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1641. Inequality, Lockdown, and COVID-19: Unequal Societies Struggle to Contain the Virus

Author:
Paul von Chamier
Publication Date:
04-2021
Content Type:
Working Paper
Institution:
Center on International Cooperation
Abstract:
There is nothing equal about COVID-19. It is now well established that poor and underprivileged social groups have absorbed most of the pandemic’s negative impact. However, the connection between COVID-19 and inequality might run even deeper. During the first wave of the COVID-19 pandemic, one additional point of the Gini coefficient correlated with a 1.34 percentage point higher rate of weekly new infections across countries. This difference in infection rates compounds like interest every week. This means that after twenty-one weeks of the pandemic, just one additional Gini å correlates with an approximately 1/3 higher overall number of cases in a country. More equal countries might enjoy an “equality dividend” that is associated with more shock resilience during the ongoing crisis. This new research from CIC sought to understand if pre-existing systemic inequities could be linked to higher COVID-19 infection rates, examining infection rates in 70 countries from mid-March 2020 through early August 2020, or what is widely seen as the first 21 weeks of the pandemic. It also studied these nations’ levels of inequality and other potential predictive variables: government efficiency (a measure indicating quality of public services and civil service capability), urban population share, share of the population over the age of 65, lockdown measures (calculated by stringency), and geographic mobility (a population’s physical movements as measured by Google’s COVID-19 Community Mobility Reports). The study tracked inequality by using the “Gini Coefficient,” a commonly used metric for measuring income inequality within nations--or, specifically, how far a country’s wealth or income distribution deviates from a completely equal distribution. Under this calculation, the higher the coefficient, the greater the income inequality within that country.
Topic:
Inequality, Resilience, COVID-19, Health Crisis, and Society
Political Geography:
Global Focus

1642. Introducing the Mind-the-Gap Index: A tool to understand urban spatial inequality

Author:
Jeni Klugman and Matthew Moore
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
Center on International Cooperation
Abstract:
Where people live exerts a strong influence on multiple aspects of their well-being, including their access to economic opportunities, education, health and other services and to their security, as well as other goals envisioned in the 2030 Agenda for Sustainable Development. In a world with high and growing levels of urbanization, policy makers are increasingly aware that the future of inequality depends largely on what happens in cities. There is also concern that rising spatial inequality can lead to social unrest, rioting, increased crime, and erode trust among separated societal groups. The World Bank estimates that half of the area that will be urbanized by 2050 has not yet been built, which implies major opportunities for the policies and decisions affecting cities to shape the world we live in. First, this paper synthesizes several research papers regarding what we already know–drawing on recent research from UNDESA and others–to outline the extent of spatial disparities, the ways that spatial inequality shapes today’s cities, and the key factors driving spatial disparities. Additionally, the paper introduces a new index designed to capture key dimensions of spatial inequality, along with analysis of results from three pilot applications in Addis Ababa, Jakarta, and Mexico City which highlights the importance of granular and up-to-date data, as well as the accumulating nature of disadvantage in poor neighborhoods.
Topic:
Inequality, Sustainable Development Goals, and Urban
Political Geography:
Indonesia, Ethiopia, and Mexico

1643. Solidarity Taxes in the Context of Economic Recovery Following the COVID-19 Pandemic

Author:
Attiya Waris
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
Center on International Cooperation
Abstract:
There are multiple examples of solidarity taxes imposed across country contexts over previous decades. The solidarity taxes that were levied were done to mitigate effects of a crisis such as a pandemic, as well as rebuilding of nations that had been affected by world wars (examples include Zimbabwe and Germany). Considering the renewed interest in solidarity taxes in the wake of COVID-19, author Attiya Waris reviews the history of solidarity taxes, and discusses key lessons from the past, in addition to drawing these lessons and findings into policy reccomendations moving forward.
Topic:
Tax Systems, Pandemic, COVID-19, and Economic Recovery
Political Geography:
Germany, Zimbabwe, and Global Focus

