Speaker 1: Hello, and welcome to Steconomics, the podcast that brings the
Speaker 1: global economy to you. No want to start this series
Speaker 1: with a story about tennis, or more precisely, the All
Speaker 1: England Lawn Tennis Club in Wimbledon. When the Wimbledon Championships
Speaker 1: were canceled earlier this summer, a lot of tennis fans
Speaker 1: and sponsors pretty upset. But someone who probably wasn't so
Speaker 1: unhappy was the person who persuaded the club many years
Speaker 1: ago to take out something called pandemic insurance. The premiums
Speaker 1: were around two million dollars a year, which must have
Speaker 1: seemed a lot of the time, but that policy meant
Speaker 1: the club could cancel the championships all together and come
Speaker 1: out ahead with the total pay out of nearly a
Speaker 1: hundred and fifty million dollars. Well done, that person. Why
Speaker 1: do I tell you this? Well I thought of that
Speaker 1: number recently when I read about the Global Pandemic Insurance Facility,
Speaker 1: which the World Bank set up a few years ago.
Speaker 1: That programs also been paying out this year, and the
Speaker 1: total payments for all of the world's least developed economies
Speaker 1: will be just over a hundred and ninety million dollars.
Speaker 1: So that's a hundred and fifty million for twenty two
Speaker 1: tennis courts in Southwest London for the sixty four poorout
Speaker 1: countries in the world. Today's program is about winners and
Speaker 1: losers in the COVID economy and the case shaped recovery,
Speaker 1: the phenomenon we're seeing everywhere where. Some of the economy
Speaker 1: is taking off coming out of this recession, but other
Speaker 1: parts are still heading down. The director of the London
Speaker 1: School of Economics, Baroness Minus Chefik, is going to give
Speaker 1: me the global picture on that in a few minutes.
Speaker 1: While some countries have done a good job of protecting
Speaker 1: the poor in this crisis, some clearly haven't. I'll also
Speaker 1: be talking to our China Economy editor James Meager about
Speaker 1: life in China without COVID. They haven't had a case
Speaker 1: for six weeks. But first we have a report from
Speaker 1: Bloomberg senior reporter Sean Donald from Cleveland, Ohio, where the
Speaker 1: gap between winners and losers lately has been very stark. Indeed,
Speaker 1: six eight seven, Oh bail us one LC versus klais
Speaker 1: gatingsas hi, I'm as Gatings. How are you God morning?
Speaker 1: I'm finding you on September four, nursing assistant Calais Gatherings
Speaker 1: did something many of us have been doing in this crisis.
Speaker 1: She dialed into a zoom meeting. Only this one was
Speaker 1: a little bit more consequential than most. Gathings was joining
Speaker 1: an online session of the Cleveland Housing Court. She was
Speaker 1: before Magistrate Mark Wiseman because she was being evicted after
Speaker 1: falling behind on a nine dollar a month rent on
Speaker 1: her home in the city's Mount Pleasant neighborhood. It's okay,
Speaker 1: it's out of control, oka'n't It's okay? Where would you
Speaker 1: go if you were evicted? The shelter? I have no
Speaker 1: where to though. That's why I need a couple of
Speaker 1: weeks to find somewhere too. I've been looking. I'm sorry
Speaker 1: to ask all these personal questions, but a new program
Speaker 1: going on with the with the government that was instituted
Speaker 1: by the CDC, so for me to find out some
Speaker 1: of these questions. Did you get a stimulus check? Yeah? Okay,
Speaker 1: all right. So around the same time, in a twenty
Speaker 1: minute drive west of Gaffin's house, tech workers Nathan Hodge
Speaker 1: and his wife, Erica Schulstad were pondering something rather different.
