WILL COVID-19 CRISIS UNITE OR DIVIDE US?

Despite early stories of solidarity, uneven effects can deepen social rifts, Krzysztof J. Pelc says.

In an attempt to find silver linings to these bleak times, the media have multiplied stories of communities coming together in the face of adversity. A well-timed book by the journalist Jon Mooallem, This Is Chance!, out this week, tells such a story in the aftermath of the Great Alaska Earthquake of 1964. The day after the disaster, scientists descended on Anchorage expecting to witness social unravelling. Instead, they found unprecedented co-operation among the city’s inhabitants. Anchorage was not the exception: shared adversity does often breed community. You may have fond memories, as do I, of the uncommon neighbourliness that met our own comparatively modest crisis, during the 1998 Ice Storm. Can we expect the same in reaction to COVID -19?

Early signs point in both directions. In my own Montreal neighbourhood, an army of mostly young volunteers has mobilized in a matter of days to offer support to vulnerable people in self-isolation, shuttling between grocery stores and pharmacies to deliver food and medication. Alongside these efforts, there have been growing reports of swindlers posing as volunteers to steal cash and credit cards.

The volunteers have quickly fought back with a system of ID verification and badges. Similar initiatives are cropping up in neighbourhoods across the globe.

Historically, natural disasters like earthquakes have sometimes undone social divisions, by forcing societies to start from scratch, and dismantling old power structures, in a way that has even favoured long-term growth.

But even natural disasters tend to hit communities unevenly. In the pre-industrial era, earthquakes toppled the poorly built dwellings of the poor, sparing the sturdier houses of the wealthy.

In the Middle Ages, the Black Death, transmitted through rodents, thrived in the poorer, more densely populated quarters, often leaving wealthier enclaves in the same city untouched. In our own time, Hurricane Katrina, and the ensuing storm surge, wreaked its greatest havoc in the Lower Ninth Ward, New Orleans’ lowest-income area.

When the damage from disasters affects people unevenly, it creates social rifts rather than solidarity. In the current case, it’s worth thinking how such cleavages are being drawn. Here are three lines of social division that are likely to worsen under the virus.

The first is between whiteversus blue-collar workers. White-collar jobs are significantly better adapted to remote work. There are notable exceptions, but while 63 per cent of workers have the ability to work from home in the top quartile of the income distribution, that number is only nine per cent for the bottom quartile. This has two related implications: blue-collar workers are more likely to be exposed to infection when they show up for work. But this means they are also more likely to require self-isolation once they show symptoms, which in turn means they are more likely to find themselves out of work. In other words, the virus will most likely aggravate income inequality, which was already among the most pressing economic concerns of our day.

A second rift will form between large and small firms. Large firms are on average more resilient to shocks. They have greater reserves of capital, and they are able to turn to bond markets for financing.

Once the economy is taken out of its medically induced coma, large firms will be more likely to bounce back, while small businesses may not manage.

This is also why the apparent destruction of wealth on the stock market likely under-represents the true devastation on the ground, as mom-and-pop shops — restaurants, hairdressers, travel agencies — will bear the most lasting damage.

Once normalcy returns, we may thus see a shift of market share from smaller to larger firms, at a time when the concentration of market power is already raising concerns.

But the most unsettling cleavage created by COVID-19 is likely to be between the young and old, and specifically between retirees and those still active in the workforce. While policy-makers have made much of the fact that hospitalization rates remain significant among the under-50, the fact remains that mortality is highly segmented by age. Those over retirement age are far more likely to die from an infection. What this means is that as the economy is forcefully put on hold, society as a whole is paying a huge economic cost to save the lives of its eldest citizens. This fact risks breeding growing resentment.

There have already been calls, in both the United States and Britain, to simply isolate vulnerable populations like the elderly, and let others go on about their lives. It is not only an unworkable idea, but also one that carries poor associations. I hesitate to bring up the precedent of the plague during the Middle Ages, when groups of vigilantes forcibly walled off the houses of the sick, abandoning them to their fates. When adversity is sustained past the initial moment of novelty, it can bring out the worst in us. We can expect that as the economic cost of self-isolation mounts, there will be growing calls for drastic solutions.

In each of these cases, governments have a role to play. Their greatest challenge will be to get resources to those who need it most, and to do it fast. As some of my own research has shown, such targeted transfers are difficult at the best of times, let alone during emergencies. The Universal Basic Income-inspired solutions currently being discussed, sending money directly to all residents, have the great benefit of being swiftly implementable.

But the policy responses we settle on will eventually need to deal with the fact that the effects of this crisis are not, in fact, universal, but highly uneven.

Recognizing this unevenness may determine whether this crisis ultimately looks more like Anchorage, or the Middle Ages.

The most unsettling cleavage created by COVID-19 is likely to be between the young and old.