1644. The Way We Voluntarily Pay Taxes

Author:
Ricardo Fuentes-Nieva
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
Center on International Cooperation
Abstract:
“Taxes are what you pay for a civilized society” stated US Supreme Court Justice Oliver Wendell Holmes in 1927. Time has shown that “civilized” means better lives and livelihoods for people where there is a solid tax base and collection–a necessary although insufficient condition for a society where people feel safe, heard, and participant in the decisions of the nation. A government that can efficiently collect taxes is a government with a solid administration and with legitimacy based on the fact that citizens pay their taxes by a combination of laws and a sense of duty and belonging. Paying taxes involves legal and moral obligations. The standard economic model for tax compliance assumes a cost-benefit calculation where someone balances the cost of being caught cheating the tax systems versus the benefit keeping some money hidden to the tax authorities. Yet there are other important reasons why people pay taxes that are not captured by a purely rational calculation. This background paper provides a framework that channels tax morale via trust and fairness directly and three elements for each one indirectly; trustworthiness of the government, reciprocity, and transparency/accountability for trust and three types of justice for fairness: distributive, procedural and retributive. This paper also makes a special distinction to the issue of corruption and how it relates to the elements within this framework. This paper will discuss the evidence on voluntary tax compliance, trust, and fairness, and the set of policies and actions that affect different mechanisms. It will provide a new framework based on the literature about the drivers of trust and fairness, with particular attention to the issue of corruption and also provide historical examples where specific interventions have successfully strengthened the tax system. Finally, it will provide ideas on how to identify the best sequence of interventions for increased tax morale in a specific context.
Topic:
Citizenship, Tax Systems, Peace, and Inclusion
Political Geography:
Global Focus

1645. Inclusive COVID-19 Relief Finance

Author:
Amanda Lenhardt
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
Center on International Cooperation
Abstract:
The COVID-19 pandemic has turned all countries’ attention to mitigating the impacts of the crisis, and with this attention has come a wave of finance to address the immediate health risks of the disease and the indirect effects on economies and on well-being. With this influx of spending on welfare and resilience, many have looked on with hope that this collective effort can be done in such a way that the world can ‘build back better.’ But, like any building project, the foundation is critical. This paper sets out to investigate whether countries are investing in the foundational social and economic structures that have led to the vulnerabilities currently upending people’s lives. Failure to address the structural inequalities embedded within societies and across the global political economic structure will ultimately leave the new structure vulnerable to collapse in the long term, and risks exposing marginalized groups to the harshest impacts of the crisis in the short term.
Topic:
Economy, Crisis Management, COVID-19, Marginalization, and Inclusion
Political Geography:
South Asia, East Asia, South Africa, and Latin America

1646. Shared Capital Initiatives – for Redistribution and Recognition

Author:
Sanjay Reddy
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
Center on International Cooperation
Abstract:
Shared capital, defined as a broadly distributed pattern of rights over productive assets, can be a powerful instrument to address economic and social inequalities. We argue that initiatives to bring about shared capital can foster both redistribution and recognition, and thereby bring about more inclusive and peaceful societies. Based on experience, we suggest moreover that they are feasible and can be advanced by suitable policies and actions—at local, national, and global levels. Shared capital can involve distribution of various rights of an asset, including those of use, control, income, and transfer. This paper considers nine cases which feature some experience of shared capital involving various kinds of rights being distributed and relate these to different kinds of assets. In almost every case, the state has an important role to play in facilitating the distribution of rights.
Topic:
Regulation, Inequality, Peace, Sustainability, Capital, Redistribution, and Inclusion
Political Geography:
Global Focus

1647. Social Contracts: A Pathway for More Inclusive Societies

Author:
Erin McCandless
Publication Date:
08-2021
Content Type:
Working Paper
Institution:
Center on International Cooperation
Abstract:
States and societies are in crisis around the world, as questions arise around the nature and quality of existing social contracts. COVID-19 has laid bare profound vulnerabilities within and across societies. The global pandemic is revealing deep failures in policy visions, institutional fragility, and incapacities of states to harness societal compliance where trust and a sense of national belonging is weak. At the same time, our interdependencies have never been so clear, as all countries, developed and underdeveloped alike, confront similar challenges. Crisis, however, offers opportunity to do things better, to build forward better – strengthening social contracts at all levels. How then, can social contracts, and compacting in times of crisis, offer pathways to address inequality and exclusion? This paper considers how social contracts can offer frameworks to foster new thinking and shape transformative policy to build more inclusive societies. Such frameworks should tie bold new policy visions to robust and resilient institutional arrangements that uproot harmful structural legacies with lasting effect for inclusive and peaceful societies. They must also offer means to address material conditions of inequality, and those related to recognition, identity, and dignity. The cases of South Africa, Tunisia, Colombia, and South Korea reveal that, while not easy nor predictable, such pathways exist. Key findings in this briefing include: Inequality and exclusion stem from policy choices and are fueled by corruption; they undermine foundations of inclusive and resilient national social contracts, e.g. trust in government and societal willingness to consent to difficult policy choices; Participation in formal electoral processes is declining while protest is rising, indicating a lack of faith in existing politics and institutional mechanisms for resolving conflict and fostering consensual politics; and Civil society movements in and across countries are advancing more inclusive social contracts that tackle vulnerability and risk through a variety of innovative means that deserve greater support.
Topic:
Peace, Justice, Social Contract, COVID-19, and Inclusion
Political Geography:
Middle East, East Asia, South Africa, and Latin America