Speaker 1: The finishing touches for the four bedroom house in the
Speaker 1: suburb of Lakewood that they had snapped up in a
Speaker 1: booming market over the summer. Let's see, so there's a
Speaker 1: lot of our space, like a nice big back and
Speaker 1: uh front porch. We made a list to justus like
Speaker 1: must have in our house. One of the one of
Speaker 1: the things we like to say as a Reese Wither
Speaker 1: June um porch couch. If you want to understand how
Speaker 1: the US recovery is reinforcing a legacy of inequality that
Speaker 1: has often been based on race, those two stories are
Speaker 1: pretty good starting points. The reality is that the gap
Speaker 1: is growing between the solidly middle class and the working
Speaker 1: poor in one of the world's richest economies. In an
Speaker 1: election year, people talk a lot about political polarization, but
Speaker 1: an equally consequential and growing economic divide has materialized as well.
Speaker 1: Think of it as the divide between bread baking America.
Speaker 1: That's those of us working from home and learning to
Speaker 1: bake sour dough and breadline America, those who are lining
Speaker 1: up at food banks and joining the growing ranks of
Speaker 1: the food and housing insecure. A lot of that is
Speaker 1: the result of who has been hit by the COVID crisis.
Speaker 1: Lower income Americans working for restaurants and hotels and small
Speaker 1: businesses have borne the brunt of the job losses. Of
Speaker 1: Americans earning less than forty thousand dollars a year laid
Speaker 1: off as a result of this year's crisis, according to
Speaker 1: the Federal Reserve, and many of those jobs aren't coming
Speaker 1: back as quickly as others. Housing is also playing a
Speaker 1: big dividing role in what the economy looks like. Almost
Speaker 1: half of renters pulled by the US Census Bureau in
Speaker 1: September said they were likely to be evicted in the
Speaker 1: next two months. A similar survey found less than twenty
Speaker 1: percent of homeowners were worried about foreclosure. The shape of
Speaker 1: the recovery and what that means for the most vulnerable
Speaker 1: parts of the American population, has a lot to do
Speaker 1: with policy choices. The FEDS response to the crisis, cutting
Speaker 1: policy rates and pouring liquidity into financial markets has brought
Speaker 1: mortgage rates down to historic laws. That's fuel to boom
Speaker 1: in home purchases and refinancings. If you are a homeowner
Speaker 1: or looking to buy and are able to work from home,
Speaker 1: your personal corner of the economy looks pretty good right now.
Speaker 1: That's the current reality and many of Cleveland's pre eminently
Speaker 1: white suburbs, and for people like Hodge, it's weird that
Speaker 1: so crazy that you think about like people want more
Speaker 1: space and interest rates are historically For someone like ga Things,
Speaker 1: who was laid off from her job at a nursing
Speaker 1: home and fell behind on the rent, your life looks
Speaker 1: pretty different, especially when Congress has been deadlocked from most
Speaker 1: of the past few months on how to roll out
Speaker 1: any new assistance for everything. And it's just like I
Speaker 1: wasn't getting a proof for anything, and then when I
Speaker 1: went back to work, I'm not working as many as ours.
Speaker 1: It's just that I just can't keep up with There's
Speaker 1: too much on my own. Ja Thing's fate that they
Speaker 1: took four minutes and forty five seconds to decide. The
Speaker 1: most important decision made by the magistrate was that she
Speaker 1: wasn't eligible for a national moratorium on evictions that have
Speaker 1: been announced two days before. She didn't even know it existed,
Speaker 1: and the reason she wasn't eligible to magic straight ruled
Speaker 1: was that she hadn't made a good faith effort to
Speaker 1: apply for rental assistance, something she also didn't know about.
Speaker 1: She might have learned about all of these things if
Speaker 1: she had only known that she was entitled to help
Speaker 1: from a free lawyer as well. Judge Mona Scott, who
Speaker 1: earlier this year became the first black woman to take
Speaker 1: charge of the Housing Court, says such problems still plagued
Speaker 1: the eviction process. That's even after the city became one
Speaker 1: of America's few to enforce a right to counsel for tenants.
Speaker 1: She sees a crisis building before her. Cleveland is a
Speaker 1: city that bears the scars of years of housing discrimination
Speaker 1: against its black residents, and like other US cities, it
Speaker 1: also hasn't tackled bigger structural problems. Even is taken up
Speaker 1: people's pay So we're not really addressing some necessary issues.
