The top 10 percent always do well out of a crisis

Two weeks ago, a dear member of our blogging community wrote down her point of view about the spreading of covid-19 in terms of economic damages. Her thoughts reminds me that this epidemic crisis hasn't been affecting people who constistute the "upper class" (the top 10 percent of World population). She wrote: "rich people always do well out of a crisis".

As mentioned in my post on January 12, lockdown and curfew measures hit mainly retailers and people who run gyms, restaurants and cafés. Differently, the two world wars hit both rich and poor people. Actually, real estate value and stocks fell to low level in the period 1914-1945, because there were expropriations and physical destruction of capital, such as buildings, factories, and infrastructures. In addition, during a period of high inflaction, as we saw in the early 1920s and late 1940s, housing became less expensive for tenants, while landlords earned less on their properties, so real estate value fell.

Nowadays, businesses of many middle class people, who run clothes shops, gyms and restaurants, have decreased sharply because of lockdown measures. To sum up, many people have lost their job because of the spreading of epidemic, but rents and the rate of return on capital is always the same. 

                                                      (The epidemic also took travel away)

                                                      (... typical small restaurants are still closed)

                                                                   (... and old shops are on the brink)

                                                                      (... curfew)

Unfortunately, the author of the brief comment above mentioned is right. From a socio-econimic perspective, the 2020/2021 pandemic has been affecting only the lower class and the main part of the middle class. 

A dark day in the history of the oldest existing nation with a constitutional government

On January, 6th, while legislators were gathering to certify Joe Biden election victory, President Donald Trump told thousands of supporters to walk to the Capitol building. And after Trump's supporters had began to gather outside the meeting place of the U.S. Congress, legislators were forced to abandon the congressional session as the Capitol building was locked down. 

At 16:20 President elected Joe Biden called on Trump to immediatyely "demand an end of this siege". But the President Donald Trump, in a twitter video, repeated false claims that he had won the election, and, on the other hand, he urged his supporters to go home in peace. A Trump's supporter, Ashli Babbitt, was shot inside the Capitol building and died later. At 05:00 pm crowds began to disperse around Capitol Hill. 

On January 7th, at 03:40 am, according to Electoral College votes, Congress confirmed Joe Biden as the winner of the 2020 U.S. election.

This week the majority of U.S. house of representatives, 222 democrats and 10 republicans, voted to impeach President Donald Trump over Capitol violence. Democrats had accused Trump, who is leaving office in five days, of inciting a crowd to storm the Capitol on January  6th. He is the only U.S. President to be impeached twice. Most people in the U.S. think that man is a danger for their democratic country, which is the oldest existing nation with a constitutional government.

Post script: the three pictures above were taken by a colleague of mine, Luigi Muci, who went to the U.S. (Pennsylvania and New york) in 2019.

The more epidemic spreads, the more people need unemployment benefits

We all want to be rid of the coronavirus, of course, although EU's media are still talking about a third wave. Furthermore, another partial lockdown may continue to destroy small businesses, such as restaurants, cafés, clothes retailers, and other small businesses, while Wall Street’s analysts are still busy finding the stocks that are primed for gains in the next 12 months. As a matter of fact, since April 2020 we have already seen a sharply rise of some companies listed on the stock market, such as of pharmaceutical, electrical car makers, and biotech. 

In this cloudy perspective, there is a great talk about rising tax with the aim of increasing public services and unemployment benefits, considering that since March 2020 many people have been loosing their job. Some countries in Northern Europe, such as Sweden, Iceland, and Denmark, are known as having a high standard of living and social security, which their taxes help to pay for. Those countries  have a progressive tax system, meaning that people with a higher income pay a higher percentage of taxes than people with a lower income. Therefore, a large proportion of tax money goes into education, health care, parental support, unemployment benefits, etc.   

The good thing is that people who live in those countries don't even think about how much taxes they pay, because they say their tax system works very well. Clearly, those resources are going to be used by everyone in the population. On the contrary, cut taxes measures could have an impact on the society, as most people trust the public sector is able to do good things with their money. 

The four pictures below were taken in 2019 by a friend of mine, Stefano, who went in Sweden for job.

 

New barriers between the UK and EU since 2021

The new year begins with "late evening" curfew in many EU countries, such as Italy, France and Germany. The new lockdown measures have come to replace the ideal of the smart city with that of the spectral city, while the US is surpassing 20 million COVID-19 cases, which is almost one fourth of global infections. It's easy to understand the main reason why 25% of global infected people (and 25% of global Covid-19 deaths) are in the US. While many Westerners continue to blame China, these figures show us where the epidemic really began to spread in early 2019.

Meanwhile, the UK leaves the EU Single Market and Customs Union. Actually, even with the new agreement between the UK and EU, since January 2021 businesses will face new barriers to trade in goods and services, and to cross-border mobility and exchanges. The UK, that relies on the EU for roughly half of its total trade in goods, will no longer benefit from the principle of free movement of goods and services. In addition, all the imports in the EU must meet all EU standards and will be subject to regulatory checks and control for safety, health and other public policy purposes.

The EU is the UK's biggest trading partner, as around 65 % of British agricultural exports go to the EU Member States, and 70 % of UK imports originate from the EU countries. In addition, last year Italian cheese exports grew just as fear of no-deal Brexit, as with about 7,000 tons, the UK is one of the leading markets.

We will see what UK's businesses and policy makers will be able to do, considering that a non-member of the EU does not enjoy the same benefits as what EU membership offers.