Things are going really bad, but also very good. The Netherlands celebrates its second corona Christmas in a row in a lockdown, but more than half do so in their own home that is worth 20 percent more than Christmas last year, and 30 percent more than Christmas 2019, when the corona virus was still an exotic phenomenon. was located around the Chinese city of Wuhan. The stock portfolio of the happy Christmas-goers is now worth 24 percent more on average than a year ago, and 28 percent more than two years ago.
The other half of the Netherlands is left behind. No capital, therefore no capital gain. And that hurts. Together, on paper, homeowners have become wealthier by the formidable amount of 640 billion euros. Anyone who had a job should be glad it still exists. Those who performed flex work have had a rough time. At an inflation rate of more than 5 percent.
One half of the Netherlands eats turkey in a warm, festive living room. The other half is outside, matchsticks in hand, noses pressed against the window. But wait a minute: wasn’t a pandemic a Great Equalizer? Didn’t it hit everyone, made no distinction and cleared up the difference between rich and poor? Secure. That happened, all in all, once. But it was also the worst pandemic ever.
It originated in Central Asia, arrived by caravan and ship in the Italian ports and subsequently exterminated a third to half of all Europeans. The plague, the Black Death, is known as the worst epidemic to ever hit the continent. Cities lost, roughly, between 1347 and 1353, half of their inhabitants, and sometimes many more. Society was defenseless: medical and scientific knowledge was completely inadequate.
Transmission by visual contact
An investigation into the cause, commissioned by the French King Philip VI, yielded a result, according to the doctors gathered, which underlines how closely medical science and astrology were still intertwined. The origin of the Black Death was sought, in the words of historian Barbara Tuchman, “in the conjunction of Saturn, Jupiter, and Mars in the 40th degree of the constellation Aquarius, which is said to have occurred on March 20, 1345” — a statement that some time throughout Europe. The transmission of the disease was a mystery, and even visual contact with a sick person is said to be dangerous, according to some explanations.
A society that loses so many inhabitants in a few years is completely disrupted. It would take Europe a long time to get back on solid ground. This also applied to the economy – especially the relationship between labor and capital. Workers became scarce, very scarce. And for the first time they could ask what they wanted for their work.
One half of the Netherlands eats turkey in a warm, festive living room. The other half is outside, matchsticks in hand, nose pressed against the window
“Farmers, craftsmen and priests discovered the lever of their own scarcity,” writes Tuchman in her standard work A Distant Mirror, about the fourteenth century. Wage demands of one-third to one-half higher were certainly no exception, partly due to the sharp rise in food prices. Within guilds there was a plea for more wages for fewer hours. Farmers left the land to which they had been associated since time immemorial – partly through their feudal lords – in search of better things. Social relations, which were always seen as immutable, were turned upside down.
Capital proved vulnerable. Land that could not be worked became wild and lost value. The upper class faced a fragmentation of wealth from many legacies, worthless land that no one worked for, abandoned castles and mansions – and a flood of villainous sham marriages with the wealthy orphans left behind. As a result, property was diluted, wasted and melted away. The very old model, whereby the landowning nobility skimmed off the proceeds of a legion of serfs and serfs, was being overhauled.
The Black Death turned out to be a great equalizer. According to the Italian economic historian Guido Alfani two-thirds of all property in Italy was owned by the richest 10 percent of all Italians. After that it was less than half, and it would be three centuries before that two-thirds was reached again. In a few decades, workers’ wages in northwestern European cities doubled.
Cholera and Spanish Flu
The egalitarian nature of the pandemic is consistent with the idea that the disease affects everyone, rich and poor alike. But that is no longer the case later on. In subsequent serious epidemics—the plague has three, with a series of outbreaks over the centuries—Alfani found no evidence of growing wealth equity. Even though death rates, at 30 to 40 percent, in some cities and areas were sometimes quite close to those from the Black Death. Wealthy families, especially through a change in inheritance law, prevented the fragmentation of property that had occurred in the fourteenth century. And the increase in real wages has now also stopped.