Speaker 1: We're not having these hard conversations. This current economic crisis
Speaker 1: is also building on the legacy of the last one.
Speaker 1: Cleveland was one of the epicenters of the subprime mortgage
Speaker 1: and foreclosure crisis more than a decade ago, and housing
Speaker 1: activists like Zach Germaniac will tell you that they are
Speaker 1: still dealing with the scars. We're one of the most
Speaker 1: heavily segregated cities in the country and quite Frankly, real
Speaker 1: estate is really at the centerpiece of that, uh, that
Speaker 1: tragic history. Hodgen Schulstad saw their new house three hours
Speaker 1: after the listing went online. They made an offer an
Speaker 1: hour later, and discovered that there were already a half
Speaker 1: dozen others. They ended up pleading their case in a
Speaker 1: letter and raising their bid to ten tho dollars over
Speaker 1: the asking price. Importantly, the final price that they paid
Speaker 1: was more than double what the previous owner paid for
Speaker 1: it in two thousand and eleven. Julie Weast is a
Speaker 1: real estate agent who specializes in some of Cleveland's western suburbs.
Speaker 1: Cleveland's really strong. I mean you're agoing, you know, downtown
Speaker 1: market people are buying left and right, um, all the
Speaker 1: way out to the suburbs. You know, it's really the
Speaker 1: pandemic has really not flowed anybody down. In some predominantly
Speaker 1: black zip codes of Cleveland, however, prices have tumbled by
Speaker 1: a fifth or more over the past year. Activists say
Speaker 1: that decline is caused in part by another phenomenon born
Speaker 1: in the last crisis, house flippers and out of town investors.
Speaker 1: The home gas Things lived in until she had to
Speaker 1: leave at the end of September is a prime example.
Speaker 1: In one two year stretch, the house sold seven times,
Speaker 1: including four times in just one month last year. It's
Speaker 1: current owner is an anonymous shell company called b l
Speaker 1: U s one LLC. But dive into public records and
Speaker 1: do a little slew thing and you end up talking
Speaker 1: to tebeau Gallan. He's a French real estate agent and
Speaker 1: he runs a Miami based company that specializes in selling
Speaker 1: Cleveland houses to French investors. Bongeour Devi Nat and found
Speaker 1: to tours Love is a London certain don't don't connection,
Speaker 1: says what is great about Cleveland's property market is that
Speaker 1: you can buy houses cheap and get fantastic cash flow
Speaker 1: from rent. Gathings home would have gotten your gross and
Speaker 1: your return of six and you're just a complimentary market
Speaker 1: or my print. Investors that are looking for um castro
Speaker 1: and properties. Housing activists don't see it quite the same way.
Speaker 1: They argue the out of state investors have actually contributed
Speaker 1: to the economic decline at Cleveland's East Side neighborhoods at
Speaker 1: the same time they're inflating rents. Germanic is a housing
Speaker 1: lawyer who works in the Slavic Village neighborhood, which has
Speaker 1: seen its own influx of new absentee landlords. He says
Speaker 1: they are often more focused on cash flow than what's
Speaker 1: happening to their properties or the community around them. That
Speaker 1: ends up hitting neighbors who do care, eventually forcing them
Speaker 1: to sell into a skewed market. I think a lot
Speaker 1: of times people find that, you know, the house that
Speaker 1: they had, you know, put so much time and money
Speaker 1: in fixing it up. They put on teen tens of
Speaker 1: thousands of dollars, They read did the roof back in?
Speaker 1: You know, two thousand three? They you know, all this stuff,
Speaker 1: and they find out, hey, guess what that that that
Speaker 1: house that you care so much about is worth fifteen dollars.
Speaker 1: The churn certainly hasn't contributed to an appreciation in the
Speaker 1: price of homes like the one gaff Things was evicted from.
