worst-case scenario does not see GDP returning to pre-crisis levels until the end of 2022. The OECD has warned this will lead to long-term increases in inequality unless action is taken.

Oxfam calculated that 112 million fewer women would be at risk of losing their jobs or income if men and women were equally represented in low-paid, precarious professions that have been most impacted by the COVID-19 crisis based on an ILO policy brief published in July 2020.

All amounts are expressed in US dollars.

Oxfam is part of the Fight Inequality Alliance, a growing global coalition of civil society organizations and activists that are holding the Global Protest to Fight Inequality from 23-30 January in around 30 countries, including Kenya, Mexico, Norway and the Philippines, to promote solutions to inequality and demand that economies work for everyone. 

Contact information

Anna Ratcliff in the UK | anna.ratcliff@oxfam.org | +44 7796993288
Annie Thériault in Peru | annie.theriault@oxfam.org | +51 936 307 990
Laura Rusu in the US | laura.rusu@oxfam.org | +1 (202) 459-3739

*******************************************************************

The Inequality Virus : Bringing together a world torn apart by coronavirus through a fair, just and sustainable economy

Oxfam International, January 25, 2021

https://oxfamilibrary.openrepository.com/bitstream/handle/10546/621149/bp-the-inequality-virus-summ-250121-en.pdf

[Excerpts]

The coronavirus pandemic has the potential to lead to an increase in inequality in almost every country at once, the first time this has happened since records began. The virus has exposed, fed off and increased existing inequalities of wealth, gender and race. Over two million people have died, and hundreds of millions of people are being forced into poverty while many of the richest – individuals and corporations – are thriving. Billionaire fortunes returned to their pre-pandemic highs in just nine months, while recovery for the world’s poorest people could take over a decade. The crisis has exposed our collective frailty and the inability of our deeply unequal economy to work for all. Yet it has also shown us the vital importance of government action to protect our health and livelihoods. Transformative policies that seemed unthinkable before the crisis have suddenly been shown to be possible. There can be no return to where we were before. Instead, citizens and governments must act on the urgency to create a more equal and sustainable world.

The inequality virus

‘COVID-19 has been likened to an x-ray, revealing fractures in the fragile skeleton of the societies we have built. It is exposing fallacies and falsehoods everywhere: The lie that free markets can deliver healthcare for all; The fiction that unpaid care work is not work; The delusion that we live in a post-racist world; The myth that we are all in the same boat. While we are all floating on the same sea, it’s clear that some are in super yachts, while others are clinging to the drifting debris.’ – António Guterres, UN Secretary General

History will remember the COVID-19 pandemic for taking over two million lives worldwide. It will remember hundreds of millions being pushed into destitution and poverty.

History will also likely remember the pandemic as the first time since records began that inequality rose in virtually every country on Earth at the same time.

The International Monetary Fund (IMF), the World Bank and the Organisation for Economic Cooperation and Development (OECD) have all expressed deep concern that the pandemic will drive up inequality all over the world, with deeply harmful effects. ’The impact will be profound [...] with increased inequality leading to economic and social upheaval: a lost generation in the 2020s whose after-effects will be felt for decades to come’. – Kristalina Georgieva, Managing Director of the IMF

This view is supported by Oxfam’s survey of 295 economists from 79 countries. They included leading global economists such as Jayati Ghosh, Jeffrey Sachs and Gabriel Zucman. 87% of respondents expected that income inequality in their country was either going to increase or strongly increase as a result of the pandemic. This included economists from 77 of the 79 countries. Over half of all respondents also thought gender inequality would likely or very likely increase, and more than two-thirds thought so of racial inequality. Two thirds also felt that their government did not have a plan in place to combat inequality.

Inequality risks being supercharged, at a huge human cost:

It took just nine months for the top 1,000 billionaires’ fortunes to return to their pre-pandemic highs 4 but for the world’s poorest people recovery could take 14 times longer, more than a decade.

The increase in the 10 richest billionaires’ wealth since the crisis began is more than enough to prevent anyone on Earth from falling into poverty because of the virus, and to pay for a COVID-19 vaccine for everyone.

Globally, women are overrepresented in the sectors of the economy that are hardest hit by the pandemic. 7 If women were represented at the same rate as men in those sectors, 112 million women would no longer be at high risk of losing their incomes or jobs.

In Brazil, people of Afro-descent have been 40% more likely to die of COVID-19 than White people. If their death rate had been the same as White Brazilians’, then as of June 2020, over 9,200 Afro- descendants would have still been alive. In the US, Latinx and Black people are more likely to die of COVID-19 than White people. If their death rate had been the same as White people ’s, then as of December 2020, close to 22,000 Latinx and Black people would have still been alive.

The World Bank has calculated that if countries act now to reduce inequality then poverty could return to pre-crisis levels in just three years, rather than in over a decade.

How history will remember what governments did in response to the pandemic, however, is a chapter yet to be written. Governments around the world have a small and shrinking window of opportunity to create a just economy after COVID-19. One that is more equal, inclusive, that protects the planet, and ends poverty.

