Hello. Today we look at how the rich got even richer during the pandemic, the easing of monetary policy in China, and which governments managed to save money during the crisis.
It’s been almost a decade since Thomas Piketty delivered 900 or so pages on “Capital in the 21st Century,” a tome which went on to sell more than 2.5 million copies in 40 languages.
Now a group he founded is back in the headlines with an estimate that the Covid-19 crisis served as a fuel for the bank balances of the global elite.
About 2,750 billionaires now control 3.5% of the world’s wealth, according to the Paris-based Global Inequality Lab.
That’s up from 1% in 1995 and the fastest gains came after the pandemic hit.
As a point of reference, the poorest half of the planet’s population owns about 2% of its riches.
Such findings add to a debate about worsening inequality during a public health crisis that’s hurt developing economies — which are short of vaccines as well as financial resources to cushion the blow — even more than advanced ones.
Within the rich world too, financial and real-estate markets have soared since the depths of the slump last year, widening domestic gaps.
Interestingly, wealth gaps are reflected in bigger carbon footprints, too. In North America, for example, the top 10% emits an average 73 metric tons per capita each year, compared with less than 10 tons for the poorest half.
Read more here.
For a while now, it’s been clear that the monetary policies of the world’s two biggest economies were on different paths.
That divergence is now upon us, as China’s policy makers moved to expand support for the nation’s economy right as the U.S. Federal Reserve gears up to reduce bond purchases as a prelude to possible interest-rate increases next year.
President Xi Jinping oversaw a meeting of the Communist Party’s Politburo on Monday that concluded with a signal of an easing in curbs on real estate.
And the People’s Bank of China also on Monday said it will reduce most banks’ reserve requirement ratio by 0.5 percentage point next week, releasing 1.2 trillion yuan ($188 billion) of liquidity.
Premier Li Keqiang — who last week had signaled the PBOC move — said later Monday night that China has room for a variety of monetary policy tools, including cutting the RRR.
Tax revenues increased in 20 OECD countries between 2019 and 2020
Source: Organization for Economic Cooperation and Development
Note: Preliminary data for 2020 not available for Australia and Japan
There’s a lesson emerging for governments from the Covid pandemic: big spenders make big savings.
Compared to previous crises, tax revenues suffered less in 2020 as governments preserved the fabric of their economies with vast outlays, according to an OECD report. That’s part of the reason why the ratio of tax to economic output increased by 0.1 percentage points to 33.5% on average across the organization’s member countries.
“Government support measures contributed to the relative stability of tax revenues by protecting employment and reducing corporate bankruptcies to a considerably greater extent than in the global financial crisis in 2008-2009,” the OECD said Monday as it released its annual taxation statistics.