The New Inequalities and People-to-People Social Protection

Yves here. On the one hand, this post contains many examples of how people with resources are assisting those hit hard by the coronavirus crisis. On the other, it is also all too apparent that in most cases, these charitable acts only make a dent in the problems most face, although admittedly shows of concern can also help assuage a sense of isolation.

One problem in American is most people live in socially and economically stratified communities. In particular, most people with means deal only with the less well off as service providers, say their nannies, drivers, tutors of their children, personal trainers, chefs and waiters at restaurants they patronize. So it is understandable that people who want to help in this crisis would reach out first to those with whom they have existing relationships. But how to get beyond that, and more important, generate broader support for community and political action?

By Nora Lustig, Samuel Z. Stone Professor of Latin American Economics and Director of the Commitment to Equity Institute at Tulane University and Nancy Birdsal, president emeritus and a senior fellow, Center for Global Development. Originally published at VoxEU

The pandemic has created a new, brutal inequality: between those who have a steady source of income and those who do not. This column provides some examples of how the plight of the latter is inspiring a new kind of informal, people-to-people social protection. While this is not a substitute for a publicly financed social safety, it can fill critical gaps and foster the solidarity and trust that is key to citizens’ support for more comprehensive social protection during the next crisis.

The lockdowns throughout the world are creating a new type of brutal inequality: between those who continue to have a steady source of income and those who do not. The latter group includes not just the already poor but the millions across the world who are now at risk of falling out of the middle class: laid-off workers whose unemployment checks will not cover the rent, drivers, small business owners, contract workers, performing artists, the child care workers at-home parents don’t need and cannot now afford. The latter are those, in the rich and in the emerging market economies at least, that provide the ballast, the invisible glue, that holds societies together.

Governments are implementing new, emergency programmes of social protection, but the traditional approach will not be enough, and cannot happen quickly enough in most countries for most people (e.g. Baldwin and Weder di Mauro 2020). The pandemic calls for new thinking about social protection, beyond what governments, large corporations, large foundations and individual philanthropists can do.

Consider what people are already doing themselves who are on the lucky side of the steady income divide, as individuals and in their neighbourhoods and communities. We call what they’re doing people-to-people social protection.

People are paying their housekeepers, babysitters and gardeners who are not working because of social distancing. They are tipping generously when they buy takeout and purchasing gift cards to support their local restaurants; in Gainesville, Florida, people can leave tips to support their favourite restaurants in “A Virtual Community Tip Jar”.1   This approach can be taken further: you can tip delivery people and trash people as if it were Christmas; and you can pre-pay your plumber, car mechanic, dry cleaner, and barber or hair stylist.

People-to-people social protection can also be about sharing the pain. In non-profit service providers and small businesses, employees can negotiate temporary salary cuts to maintain a full work force, at least for staff above a certain income level.

Do you have a skill to donate virtually for those whose classes are cancelled, e.g. teaching English as a foreign language in the US, or German to Syrian migrants in Germany? City people can leave non-perishable food they don’t plan on eating in a plastic bag in front of their buildings so the homeless may have access to them. Do your children’s teachers have students who need materials you can purchase online for direct delivery? If you are a landlord with a tenant who lost her job, consider a no-interest loan.

People-to-people social protection is not only about money inequality.  In addition to a new inequality in the income dimension, there is inequality in terms of scarce access to protective gear. People are leaving a package of protective gloves for their mailwoman and UPS delivery man; or on top of their garbage pails for the garbage pickup workers.

Of course, there is the inequality in terms of how the disease is particularly vicious with the elderly and those with prior underlying conditions. If you are young and know people in this group live in your building or your neighbourhood, you can offer to buy food and prescription drugs for them so they avoid exposure.

And there is a vast inequality in terms of availability of time. Families with small children have time for nothing else while many of the rest are looking for ways to pass time. Those rich in time can offer to tutor or read stories to neighbours’ children using Zoom or Skype.

People-to-people social protection takes what is normal within families and extends it beyond. Above are things you can do for your neighbourhood shops and the people that work for you in normal times.

What can we do for the poorest and most vulnerable such as the homeless, street children, and those living in slums in your city, your country and around the world?  This is the moment to increase regular donations to NGOs and charities or start giving if you are in the group who did not before.

Of course, people-to-people social protection cannot substitute for what local and national governments do and must do for the newly vulnerable as well as chronic poor. (And local governments are innovating too; New York City is helping settle the homeless in otherwise-empty hotels, where they can practice social distancing).2 A permanent and efficient social safety net in the end has to be the task of government. Still, in this moment of crisis, people-to-people direct support is a form of collective action that can fill in the gaps, and can foster the solidarity and trust that is key to citizens’ support for more comprehensive publicly financed social protection for the next crisis.

