To what extent does the coronavirus pandemic give
economies the opportunity to create fairer societies?
The coronavirus pandemic was a widespread virus which sent the entire
world into a global lockdown. Almost 7 million lives have been claimed
internationally shaking the foundation of societies in a mental, economical
and physical way. Many regulations on travel and movement of all citizens
were implemented to protect citizens from this virus and this in turn had a
large economical effect on society due to decreased production,
productivity, international trade, employment and climate change. This
begs the question, how does all this put economies in a position to lead to
a fairer and more equitable society?
The pandemic has left 1.6 bn students out of school affecting education
worldwide, with around 251 m people being pushed towards poverty in
2030. These crises have left governments spending staggering amounts of
money to reduce the harmful socioeconomic effects of the pandemic with
deficits being higher than they were in WWII! It is obvious that the
pandemic had the largest impact on lower to middle income countries
which again links back to how does the pandemic give economies a
chance and creating a more equal society. Despite Thomas pickety stating
that such worldwide pandemics can be a stimulus for economic reform in
countries, some economies lack the financial or general ability to briing
such reform without the assistance of the international community. It is
estimated that low-income countries will need around $200 billion until
2025 to step up their response to the pandemic, and a further $250
billion to catch up with advanced economies. In conclusion, It is
possible financially to reform from the pandemic but it is important to
note that not all countries have the financial capability for such reform
and all external aid can result in a massive opportunity cost for other
nations.
One way in which all countries can promote equality is to use a more
equitable taxation regime, in which the rich are taxed more heavily
compared to the poor. This will serve beneficially as more revenue will
be raised to the governments and the lower income segments of
society will be less prone to fall into poverty due to a significant
reduction in income through tax. The problem with this however is that
there ARE loopholes to avoid taxes which the rich can use, such as
moving out of a nation to another nation with less tax rates on the
wealth such as places like Dubai and Monaco. Things such as these
are major flaws in schemes such as these and can only be fixed with a
stricter tax system which does not allow such loopholes to be used.
this however, would need to co-operation international-wise which
may prove difficult as such laws would not necessarily benefit every
party involved as lower tax rates are often an incentive to attract more
businesses to increase economic activity.
It is crucial to understand that due to the massive deficits and debts
built up by the spending of governments to lessen the impacts of
covid. A higher tax system will most likely be put in place for a
government to financially recover and regain growth.
In the case of “donut economics”, It would most likely be unwise to
implement such strategies at this point. Yes, Climate change and
combatting it is certainly a very important task. However, these
coming years will be crucial in the recoveries of all economies after
the effects of covid, so it is important that all available finance is not
tied up elsewhere and implementing such economical restrictions to
preserve the environment may harm or otherwise lengthen the
recovery process which is not ideal. It is wiser to put off such plans for
future when an economy is in a better shape to implement such
barriers for economic activity to preserve the planet. All in all, Climate
change should not be the MAIN concern when planning to recover an
economy and achieve economic growth as I believe regaining
economical footing is the main priority at this point.
The pandemic has left all economies in a weaker state than pre
pandemic statistics and recovery must be the main focus for all
economies effected. The huge amounts of spending has resulted in
high debts and deficits compared with reduced GDP and overall
output and employment, lowering tax revenue. As thomas pickety
says, it is important that laws are implemented such as proggresive
tax structures and fairer social laws in order to help develop a more
equitable economy. Donut economics despite having a crucial point
and benefits, is not a very timely strategy as I've stated above that an
economies main concern should be foremost about recovery and
restructuring of taxing which will involve rich and poor into agreement
which in itself is a difficult feat and implementing donut economics
may hinder and restrict such economic growth and vital recovery.