In an earlier post I mentioned how I thought the long-term consequences of the current pandemic were going to be staggering. I didn’t mean that in a medical sense. Bodies aren’t piling up in the streets. It doesn’t seem as though Covid-19 is going to have any significant impact on the world’s population, which is probably still going to peak somewhere around mid-century. But the economic and political fallout from the pandemic will be huge.
What I was thinking of is the comparison between what happened in the 2008 financial crisis and what’s happening now. Specifically, what’s happening now is that the pandemic is deepening economic inequality, which is already at a dangerous level after a decades-long widening of the gap between rich and poor. The subprime crisis was just another big step in this process, but the pandemic is proving to be even worse, exacerbating the so-called Matthew effect (“to every one who has will more be given; but from him who has not, even what he has will be taken away”).
As Don Pitts writes in a recent piece for the CBC: “There was speculation early in the pandemic that the crisis might be the catalyst for a move away from wealth polarization. But just as they did after the 2008 crisis, lower-for-longer interest rates have once again flowed straight into the pockets of the wealthiest.” Funny how that always seems to happen.
On the individual level it’s well documented now that densely populated and poor areas (both within states and globally) have become virus hotspots, while minorities and workers in low-wage jobs are most at risk both of catching the disease and finding themselves unemployed. On the other side of the great divide, big businesses are able to ride out this crisis. For Amazon it’s even been a boon. And so corporate and capital concentration continues apace while, once again, the little guy goes to the wall.
There will be a political reckoning for all this and I think it would be foolish to think that it is bound to take a progressive turn. Of course that could be the case. As Rebecca Greenfield reports for Bloomberg, “Catastrophic events such as the pandemic have historically been a catalyst for reshuffling the economic order. During the Great Depression, with the New Deal, American workers gained a safety net. After World War II they won leverage with employers and higher pay.” So you can say it’s happened before. But I don’t see a lot of grounds for optimism. Instead we’re likely to see more divisive politics leading to even more regressive outcomes.