Endnotes

1 https://gainesvilletips.org/

2 https://thecity.nyc/2020/03/nyc-sends-homeless-other-coronavirus-patients-to-hotels.html

See original post for references

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18 comments

  1. notabanktoadie

    The pandemic has created a new, brutal inequality: between those who have a steady source of income and those who do not. Nora Lustig

    And that’s a disgrace since ALL fiat creation beyond that created by deficit spending for the general welfare should be via an equal Citizen’s Dividend.

    Instead, we have deficit spending that is NOT for the general welfare (e.g. bloated military spending) and fiat creation by the Central Bank for special interests such as for the banks and asset owners (e.g. loans and asset purchases).

    Reply
    1. Kirk Seidenbecker

      Citizens dividend, yes, but economic rent (unearned income) capture methods need to be addressed as well. One large example – roughly 80% of bank credit comes from mortgage loans. A citizens dividend alone would eventually be skimmed away by current assessment practices, banks being the beneficiaries of manipulating the process of the capitalization of site value.

      https://michael-hudson.com/2001/10/the-land-residual-vs-building-residual-methods-of-real-estate-valuation/

      Reply
      1. notabanktoadie

        Yes, we need land reform too (c.f. Leviticus 25) in addition to fiat creation reform. Nice article by Michael Hudson, btw. And written in 2001! Thanks.

        But in addition to those two reforms, we need to reduce private depository institutions to 100% private businesses with 100% voluntary depositors. Otherwise, in addition to unjustly rising housing costs, we shall continue to have the public dis-employed with what is currently, in essence, the public’s credit but for private gain.

        Btw, I would be greatly interested in any links to articles by Dr. Hudson advocating that banks be completely de-privileged, especially since Dr. Hudson seems to respect Old Testament economic policies such as debt-forgiveness and since such privileges make a mockery of Deuteronomy 23:19-20.

        Reply
      2. GramSci

        This paper deserves deeper study than I can give it today, but in 2001 Hudson is already anticipating hit themes\ that played in 2008 and are replaying today, under new cover.  People who desperately want to uncover all of Trump’s ill-gotten gains would no doubt gather much wood for the witch-burning here, though they might risk gathering their own scions into the bonfire.

        Accounting Agnosia? Bill Black woncha please come home!

        Thanks for the link.

        Reply
  2. jef

    You can give a man a fish or you can give a man a loan stipulating he only spends it buying your fish. That way you have a debt slave and a market for your fish. Win win.

    Reply
    1. SouhtSideGT

      I have used a variant of that proverb for years. Something like, “Give a man a fish and he eats for a day. Teach a man to fish and you hate America you rotten socialist dirtbag.” Thanks, jef. Very funny and exactly to the point.

      Reply
    2. Janie

      My friend’s variant: give a man a fish and you feed him for a day; teach him how to fish and you get rid of him fir the weekend.

      Reply
  3. Billy

    “a new, brutal inequality: between those who have a steady source of income and those who do not…”

    The problem is that former have become the latter. FWIW, we have been treating our garbagemen, mailman, barber, clerks in stores, as though they were equals and friends, tipping generously and giving Christmas gifts. Just listening to their concerns, being genuinely interested in their lives, steering them toward resources–every person manifesting any complaints or interest in their economic circumstances, is referred to this website, is another gift we get and get, and one from which one can learn.

    Reply
  4. chuck roast

    A bit of good news on my walk today: I cruised down Funky Broadway to the YMCA. The “Y” houses around 75 souls as full time residents. All of them are marginal (thank you Austrians) economically. Probably on Medicare and most appear to have associated health issues.

    I chatted up a couple of guys having coffee and butts nearby and asked them if everybody in the building was healthy. They told me that it was all good and they had to use hand sanitizer on the way in. I’m very concerned about these folks because their habit is to hang together in groups and share…butts, whiskey, pot. This operational mode does not translate well to the new isolation. We’ll keep our fingers crossed.

    Reply
  5. EoH

    Whimsical charity is an inadequate substitute for government policy. People fought and bled over that over a hundred years ago, and here we are doing it again.

    Reply
  6. Anonymous

    Is this a good place to mention again that Yves and Lambert have both mentioned recently things are a little tight? I, for one, have found NC’s coverage recently to be of immense personal value, helping me to keep myself and my family safe.

    Things are always tight around here, but our family made a donation today to help NC out. Tip like it’s Christmas, as the article says!

    Reply
  7. norm de plume

    Last night I watched a movie on Netflix called ‘The Platform’ which is about the ultimate ‘stratified community’. It is not for the faint of heart and a pretty blunt instrument, but it manages to cut very close to the bone. A metaphor not unlike the train in Snowpiercer, but more successfully wrought IMHO. Brutal and at times behaviourally over-extended but then it is not meant to be realism.

    Not much of the sort of milk of human kindness solidarity this post celebrates. No more penetrating allegory of ‘trickle-down’ capitalism can be imagined.

    Reply
  8. SouthSideGT

    Great article like always. I am wondering why Rand Paul doesn’t rise from his sickbed and praise all the charity that is taking the place of governmental action.

    Reply

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