How the poor become poorer and the rich richer post the Covid 19 Pandemic is a question that is not difficult to answer. This unfortunate divide has been present in the world for the past thousands of years.
Nonetheless, over the past few decades, the gap between the two had been dramatically reduced. At least, governments of various countries were trying to bridge this chasm.
Then came Covid 19 and everything became normal again. The rich started to become richer while the poor started losing their savings. Work was scant and unemployment rate soared. Inflation doubled and the purchasing power of people reduced dramatically.
One of the main reasons why the global economy has yet to kick-start is owing to the current war between Russia and Ukraine. This conflict has further broken the global supply chain. It has impacted almost each and every business model that exists today.
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How the Poor Become Poorer & the Rich Richer Post the Covid 19 Pandemic Article Contents:
1) The Overall Economic Scenario Explained in Brief
2) Impact of Covid 19 on Food Production
3) How has Covid 19 Impacted the Stock Market?
4) How has the Vehicle Industry Suffered?
5) Impact of Covid 19 on the Entertainment & Business Sector
6) How has the Corona Virus Affected the Retail Stores?
7) How has the Tourism and Restaurants Fared Post the Corona Pandemic?
8) How has Covid 19 Impacted the E-commerce Industry?
9) Why have the Poor become Poorer and the Rich Richer after Covid 19 Pandemic?
10) Main Reasons why the Gap between the Rich and Poor is Growing Wider with Each Passing Year?
11) How to Bridge the Gap between the Rich and the Poor Post the Covid 19 Pandemic?
The Overall Economic Scenario Explained in Brief
@ The stock and share market literally crashed. The market claims to have seen its worst after the 1987 era.
@ It is claimed by the International Labor Organization that 400 million jobs were lost during the pandemic. This means a loss of US 3.5 trillion dollars.
@ Europe’s GDP is estimated to fall to 8%, which is the highest after the Great Depression.
@ Almost 16 million people lost their lives from corona virus.
@ Corporate Investments fell by almost 26% post the Covid 19 pandemic.
@ In the year 2020, the GDP of USA fell by 3.5%. Nonetheless, it grew by 5.6% by the end of 2021. This makes the US (GDP) to be the highest globally ($22996 billion).
Impact of Covid 19 on Food Production
@ During the second half of the year 2020, it was predicted that many parts of the world would be adversely impacted by famines.
@ Luckily, the predicted global famine never really took place. It was all a hoax brought about by export restrictions and hoarding (of essential commodities).
@ In 2022, when Russia Invaded Ukraine, the global food supply took a major hit.
@ Prices of fuel and crops (such as cotton and wheat) soared out of proportion.
@ The prices of oil seeds rose considerably. Even the prices of fertilizers took a skyward leap.
@ The Food and Agriculture Organization released a data wherein it claimed that the prices of food increased by over 20% in the year 2022. This was the data rolled in the month of February, 2022.
@ In the month of March, 2022, the roll-over prices of food increased by an unprecedented 40%.
@ The global hunger crises intensified owing to the Russian invasion of Ukraine. This crisis was further intensified owing to the unprecedented global climate changes.
@ Climate changes in Africa led to the crops failing. This in turn affected the food stocks held by the United States and Europe. It is being stated the food insecurity is currently a big challenge in Europe and USA.
@ Some industry specialists claim that the current inflation in food supplies is the worst since the 2006 debacle.
How has Covid 19 Impacted the Stock Market?
@ Share market has witnessed a dramatic decline ever since this pandemic hit the globe.
@ The oil prices dipped to an all new low during the year 2020 when Russia had a dispute with the Arabian oil companies.
@ Stock market crashed owing to this very reason.
@ Price of natural gas has however fallen.
@ It is predicted that a deficit of $220 Billion in the form of ‘development aid’ was created in developing countries owing to the Covid 19 pandemic. This report was provided by the United Nations Development Program.
@ The volatility spillovers during the Covid 19 pandemic totaled close to 70%.
@ Recession is once again predicted post the Russia invasion of Ukraine.
How has the Vehicle Industry Suffered?
@ New vehicles in the United States have witnessed all-time low sales volume. The sale of new cars in USA has reduced by over 39%.
@ General Motors, Ford and Stellantis have shut shop in USA.
@ The German automobile market suffered owing to the rising demand of electric vehicles.
@ Production of cars in England in the year 2021 was the lowest in the past 65 years.
Impact of Covid 19 on the Entertainment & Business Sectors
@ Top multinational business houses lost almost 13 billion dollars owing to Covid 19 pandemic. The companies affected the most include big-guns such as JC penny, Kohl’s Neiman Marcus etc.
@ J.Crew filed for bankruptcy. JC Penny followed soon after.
@ Pier 1 Imports Inc. filed for bankruptcy as no one was keen on buying their business.
