Gabriel Zucman on the Rise of Inequality in the Age of Crisis

The coronavirus pandemic is dramatically disrupting not only our daily lives but society itself. This show features conversations with some of the world’s leading thinkers and writers about the deeper economic, political, and technological consequences of the pandemic. It’s our new daily podcast trying to make longterm sense out of the chaos of today’s global crisis.

On today’s episode, Gabriel Zucman, economist and author of The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay, discusses how the volatile stock market and how Coronavirus will widen the gap of inequality in America.

From the episode:

Gabriel Zucman: It’s difficult to comment on day-to-day changes in the stock market. The stock market has declined significantly since the outbreak of the crisis, which reflects the fact that there’s just a lot of uncertainty about how the crisis is going to evolve and how long people are going to have to shelter at home and how long businesses are going to be shut down.

That’s why we see these erratic movements in the stock market these days. It’s an unprecedented crisis with billions of people stranded at home with thirty percent of the economy on lockdown. This has never happened in the past. It is completely unprecedented, and so it’s just very hard to make predictions about the future, how things are going to evolve. What are going to be the economic and social and political consequences?

Andrew Keen: But the injustice that you write about as an economist in your work is borne out in this crisis, isn’t it? This is not just some sort of black swan moment. Isn’t that connected with the structural problems of contemporary capitalism?

Gabriel Zucman: I think the crisis is having dramatic consequences. It’s hurting tens of millions of Americans and billions of people around the world in ways that could and should have been softened by government intervention.

To put it differently, the crisis is laying bare structural deficiencies in social programs in the U.S. in particular. Many millions of Americans, for instance, don’t have health insurance. We’re already seeing reports of people who died of the virus because they didn’t seek medical care, because they were afraid about the cost, about the bills, about lacking insurance, or sometimes they were denied access to healthcare for lack of insurance. We are seeing millions of Americans with sharp drops in their income who can’t face bills, who can’t pay their rent. And so the crisis is in a revealing structural deficiencies in the Western welfare states. That’s one thing.

The other thing is that there are lots of uncertainties at that stage that reinforces the rise of inequality that has happened since the 1980s for the very simple reason that high-earning professionals are not affected much by the crisis. They can work from home. They keep most of their income while low earners are disproportionately affected. Many of them are losing their jobs or are seeing that their hours are drastically reduced. So we might see a widening of of inequality in the months ahead, but a lot depends on on how governments are going to respond to the crises and nothing is set in stone. There was quite an ambitious relief package in the U.S., more than 10 percent of U.S. GDP in emergency relief. Much more should be done.

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Gabriel Zucman is professor of economics and public policy at the University of California, Berkeley. His research analyzes the accumulation and distribution of wealth through global and historical perspectives. He received his PhD in economics from the Paris School of Economics in 2013. He was awarded the Bernácer Prize in 2018 and a Sloan Research Fellowship in 2019. He is the author of The Hidden Wealth of Nations: The Scourge of Tax Havens, which has been translated into eighteen languages.