Inequalities may widen

The coronavirus outbreak has exposed existing inequalities and risks making them much worse without reform, argues Nobel prize-winning economist Angus Deaton.

The Scottish-born Princeton professor is calling for changes to the US healthcare system and the country’s big techmology firms.

“Someone compared the pandemics to an X-ray machine that makes the inequalities already there much more transparent,” the 75-year-old said.

“The educated people, most of us have jobs we can continue to do almost the same way, we talk to people on Zoom and we get paid just the same.”

But those with less formal education were often “essential workers who risk their lives with Covid-19. Or if they are in nonessential things, they might lose their jobs”.

In the US, death rates have risen for those without university degrees and were going down for those with one, he added. In addition, “mortality rates from Covid-19 are much higher for African-Americans than for whites”.

He said these factors could not have predicted the wave of protests that have swept the US following the death of George Floyd.

“But I nor you can say it has nothing to do with Covid-19,” he said.

Deaton, who won the Nobel prize in 2015, is lauded for his insights into poverty and health issues – and he sees this as a key area for change. He expressed hope that the outbreak would finally force reform of US healthcare.

“When people lost their jobs they lost their medical insurance,” he said. “There are a huge number of people who have been treated for Covid-19 and survived and will end up with huge medical bills.

“There’s a huge number of people that have died from Covid-19 and their families will end up with huge medical bills.

“And they cannot pay these bills – even people who have insurance, because often insurance has huge deductibles.”

Asked what could replace the US system, Deaton reeled off a list including the French, Canadian, German, Dutch and Swiss models.

“Anything is better than pretending that the market can deliver healthcare,” he said. “All you get is this enormous conspiracy to sort of transfer money from ordinary people to much better-off people. It’s been a major destroyer of jobs and a major source of inequality.

“The stumbling block for better welfare in America has often been race and maybe what’s happening now will change that.”

However, he was not optimistic: “The most likely thing it that it will end up the same as it was.”

“I’m really worried that big tech firms are going to prosper while many other businesses go bankrupt.

“I think all the indicators turn towards making inequalities worse.” –