@ Family Video Movie Club Inc. also shut shop in USA after it failed to generate any revenue.
@ Countless cinema halls closed permanently owing to huge losses.
@ Netflix rose to an all new level as people watched movies and TV serials online.
@ The Summer Olympics in Tokyo were stalled for 1 year.
@ Disney and Hulu online channels witnessed a 31% increase in online viewership.
@ The video game industry suffered terribly owing to the restrictions on imports from China.
@ DC Comics and Dark Horse Comics witnessed terrible and unprecedented losses. Their publications (print-runs) were reduced to an all-time low.
@ The book sales in USA (brick and mortar stores) dropped by almost 34% during the pandemic. They have yet to recover.
@ LSC Communications (one of the largest publication houses in USA) filed for bankruptcy.
@ Refugees from the Russia-Ukraine conflict may lead to 15 million or more people (as per LeanAndFit) seeking shelter in Europe. This shall have an adverse impact on the pricing structure. The prices of gas and essentials shall increase dramatically.
@ Semiconductor industry is witnessed to see unprecedented growth in the next 10 years. It would become a Trillion dollar industry in a decade.
How has the Corona Virus Affected the Retail Stores?
@ Business reduced dramatically as sales dipped during the pandemic. This was owing to lockdown.
@ It is estimated that in the USA alone, customers visiting stores reduced by 30%. Shops and stores therefore were forced to shut down.
@ Almost 41% shoppers in the United States alone were shopping from online portals.
@ Home delivery picked speed and retail stores took a major hit.
@ Retail stores that cater to non-essential goods have suffered losses.
@ Stores that sell essentials such as food, groceries and medicines have witnessed significant growth.
How has the Tourism Industry and Restaurants Fared Post the Pandemic?
@ Countless restaurants and cafes in the world shut shop.
@ Takeout services started to become far more impactful.
@ More than 100,000 restaurants and cafes closed down permanently.
@ Ghost kitchens have thrived and received orders worth 50 billion dollars or even more during the pandemic era.
@ Fears of falling sick and complying to corona virus guidelines (that differ from one country to another) reduced international travel.
@ Medical insurance on international travel forced many travelers to postpone their travel plans.
@ Restrictions based on quarantine and high cost of airfares forced many travelers to quit their plans midway.
@ Many airlines shut shop and the loss of jobs in the airline industry was really high.
How has Covid 19 Impacted the E-commerce Industry?
@ The e-commerce industry boomed during the pandemic.
@ It has been claimed by industry pundits that customers paid in excess of $30 Billion more buying products online.
@ In the years 2020 and 2021, e-commerce sales added another $220 Billion in revenue (boost from the normal pre-pandemic sales) in USA alone.
@ Customers spend close to $7 Billion each month buying groceries online. Earlier (pre-covid19 pandemic) they spent $3 Billion monthly.
@ Online retailing is stated to grow rapidly in years to come. More and more customers are comfortable shopping online instead of offline.
Why have the Poor become Poorer and the Rich Richer after Covid 19 Pandemic?
@ Oxfam International clearly stated in their report that during the Covid 19 pandemic, the top 10 richest people in the world increased their income two-folds.
@ So while 99.99% people were suffering, only 0.01% people were enjoying their life.
@ This report also stated that these 10 individuals had more wealth than 3.1 billion people (the female population) living in Africa, Latin America and Caribbean Islands combined.
@ In an ironic phase wherein almost 25,000 people were dying daily, the gap between the super-rich and the poor was growing wider at a rapid pace.
@ The divide between the rich and poor has been there for centuries. The main reason was colonization. This was followed by caste, religious beliefs and current geographical location.
@ Top ten percentile of rich men and women across the globe control more than seventy five percentile wealth of the world.
@ Post the pandemic, almost 161 million people were thrust into the poverty category.
@ It has been predicted that post the Covid 19 pandemic, developing countries have been placed under a one trillion dollar debt. This makes the poor even poorer.
Main Reasons why the Gap between the Rich and Poor is Growing Wider with Each Passing Year?
There are so many reasons behind the divide between the rich and poor that including these in a single article is out of the question. So, here are a few of these:
Payouts are Uneven:
One of the main reasons behind the divide between the rich and poor is inequality in salaries. Some get paid tens of thousands of dollars per month while most others get a fraction of this pay-scale.
The Skill Based Income Parameter:
There are a few individuals who get paid a hefty amount just because they are highly qualified. This includes educational qualifications and awards for excelling in their respective fields.
Most other employees belong to the semi-skilled and unskilled categories. They get a measly salary as compared to their highly skilled counterparts.
Top 10% Rich Control 76% of the Global Wealth:
Trillion of dollars are in the hands of a handful. The masses (on the other hand) have to make do with what they can gather. The gap between the privileged few and those that have to toil day and night to earn their daily bread has only widened.
