The Coronavirus Pandemic Has Exposed the “Violence of Social Inequality”’

AMY GOODMAN: This is Democracy Now!, democracynow.org, The Quarantine Report. I’m Amy Goodman, here in New York City, the epicenter of the pandemic, joined by my co-host Nermeen Shaikh, who is staying home to help stop community spread. Hi, Nermeen.

NERMEEN SHAIKH: Good morning, Amy. And welcome to our listeners and viewers around the country and around the world.

AMY GOODMAN: Today we look at how the coronavirus pandemic has shone a light on inequality around the world. The World Food Programme warns the pandemic could lead to a massive spike in global hunger, and a new report predicts more than 100 million people in cities worldwide will likely fall into poverty. The United Nations labor agency said Wednesday some 1.6 billion workers in the informal economy, quote, “stand in immediate danger of having their livelihoods destroyed,” unquote, by the global economic catastrophe triggered by the pandemic.

Well, for more on how the coronavirus pandemic has impacted the most vulnerable and whether the crisis could be a catalyst for change, we’re joined from Paris, France, by French economist Thomas Piketty, whose work focuses on wealth and income inequality. His 2014 internationally best-selling book, Capital in the Twenty-First Century, looked at economic inequality and the necessity of wealth taxes. His new book, more than a thousand pages long, is called Capital and Ideology. It’s been described as a manifesto for political change.

Thomas Piketty, welcome to Democracy Now!

THOMAS PIKETTY: Hello.

AMY GOODMAN: Well, it is a great honor to have you with us. Can you talk now about how this pandemic is likely to trigger the sharpest recession in the United States since the Great Depression, perhaps a depression? Can you talk about the long-term effects of the crisis, and perhaps what can be done to ameliorate it?

THOMAS PIKETTY: Right. So, you know, what I show in my new book, Capital and Ideology, is that this kind of crisis, very often in history, has a potential to change dominant views about what we should do about the economy, how we should organize our societies, the level of inequality.

So, you know, the first visible impact of the crisis is that we see the violence of social inequality. So, you know, people are not equal with respect to lockdowns. They are not equal with respect to joblessness, income loss. So, you know, you can see people who have a very small home or people who have no home, who are homeless, are in a very different situation than people who are locked down in their nice apartment or nice house.

And in terms of income support, you know, when you don’t have any wealth in saving and when you are in a very precarious labor market position, you lose your income resources very fast. And I should say that, you know, the unemployment benefit system in the U.S., in particular, is far too restrictive, and you have lots of workers who actually don’t have access to adequate income support. You have lots of people who don’t have access to housing.

And we’ve seen some of your reports, from just before, that it’s a service issue. You know, we should do more. And the U.S. government and governments around the world should do more about changing their view on what we do with housing, you know, getting urgent solutions for the people who don’t have proper housing, extending income support, making them over and beyond what we’ve been doing in the different countries.

And then we also need to start thinking about a different kind of recovery. We cannot just go business as usual with the same economic sectors again. I think it’s an opportunity to rethink about a different kind of recovery, you know, more green, more social and trying to reach a more equitable and more sustainable development model, because this is something we’ve been discussing for a long time, especially since the 2008 financial crisis. And I think, with the financing of this crisis, we are going to have to change our view about what’s a proper level of inequality in a society.

You know, we see today that all the ideologies against government action, in particular against public health systems and public investment in the hospitals, this discourse today, of course, looks very weak, given the reality of the situation. So, you know, I think this is likely to change. It has already been changed to some extent, but this needs to go much further than what we have done so far.

NERMEEN SHAIKH: Thomas Piketty, before we get to what might happen once this pandemic has come to an end, could you respond to the stimulus package that the Trump administration has proposed and that the U.S. Congress has approved, who that stimulus package is helping or what companies the package is helping, and how it compares to the stimulus package put together by the Macron government?

THOMAS PIKETTY: Yeah, you know, there’s a number of differences between the U.S. and the European stimulus package. I would say, you know, the first thing is that the U.S. package is certainly insufficient in terms of unemployment insurance. Generally speaking, unemployment insurance gives, in Europe — not only in France, but also in Germany, in Denmark, throughout Europe — are more developed than in the U.S. You know, they are more generous, including to wages, you know, at two times, three times, four times the minimum wage, whereas the unemployment benefit system in the U.S. is going to be pretty weak.

And also, in terms of coverage of workers which don’t have a permanent wage earner status and who have different labor market status, including temporary work, I would say, on both sides of the Atlantic, there is a lot of missing areas and a lot of gaps — I mean, a lot of people who simply don’t have access to adequate income support. And I can see them in the streets of Paris, and I assume this is the same in the U.S., you know, people who have to keep working, doing dirty, dirty jobs, on their bicycle, or all sorts of jobs where we don’t have adequate unemployment benefit.

