Inequality in the Time of COVID-19: The New Great Leveler?

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War has often been called the great leveler. A society under attack is united by fear of the enemy, and individuals —regardless of their economic or social status — are prepared to make common cause because they believe their government’s argument that “we are all in this together.” Many politicians have referred to the current battle against COVID-19 as a war, albeit with an invisible foe, and have called on citizens to adopt the “we are all in this together” mentality. However while the war metaphor may be an apt description of our fight against the global pandemic in many ways, it also masks some important distinctions about the degree to which all citizens are “in this together”, distinctions which are often quite visible during a physical conflict.

During the World War II bombing of London in the Battle of Britain, for example,  low-income neighbourhoods in the East End were flattened. This was due to the location of their modest homes in undesirable areas near the docks, shipping and key manufacturing plants. Meanwhile, as demonstrated so graphically in the wonderful movie “Mrs. Henderson Presents”, many of the elites in the upper crust neighbourhoods stood on the balconies of their mansions and watched the pyrotechnic show, secure in the knowledge that only an errant bomb would ever fall anywhere near them.

It was only after the war that things improved dramatically in Britain as the majority demanded change, having seen firsthand how unevenly both wealth and the burden of the war were distributed. Like other western liberal democracies, the British quickly introduced the various programs of the welfare state, including government-funded healthcare, social assistance, pensions and support for access to postsecondary education. (Margaret Thatcher was one recipient of the latter, although she rarely acknowledged her debt to the state for her Oxford degree.) Meanwhile in the United States, despite the ingrained distrust of government, Franklin D. Roosevelt had already been able to persuade his fellow millionaires that they needed to let his government take similar action to narrow the outrageous wealth gap created during the Roaring Twenties and made glaringly obvious by the Great Depression that followed. His warning to them that failure to do so would result in an internal war, a communist-inspired revolution, produced the New Deal. In addition to some rudimentary aspects of the welfare state ( but not, evidently, a national health care system), his program invested heavily in badly needed infrastructure projects across the country, projects which in turn created jobs for the huge number of unemployed workers of the day.

For several decades these various social welfare programs did reduce inequality in all liberal democracies, while progressive income tax systems, (along with booming economies), allowed their governments to fund them. However neoconservative governments in many of these countries began to cut back on spending and benefits for these programs in the 1980’s and 1990’s, at the same time that their taxation systems were made less progressive and more favourable to the wealthiest members of society. (Margaret Thatcher comes to mind once again, and her counterparts Ronald Reagan and Brian Mulroney.)

The 2008 Great Recession only served to heighten these trends, as did the increasing inequality of wealth distribution that resulted from the negative aspects of economic globalization. Mass citizen protest movements began to mobilize, and a growing number of prominent economists and public intellectuals — such as George Soros, Benjamin Barber, Joseph Stiglitz and James Tobin — also began to call for significant changes to the international economic order to redress this inequality. This concern was also highlighted by Klaus Schwab, founder of the Davos World Economic Forum, at its annual January meetings in 2019 and 2020.

In short, growing income inequality, and in particular the huge gap that had developed between the top 1% and the rest of the population in most liberal democracies, was already on the radar screen of many citizens long before the arrival of COVID-19. (In Canada, this concern translated into public support for the Trudeau Liberals’ emphasis on the “struggling middle class” and “real change”, and programs such as the Child Welfare Benefit that lifted nearly 1 million citizens, including 300,000 children, out of poverty by 2019.)