Speaker 1: It reached a peak value of ninety three thousand dollars
Speaker 1: in two thousand four, after nearly a thirty years of
Speaker 1: ownership by just two families, according to property records. By
Speaker 1: the time Gallon's French investor bought it last year, that
Speaker 1: value had slumped by a third, which brings us to
Speaker 1: the current crisis. And how many people worry it isn't
Speaker 1: done yet. When it comes to the Cleveland or the
Speaker 1: broader US housing market, so far, neither have been hip
Speaker 1: by the wave of evictions many have feared. In Cleveland's case,
Speaker 1: that is largely due to a rental assistance program that
Speaker 1: is running out of money. According to Kevin Novak, who
Speaker 1: runs HN Housing Partners, a community group and developer that
Speaker 1: oversees the program, I'm not sure that really get through
Speaker 1: the end of the year with what we have available
Speaker 1: for our three months of emergency assistance. UM. It seems
Speaker 1: to me like this is a crisis that's going to
Speaker 1: go beyond the end of the year. The national moratorium
Speaker 1: announced in early September did not come with any new
Speaker 1: funds for rental assistance, and it did not include any
Speaker 1: measures to forgive tenants their debts, which means landlords are
Speaker 1: watching the past you rent bills pile up. To Judge
Speaker 1: Scott of the Cleveland Housing Court, the question is not
Speaker 1: whether or new evictions will come, it's when it's a moratorium.
Speaker 1: Does not mean your ring, does not mean you don't
Speaker 1: pay your car now, does not mean you do not
Speaker 1: pay your gas and light your cell phone bills. It
Speaker 1: still means that you have to pay these deals, um,
Speaker 1: because it's not if they come to collect, is when
Speaker 1: they come and collect. When that new wave of evictions
Speaker 1: does come, it will have other consequences as well. One
Speaker 1: recent study of thousands of evictions in Cleveland found they
Speaker 1: resulted in not just housing instability, but children missing more
Speaker 1: school and kids and families that are evicted also being
Speaker 1: tested less often for lead poisoning, a persistent problem in
Speaker 1: the city. Meanwhile, homeowners and better off suburbs can look
Speaker 1: forward to a property market fueled by low interest rates
Speaker 1: for some time. The Fed in September indicated it expected
Speaker 1: not to raise rates until three which is when it
Speaker 1: expects things to get back to normal in the US economy.
Speaker 1: But for those hard pressed neighborhoods on the East side
Speaker 1: of Cleveland, getting back to normal would not be much
Speaker 1: to celebrate. For them and countless neighborhoods like them in
Speaker 1: today's America, that would mean just lagging ever further behind.
Speaker 1: For Bloomberg News, I'm Sean dar So I'm delighted now
Speaker 1: to talk about some of the broader issues raised by
Speaker 1: that piece with Minu Shafik, now Baroness Shafiq, Director the
Speaker 1: London School of Economics. But I think she's one of
Speaker 1: few people who before that held very senior positions at
Speaker 1: the World Bank, the i m F and the Bank
Speaker 1: of England, where she was Deputy governor most recently. So
Speaker 1: welcome on the Welcome on Stephanomics. Um what I'm struck by.
Speaker 1: And obviously there was a sort of vivid demonstration in
Speaker 1: that piece of the Tale of Two Cities that this
Speaker 1: is a recession. I mean, recessions always have an unequal
Speaker 1: impact on people, but this one it seems rare, even
Speaker 1: by the standards of recess to have one in which
Speaker 1: a big chunk of the economy has been hit by
Speaker 1: this record recession. But actually quite a lot of people
Speaker 1: on the upper end of the income scale have done
Speaker 1: better as a result of this recession. They've now got
Speaker 1: savings that they didn't expect to have. We've seen soaring
Speaker 1: savings rates which presumably will go it could well go
Speaker 1: into their pension pots, all their wealth, and we've actually
Speaker 1: seen their existing wealth go up because of what's happened
Speaker 1: to the stock market. Has that been true globally or
Speaker 1: would you say the only equality was particularly stark in
Speaker 1: the US well. Some people have called COVID the Great
Speaker 1: revealer because it's revealed all of these fundamental inequities and
Speaker 1: weaknesses in our in our economies, and in our societies.
