- Applied Institute for Research in Economics
This is an English translation of the article which appeared on 14 May 2020 in Nexos.
Until vaccines, more healthcare capacity and better treatments turn up, there will not be a way to win with COVID-19. It is about minimising loss as an objective and, implicitly or else, deciding who gets protected and how, as well as who is demanded what type of sacrifice. Thus, different combinations of measures have been implemented in order to put a break on the scourge throughout the world. In Mexico, this crisis lays inequalities bare and has the power to deepen their effects. In a country characterised by low social mobility, in which poverty conditions persist across generations, and where most people live hand-to-mouth in a widespread informal economy, government action must be swifter and broader. The call for voluntary lockdown (which is now being dismounted with the “New Normality” plan) without a transfers program protecting those who may be affected by the health and economic shock, puts most of the population in an individual decision dilemma that they should not have to face. This situation showed that not all Mexicans have the same capabilities to choose, and therefore, do not count on the same effective rights.
For a while it has been impossible to conceal Mexico’s inequalities. The country is characterised by the absence of episodes of high material growth in recent history, which translates into increasing inequality in people’s perception. Additionally, Mexico features high persistence in the transmission of poverty: if you are born into that condition, you rarely leave it behind. That happens, to a large extent, because Mexicans born in poverty generally lack opportunities for development enabling them to overcome their accident of birth. As we move up the social origin ladder, these barriers decrease but do not disappear. In fact, only a small proportion of Mexicans enjoy a broad set of development opportunities. This inequality maps onto low social mobility, which in turns signals its persistence. Add to the aforementioned a key trait of the country’s labour market: more than half of the economically active population make a living in the informal economy and only about 20% could work from home.
The Mexican government’s response to the COVID-19 shock has not considered these features, or at least it has not fully incorporated them into policy design. The specific package of measures applied in Mexico boiled down to advising the population not to leave home and demanding firms not to lay off workers. However, this was not accompanied by a broad enough fiscal program guaranteeing that everyone could follow the government advice and that the ensuing economic shock would be mitigated. In summary, though disguised in the official discourse, de facto the federal government, in proper libertarian style, transferred and transformed the collective responsibility in the fight against the pandemic into businesses’ and people’s individual responsibilities.
Above and beyond the specific advantages and disadvantages (and bearing in mind that no policy approach lacks either), this policy presents ethical dilemmas as interesting as they are serious. Particularly, the situation can be assessed resorting to the ideas of Nobel Laurate economist and philosopher Amartya Sen. In that respect, it is worth contrasting Mexico’s approach to a similar policy decision in a completely different context: Sweden’s. The Scandinavian country has gained a controversial reputation due to its relatively liberal attitude toward lockdowns and some of its detractors point to the country’s relatively high death rate per million. However, at least Sweden counts on one of the best welfare states in the world, in addition to an individually affluent population on average, with formal employment and savings in case of need. Whoever wishes to stay at home in Sweden, unlike Mexico, can do so without risking not having three meals a day or tenancy eviction.
In Mexico it would be delusional to expect most people, who must get out to work to survive, stay at home on their own volition just because the government advised so. In other words, and based on Sen and the philosopher Isaiah Berlin, not everyone in Mexico has the actual capability to stay at home; only a minority can actually exercise that positive liberty. Moreover, there is clear inequality of opportunities about this: wealthier people with higher savings capacity, better social networks, etc. do enjoy such freedom; whereas materially poor people in informal employment, i.e. those most vulnerable, are deprived of it. In light of the above, fiscal transfers would be more effective given the need to implement social distancing in order to protect people’s health, but also in order to minimise and overcome the implied economic cost.
Here it is worth mentioning that the fall in Mexico’s economic activity will be inevitable this year and very likely the next, even if the government did not take any public health measures at all (above and beyond increasing hospital capacity, more testing, etc.). This will happen because the world recession will hit all of Mexico’s sectors, especially exports, including oil, manufacturing and tourism. Thus, Mexicans, who are mostly relatively vulnerable, risk suffering even more destitution; for instance, malnutrition and other diseases. The more so then, besides asking people to stay at home, a swift fiscal response to support the vulnerable population is required.
One of Amartya Sen’s fundamental contributions to ethics in economics was to show that, historically, the problem in famines was not the lack of food per se (despite poor harvests) but the absence of entitlements among the destitute population. People died of hunger because they did not have income to buy food which was available; and society or the state did not bestow upon them the entitlement to receive that food in alternative ways (e.g. as though it were humanitarian aid, but based on a fundamental human or citizen right). Likewise, the COVID-19 pandemic will be (or should be) remembered, among other things, for how vulnerable populations were protected by their fellow citizens; that is, whether everyone’s right to receive support, and not be left destitute in the event of a shock of nature, was acknowledged and upheld.
A combined health and economic shock such as the current pandemic is likely to have longer-term effects. From a perspective of destitution and inequality of opportunity, the absence of subsistence floors and social safety nets in general, constitutes a circumstance conditioning the fate of this generation and the next. When John Roemer mentions people’s circumstances as a determinant of their achievement in human development and welfare indicators, he refers to anything beyond individuals’ control, for which they cannot be held responsible, accordingly. In the context of the pandemic, the loss of health and risk of death among some of the household’s economic providers cannot be deemed anything but a circumstance, especially for the rest of household members. This means that, notwithstanding people’s efforts to avoid contagion, if they get sick because of their need to secure daily sustenance for their families, and if this in turn leads to death, families will have to deal with this adverse circumstance now and in the future. Allowing a situation neither caused nor easily controllable by households, to affect them in any way, either because their members stay at home without resources or because they go out to find them, only highlights the urgency of a social response to the plague.
Mexico reminds us of two key ethical aspects of the social order in the light of Amartya Sen’s ideas. First, that without entitlements there cannot be freedoms. Second, that there is a close connection between unequal opportunities, the lack of freedom, and the violation of fundamental rights. In the face of such a situation, public initiative must set action criteria prioritising, first, the survival of the population and, second, the guaranteed exercise of rights, irrespective of people’s socio-economic situation. In that sense, any self-imposed limitation in the government’s effort to attain these two objectives cannot be justified.
The views expressed in this article are those of the author and may not reflect the views of Leeds University Business School or the University of Leeds.