Tuesday, September 15, 2020

Inequalities and Covid-19


Inequality is by definition multifaced. Not only is there a difference between income and wealth inequality, but inequality can be also inequality between genders, races, ages, territorial units within a country and so forth. When one takes a stroll in a city like New York, inequality is evident by simply walking from one area to the next.

Thus, it is not surprising that one is likely to see a relationship between inequality (in its many incarnations) and the effects of the pandemic. This is, I think, very obvious in the case of the United States, but is probably so in other devastated countries like South Africa, Peru, Chile, Brazil and India.

US health inequality is well known. Even after Obamacare, almost 30 million Americans do not have health insurance. Many depend on their jobs to provide it. When jobs are gone, as was during the pandemic, the insurance was lost too. Health inequality contributed to casualties even if many hospitals treated patients regardless of whether they had insurance or not—thus showing a remarkable level of civic spirit that politicians apparently lack.

US education inequality is seldom mentioned in covid debates. But low quality of elementary and high school education combined with wide latitude to do home schooling contributed to widespread dismissal of science and prophylactic measures to curb the spread of the epidemic. The fact that the US ranks way ahead of its income comparators in the percentage of the population who holds the most extravagant beliefs (from rapture to flat earth) is not an accident. It showed its nefarious character during the crisis when people just refused to believe in what science told them was bad for themselves and their family and friends.

A fragmented system of political decision-making seemed at first very helpful, in face of an openly obstructionist federal government. By that too proved an illusion: inability of higher territorial units (like states) to enforce rules to contain the pandemic over lower jurisdictions (counties) led to an administrative chaos. Additionally, it led to the expansion of the pandemic since unequal treatment by countries under conditions of free movement of people, spreads the virus. The least restrictive units determined the spread. Being responsible under such circumstances made little sense as it would only harm own business and not check the contagion. Thus the incentive for generalized irresponsibility was created.

Inequality in political power became obvious too. Even when state or county administrations were determined to impose harsh measures, they were subjected to the relentless pressure of businesses. Few politicians, who are aware of how important is business support for their elections, were able to resist that pressure. Most notably, that transformed California from an early success case into a debacle. 

Inequality in casualties, as the latter were especially high among Blacks and Latinos, probably blunted the political response. Neither of these two communities is politically powerful. Among the Latinos in California many might have been non-documented aliens, and hence their political influence was even less. Their deaths largely did not matter.

The outcome of all these processes was that a democratic country appeared, and indeed was, much more indifferent to deaths than an authoritarian regime like China's.

US cared more about businesses than deaths, but ended with an epic economic decline and the highest death toll in the world (as of September 2020).


[This is a short piece written at the demand of the Bosch Stiftung in Berlin to explain how I see the intersection of inequality and the pandemic.] 

Friday, September 11, 2020

My interview for "Marianne" as "C,A" is published in French

 1.                 Grâce à vos précédents travaux, le grand public a pu voir en une courbe, la fameuse courbe de l'éléphant, l'évolution des inégalités liées à la mondialisation. Votre nouveau livre sur le capitalisme s'inscrit-il dans la suite de ces travaux ?    

Only in part. The new books deals obviously with inequalities (since I have spent most of my life studying them) but instead of global inequalities which were underlying the elephant chart it concentrates on national inequalities and upper class reproduction in the system of liberal capitalism like the United states and political capitalism like China.

 Of course, these national inequalities were treated also in « Global Inequality » (Chapter 2)  but here I think they are placed much more firmly within a political context. I see income and wealth inequalities not only as being derived from a way that a political and economic system is organized, but sustaining that political system especially through ability to transmit these advantages to children and to influence economic rules. We see that in liberal capitalism quite clearly : economic power is often used to acquire media power and then political power. Why is Jeff Bezos the owner of the Washington Post and Donald Trump the President of the United States?

This is why, at the end of the book when I go through some recommendations pertaining to liberal capitalism, I reduce them to only three simple policies : limiting inheritance that can be transmitted to children (through heavy taxation of inheritance), limiting the role of private schools (by making public schools better and more attractive) and limiting the influence of money on the media and politics. 

2.                 Pouvez-vous revenir sur la distinction entre « capitalisme libéral méritocratique » et « capitalisme politique » ?

Liberal capitalism is basically Western capitalism where the “infrastructure » is capitalistic (private means of production, hired labor, decentralization of economic decision-making) and the political space is democratic.

I have however to explain the terms « meritocratic » and « liberal » that I use in reference to this type of capitalism. They come from John Rawls. He called meritocratic equality is the one where there are no legal (I emphasize legal) distinctions between citizens. There is no nobility or clergy that are the only ones that can accede  to certain high positions. There are no slaves. There are no castes. It is simply equality before the law. All modern societies are, in that sense,  « meritocratic ». So that use of term is very different from the colloquial use where we speak of « meritocracy » as something very positive with everybody getting what he or she “deserves”. For Rawls, the next level of equality is « liberal » where society tries to limit the influence of inherited advantage on one’s life chances. This is where taxation of inheritance and public education come.

Now, modern Western societies span the range between these two types. Some where social functions are limited, are satisfied with only legal equality of citizens and let inheritance and private-for-profit education flourish. The US comes close to that type. Others, in Europe, take equality of opportunity and social mobility more seriously and are closer to what Rawls called « liberal » capitalism.

