Maggio 17, 2020

Covid-19 as an X-Ray Machine


The Covid-19 pandemic and the subsequent Great Lockdown have proved to be an unprecedented crisis. The world has seen massive economic crises and pandemics before. Sometimes they even occur at the same time, as history has shown to us in the great diseases of antiquity and the middle ages. But never before, an economic crisis, the shutdown of the economy, was a deliberate decision in the process of fighting a disease.

In Mexico, this whole process has come to work as an x-ray machine that looks through the infected tissues of society and its broken bones. The Great Lockdown has put for all of us to see the great dangers of an unequal society. The inequality in the labour markets, the disparity in the access to health services, the violence and unfairness of treatment inside homes. Economic and structural inequalities are a known problem in Mexican society; the Covid-19 has made it clear that it is a between life and death type of problem.

In regular times, being in the formal or the informal sectors of the economy already determined for most of the population if they had access to healthcare. Those with formal jobs can either opt between social security or private insurance pending on their type of job and level of income. Those without formal employment and the population in poverty, instead have to rely on cheap health services or no services at all.

In general, socioeconomic status is highly correlated with life expectancy and different health hazards, but this epidemic took it to another level. Suddenly if you have a regular source of income, substantial savings, or job security, you could minimise your infection hazard by staying home, a privilege that just about 40% of the working-age population can afford. Without a public transfer of resources for the other 60% of the working force, we are effectively asking them to choose between their economic needs and the risk of infection. The reality is that half the population does not have the means to afford to stay at home. They have to earn what they consume daily.

The Covid-19 pandemic has put under the x-ray machine the structure of employment in the country.  It has revealed the extremely underpaid essential workers in the economy and their regular exploitation. Industries that make pressure to reopen the economy fast, or even worst with those big businesses that disobey the shutdown and remain open and defiant, it shows how they value more their profits over the lives of their workers and their customers. That those industries are dominated by transnational companies fully integrated into the global value chains of US manufacturing, exposes the severe risks of an unbalanced insertion in the global economy that favours particular types of economic objectives instead of global public goods, like health.

In other aspects besides the labour market, the confinement has put to some degree head to head the realities of sexism and macho culture and that of the idealisation of the traditional Mexican family. Emergency calls reporting domestic violence to the 911 telephone number have skyrocketed, a yearly increase of 16% in March, but even without that type of abuse, the lockdown has exhibited the unequal distribution of household tasks, the disregard for those unpaid care jobs that we so much take for granted and that have immense value for society.

The virus has exposed the whole country to the reality of a state with minimal capacities, without fiscal space for overall public spending on health, social protection, or even countercyclical macroeconomic management. At the same time, the Covid-19 pandemic and the Great Lockdown have combined to make the privileged segments of the population aware of their not so well fellow countryman. But to what extent these events will prompt changes in the Mexican society is unknown.

For sure, changes are to be expected, pandemics and severe economic crisis never left societies untouched, never left them the same. Unfortunately, those changes are not always positive. If history teaches us something, is that if there is a force that shapes these types of events and makes them opportunities for social change and improvement is politics. Yet politics are fickle.

Is uncertain if Mexican society has been or will be changed by the pandemic in some specific way. In the past, great pandemics have resulted in unexpected changes. In some countries, they have reduced inequality; in others, inequality has unexpectedly increased. Some nations improve others stagnate and wither. But if we cannot talk about what has changed, we can at least wish for those changes to be in a certain way.

Hopefully, the Mexican society will realise that their current levels of inequality are a danger for all of us. That we need to correct the fundamental injustices in our country. To accomplish those changes, we need to realise that a strong state is required. Without sufficient fiscal capacity to provide for public goods, like healthcare for all and the recognition, enforcement, and expansion of labour rights, we will never be prepared for the crises of the future, and there will always be crises in the future. The tragic outcome of inaction is that more people will suffer. The change cannot be individual; by necessity, it has to be a change that encompasses all society, businesses, and government alike.

Right now, the country needs to find or create the space for a stronger countercyclical response in the economy. It needs to expand social protection programs that can provide some form of supplementary income to large segments of the population and a way to save as many jobs as it can. We are currently walking in unknown territory, it is impossible to foresee what will be the new normal, neither how deep the economic fallout is going to be. We cannot tell what will change. We can only hope for it to be for the best.

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About Diego Castaneda

Diego Castaneda

Diego is an economist and economic historian, he received an MSc in Economic History from the University of Lund and a BSc. in Economics and International Development from the University of London under the academic direction of the London School of Economics. He has served as a consultant for the UNDP, as an advisor in economic development in the Mexican Senate of the Republic and is a regular contributor to different Mexican newspapers and magazines. His research interests are Latin American and global income and wealth inequality from a historical and contemporary perspective, long term economic growth and energy transitions.

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