What’s missing also from the Trump recovery plan, I think, is a clear understanding of how we are going to have a recovery in the medium run that puts more emphasis on, I think, first investing in the hospital sector. You know, I think it will be a good time in the U.S. to move in the direction of a universal healthcare system — that’s for sure — but, more generally, to invest more in the hospital sector. I think we are going to have — we cannot just recover with the same sectors as before — you know, automobile, airplane, etc. We also have to take this opportunity to think about a more sustainable and equitable development model. So this means investing more in sectors like health, hospitals, but, more generally, investing more in innovation and environmental technologies. We have to invest more in schools, universities. You know, historically, the source of prosperity has been education and relatively equal level of education. And the U.S., in particular, has been an economic leader for most of the 20th century because it was an educational leader.

And I think we’ve lost memory of that, because this has been replaced, starting in the 1980s, 1990s, by a different kind of ideology, according to which prosperity will come from more and more inequality, more concentration of wealth in a few hands. But, in fact, this doesn’t work. And, in fact, the growth rate of the U.S. economy has been divided by two. If you look at national income per capita in the U.S. between 1990 and 2020, it has been only 1.1% per year, whereas between 1950 and 1990 it was 2.2%. And if you look between 1910 and 1950, it was 2.1%; 1870-1910, about 2.1%, as well. So, the last 30 years have been characterized by very high levels of inequality, rising concentration of wealth at the top, declining wages at the bottom, in particular decline in minimum wage, and also decline in growth. So, in the end, this course toward more and more inequality didn’t work. And I think we should take this opportunity of this crisis, and after the 2008 financial crisis, to just rethink not only about our health policy and investing more in hospitals, which is a just conclusion from this crisis, but also to rethink about our economic model more generally and moving toward more equality, more sustainability.

And this is what I don’t see. And I don’t see it with Trump. I don’t really see it with Macron. You know, both presidents, of course, are supposed to be very different, as we all know, but at the same time, there is one important common point. It’s that they started their mandate by giving a big tax cut to the wealthy, to summarize. You know, in France, there was a repeal of the wealth tax. In the U.S., there was a big tax cut for very high-income taxpayers and for large corporations. Trump also wanted to get rid of the estate tax. He couldn’t get it adopted, but that was his plan. And so, both presidents made these huge tax cuts to the wealthy.

And the big question is: Are they going to be able today to sort of change, you know, hold back a little bit and say, “Well, look, now we are going to have to pay for more investment in public services. We have to care more about all these healthcare workers, all these homeless. We have to” — are they going to be able to change their mind and change their ideology about these tax cuts? And, you know, I think it’s very much an open question at this stage. It will depend on the strengths of the mobilization in the opposition parties and various social groups as a push for different policy. It will also depend on what people within the Republican Party or people within Macron’s party, in the case of France, whether they will accept to continue supporting their champion without a change in the policy package.

And yeah, I guess it’s too early to say what the full, long-run consequences, in terms of economic policy and political ideology of this crisis, are going to be. And it’s a general lesson that I take also from my book Capital and Ideology, which is that the crises are a time when you have — you know, different trajectories are possible. You have very fast bifurcation. That’s a very general lesson of history, that the level of social inequality across societies primarily depends on political mobilization and ideological change, rather than pure economic or technological determinants. So, you know, things can change much faster than the dominant discourse and the various elite in different societies tend to imagine. And, you know, elites always tend to present inequalities as sort of fair and natural and sort of something that you cannot change, as if it was a rule of nature. But what we observe in history is very frequent and very rapid change in the way we organize systems.

So, think of the wealth tax. You know, a few years ago, the idea of a progressive wealth tax on billionaires was hardly discussed. And we’ve seen in the recent U.S. campaign that it was actually very popular. So, you know, Bernie Sanders and Elizabeth Warren didn’t win the primary, but their wealth tax proposal was extremely popular among voters — and not only among Democratic voters, but also among Republican voters. And I think Joe Biden would be well inspired to borrow some of these ideas in order to show that more economic justice can actually come together with more economic prosperity, which was the case historically for a very long time in the United States but has ceased to be the case. And, you know, I think this is the right time to change the narrative and to change the trajectory.

NERMEEN SHAIKH: Thomas, could you also respond to efforts that have been made at the global level to address this crisis? The International Monetary Fund announced that it will provide immediate debt relief to 25 different countries, among them the poorest in the world — Yemen, the Central African Republic, Mozambique, etc. And creditor countries, including France and the U.S., have also agreed to suspend debt. What effect do you think this will have? How much will it affect debtor countries? And what more do you think needs to be done?

