debt, inequality and covid-19

By Kevin Boon

REAL attended the Positive Money webinar on 23 September 2020. The webinar was made up of the following panellists:

Shreya Nanda – economist at the Institute for Public Policy Research’s Centre for Economic Justice.

Dr Natasha Codiroli – quantitative researcher at Advance Higher Education.

Asad Rehman – Executive Director of War on Want.


Shreya’s key message was that, left unchecked, the current economic system tends to lead to increasing wealth inequality. The structures put in place through social democratic systems (relating to taxation, trade unions etc) were removed during the Thatcher period. Crises have accelerated the problems, for example after 2008 and during COVID-19. We can already see that inequality is increasing as a result of the pandemic.  We need to see government increasing social insurance but also rewiring our economic system. This could include elements of the post-war settlement; higher taxes, a jobs guarantee, more democratic ownership of industry or a combination of these.

Natasha discussed inequality in the context of COVID-19. Women entered the pandemic in a more economically precarious position.  Both women and those from the BAME community were more likely to be working in healthcare and those sectors of the economy which would be hit by lockdown at the same time as having less of a safety net. Research conducted in April 2020 of a representative sample of 3,280 people found that across all groups, around a third of people had anxiety around money and debt. The figure was consistently higher for women of BAME backgrounds. This group was also found to be giving more both at work and in their personal lives through, for example, caring. All cohorts had lower life satisfaction and happiness and higher anxiety as a result of COVID. However, this was more pronounced for women and those in the BAME community.

Asad talked about the importance of understanding both the world we are in and the world we’re fighting for. We need to connect the issues we face from systemic exploitation of the global south, the climate crisis, neoliberal inequality, racialised capitalism and COVID. We are no longer shocked by the impacts of the climate emergency – the devastating impacts such as wildfires and floods have become the new norm and these are occurring at just 1oC of heating. Despite large-scale destruction at great economic cost, global emissions have doubled since 1990. Asad suggests the root cause is an economic model which pursues profit and extraction of resources whilst doing little to benefit the majority of the population. We know the importance of not breaching the 1.5oC threshold in terms of feedback loops, threatened food production and water stress. But the economic threats are also devastating. The IPPC estimate the cost to meet the damages associated with a 2oC world will be USD 69 trillion. The IPPC has also talked about climate apartheid with another 120 million people pushed into extreme poverty by 2030 as a result of climate impacts. Although people claim progress has been made reducing poverty in terms of the USD 1.50 a day benchmark, the number of people with income at a more dignified minimum of USD 5.50 a day has remained unchanged since 1990 at around half the world’s population. Structural adjustment programmes, forced privatisations and trade rules have prevented countries in the global south meeting the needs of their citizens. There are 46 countries spending more on debt repayment than on public health. The number of countries living in a debt crisis has increased to 52 from 22 in 2015.

Asad believes that central to addressing the issue of poverty is financial transfers and reparations to the global south. In the case of Britain, the slave colonies provided commodities needed for its industrial development – sugar, chocolate, tobacco, cotton. It has been estimated that Britain extracted USD 45 trillion of wealth in the period 1765 to 1938 from India alone. In this moment of multiple crises, we can no longer have piecemeal responses. At the heart of this is the right of everyone to have a dignified life. This means a living wage, guaranteed income, social protection, public services, workers’ rights but also energy and food becoming public goods. It also means tackling the power of big corporations. The UK can play a pivotal role as the second largest financial centre in the world.

During the discussion, Shreya talked about the importance of a just transition when developing a strategy for net-zero referencing the fuel duty measures taken in France which alienated the population giving rise to the yellow-vest movement. Natasha highlighted the need for recovery taking into account the gender and racial inequalities which exist after the current downturn. In terms of tax havens, action needs to be taken at the national and international level. Nationally we can design tax policy in terms of unitary taxation and destination-based taxation which specifically targets sales and jobs in this country.

The current crisis gives us an opportunity to make demands which seemed politically impossible such as a global wealth tax. We need to put forward a vision for the future and focus, as a coalition, on the key demands.