In identifying some of the main economic challenges facing a covid-19 pandemic-hit world, a recently published report ‘Chief Economists Outlook: May 2022’ by World Economic Forum (WEF), and based on the opinions of a number of leading economists globally, pointed out ‘The barrage of shocks and disruptions and the subsequent overload on the capacity of policy-makers and institutions risks diverting focus towards rising economic nationalism, causing a damaging pull-back from economic integration and a shift away from progress on humanity’s long-term goals, such as combating climate change, reducing inequality and preparing for demographic change.’
Inequality was already rising over the last many decades under the assault of neoliberal policies in many parts of the world, at the back of diminishing role of government, and regulation to virtually unfettered markets, and has not only reduced the extent of predistribution and redistribution policies, it has also allowed much greater perpetuation of extractive institutional designs of the politico-economic elites to use public policy, including using largely unregulated markets to their advantage.
Highlighting about the role of predistribution and redistribution policies, a June 2015 WEF published article ‘What is predistribution?’ pointed out ‘…helping the less well-off through the redistribution of income through taxes and government programs – referred to as tax-and transfer programs. … For policymakers concerned about the incomes of those at the bottom of the income ladder, a predistributionist approach would favor raising wages, perhaps by increasing the minimum wage, over increasing government transfers to those workers in the form of, say, earned income tax credits.’
Although global supply shock explains in part the role of pandemic in creating this disruption, it strongly appears that weakly regulated markets and supply chains, have led to over-board profiteering, along with allowing some sectors, for instance the pharmaceutical industry– to reap unfair level of profits, as remaining unregulated, in addition to being safeguarded by intellectual property rights (IPRs) to the extent to enable them to take advantage of their importance during the pandemic, to in turn, reap windfall profits.
Over decades of neoliberal assault had already led to a serious increase in inequality globally, not to mention the role of procyclical policies, especially during the pandemic, which have not allowed much needed inclusive growth, where growth did take place like in Pakistan roughly over the last two fiscal years on one hand, and on the other, lack of capacity to deliver meaningful stimulus during the pandemic in the global South, have both lead to a seriously acute level of inequality.
Renowned economist Jayati Ghosh, in an interview to ‘Democracy Now’ in April, pointed out with regard to unfair level of profiteering during the global supply shock, that ‘The prices themselves have gone higher than you would expect given the actual impact on supply… and that’s because there’s been very feverish speculative activity in what are called the commodity futures markets.’
A recently released report ‘Profiting from pain’ by Oxfam revealed the shocking extent of rise in global inequality during the pandemic, as ‘Billionaire wealth has soared during the COVID-19 pandemic as companies in the food, pharma, energy, and tech sectors have cashed in. Meanwhile millions of people around the world are facing a cost-of-living crisis due to the continuing effects of the pandemic and the rapidly rising costs of essentials, including food and energy. Inequality, already extreme before COVID-19, has reached new levels. There is an urgent need for governments to implement highly progressive taxation measures that in turn must be used to invest in powerful and proven measures to reduce inequalities.’
Over decades of neoliberal assault had already led to a serious increase in inequality globally, not to mention the role of procyclical policies, especially during the pandemic, which have not allowed much needed inclusive growth, where growth did take place like in Pakistan roughly over the last two fiscal years on one hand, and on the other, lack of capacity to deliver meaningful stimulus during the pandemic in the global South, have both lead to a seriously acute level of inequality.
Economics Nobel laureate, Joseph Stiglitz, in an article ‘Of the 1%, by the 1%, for the 1%’ that he wrote back in 2011, highlighted the serious nature of inequality, even in the context of developed countries, as ‘The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. … While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall.’
The situation of inequality, it strongly appears, has worsened over the years, as the same report by Oxfam pointed out with regard to inequality ‘Oxfam’s research has found that: Billionaires have seen their fortunes increase as much in 24 months as they did in 23 years. Billionaires in the food and energy sectors have seen their fortunes increase by a billion dollars every two days. Food and energy prices have increased to their highest levels in decades. 62 new food billionaires have been created. The combined crises of covid-19, rising inequality, and rising food prices could push as many as 263 million people into extreme poverty in 2022, reversing decades of progress. This is the equivalent of one million people every 33 hours. At the same time a new billionaire has been minted on average every 30 hours during the pandemic. This means that in the same time it took on average to create a new billionaire during the pandemic, one million people could be pushed into extreme poverty this year.’