Speaker 1: And I often think about the impact of COVID as
Speaker 1: case shaped. You know, people have debated is it going
Speaker 1: to be a V shaped, you shaped, L shaped recovered.
Speaker 1: I think K is the right letter, because you have
Speaker 1: a sharp drop. And then some things go up and
Speaker 1: some things go down. And what we're seeing is that
Speaker 1: some sectors and some parts of society I'm doing better
Speaker 1: and others have done much worse. Those that have done
Speaker 1: worse have tended to be women, the young, and those
Speaker 1: who are precarious or flexible work. Is the US worse?
Speaker 1: I think the US is worse for two reasons. One
Speaker 1: that the safety net in the US is much thinner
Speaker 1: and got more holes in it than in other countries.
Speaker 1: And to the US has a higher proportion of its
Speaker 1: workforce inflexible work relative to other advanced economies. We had
Speaker 1: actually quite a significant boost to incomes, even at the
Speaker 1: lower end as a result of that enormous fiscal support
Speaker 1: package in the US earlier in the year, but as
Speaker 1: we know, those higher unemployment benefits, some of which were
Speaker 1: higher than what people had previously gotten. Wages have run
Speaker 1: out now and the President has said that he's not
Speaker 1: going to try and do a deal on a further
Speaker 1: stimulus this side of the election. What's the implications of that,
Speaker 1: do you think? Well, I think the implications for for
Speaker 1: for the poor in the US are are are devastating. Um,
Speaker 1: you know, the US has always been on the sort
Speaker 1: of stingier end of unemployment insurance. In the US, typically
Speaker 1: if you're unemployed, you get you get insurance for about
Speaker 1: six months. In continental Europe, it's more typical to get
Speaker 1: from one to two years of unemployment insurance. Also, the
Speaker 1: level at which you're compensated tends to be higher. In
Speaker 1: the US you get about, you know some typically around
Speaker 1: half your previous wage. In other parts of the world
Speaker 1: you're getting a much higher proportion of your previous wage,
Speaker 1: so you're able to sustain your standard of living. And
Speaker 1: so the fact that that basic income support will be
Speaker 1: withdrawn will have very negative consequences for inequality and poverty
Speaker 1: in the US. And we've heard the head of the
Speaker 1: Federal Reserve actually warning about the pace of the recession
Speaker 1: at the recovery itself facing a threat from that that
Speaker 1: you could have this sort of double dip that's entirely
Speaker 1: reduced by by policy. I wonder, I mean, in your
Speaker 1: in your previous very illustrious jobs, you have spend quite
Speaker 1: a lot of time advising countries on policies, but developing
Speaker 1: and developed. If you're sitting in I don't know, the
Speaker 1: UK Treasury now or chanceries across across Europe, how does
Speaker 1: the sort of unevenness of the impact of the virus
Speaker 1: and the recession affect how you think about the recovery
Speaker 1: because countries are trying to think about how to help
Speaker 1: countries grow out of this, but they're still living with COVID.
Speaker 1: You know, the initial reaction was to just put a
Speaker 1: bottom on people, put a floor on people's incomes, and
Speaker 1: the things like furlough schemes, unemployment insurance, those were always
Speaker 1: to just keep people supported in the early stages. But
Speaker 1: I think we're moving to to another stage in which
Speaker 1: there must be much greater differentiation, and we know that
Speaker 1: some jobs will disappear permanently. You know, I don't think
Speaker 1: anyone's going to be ordering new airplanes for major airlines
Speaker 1: anytime soon. For example. Uh, and we know, but things
Speaker 1: like retail, the retail sector will change fundamentally. We were
Speaker 1: already seeing that starting to happen. We know that's likely
Speaker 1: to be permanent, and so we can't go against the
Speaker 1: grain of those big economic structural changes. But we have
Speaker 1: to We have to basically support people through the transition
Speaker 1: to move to jobs which are going to be in
Speaker 1: those parts of the economy that are growing. And other
Speaker 1: countries manage this. Uh, you know, I always hold Denmark
Speaker 1: up as a fantastic example. They spend one point seven
Speaker 1: percent of GDP on reskilling workers. That's a normal times
Speaker 1: not even with COVID. Most countries spend that. But it
Speaker 1: means you're able to get people back into work quickly.
