COVID-19 and a fairer economy

FT European Economics Commentary Martin Sandbu believes the COVID-19 pandemic is a once-in-a-lifetime chance to rebuild better economies that work for everyone. Sandbu author of ‘The Economics of Belonging’ – see previous post – talks here about the polarisation of rich societies since 1980. The main points of interest that he raises are below. Worth a look.

  • 1980 – large number of jobs available in factories start to disappear.
  • Globalisation – not the main cause of unemployment but technology has taken a lot of the manual and clerical jobs (structural unemployment) and retail has gone online.
  • Tax systems have not redistributed income – unions have been in decline.
  • Rural areas worst effected – good jobs more prevalent in cities so rural areas suffer.
  • Low paid service jobs have been impacted by COVID-19. Also as they involve contact with others there is more exposure to the disease.
  • Pandemic catalyst for change. History tells us – US Great Depression = New Deal, 2nd WW = postwar welfare state.
  • Technology change is with us so the need to find new ways of working. Do we have a Universal Basic Income (UBI)?
  • Lower burden of employing workers – less income tax, payroll tax and generally make it cheaper to hire people in to better jobs. Make up the shortfall in revenue elsewhere.
  • With the significant increase in inequality – introduction of a wealth tax. Also a tax on carbon emissions and redistribute to help the worse off.
  • Greater need to overcome regional inequality within countries
  • Need to the political will to make economies work better for everyone.

Leave a Reply

Your email address will not be published. Required fields are marked *