On 20 March, the UK government announced an unprecedented package of support during the coronavirus lockdown. More or less simultaneously, the US announced a $1 trillion support package. The packages were designed to protect both individuals and businesses. As the Sun reported, Boris Johnson made it clear that, “we are all in this together.”
But of course different people have had very different experiences since lockdown began. And it is worth standing back and asking the question: to what extent are we really all in it together?
Disappointingly, the answer is that we are not, really: the benefits of the support package have flowed disproportionately to where they are least needed:
- many already wealthy people have become even wealthier;
- many of those who have become worse off were already vulnerable; and
- there are already calls for the package to be paid back by precisely the people who benefited least from it.
Many Already Wealthy People Have Become Even Wealthier
According to Fast Company, one group which has benefited disproportionately since the start of the crisis is America’s billionaires, who it says have become richer by $280 billion. That is an increase of about 10% in their net wealth. They report, for example that:
“The initial stock market crash may have dented some net worths at first—for instance, that of Jeff Bezos, which dropped down to a mere $105 billion on March 12. But his riches have rebounded: As of April 15, his net worth has increased by $25 billion.”
In the UK, calls for government largesse to be paid to wealthy tax avoiders has prompted many senior members of the Church of England to urge the government to follow the lead of other governments and refuse to give taxpayers money to
“some large corporations [who] continue to avoid responsibility, making huge profits yet hiding their wealth in tax havens.”
A particularly egregious case in the UK is that of Sir Richard Branson, 51% owner of Virgin Atlantic who is asking the government for £500 million in support. Sir Richard is a billionaire tax-exile with his own private island who not only has not paid UK tax for 14 years, but has also sued the NHS. Neither of these considerations have dampened his enthusiasm for receiving taxpayer support now.
Even for those who are far from being ultra-rich, the lockdown has not always been painful. The FT reported on comments from Torsten Bell of the Resolution Foundation,
“[He] said a person’s experience of the lockdown was often linked to their wealth; ‘lots but not all’ higher earners were able to work from home on full pay or survive on 80 per cent if they had been furloughed. ‘Their income has been protected and there have been big falls in their expenditure. Their financial situation is no worse than before and, in some cases, better.’”
Many Of Those Who Have Suffered Most Were Already Vulnerable
Meanwhile, at the other end of the spectrum, many poorer people are facing real hardship. Professor Philip Alston, UN rapporteur on extreme poverty said that globally “the most vulnerable have been short-changed or excluded.”
He commented that, “Governments have shut down entire countries without making even minimal efforts to ensure people can get by. Many in poverty live day to day, with no savings or surplus food. And of course, homeless people cannot simply stay home.”
In the UK, the government has announced support for workers – and without this, hardship would be far greater – but there are still far too many holes in the support network, and far too many people falling through them. Many self-employed people have seen their income fall significantly, despite the support package. As the Office for National Statistics reports,
“Over 4 in 5 adults in Great Britain (84.2%) said they were very worried or somewhat worried about the effect that the coronavirus (COVID-19) is having on their life right now. Just over half of adults (53.1%) said it was affecting their well-being. Nearly half of adults (46.9%) reported high levels of anxiety. And over 1 in 5 adults (22.9%) said it was affecting their household finances.”
The Financial Times described this effect as “turbocharging existing trends.”
At the most vulnerable end of the spectrum, the effect is worst. Food banks, which give out at least 1.6m parcels a year, have lacked supplies (though the Chancellor has recently announced further support for charities).
And, even more seriously, the risks of exposure to the coronavirus itself are not evenly distributed. Some of us are able to work from home and isolate very effectively. Others – particularly those working in what we now recognise as key roles, such as nurses, carers, farm-workers, shop-workers and delivery drivers – have to continue working; they have to come into close proximity to strangers, and in many cases they have to do so without adequate personal protective equipment.
Care homes, in which according to the FT a high proportion of unreported coronavirus occur, have struggled for personal protective equipment and to maintain staffing levels. Partly, this is because there have been sustained real-terms cuts in public funding of social care in the UK, according to the King’s Fund thinktank, with a £700m reduction between 2011 and 2018.
Although the reasons for it are not clear, there is evidence that the virus has disproportionately affected members of the Black, African and Middle Eastern communities. According to Kamlesh Khunti, professor in primary care diabetes and vascular medicine at the University of Leicester,
“This is a signal and it needs to be looked at more carefully. South Asians [tend to] live in more deprived areas and have more cardiovascular disease and diabetes.”
There Are Already Calls For The Most Vulnerable To Pay
There have been many calls for another round of austerity once the crisis is over, none more chilling or more explicit than that by Daniel Hannan in the Daily Telegraph. Having made the extraordinary claim that the economic problems in the 1970s were a result of residual wartime borrowing (even though debt to GDP had fallen from over 250% under 60% by 1970) Hannan went on to say,
“If we decide that our priority is economic recovery, a lot of things will change. Budgets previously regarded as sacrosanct will have to be cut to return to sustainable deficits. Regulations that inhibit growth, including planning rules, will be scrapped. Even the minimum wage will be hard to justify if millions of people are looking for work.”
In Hannan’s world, which is a market fundamentalist world, austerity drives growth; sacrosanct budgets (only the NHS and old-age pensions spring to mind as having been sacrosanct) will need to be cut; and regulations and protections of all forms will need to be scrapped. This is an economically illiterate, scorched-earth future in which a tiny minority will become even wealthier, while the mass of the population struggle ever harder.
Fortunately, of course, there is an alternative to that world. The coronavirus has shown us the value of good government (and the price of bad government). We can see that countries whose governments act on behalf of their entire populations, rather than being driven by a tiny segment of business interests, can perform far better. We can also see that governments can afford to spend vastly more than they were telling us was affordable just a few months ago.
As John Maynard Keynes famously said, “anything we can actually do, we can afford.”
And what we can actually do is to build a new Golden Age of Capitalism; a world in which everyone – not just the richest – becomes far better off over time; and a world in which we respect and protect our environment. In fact, it will take only five relatively straightforward steps to create such a world.