The world will be more unequal after Corona

As far as the situation can be seen at the beginning of August 2020, the corona pandemic is not even suitable as a leveling machine. Evidence of this can be found in the labor market, education and literature.

What does Corona make of the difference between rich and poor?  (Symbol image)

Sind epidemics are the “most social of all diseases”? One hears such assertions more often these days: Epidemics never only affect the individual, but always society as a whole. From this it can then be deduced that all people are equally entitled to help, precisely because a pandemic like Covid-19 spares neither the poor nor the rich. To call this non-discrimination “social” seems to me to be rather inappropriate. At least when the association “solidarity” or even “non-profit” resonates with “social”.

Because even if the virus does not discriminate, the economic shock that the pandemic brought to the world certainly does – and to a considerable extent. The only question is how: will the world be the same or more unequal after Corona? If you follow Walter Scheidel, an ancient historian who teaches at Stanford University, Corona should equalize the world. In his book “After the War Everyone is Equal” (English: “The Great Leveler”) he shows that in normal times social inequality between people increases, while bad times have at least one good thing: they level the income gap.

“Bad times” are great wars, revolutions, dramatic state bankruptcies and pandemics. They are united by the fact that the wealth of the rich will be destroyed and at the same time the poorer classes have more money because – as cynical as it sounds – there are fewer people left to compete for jobs after the catastrophe. The labor supply has become scarcer, but demand is growing in times of reconstruction. The finding applies particularly to the time a hundred years ago, when the effects of the end of the First World War and the Spanish flu were superimposed.

Does Corona make the world more equal?

So also applies: After Corona, everyone is the same? Probably not. It is more likely that Covid-19 will make the world more unequal. And that especially the poor will suffer. The shareholders were happy again after a brief shock; your depot will soon reach the pre-Corona peak again. It is hardly to be feared that the high national debt will result in a loss of wealth, especially for millionaires; rather, inflation affects everyone, especially the poor. Unemployment is already rising worldwide, and the low-skilled in particular are losing their jobs. Even more: Corona was not infrequently carried away from the rich cities of the world to poor countries. In the rich oil states of the Middle East, the lockdown meant that hundreds of thousands of migrant workers were sent home from India, Bangladesh or Indonesia, with the result that they imported the virus back home. You can’t call it social.

But what is the spreading effect of the virus in rich countries? Aggregated figures like the decline in gross national product and rising unemployment remain fairly abstract. How should one concretely imagine the 10 percent slump in economic output that statisticians have calculated for the second quarter in Germany? Harvard economist Raj Chetti and his “Opportunity Insight Team” made a fascinating attempt to make distribution effects concrete. To do this, the team evaluates data on people’s real consumer behavior, which is provided by credit and debit card companies. For sensitive German data protectionists, one must immediately add that although there is a wealth of real-time data that can be bought on the market, it is of course all anonymized.