Speaker 1: They have income support when they lose their jobs, but
Speaker 1: they're very quickly supported to get back into new jobs
Speaker 1: through training. We're done in partnership with employers to make
Speaker 1: sure that the skills they acquire are relevant. So this
Speaker 1: is it is a doable thing, but it does require
Speaker 1: much more serious resources to help people move on then
Speaker 1: most countries dedicated. Yeah, what's it called is flex security
Speaker 1: or there is their model. Yeah, so you feel secure
Speaker 1: and you're you're secure that you're going to have a job,
Speaker 1: but it's not necessarily going to carry on being the
Speaker 1: same job. It's it's frustrating how often Denmarks seems to
Speaker 1: appear at top of the list on all these all
Speaker 1: these comparisons I see actually, and I'm sure it's related.
Speaker 1: They have done pretty well managing the virus and they
Speaker 1: come very high on the trust in government measures, and
Speaker 1: of course those two things go together and we are
Speaker 1: not so then go together in the UK absolutely, and
Speaker 1: they also ranked top of the list on happiness, so
Speaker 1: it's sort of you know, it's all a virtuous cycle.
Speaker 1: But people, I think that is part of the legacy
Speaker 1: of COVID is that all of you know, people are
Speaker 1: carrying too many risks on their own, risks of unemployment,
Speaker 1: risks of ill health. And one of the solutions to
Speaker 1: this is to share those risks more widely in society.
Speaker 1: And it's not just socially desirable, it's also economically more efficient.
Speaker 1: Of course, if we did come out of this saying look,
Speaker 1: government needs a look bigger role, not just right now
Speaker 1: where it's been forced to sort of put flaw under
Speaker 1: people's incomes, as you said, but longer term. We need
Speaker 1: to put back some of those supports for people risk
Speaker 1: sharing mechanisms that we've taken away over the last few decades.
Speaker 1: You know, that's going to cost money. And I just
Speaker 1: wonder when you hear things like that's the story in
Speaker 1: Cleveland and other places where the gaps in income but
Speaker 1: also wealth are very stark um, does it open up
Speaker 1: the potential to talk about wealth taxes there's a way
Speaker 1: of paying for the cost of this crisis or the
Speaker 1: cost of spending we know we have coming down the road.
Speaker 1: Do you think that's easier now? If we've seen very
Speaker 1: graphically have some you know, the stock market has kept
Speaker 1: going up as people's incomes this year have gone down. No,
Speaker 1: wealth inequality has gotten very, very extreme, and this has
Speaker 1: gone up a political agenda. I think you know there
Speaker 1: are three ways you can tax wealth. One, you can
Speaker 1: tax it when it gets past to the next generation
Speaker 1: through inheritance tax. Two you can tax it things like
Speaker 1: capital gains and dividends, and that's also very common. Most
Speaker 1: countries have some kind of inheritance tax and some kind
Speaker 1: of tax on capital gains. The thing that's really difficult
Speaker 1: in which people are debating much more now is taxing
Speaker 1: the stock of wealth which people have accumulated over the
Speaker 1: course of their lives. There's only four countries in the
Speaker 1: world that I'm aware of that have that try and
Speaker 1: do that. Norway, Spain, Switzerland and Colombia. Many other countries
Speaker 1: have tried and failed and changed their minds. So Finland, France, Iceland,
Speaker 1: Luxembourg and Never and Sweden have all attempted to tax
Speaker 1: the stock of wealth and have found it too difficult,
Speaker 1: mainly because frankly, the wealthy and their accountants are very
Speaker 1: good at devating wealth taxes. So you've got lots of
Speaker 1: grief and very little revenue. And so while I think
Speaker 1: politically wealth taxes might be part of the solution to
Speaker 1: the current fiscal challenges, I think in the end, broad based,
Speaker 1: fairly designed taxes with few loopholes are much more likely
Speaker 1: to be able to sustain a sort of generous, effective
Speaker 1: social safety in those countries. Mhm, well, we shouldn't. I
Speaker 1: shouldn't let you go without talking a bit about the
Speaker 1: rest of the world, about the developing world, because um,
Speaker 1: the gaps that we're seeing there, particularly in the sort
Speaker 1: of level of support that governments are able to provide
Speaker 1: in response to this recession obviously much larger even than
Speaker 1: we're seeing in most parts of the US. I mean,
Speaker 1: I was looking at numbers the other day. I mean
Speaker 1: that the poorer countries have largely not suffered a lot
Speaker 1: of COVID deaths. And you know that much much higher
Speaker 1: population of developing world still seeing a total number of
Speaker 1: deaths um much lower on the same order as the
Speaker 1: developed world, but they've got completely hammered by the global downturn.