1648. Social Contracts: Embracing a Just Technological and Energy Transition

Author:
Ian Goldin
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
Center on International Cooperation
Abstract:
Social contracts determine what is to be provided and by whom. In democracies, political processes determine these outcomes, with the extent to which individuals, communities, cities, businesses, governments, and other actors and institutions provide education, health, security, infrastructure, and justice to shape what comes to be understood as the social contract. Whether prevailing social contracts produce desirable consequences, such as human rights, individual freedom, self-determination, human development, prosperity, and equality reflects their efficacy. What is considered an effective contract in the US or Europe, may however be viewed very differently in China, with the priorities and norms associated with shaping social contracts, as well as the means to achieve them, varying from country to country and over time. In this brief, author Ian Goldin shows that many existing social contracts are inadequate and require renewal to overcome countries’ failures to address the needs of the majority of their citizens. New pressures on societies arising from the pace of change associated with the technological and energy revolutions have created an urgent need to build new social contracts which ensure that no one is left behind. This need has been made all the more urgent by the COVID-19 pandemic, which has shown the extent to which large parts of society—informal sector workers, uninsured self-employed, unemployed, migrants, and others—have fallen by the wayside due to outdated or non-existent social contracts. Establishing secure and comprehensive social contracts is not synonymous with the establishment of a welfare state, as this is only one way to secure effective social contracts. How welfare states adapt to meet the new technological and energy transition, and which other models may serve to build effective social contracts is a key question.
Topic:
Energy Policy, Science and Technology, Peace, Justice, Social Contract, Transition, and Inclusion
Political Geography:
Global Focus

1649. Employment Transitions

Author:
Ian Goldin
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
Center on International Cooperation
Abstract:
The world of work is undergoing a fundamental transformation that will impact on workers and job seekers everywhere. Among the key drivers of this change are the climate emergency, demographic shifts and technological revolutions. Far from heralding better lives, the employment transition which was created by the industrial revolution led to immense hardships, rapidly rising pollution and heightened levels of poverty, malnutrition, and civil strife, culminating in the French and other revolutions. Today we are faced with an even more rapid, radical, and wide-ranging transformation of work, which threatens to be as disrupting. This time, however, we have the means to analyze and prepare for change. The purpose of this research paper is to identify how employment is being transformed and to examine the options for a just transition, which will lead to improvements for workers around the world. Author Ian Goldin begins this paper by identifying the challenge we are facing. It then defines employment transitions and lays out the weaknesses of current models of employment. Finally, it suggests policy options which tackle transitional assistance for workers, aiming to draw overall conclusions on what works in different economies.
Topic:
Science and Technology, Employment, Transition, and Workforce
Political Geography:
Global Focus

1650. Cordon of Conformity: Why DSGE models Are Not the Future of Macroeconomics

Author:
Servaas Storm
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The Rebuilding Macroeconomic Theory Project, led by David Vines and Samuel Wills (2020), is an important, albeit long overdue, initiative to rethink a failing mainstream macroeconomics. Professors Vines and Wills, who must be congratulated for stepping up to the challenge of trying to make mainstream macroeconomics relevant again, call for a new multiple-equilibrium and diverse (MEADE) paradigm for macroeconomics. Their idea is to start with simple models, ideally two-dimensional sketches, that explain mechanisms that can cause multiple equilibria. These mechanisms should then be incorporated into larger DSGE models in a new, multiple-equilibrium synthesis – to see how the fundamental pieces of the economy fit together, subject to it being ‘properly micro-founded’. This paper argues that the MEADE paradigm is bound to fail, because it maintains the DSGE model as the unifying framework at the center of macroeconomic analysis. The paper reviews 10 fundamental weaknesses inherent in DSGE models which make these models irreparably useless for macroeconomic policy analysis. Mainstream macroeconomics must put DSGE models, once and for all, in the Museum of Implausible Economic Models – and learn important lessons from non-DSGE macroeconomic approaches.
Topic:
Economics, Economic Growth, Macroeconomics, Money, Demand, and Models
Political Geography:
Global Focus