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.