Political capitalism is also a capitalism, as defined above, but with the political system that is not democratic. As I defined it in the book it has three features : a competent and efficient bureaucracy whose objective is maximization of economic growth, absence of the rule of law, and autonomy of the state. It is from the contrast between an efficient bureaucracy (which in principle has to follow the law) and the need for discretionary decision-making implied by the absence of the rule of law, that we find corruption. Corruption is thus, I argue, an inherent or endemic feature of political capitalism, not an anomaly.

Finally, political capitalism tries to maintain autonomy of the state, meaning that the state may never become simply a vehicle for the expression of the interests of the rich or, to use Trotsky’s term in a different context, “conveyor belt” of the capitalist class (which it is often in liberal capitalism).

3.                 Selon vous, s’il ne veut pas devenir une ploutocratie, le capitalisme libéral doit s'attaquer au problème des inégalités. Est-ce possible avec la mondialisation qui pousse à la compétitivité ?

Many economists  have maintained a very wrong view on globalization, arguing simplistically that it would be a win-win proposition for all. But it was not, and we see it clearly now. Let me show that by historical analogies. The first industrial revolution has been a wrenching process that led to the expropriation of peasants (whenever it was done: from the 18th century England to Stalin’s Soviet Union), creation of an urban proletariat living at the subsistence, and pauperization and vagrancy for many. Accompanied by globalization, the process has led to the colonization of large parts of the globe, slave trade, and finally loss of jobs for those who were less efficient, as for example Indian textile-makers that were « destroyed » by British competition.

Now, when you look at today’s technological revolution and globalization, why would such a momentous process have less deleterious impact ? We have not escaped history. We are not at its end. We do not live in a world of universal harmonies. And indeed those who were displaced by technological change (the routine labor), those whose jobs went to workers at the other end of the world who could do the same thing much more cheaply, are today’s losers. Many of them might not have lost in absolute terms the way that farmers and slaves lost during the previous globalization, but they did lose in relative terms. Their economic position, within their own countries, and globally has deteriorated.

The difference with the first globalization is that, at the worldwide level, the costs of this globalization are paid largely by the western middle classes, while in the 19th century the cost was paid by urban proletariat in the West and the colonized nations.

4.                 Votre cadre d'analyse permet-il d'expliquer les tensions, désormais ouvertes, entre la Chine et les États-Unis ?  

I think so in two ways. First, China through its extraordinary economic success clearly shows that capitalism and democracy can be decoupled. As I mention in the book, historically, economically most successful countries over a given period were both imitated by others and themselves tended to « export » their model abroad. China has been rather quiet on the « export front », perhaps for historical reasons  and perhaps because the Chinese political capitalism has many China-specific features which cannot be so easily transplanted elsewhere. But this is changing now, and we notice China’s much more assertive policy in the ideological domain.

When you look at the crisis of democracy in the United States, you understand why China might feel ideologically more confident now. So the China-US competition has, for the first time, acquired the features of an ideological competition even if the two systems are capitalist. This is of course different from the competition with the Soviet Union.

This ideological competition has also a great power competition elements. They are geopolitical. My books deals less with it. But I think that the latter (geopolitical competition) cannot be understood without its ideological underpinnings. In fact, all the competitions from the Napoleonic wars to today had an ideological part and another purely political or military. The same is true for China and the United States.

5.                 Le modèle libéral n'est-il pas en train de devenir autoritaire et de se rapprocher du capitalisme politique ?

That’s quite a possibility. We are at a bizarre crossroads where most of the commentators, sociologists or economists discuss « populism » whereas what is really happening is « plutocratization ». Take Trump. He is called a « right-wing populist ». But when you look at his policies he has consistently delivered things that the rich wanted to have : deregulation, lower taxes, private school system, use of the state for private gain, high stock market. These are entirely mainstream rich Republican policies. Some sociologists are impressed by his seemingly populist language, and fail to look at the economic reality.

Moreover, as I have argued, Trump rules the United State the way that he was managing his companies. When people ridicule him for not knowing the US constitution and the like, they also make a total mistake. Trump does not see the difference between a company and the state. This is the best indicator that it is the neoliberal economics that has already been spreading to a number of areas  and is now in the process of taking over the state as well.

6.                 Vous évoquez deux alternatives théoriques au capitalisme libéral et au capitalisme politique : le capitalisme populaire et le capitalisme égalitaire ? Sont-ils réellement possibles et souhaitables ? 

I am not entirely pessimistic as to their feasibility. People’s capitalism would be a capitalism (still a capitalism!) where the ownership of capital would be much more diffused or widespread—whether it would come from workers’ shares in companies or from special tax privileges given to small investors. In such a system,  the rising share of capital in total income, which is likely to result from robotics and further improvements in technology, need not immediately translate into higher inter-personal inequality as it does today.

This is hard to imagine for many because we are all conditioned by centuries where having property meant being rich, but imagine for a moment that we all have approximately similar amounts of property (similarly valuable apartments or similar number of company shares), Then an increase in the rate of profit or in the value of housing will reduce (not increase) inequality. I am not arguing that we can get there very quickly or easily,  but once we visualize this objective, yes, I think we can start with small steps going in that direction.