Labor Markets Widen the Rich and Poor Divide:
As the rich are few in number and the poor are quite large, the concentration of wealth is uneven. Wealth is in the hands of a handful only. This reduces the degree of specialization and low degree of skill levels. Labor markets are to be blamed for the same.
The Social Structure:
The way of life in a particular geographical location is termed a social structure. When your way of life is such that a few shall dominate the masses then, inequality of income is bound to happen.
The handful of rich shall lead to the wealth being distributed to only those that fit into the standards established by the controlling figures (the rich and influential).
Customs, traditions, principles, values and way of life, determines whether the rich shall get richer and the poor poorer (or not).
Globalization and its Contribution towards the Rich & Poor Divide:
When the local market becomes global then, the divide between the rich and poor widen automatically. Most low-paid and hard work is shifted to developing countries.
This in turn compels the rich and developed nations to become richer and the poor nations to become poorer. Nonetheless, a fraction of the poor (wherein the global manufacturing units paying measly sums to its workers has been established) do become rich.
Gender and Race:
Women have always been behind men in terms of wealth. They have less access to property ownership and their wages too are less (when compared with men). Black, Asian, African and Latin American women are monetarily weaker than women in other parts of the globe.
Men in various countries never share their assets with their wives. Certain races such as Latin America, Africa and Asia have less capital as compared to White and Hispanic races.
Technology & Government Policy:
Changes in technology tend to widen the gap between the rich and poor. When robots start taking over manual labor, unemployment rate soars. This leads to mass poverty.
Government policies related to urban and rural development also widens the existing gap between the rich and poor. Economic policies and employment policies also contribute to this divide.
Contribution of the Taxation System:
Most salaried employees tend to pay their taxes on time. On the other hand, large business houses evade taxes. This creates a gap between the rich and poor.
Compared to their earning, the proportional taxes paid by the service class are way higher than what the business class pays. It is but obvious that the poor shall become poorer and the rich richer.
The Role of Education in the Rich Vs Poor Divide:
Less educated individuals tend to suffer from mental and physical health issues (obesity, depression, addiction etc). Children of the less educated cannot afford their own homes. Hence, they remain with their parents thereby increasing the economic pressure on their parents.
Those that are highly educated tend to get lucrative employment. They are also mentally stable and are able to ward off addictions (alcohol, cigarette, drugs etc). Educated individual are able to afford to live in their own homes.
So, the educated class tends to be richer and the uneducated class poorer.
How to Bridge the Gap between the Rich and the Poor Post the Covid 19 Pandemic?
Bridging the gap between the rich and poor is easier said than done. It is a way more complex process than it seems. No matter what we do, the gap between the rich and the poor shall always remain.
All that can be done (via progressive and liberal policies) is to decrease this gap. The process shall take several years, if implemented properly.
Here are a few ways by which this gap can be reduced considerably:
Same Schools and Syllabus:
Spreading equal education opportunities to all is a great way to initiate skilled labor. So, when the poor get the same education as the rich, the gap between the two shall automatically diminish.
Change in Government Policies:
Government policies should be such that power should not be given to a handful. Instead, it should be distributed evenly. If the need arises then, castes and races that have been doomed should be given extra privileges.
Extra Job Opportunities to the Poor:
In order for the poor to rub shoulders with the rich, you need to provide them with lucrative jobs. An extra quota should be assigned by the government of various nations that caters to the downtrodden classes.
Higher Tax for the Rich:
Tax system should be such that the rich should be taxed higher than others. This is a progressive way to allow the poor to come up the wealth ladder. The rich shall not be much affected as their wealth is ever increasing. So, it is a win-win situation for all.
Increase the Purchasing Power:
If you want the poor to flourish then, you need to give them freebies. Some of these include free water, subsidized electric bills and free medical insurance cover.
Old age pension for senior citizens and subsidized rates for groceries should also be made available. When the poor witness reduced inflation levels then, they can easily hope to save money. This is how the rich vs poor divide can be bridged.
How the poor become poorer and the rich richer post the Covid 19 Pandemic article has come to its conclusive stages. Concentration of power and wealth in the hands of a few has been the main reason for this phenomenon.
During and after the corona virus, only the rich and affluent had the necessary funds to survive and grow. They diversified their businesses from the traditional brick and mortar set-up to online streams.
The poor not only lost their jobs, millions lost their loved ones to the dreaded coronal virus. They could not afford the high medical costs to survive the infection. Those that could became worse off financially when their loved ones recovered.
The Russian invasion of Ukraine has further complicated matters. Recession is on the horizon and jobs are being lost in their millions. If corrective measures are not taken by the governments (of various countries), the gap between the rich and poor would simply continue to widen.