Who wins and who pays? Rentier power and the Covid crisis

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The massive expansion of state intervention in response to the Covid-19 pandemic – in particular, to underwrite wages for workers and loans for small and medium-sized businesses – may at first sight seem to be progressive.

However, whether this is really the case depends on how these interventions ultimately affect the balance of wealth and power in the economy. Our analysis suggests that in fact the crisis will exacerbate inequalities between the working poor and the asset-owning wealthy.

Without a drastic change of approach, the crisis is likely to significantly exacerbate existing structural inequalities – insulating creditors and asset-owners from the worst effects of the pandemic while driving many of the most financially vulnerable deeper into debt. The economists call for short-term measures to ensure that banks, landlords and the well-off also take their share of the burden, including:

  • Cap interest rates on the state-backed portion of new business loans at 0 per cent or 0.5 per cent, as in Switzerland
  • Consider bans on dividends and share buybacks so that government support for large businesses does not indirectly subsidise shareholders and highly-paid executives
  • End "no fault" evictions urgently as the first step in a wider package of reforms to boost renters' rights.
  • Explore the possibility of a freeze on rent, debts and bills for some struggling households, without new debts accruing, within current legal frameworks

These issues did not arise with the crisis: they are symptoms of deep structural problems with the UK economy which long predate the pandemic. If we are to create a more just economic settlement for the future, we must also confront these imbalances of wealth and power with long-term structural solutions: enhancing public and community ownership of vital infrastructure like housing and finance, strengthening the rights of private renters and consumers, and acting to prevent an even greater concentration of monopoly power in the wake of crisis-induced business failures.

This report argues that we must not repeat the mistakes of previous crises, by asking those least able to weather the crisis to make the greatest sacrifices. The economic risks and costs of the shutdown should be shared fairly across society.