THOMAS PIKETTY: Well, first, let me make clear two things. You know, this suspension of debt payment, it’s better than nothing, but I think it’s not enough, because in the decisions that have been taken is that this country will have to repay more one year from now, two years from now, in order to compensate for what it didn’t pay this year. So it’s just a suspension, but you still have the payments that are pending. And I think, in many cases, we should just cancel some of this debt for good, or other, you know, much longer horizon, with a much longer suspension.

There’s also one thing I want to stress, is that the French proposal to suspend the debt payments in Africa was a bit hypocritical in the sense that most of the debt is not held by France, it’s held by China or other countries. And, you know, it’s good to propose that other countries suspend their debt, but I think it’s even better if you can show the example, so you can decide to stop your payment for your own debt.

You should also, you know, in the case of Europe, develop more solidarity within Europe. And I would like France to propose to mutualize the interest rate to countries like Italy and Spain, which have been hit very hard. And, you know, the usual excuse for not doing that in France is to say, “Well, look, the Netherlands or Germany don’t want to do it, therefore we can’t do it.” But, you know, it’s always better to do something with two countries or three countries rather than one. Of course, it’s even better if all countries join after that. But to begin with, every initiative is good.

Now, over and beyond this issue of debt, which is very important, I think this crisis, especially in developing countries in Africa or in India, for instance, should be used as an opportunity to accelerate the development of the welfare state, of the safety net system. And in many of these countries, you just don’t have anything in terms of safety net, which means that when you decide a lockdown, when you decide a confinement, like what happened in India a couple of weeks ago, it’s not clear that it’s really something you can sustain for very long, because, in practice, what happened — and we’ve seen that on TV and in many articles — is that, in practice, many of the rural workers or migrants were just pushed away of the cities. You know, many people that were working on construction sites in cities or who didn’t really have a solid home in the cities were pushed away, which is sometimes violent, and mass transportation of people through the countryside, which is probably not the best way to avoid the spreading of the virus. And, you know, in any case, if you don’t have a basic safety net, at some point people will have to go out and work and find work and find money and find food. And so, you know, this should be an opportunity, both in India, in Africa, in every country where you don’t have such a system, to develop this kind of basic income scheme, which is possible.

You know, let me say that if you look in the case of India, which is a very important case, of course — you know, it is about to become the largest country in the world very soon. This is the largest democracy, electoral democracy, in the world. And last year, during the electoral campaign in India, there was a proposal by the Congress Party and by a number of low workers’ party to put in place a minimum income scheme. Unfortunately, they didn’t win the election, partly because there were terror attacks in Kashmir in January 2019, which allowed the Hindu nationalist party of Modi to reframe the election more in the direction of a Hindu-Muslim identity conflict, rather than redistribution and sort of social inequality. This is sad. But, you know, this is not the end of history. I think the discussion will continue.

And sometimes what you see in history following like big crises like this one is that even a government like Modi, you know, even a government which initially didn’t plan to introduce the welfare state or to introduce progressive taxation — like you see it after World War I, after World War II, even sort of right-wing governments or governments who didn’t have such plans end up developing new policy tools just because the circumstances sort of force them to do so.

And at this stage, nobody knows. You know, at this stage, we talk mostly about the U.S., about Europe. Nobody knows how the epidemic is going to spread in the South. We don’t have much data. This might take a bit more time. What we know from the Spanish flu of 1918, 1919, which is the closest historical precedent to what we have today, is that the human casualties, as a proportion of the population, were much, much larger in India, in Indonesia, in South Africa. It was up to 5% of the population who died in these countries, as compared to 0.5% to 1% in Europe or in the United States, which is already enormous. You know, today, 0.5% to 1% in the world would mean 50 million people killed in this. So this is already an enormous mortality rate. But in poor countries, it was five time more. So, nobody knows at this stage how things are going to work out in the South, but it’s clear that in case things go bad and in case a more complete lockdown is necessary in these countries, then governments will have to develop safety net.

And, you know, the international community will have not only to suspend all debt and to actually cancel all this debt, but we will really — we will also to think also to a different international economic, financial and tax system. You know, there’s been a lot of discussion over the past 10 years at the level of the OECD on how you tax large multinational corporations, which, as we know, very often don’t pay tax anywhere. So there’s a proposal at the level of OECD, so everybody’s around the table and pretending to be cooperative, at least for one time. And the idea is to have a common declaration of profits at the world level for large multinational corporations. And then the question is: How do you distribute these taxable profits across countries? And so far, because the OECD is a club of rich countries, countries in Europe and North America have said, “Well, we are going to try to get the money out of tax havens to bring them, those taxable profit, back to us,” basically, rather than back to the South. So they are discussing about distributing the corporate tax base in proportion to the sales, in proportion to indicators, which are sort of moot, in effect, for where the final consumers are in the North in terms of total value that is being sorted.

