Do you know what I find so distressing? During the COVID-19 pandemic the richest people only got richer as equity markets went up and up. And what is even more distressing is that at the same time the number of people who have to make ends meet on €1.60 per day has grown by over 100 million. Of course, the most immediate health effects and overflowing ICs are also distressing and need to be addressed urgently. But only focusing on the short term does leave us with a blind spot. Because COVID-19 is also an extremely effective inequality accelerator.
Inequality is increasing on many fronts: between countries, as well as within those countries, between companies and, not forgetting, between generations. Countries such as the Netherlands have the financial means to bring their economies to a standstill in order to stop the virus in its tracks. Governments and central banks are handing out money to soften the blow. And these same countries are the first to buy up the available vaccines, which means that in countries that are already having a hard time the recovery will be delayed and will be slower.
Within the Netherlands and many other countries, inequality is also increasing further. What it comes down to is that all those who had assets, be it a house, stocks or pension entitlements, do not have much to complain about. But many of those with a less certain employment relationship saw their incomes evaporate and prospects deteriorate.
The inequality between companies is only increasing: big businesses are getting bigger and small ones are being decimated. A select group of big (tech)companies is reaching dizzying heights. Many smaller companies, on the other hand, including retailers and the self-employed, are struggling.
And finally: inequality between generations is also increasing. Whereas the younger generation is falling behind in terms of education and school leavers are no longer able to find jobs, pensions are (once again) left intact and debts are being accumulated that will inevitably have to be paid off by the younger generations.
You could say that Covid-19 is something that we cannot stop from happening. But that is less true for the effects of inequality: these are due to human choices. And whichever way you look at it, these work in favour of those who were already in a better position before the coronavirus hit.
Now that vaccines are available, we will at some point get on top of this pandemic. But I fear that the inequality will only become greater and the public's discontent with current policy is already huge. If nothing is done about the growing inequality, the impact will be just as contagious as the virus itself: further intensification of political tension and polarisation. There is no vaccine that can prevent that. But better policies would.
This is a translation of Hans Stegeman's column in Het Financieel Dagblad, published January 13th, 2021.
Read Hans' previous column 'Who will pay the COVID-19 bill?'