Speaker 1: You know, what's what are the priorities? What can the
Speaker 1: rest of the world, What should the rest of the
Speaker 1: world be doing about that? I mean, you're absolutely right.
Speaker 1: The good news partly because of demographics, because they are
Speaker 1: younger populations, the death rates have been lower, but the
Speaker 1: economic consequences have been devastating. The good news on the
Speaker 1: economic side is that most developing countries are now have
Speaker 1: mechanisms in place to transfer income to the poorest households
Speaker 1: very effectively. So more than a hundred developing countries now
Speaker 1: have cash transfer schemes where they can get small amounts
Speaker 1: of money in onto the mobile phone banks bank accounts
Speaker 1: of poor people very quickly, and so from jip to Ethiopia,
Speaker 1: to Tanzania to to Peru. Those systems have worked really
Speaker 1: pretty well. So the mechanisms have been there. The problem
Speaker 1: developing countries have is they don't have enough resources to
Speaker 1: put through the mechanisms, and that brings us really to
Speaker 1: the problem of the global financial safety net and how
Speaker 1: for rich countries, you know, there have been literally trillions
Speaker 1: spent to support the economy during this crisis. For poor
Speaker 1: countries that just hasn't been possible, and there hasn't been
Speaker 1: anywhere near and adequate international response in terms of providing
Speaker 1: financing to the poorest countries to help them cope. Baroness Chafi,
Speaker 1: thank you so much for joining Stephanomics pleasure. Thank you,
Speaker 1: Stephanie m h. We've been talking about inequality in this
Speaker 1: program and the gaps between the halves and I have
Speaker 1: not but when it comes to countries, there's now a
Speaker 1: pretty large gap between the countries that have apparently tamed
Speaker 1: the virus and those that are now bracing for a
Speaker 1: second wave. So for this last part of the program
Speaker 1: this week, I wanted to give you a sense of
Speaker 1: how the other half lives. Visiting a place where hundreds
Speaker 1: of millions of people are going on holiday this week,
Speaker 1: traveling meeting family, going to the movies, all the things
Speaker 1: we might dream of doing without a care in the
Speaker 1: world when this pandemic is finally over. But it's not
Speaker 1: a dream. It's happening right now this week in China.