They can do this by urgently transforming the current economic system, which has exploited and exacerbated patriarchy, white supremacy and neoliberal principles. A system that has driven extreme inequality, poverty and injustice. One that left our world completely unprepared when the crisis came. More than ever, governments have at their disposal realistic, common sense ideas to shape a better future. They must seize the opportunity.

The virus has hit an already profoundly unequal world

The coronavirus crisis has swept across a world that was already extremely unequal. A world where a tiny group of over 2,000 billionaires had more wealth than they could spend in a thousand lifetimes. A world where nearly half of humanity was forced to scrape by on less than $5.50 a day. A world where, for 40 years, the richest 1% have earned more than double the income of the bottom half of the global population. A world where the richest 1% have consumed twice as much carbon as the bottom 50% for the last quarter of a century, driving climate destruction. A world where the growing gap between rich and poor both built on and exacerbated age-old inequalities of gender and race.

This inequality is the product of a flawed and exploitative economic system, which has its roots in neoliberal economics and the capture of politics by elites. It has exploited and exacerbated entrenched systems of inequality and oppression, namely patriarchy and structural racism, ingrained in white supremacy. These systems are the root causes of injustice and poverty. They generate huge profits accumulated in the hands of a White patriarchal elite by exploiting people living in poverty, women and racialized and historically marginalized and oppressed communities around the world.

Inequality means that more people are sick, fewer are educated and fewer live happy, dignified lives. It poisons our politics, driving extremism and racism. It undermines the fight to end poverty. It leaves many more people living in fear and many fewer in hope.

Such extreme inequality meant that billions of people were already living on the edge when the pandemic hit. They did not have any resources or support to weather the economic and social storm it created. Over three billion people did not have access to healthcare, three-quarters of workers had no access to social protection like unemployment benefit or sick pay, and in low- and lower-middle-income countries over half of workers were in working poverty.

Since the virus hit, rich people have got richer, and poor people poorer

In the first months of the pandemic, a stock market collapse saw billionaires, who are some of the biggest stockholders, experience dramatic reductions in their wealth. Yet this setback was short- lived. Within nine months, the top 1,000 billionaires, mainly White men, had recovered all the wealth they had lost. With unprecedented support from governments for their economies, the stock market has been booming, driving up billionaire wealth, even while the real economy faces the deepest recession in a century. In contrast, after the financial crisis in 2008, it took five years for billionaire wealth to return to its pre-crisis highs.

Worldwide, billionaires’ wealth increased by a staggering $3.9tn (trillion) between 18 March and 31 December 2020. Their total wealth now stands at $11.95tn, which is equivalent to what G20 governments have spent in response to the pandemic. The world’s 10 richest billionaires have collectively seen their wealth increase by $540bn over this period.

Worldwide sales of private jets soared when commercial travel was banned. While Lebanon faces economic implosion, its super-rich are finding solace in mountain resorts. In country after country it is the richest who are least affected by the pandemic, and are the quickest to see their fortunes recover. They also remain the greatest emitters of carbon, and the greatest drivers of climate breakdown.

At the same time, the greatest economic shock since the Great Depression began to bite and the pandemic saw hundreds of millions of people lose their jobs and face destitution and hunger. This shock is set to reverse the decline in global poverty we have witnessed over the past two decades. It is estimated that the total number of people living in poverty could have increased by between 200 million and 500 million in 2020. The number of people living in poverty might not return even to its pre-crisis level for over a decade.

The pandemic has exposed the fact that most people on Earth live just one pay check away from penury. They live on between $2 and $10 a day. They rent a couple of rooms for their family in a slum. Before the crisis hit they were just managing to get by, and starting to imagine a better future for their children. They are the taxi drivers, the hairdressers, the market traders. They are the security guards, the cleaners, the cooks. They are the factory workers, the farmers. The coronavirus crisis has shown us that for most of humanity there has never been a permanent exit from poverty and insecurity. Instead, at best, there has been a temporary and deeply vulnerable reprieve.

It simply makes no common, moral or economic sense to allow billionaires to profit from the crisis in the face of such suffering. Their increasing wealth should be used instead to confront this crisis, to save millions of lives, and billions of livelihoods.

...

Transformative policies that seemed unthinkable before the crisis hit have suddenly been shown to be a possibility. There must be no return to inequality as usual. Instead, governments must muster the urgency to create a more equal and sustainable world and a more human economy.

‘Historically, pandemics have forced humans to break with the past and imagine their world anew. This one is no different. It is a portal, a gateway between one world and the next. We can choose to walk through it, dragging the carcasses of our prejudice and hatred, our avarice, our data banks and dead ideas, our dead rivers and smoky skies behind us. Or we can walk through lightly, with little luggage, ready to imagine another world. And ready to fight for it.’ – Arundhati Roy

People want a very different world

It was clear before the crisis, and is even clearer now, that people are demanding a better world. In 2019, before the pandemic hit, protests about inequality had spread across the planet. In 2020 the Black Lives Matter protests showed profound rejection of racial inequality. Polls from across the world show overwhelming support for action to build a more equal and sustainable world in the wake of the pandemic.