The plague has never gone away: according to scientists, the world is still in the third wave – although antibiotics are very helpful against it. In the U.S, but also in other parts of the world, cases still regularly crop up.
Also read this Christmas essay by Menno Tamminga: What are today’s billionaires doing in return for society?
A series of cholera epidemics in Europe did lead to a slight decrease in wealth inequality in the nineteenth century, but this was always temporary and was quickly remedied. As for wage effects, it was to be expected that the industrial revolution reduced the power of the labor factor to such an extent that conditions were hardly comparable to before.
Until the large-scale rise of trade unions, the bargaining power of the average worker was limited or simply absent. And it would not take until after the Second World War until entrepreneurs realized en masse enough that the worker was also a consumer – and that his income offered the purchasing power necessary for the sale of products and services.
But what about the Spanish flu epidemic of 1918 and 1919? The current Covid crisis is often compared to that large-scale pandemic, although the death toll was much higher at the time. According to the US Centers for Disease Control and Prevention, an estimated 500 million people worldwide – a third of the population at the time – became infected and about 50 million died.
But, Alfani argues, even that was too small-scale to cause such social disruption that major effects occurred in the distribution of wealth and income. Although confidence in government and society declined sharply after the Spanish flu, this may have influenced the fatal decades that followed.
Now that Covid-19 is entering its fifth wave with the omikron variant, on the eve of 2022, it remains to be seen what the long-term consequences of the corona pandemic will be. So far things are going well under the circumstances. Modern society is better organised, medical science is infinitely more advanced. The same applies to economic policy. In the crisis of the 1930s, fiscal policy was used for the first time, and successfully, to mitigate the economic depression of the time.
Government intervention has been an obvious remedy ever since. In the West, in recent years most countries had the money available to support employment and keep companies afloat or, as in the United States, mainly to maintain incomes.
Central banks helped by massively buying even more government bonds than they already did. In the context of the pandemic, the European Central Bank (ECB) alone has already bought up around 1,700 billion euros in government and other loans. That keeps the interest paid by governments close to zero – and even below that for countries like the Netherlands and Germany. Not unimportant: the total purchases by the ECB are quite close to the extra government money spent in the context of the corona crisis. In essence, the central bank has largely financed the corona policy with ‘new’ money.
Effects
It all helped. Instead of the smoking mess that the economy was after previous pandemics, the West is not in bad shape. Unemployment is not or barely higher than before the virus started to spread. The economy has taken a dent and will probably never make up for some of the damage. But that damage is relative. This only concerns the economic growth that could have taken place without a pandemic. In absolute terms, the economy is back to pre-corona levels, or close to it.
Still: not only the medical, but also the economic part of virus control has side effects. Extraordinarily low interest rates continued to push up house prices. This low interest rate, together with the support for business, has managed to prop up and further boost share prices. Wealth inequality can only be identified at a later date, but can only have increased further.
The better you had it when the pandemic hit, the better you come out
Moreover, the policy of high spending and low interest rates has contributed to inflation, which is now about 5 percent year-on-year in Europe and at 7 percent in the US. The associated loss of purchasing power affects the bottom of society the hardest in proportion. Self-employed workers affected by Covid measures will face a chilly winter with less support than before.
In short, the better off you were when the pandemic hit, the better off you’ll come out. For example, Covid could become the first pandemic to widen both wealth and income inequality. A kind of slide of the Black Death.
The social consequences of the latter festered for a long time – there are historians who think that the Renaissance without the plague might have happened later. Even now we do not know what the long-term effects will be. The coming year will provide more indications for this.
What we do know is how surprisingly good and prosperous a large part of the Netherlands has so far emerged from this pandemic. But another part doesn’t. People whose starting position was not so good. Entrepreneurs who have been struggling for almost two years. People with low incomes, for whom the current price increases are really difficult. There may be additional policies. But it doesn’t hurt to think about what you yourself, from person to person, can do for them in the coming days.
A version of this article also appeared in NRC Handelsblad of 24 December 2021
A version of this article also appeared in NRC in the morning of December 24, 2021
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