## COVID-19 and Global Inequality – IMF F&D ## Source details **Canonical URL:** [COVID-19 and Global Inequality – IMF F&D](https://www.imf.org/en/publications/fandd/issues/2020/09/covid19-and-global-inequality-joseph-stiglitz) ## Other formats - [Markdown version](/en/publications/fandd/issues/2020/09/covid19-and-global-inequality-joseph-stiglitz/index.md) - [Structured JSON version](/en/publications/fandd/issues/2020/09/covid19-and-global-inequality-joseph-stiglitz/index.json) - [Bundle manifest](/en/publications/fandd/issues/2020/09/covid19-and-global-inequality-joseph-stiglitz/bundle-manifest.json) ## Bibliographic details - Authors: JOSEPH STIGLITZ - Published: September 1, 2020 --- ### Overview - Author: JOSEPH STIGLITZ, Nobel Memorial Prize in Economic Sciences recipient and professor at Columbia University. - Publication: F&D Magazine, Conquering the Great Divide, September 2020. - Central claim: The pandemic has revealed and is likely to increase disparities and inequalities within and between countries unless governments and international institutions change course. ### Health, vulnerability, and unequal exposure - COVID-19 disproportionately affects: - people in poor health; - those whose daily lives expose them to greater contact with others; - the poor, especially in poor countries and in advanced economies where access to health care is not guaranteed. - United States example: - Attributes part of its high number of cases and deaths to having among the poorest average health standards of major developed economies. - Notes life expectancy is lower now than it was even seven years ago and highlights the highest levels of health disparities. ### Cross-country differences in pandemic management - Key factors explaining country outcomes: - preexisting state of health care and health inequalities; - preparedness and economic resiliency; - quality of public response, including reliance on science and expertise; - citizens’ trust in government guidance; - how citizens balanced individual “freedoms” with respect for others (externalities). - Contrasting cases: - United States as one extreme. - New Zealand as an example of competent government, reliance on science, social solidarity, trust in government, successful disease control, and redeployment toward a greener, more knowledge-based economy with greater equality. ### Labor markets, automation, and widening inequality - Pandemic-induced shifts likely to increase inequality: - Perceived higher risk/cost for certain activities, goods, services, and production processes. - Greater substitution of robots for humans where possible. - “Zooming” replacing airline travel at least at the margin. - Broadening of automation threat to low-skilled, person-to-person service workers (including education and health). - Result: decreased demand for certain types of labor and accelerated inequality trends. ### Policy prescriptions — domestic economic rules and redistribution - Need for a comprehensive program to reduce income inequality; upskilling alone is insufficient. - Critique of prevailing economic model: - Competitive equilibrium model does not well describe today’s economy, especially regarding inequality and innovation-driven growth. - Economy characterized by market power, exploitation, rent seeking, and weakened constraints on corporate power. - Recommended rule changes and policy directions: - Monetary policy that focuses more on ensuring full employment of all groups and not just on inflation. - Bankruptcy laws better balanced to replace creditor-friendly rules and to provide accountability for predatory bankers. - Corporate governance laws that recognize the importance of all stakeholders, not just shareholders. - Globalization rules that protect workers and the environment, not just corporate interests. - Labor legislation that better protects workers and provides greater scope for collective action. - Improve redistribution mechanisms because market distribution alone and current tax systems (notably regressive systems in some countries like the United States) are inadequate. ### International dimensions and global solidarity - Developing countries face: - poorer health conditions and systems; - greater vulnerability to contagion due to living conditions; - fewer resources to respond to the economic aftermath. - Global pandemic control and recovery require assistance from developed economies as a matter of self-interest and humanitarian concern. - Group of Twenty commitment noted but aid to date described as insufficient. - Proposal for Special Drawing Rights (SDRs): - Reference to an issuance of $500 billion in SDRs used in 2009 and readily available now. - Lack of enthusiasm from the United States and India has prevented issuance so far. - Suggestion: developed economies could provide SDRs to a trust fund for use by developing economies to meet pandemic exigencies. ### Debt, restructuring, and global economic outlook - Expectation of a rash of debt crises: - Low interest rates and loose lending by advanced-economy financial markets contributed to profligate borrowing in emerging market and developing economies. - Several countries now have more debt than they can service given the pandemic downturn. - International creditors, especially private creditors, should anticipate debt restructuring. - The key question: whether restructuring will be orderly or disorderly. ### Conclusions and imperative for change - The pandemic has revealed enormous cleavages and is likely to increase disparities and leave long-lasting scars unless there is greater global and national solidarity. - International institutions like the IMF have provided leadership; some countries have shown effective domestic leadership. - Where failures occurred, they have hampered the global response. - The pandemic and its economic aftermath are likely to persist for a long time, but it is "still not too late" for a change of course. *Source: COVID-19 and Global Inequality – IMF F&D (September 2020).* --- ## Content in this bundle - **COVID-19 and Global Inequality – IMF F&D** - [COVID-19 and Global Inequality – IMF F&D (Markdown version)](/-/media/files/publications/fandd/article/2020/september/covid19-and-global-inequality-joseph-stiglitz.pdf.md){rel="alternate" type="text/markdown"} - [COVID-19 and Global Inequality – IMF F&D (PDF)](/-/media/files/publications/fandd/article/2020/september/covid19-and-global-inequality-joseph-stiglitz.pdf){rel="external" type="application/pdf"} - **Superar la gran brecha ● Finanzas y Desarrollo ● Septiembre de 2020** - [Superar la gran brecha ● Finanzas y Desarrollo ● Septiembre de 2020 (Markdown version)](/-/media/files/publications/fandd/article/2020/september/es/covid19-desigualdad-mundial-joseph-stiglitz.pdf.md){rel="alternate" type="text/markdown"} - [Superar la gran brecha ● Finanzas y Desarrollo ● Septiembre de 2020 (PDF)](/-/media/files/publications/fandd/article/2020/september/es/covid19-desigualdad-mundial-joseph-stiglitz.pdf){rel="external" type="application/pdf"} - **Vaincre la Grande Fracture** - [Vaincre la Grande Fracture (Markdown version)](/-/media/files/publications/fandd/article/2020/september/fr/covid19-et-inegalite-mondiale-joseph-stiglitz.pdf.md){rel="alternate" type="text/markdown"} - [Vaincre la Grande Fracture (PDF)](/-/media/files/publications/fandd/article/2020/september/fr/covid19-et-inegalite-mondiale-joseph-stiglitz.pdf){rel="external" type="application/pdf"} --- _Source: https://www.imf.org/en/publications/fandd/issues/2020/09/covid19-and-global-inequality-joseph-stiglitz_