As the pandemic crisis has evolved, therefore, it has not escaped the notice of many commentators that, despite the fact the virus undoubtedly does not discriminate on the basis of wealth or social standing, some citizens are more “in” this war than others. Those with second homes in the country or those who live in large houses in the exurbs and suburbs, and those with one or more private cars, to say nothing of those who are either financially independent or whose jobs as professionals allow them to work from home, are in much less contact with the threat than those who live in apartments in inner cities and take public transit, or whose jobs as cashiers or clerks in grocery stores, pharmacies or manufacturing, are considered “essential.” Similarly those who work in the ‘gig’ economy, who are small business owners or self-employed, to say nothing of the elderly, the disabled and otherwise marginalized members of society, are far more vulnerable to both the physical and the economic threat the virus poses. Children in low-income families, meanwhile, may have little or no access to the technology required for the online learning format that has been imposed by the crisis, just as those in rural or remote areas and indigenous communities may lack the internet access necessary to work from home or take advantage of online health care services. In some countries, and notably the United States, the racial divide has already proven to be a significant factor, as recent data indicate black Americans are far more likely to become seriously ill and/or die during this pandemic because of their disproportionately low economic status.[1] In sum, while it is certainly true that no one is immune to this dreadful virus, it is also clear that the pandemic is not proving to be the great leveler.

Still, the pandemic will eventually be defeated. In Canada, recently released data show that measures taken to date likely have reduced the costs to society and the economy, and projections indicate they will continue to do so if stringently followed. Meanwhile the government’s massive economic relief plan appears to have provided most Canadians with the means to weather the storm, at least in the short term. Statistics on compliance with voluntary physical distancing and other measures also suggest a high percentage of citizens are adopting a positive sense of civic duty and commitment to society as a whole.

This is particularly significant, reflecting the fact that Canada’s political culture has historically balanced individual rights with collective responsibilities. Similarly, it is important to note that Canada’s income disparity, while still too great, is less than most other western democracies, primarily due to the impact of our panoply of existing income distribution programs.[2] At the same time, Canada’s economy is one of the best-positioned in the OECD to bring the country out of its current near-total shutdown. With the lowest debt-to-GDP ratio in the G7, the federal government can afford to take on more debt and spend heavily to speed the recovery. The obvious question is what priorities the federal government should adopt in the post-pandemic era.

It is here that COVID-19 could serve the same role as the Great Depression and the Second World War, assuming the Trudeau government is prepared to take the  lead and introduce a range of bold initiatives to reduce income disparity and promote greater equality of opportunity while kick-starting the economy. Planning is no doubt already underway to make substantial investments in infrastructure, as the recent appointment of Michael Sabia to head the Canadian Infrastructure Bank suggests. One key area to reduce social inequality would be the completion of a national high speed broadband network to connect rural, remote and northern communities. Meanwhile the patchwork of new measures to ensure short-term financial support for all Canadians has already raised the question of whether the time may finally be right for the government to create some form of universal Basic Annual Income.[3] The difficulties encountered in supporting university students through this crucial period — given the dependence of so many of them on loans and part-time employment to pursue their studies—  highlight once again the need to base access to postsecondary education on ability rather than funding, and should prompt consideration of free tuition for those who meet high academic criteria. Finally, two programs that successive Liberal governments have already expressed interest in pursuing, namely a national pharmacare plan and a national homecare plan,  should finally be implemented to bring Canada’s welfare state architecture up to the level of most European states and ensure better health outcomes for all Canadians. 

With interest rates at near all-time lows and the finances of the Canadian government in better shape than most of its counterparts, these investments in Canadians should not only reduce income inequality and enhance opportunity, but result in a robust economic recovery that benefits everyone.         

[1] See for example Elvia Diaz. “Why is coronavirus killing so many black Americans? Because they are Poor” USA Today. April 9, 2020.

[2] Two studies which demonstrate Canada’s relatively positive ranking are the U.N. Human Development Index report (2019) and the OECD’s 2018 report on Inequality.

[3] Victoria Collins. “Covid-19 and Universal Basic Income: Lessons for Governments”. Forbes. March 19, 2020. In the Canadian context see Hugh Segal. Interview CBC Radio. March 27, 2020.  and Jim Stanford. “We’re Going to Need a Marshall Plan to Rebuild After Covid-19” Policy Options. April 2, 2020