We all knew it, but now there is proof: there are some clear COVID-19 winners – and losers.
An Oxfam study shows that the world's 10 richest men doubled their fortunes during the pandemic,
while more than 160 million people are projected to have
been pushed into poverty since the pandemic hit.
But what if I told you that this doesn’t have to be the trajectory we’re going down?
Let’s take a look at why the world has become even more divided and dispersed in the past two
years – and what we can do against this rising inequality. Because there are actually lots of
solutions floating around, including from the very people who increased their wealth
during the pandemic, now asking to be taxed properly for the greater good.
We've really had during the pandemic an inequality explosion.
It's been a period that has been an unprecedented boom for billionaires.
It's a question of resource distribution. There's enough resources on this planet,
but the distribution doesn't work. It’s not a secret that the world has
always been divided into the poor and rich. But while we are on a good way to closing this gap,
the pandemic has been a huge setback. One of the reasons is that governments
across the world cut interest rates to record low levels during the pandemic,
while central banks bought up government bonds and stocks in order to increase economic activity. All
of that led to soaring stock markets, benefiting those who already had money and investments.
It was hard not to make any money on shares and speculation within the last two years
because the entire market was going up and this was because of the liquidity
support of all central banks worldwide. Meanwhile, the rest of the world – and
especially those who couldn’t work from home - experienced dramatic income losses during
the pandemic. And it was especially those who were already poor and vulnerable who suffered the most.
Urban informal sector workers have been affected more than formal sector workers. Women have been
affected more than men. And workers with less education have been affected much more than
workers with more education, just because of the nature of work that they're engaged in.
A lot of these people are in the service sectors which are basically client-facing services,
which were the first ones to be affected when economies closed down and mobility
was restricted because of the pandemic. So there needs to be support for those
groups which have suffered the most during the pandemic. And it includes policies like
access to finance, access to training, in some cases providing support to households and so on.
Data from the World Bank shows that the poorest 20 percent of the globe had the
steepest decline in incomes. Unfortunately, they are also the ones to recover the slowest.
As jobs are coming back, it's not as if all women who have lost jobs are coming back
at the same rate as male workers are. The poorest 40 percent have not started
to recover their income losses, whereas the top 40 percent have actually recovered quite a bit
of their initial income losses. So the difference in recovery essentially results in the gap between
the top and the bottom widening over time. One field that is responsible for a large
rise in inequality and a slower recovery over time is education.
A large fraction of children in poorer families, particularly those in low-income countries,
have not had access to learning during long school closures amidst the pandemic.
Data by the World Bank suggests that the share of 10-year-olds who cannot read a basic text could
reach 70 percent in low- and middle-income countries because of school closures.
The implications of that for income distribution in the future, I think, are more severe than
anything that happened to jobs and incomes now. One of the biggest reasons for the slow economic
recovery in the global south has been the distribution of COVID-19 vaccines.
While only 7% of people in low-income countries have received a vaccine dose, more
than 75% have done so in high-income countries. One idea that is already being discussed globally
is a billionaires’ income tax or a wealth tax. The money could be used to invest in worldwide
vaccine production as well as health care in the fight against the pandemic – and inequality.
And believe it or not, some ultra-rich people themselves are all for it.
Over 50 millionaires and billionaires in German-speaking countries have banded together
in a group called “Tax Me Now”, demanding to be taxed properly for the greater good.
I think it's very important that the class of millionaires and even richer people
stand for tax justice. We're facing a once-in-a-century challenge
right now. We are facing ecological disaster, the failure of democracies, the rise of populism
and the large inequality crisis and all of these challenges are linked to questions
of resource allocation and there are enough resources. So we as the rich people’s class,
we can choose if we pay our fair share or if we face things like revolution and social unrest.
Tax Me Now wants the rich to be taxed more on a national level, and to fight against tax havens
on an international level by introducing measurements and minimum taxation standards.
So my average tax level is lower than the tax level of my employees. That's not okay. I can
assure you that we have a lot of privileges right now that we shouldn't have, like we are not being
taxed for heritage. We're not properly taxed for capital gains. We have a lot
of loopholes and possibilities to evade taxes on a legal basis. Frankly speaking, it's too easy
to evade taxation on an international basis, and these things at least shouldn't be legal.
But how exactly would it work to change that on a global scale? We all know how easy it is
for millionaires to maneuver their money – or the headquarters of their companies - to tax havens,
such as Switzerland, Luxembourg, the Cayman Islands, Hong Kong or Singapore.
It has to be done through international cooperation. Otherwise, they will be
able to just move it around, right? So, [there’s a need for] sort of
establishing minima that prevent certain countries from trying to act as tax havens.
And of course, the minimum corporate tax that's being agreed at the OECD and now has
to be ratified is a start in that direction. It shows that with political will, it can be done.
What we think about is, for example, a property register. We believe 30 percent
of all the property of the billionaires and millionaires at the present is being
hidden away in international tax havens. So long as money is liquid and is flowing around
as money, it's flowing through the banking system. The banking system has a stake in the economy
and it can be affected by it, by the government. Different governments can seriously constrain what
banks do. They just need to want to do that. Rich people are very good at lobbying
and they have a lot of backing in government. And so greater attention paid to this by
everybody else, the 99 percent if you like, can play a real role in changing the political game.
That’s of course easier said than done. We know from experience that coordinated global
action on issues like this is often slow and patchy and doesn’t happen overnight.
That’s why some initiatives aren't directing their attention to only the rich,
but also the global middle class. Many of us, especially those living
in developed nations, are actually richer than we may think – and by donating just
a fraction of our income, we could help end poverty and boost shared prosperity as well.
We still have so much more than many people in the rest of the world who don't have the same social
safety net, who don't have the same services and baseline living standards that we have in
countries like Germany and Australia. A median income in a rich country
like the UK or Australia puts you comfortably within the top five percent richest people in
the world. And that money can improve the life of someone in extreme poverty about 100 times more
than it can improve your own life. And it turns out, the pandemic
might just have been the push that people needed to snap into action.
It has been quite heartening to see a lot of people who do have more throughout this pandemic
take a moment and realize that now is a really good time to be giving, especially those who have
benefited from things like a stock market rally. And I've seen people really turn that into empathy
and to compassion and go, yeah, if this is what it's like for me, when things are actually
relatively good and the worst case isn't that bad, I couldn't imagine being in a situation where it's
much worse, and I have seen that drive compassion, and I really hope that is quite lasting.
The pandemic is likely going to be with us for a while and its economic aftermath for an even
longer time. It’s a global crisis that affects all of us – and hence needs a global response.
That’s why the experts we talked to for this report believe it’s a matter of self-interest - as
well as a moral and humanitarian duty - for the richer world to help those
less fortunate. Otherwise the pandemic will persist longer than it otherwise would,
global inequalities will grow even more, disparities will widen
and there will be global divergence. It's not just about inequality today,
it's also about what the current impacts can mean for inequality and social mobility in the future.