AMY GOODMAN: Thomas Piketty, I hate to cut you off —

THOMAS PIKETTY: But, you know, I think there are other proposals — yeah.

AMY GOODMAN: — but we only have a minute to go, and I want to ask you —

THOMAS PIKETTY: Sure.

AMY GOODMAN: The U.S. Labor Department has just released its latest unemployment numbers, as you were speaking, showing more than 3.8 million people filed for unemployment benefits in the last week. So that brings the total number to 30 million people who have filed for unemployment in just six weeks. I want to go back to two months ago. Bernie Sanders was the Democratic front-runner for president, a man you supported. The unemployment rate was 3.5%, and the U.S. just reported its first coronavirus death. So, I want to ask you about the significance of this. Last month, you tweeted a graph showing voter turnout from 1945 to 2020, which revealed far fewer Americans over that period voted in elections than the electorate, proportionally, in either Britain or France. You tweeted, “Sanders to the aid of US democracy. Only a full-scale reorientation of the type proposed by Sanders would eventually rid American democracy of the inegalitarian practices which undermine it and deal with the electoral disaffection of the working classes.” That’s what you wrote then. Talk about what has happened in this two months, what you think needs to happen, this as the Senate Majority Leader Mitch McConnell has said states should simply go bankrupt, unless they agree to a Republican austerity plan, and then they might get some U.S. government aid.

THOMAS PIKETTY: Yeah. I mean, this statement is particularly crazy. I mean, we had this kind of statement back in the ’30s. You know, they were what we call the liquidationist ideology: “Let’s liquidate bad firms, bad banks, bad states.” But, of course, this is the worst policy you can imagine, both in terms of social consequences and in terms of macroeconomic consequences.

Look, I think, you know, coming back to Joe Biden and the Democratic Party, I think Joe Biden will be very well inspired to borrow some of the new ideas that were put forward by Bernie Sander, Elizabeth Warren, including a progressive wealth tax on billionaires, including more investment in public hospitals, in public universities. You know, I think this is the time for the Democratic Party to show to the middle class and the lower-middle class and the lower socioeconomic groups that they care about redistribution and they care about improving the minimum wage, which is what the Democratic Party stood for until the ’60s, ’70s and even ’80s.

And then, what I show in my book Capital and Ideology — which, by the way, I should say, it’s a very readable book. You know, it’s a bit long, but it can really be read. It’s not technical at all, and it’s a broad history of inequality regime across societies. And I show that the Democratic Party in the U.S., starting, as you were saying, in the ’50s, ’60s, just like social democratic parties in Europe, gradually lost touch with the more disadvantaged electorate. And, you know, I compare all these countries and timing together. And my conclusion is that this is largely because they failed to renew their policy package and to keep redistributive ambition.

And I think many of the lower-class and lower-middle-class voters have just stopped voting, so now, somehow, also voting for Trump, and, in Europe, somehow, also voting for the nationalist party, I think, largely, for lack of a better alternative. And they feel that protection and return to the nation-state and the frontiers of the nation-state at least will protect them a little bit more than nothing at all. And I’m not sure they are so optimistic that all the gesticulation by people like Trump or Marine Le Pen in France will do a lot of good, but at least they see something new, and they hear nothing for them on the other side, therefore they feel — but let’s remember that most of these voters are actually staying at home. You know, if they were really enthusiastic about Trump or Le Pen, they would all go and vote, and you would have a 90% participation rate, which is not at all what you have.

AMY GOODMAN: Twenty seconds.

THOMAS PIKETTY: Yeah. If you look, in the U.S., in particular, the bottom 50% income voters, you have huge abstention, you know, very low turnout. So I think this shows that there’s a need for a different discourse trying to bring back these voters to the voting booth. And I think this crisis is that opportunity for Joe Biden, in particular, to send a strong signal to this electorate.

AMY GOODMAN: Well, I want to thank you so much, Thomas Piketty, and there’s so much more to talk about. But people can read a lot about your thoughts in your new book. Thomas Piketty, French economist whose work focuses on wealth and income inequality. His new book is just out; it’s called Capital and Ideology.

When we come back, President Trump invokes the Defense Production Act to bar local governments from closing meatpacking plants around the U.S., even though they are the major hot spots for the coronavirus. What does this mean for the thousands of workers who have gotten sick? We’ll get response from global health law expert Lawrence Gostin. Stay with us.

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AMY GOODMAN: Mozart’s The Marriage of Figaro, performed by the National Orchestra of Île-de-France while socially distancing in their homes, playing alone together.