2020: The K-shaped year

Over one and a half million people died from the coronavirus in 2020. Hundreds of thousands have been severely ill. Economies and lives have been shattered. If you were to think of a letter to describe the year, the first choice would probably be an ‘I’, written from the top downwards.

But, look a little closer and a rather different picture emerges. To be sure, the pandemic and the lockdown to combat it have ravaged economies, thrown millions out of work, exposed gaping holes in health care provision and pushed millions into poverty. But, that is far from being the whole truth.

The challenge of the pandemic has also brought out the best in us. Doctors, nurses and other health workers have been at the forefront of the battle, fighting heroically to save lives. Scientists have raced against time to develop and successfully test vaccines against the virus within months. Millions of workers have stuck to their posts in the midst of a pandemic, ensuring that essential services remained open. Central bankers lost no time in buttressing the financial system and swiftly restoring confidence in the markets. Governments rose to the occasion, providing support not only to those who had lost their jobs, but also to businesses.

What stands out in 2020, however, is the very different effects the pandemic has had on different segments of society. Yes, many people have lost their jobs and have been reduced to penury — for us in India the defining image of the year is perhaps the sight of millions of migrant workers trudging hundreds of miles on foot back to their villages. But, many have seen their wealth increase substantially, as the stock markets scaled new heights. For some, it has been business as usual, including pay hikes and bonuses.

Many businesses have taken advantage of the very low interest rates to refinance their loans. A few have lost no time in raising capital from booming stock markets. While the children of the elites have had no difficulty in adapting to online classes, poor children have fallen behind, some of them being forced to help their parents in earning a living. In short, the year has been a K-shaped one, with some seeing their fortunes go up, represented by the upper arm of the ‘K’ while many have seen their incomes plummet, depicted by the lower arm of the ‘K’.

Of course, such inequalities existed even before COVID-19. What the pandemic has done is exacerbate them. There is now prosperity in the midst of ruin.

Indeed, the pandemic has brought into focus the duality and contradictions in the system. On the one hand, it has showcased humanity’s ability to rise to the challenges, its mastery of technology and the ability of the system to create enormous wealth. On the other, it has shown that the system produces very different outcomes for different classes.

There are other contradictions. The current epoch has been labelled the Anthropocene, in which human activity is reshaping the planet. The COVID-19 pandemic may well be the result of humans pushing ever deeper into territory earlier reserved for other species, such as bats. Dire warnings have been issued about the impact of unregulated growth on climate change—the Lancet has said that both COVID-19 and climate change are the result of human activity that has led to environmental degradation. In the financial sphere, many have viewed with trepidation the tsunami of liquidity unleashed by central banks, the rising debt levels and worry whether central banks have the gumption to stem the tide and what would happen to economies and markets if and when they do. The havoc wrought by the pandemic has led to even greater injection of liquidity and debt. In technology, there are concerns about the impact on jobs from the development of artificial intelligence and robots. Some have said that the pandemic has provided a boost towards the application of AI technologies. And, finally, the pandemic has heightened geopolitical tensions and inflamed rivalries between some nations.

What stands out in 2020, however, is the very different effects the pandemic has had on different segments of society.

Of course, one should not underestimate human resilience and ingenuity. The First World War and the Spanish flu of 1918-19 were followed by the Roaring Twenties, a period of great hope and optimism in some developed economies. But, research shows that the decade was far from ‘roaring’ for the broad masses in the US. Nor was it particularly great for Europe, while the rest of the world saw little impact. And, we shouldn’t forget the nineteen twenties were followed by the Great Depression, the rise of Fascism and the Second World War.

But, then, the world is a very different place compared to a hundred years ago. We face far more serious challenges today, although we also have the technology and institutions to face them. But, do we have the will? What is undeniable is that the pandemic has sharpened the contradictions of the system.