After the financial crisis of 2008, governments made clear choices: cut taxes for the richest people and corporations; allow corporations to prioritize ever larger payouts to rich shareholders over workers; implement brutal austerity measures with cuts to public services like health; and continue to subsidize fossil fuels and climate destruction. These choices drove up inequality and have caused huge suffering. This time it must be different.

This view is increasingly accepted by influential voices and organizations around the world, including even those that represent the status quo. Klaus Schwab, the Chairman of the World Economic Forum, which organizes Davos, recently called out ‘neoliberal ideology’, writing that ‘we must move on from neoliberalism in the post-COVID era’. The IMF has said that there should be no return to austerity and has called for progressive taxation. The Financial Times has called for ‘radical reforms’ to reverse ‘the prevailing policy direction of the last four decades’, arguing for redistribution, basic incomes and wealth taxes. Without the pandemic, these arguments would have seemed unthinkable in recent years.

Oxfam has identified five steps toward a better world.

1. A world that is profoundly more equal and measures what matters

A radical and sustained reduction in inequality is the indispensable foundation of our new world. Governments must set concrete, time-bound targets to reduce inequality, and not simply back to pre-crisis levels: they must go further to create a more equal world as a matter of urgency. They must move beyond a focus on Gross Domestic Product (GDP) and start to value what really matters. Fighting inequality must be at the heart of economic rescue and recovery efforts. This must include gender and racial equality. Countries like South Korea, Sierra Leone and New Zealand have committed to reducing inequality as a national priority, showing what can be done. The World Bank has calculated that if countries act now to reduce inequality global poverty levels will return to their pre-coronavirus levels in three years instead of over a decade from now.

2. A world where human economies care for people

Governments must reject the old recipe of brutal and unsustainable austerity and must ensure peoples’ wealth, gender or race does not dictate their health or education. Instead, they must invest in free universal healthcare, education, care and other public services. Universal public services are the foundation of free and fair societies and have unparalleled power to reduce inequality. They close the gap between rich and poor, but also help close the gap between women and men, especially in redistributing the responsibilities of unpaid care. They help to level the playing field for racialized and historically oppressed and marginalized groups. Countries like Costa Rica and Thailand achieved universal health coverage in a decade. Others can do the same.

Governments must urgently deliver a ‘People’s Vaccine’ to tackle the pandemic. To do this they must face down pharmaceutical corporations, and insist on open access to all relevant patents and technology to enable safe and effective vaccines and treatments for all.

Cancelling debts would release $3bn dollars a month for poor countries to invest instead in free healthcare for everyone.

3. A world without exploitation and with income security

Inequality should be prevented from happening in the first place. To do this, businesses should be redesigned to prioritize society, rather than ever greater payouts to rich shareholders. Incomes should be guaranteed and maximum wages could be introduced. Billionaires are a sign of economic failure, and extreme wealth should be ended. The virus has shown us that guaranteed income security is essential, and that a permanent exit from poverty is possible. For this to happen we need not just living wages, but also far greater job security, with labour rights, sick pay, paid parental leave and unemployment benefits if people lose their jobs. Governments must also recognize, reduce and redistribute the underpaid and unpaid care work that is done predominantly by women and racialized women in particular. In the UK, a study by the High Pay Centre found that a maximum wage of £100,000 (approximately $133,500) would have the power to redistribute the cash equivalent of over 1 million jobs, showing that if the very rich earned a little less, mass-layoffs could be avoided.

4. A world where the richest pay their fair share of tax

The coronavirus crisis must mark a turning point in the taxation of the richest individuals and big corporations. We must look back on this crisis as the moment when we finally started to tax the rich fairly once more – the moment that the race to the bottom ended and the race to the top began. This can include increased wealth taxes, financial transaction taxes and an end to tax dodging. Progressive taxation of the richest members of society is the cornerstone of any equitable recovery from the crisis, as it will enable investment in a green, equitable future. Argentina showed the way by adopting a temporary solidarity wealth tax on the extremely wealthy that could generate over $3bn to pay for coronavirus measures, including medical supplies and relief for people living in poverty and small businesses. A tax on the excess profits earned by corporations during the coronavirus pandemic could generate $104 bn: enough to provide unemployment protection for all workers, and financial support for all children and elderly people in the poorest countries.

5. A world of climate safety

Climate breakdown is the biggest threat ever to human existence. It is already destroying the livelihoods and taking the lives of the poorest, economically excluded and historically oppressed communities. Women in these communities are among the most affected. To prevent this, we need to build a green economy that prevents further degradation of our planet and preserves it for our children. We need an end to all subsidies for fossil fuels, and an end to fossil fuel corporations and their rich shareholders making profits from government bailouts. The fight against inequality and the fight for climate justice are the same fight. The pandemic has shown us that massive action by governments is possible in the face of a crisis; we must see the same level of action to prevent climate breakdown.

AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter. For an archive of previous Bulletins, see http://www.africafocus.org,

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