Speaker 1: And here to tell us more is Bloomberg's China Economy editor,
Speaker 1: James Mega. James, I guess you should tell us a
Speaker 1: bit about how special this week is in China, and
Speaker 1: then what's actually been happening This week is a big
Speaker 1: holiday week. The first of October this year was this
Speaker 1: China's National Day, of course, and then it was also
Speaker 1: the mid Autumn Festival, which is a big it's kind
Speaker 1: of like Thanksgiving in the US. Families get together, people
Speaker 1: gather to celebrate the festival. Those two both fell on
Speaker 1: the same day. And so there's a week long period
Speaker 1: of holidays this for the first week of October. And
Speaker 1: and how as you said, hundreds of millions of people
Speaker 1: are traveling across the country. People are taking this week
Speaker 1: after go the movies, go shopping, going holidays, to the beach,
Speaker 1: that kind of stuff. So it's a massive week for tourism,
Speaker 1: and it's a massive week for for you know, for
Speaker 1: for shopping and going out of course, there's been quite
Speaker 1: a lot of discussion in the States and across Europe
Speaker 1: about whether or not Christmas is going to be canceled
Speaker 1: this year. Certainly a lot of talk about how the
Speaker 1: limits on numbers and constraints on hospitality, all the things
Speaker 1: we've grown used to are going to affect our ability
Speaker 1: to celebrate Christmas or Thanksgiving. But it doesn't seem like
Speaker 1: those kind of things are impinging. I mean, people are
Speaker 1: deciding to just go for it. It's been six weeks
Speaker 1: now and since there was a confirmed case of COVID
Speaker 1: on the mainland in China. So people are obviously not
Speaker 1: concerned that they're going to get sick if they go out,
Speaker 1: if they go to the movies, if they catch a plane,
Speaker 1: if they get on a train. They're just not worried
Speaker 1: that they're going to be sick, and so they feel
Speaker 1: free and they feel confident that they can do all
Speaker 1: of these things. You know, in Europe or American maybe
Speaker 1: the case there may be restrictions, But even if there
Speaker 1: was no restrictions, I mean, how confident are people going
Speaker 1: to be to travel across country to go have Christmas
Speaker 1: and their parents or their grandparents place, you know, if
Speaker 1: there's a chance you could die or we get very
Speaker 1: sick to have that turkey. So the situation in China
Speaker 1: is now that people are confident that they can do
Speaker 1: these things and not get ill, and so they're going
Speaker 1: out and doing them. You say that people are basically
Speaker 1: feel like they don't have to fear catching COVID because
Speaker 1: there's so little around. But do you think there's a
Speaker 1: risk now when you have so many, hundreds of millions
Speaker 1: of people getting on trains going to beaches, that we
Speaker 1: will get a return of the virus in China. I
Speaker 1: think some people are concerned. I mean, I've heard that
Speaker 1: some schools have told parents that if they go on
Speaker 1: holidays somewhere and there's and there's an outbreak of COVID
Speaker 1: in that place, when they come back from from their holidays,
Speaker 1: their kids will have to quarantine at home for two weeks.
Speaker 1: And so I've heard that many families are not going
Speaker 1: on holidays just because they don't want to take the
Speaker 1: risk of having to then quarantine at home again for
Speaker 1: two weeks and go back to home schooling, which is
Speaker 1: everyone now knows is not a great situation. I mean,
Speaker 1: I've been doing that myself for for a little while,
Speaker 1: and it's not the best educational experience for for parents
Speaker 1: or students, and so I think a lot of families
Speaker 1: maybe are just you know, don't want to take their risks,
Speaker 1: so they're not traveling. So yeah, the numbers of people
Speaker 1: who are traveling down on last year. Um, But you know,
Speaker 1: I think for the most part, people are confident that
Speaker 1: they can they can go away and then they won't
Speaker 1: be there won't be an outbreak. And if there is
Speaker 1: an outbreak, I mean, China's shown that it has the
Speaker 1: ability and knows what to do to sort of stop
Speaker 1: that in its tracks. There was a series of small
Speaker 1: outbreaks in Beijing up in the north of China earlier
Speaker 1: this year, and the government very clearly quickly stepped in
Speaker 1: and squash those and I think if if there is
Speaker 1: another outbreak after this holiday period, they can do that again.
Speaker 1: Do we think this is part of just back to
Speaker 1: normal for the Chinese economy generally or there as there's
Speaker 1: still parts that are showing weakness. I mean, in general,
Speaker 1: we've said that it's been a bit of a two
Speaker 1: track recovery even in China, and that consumption hasn't got
Speaker 1: back to where it was but is this perhaps a
Speaker 1: sign that things are changing. I think in China, I mean,
Speaker 1: it's it's definitely still the two track recovery. I mean, obviously,
Speaker 1: if you're taking if you're going to the beach in China, uh,
Speaker 1: you know, you're not going to be the poorest people
Speaker 1: in the country. And a lot of the people who
Speaker 1: are traveling are those people who may have gone overseas,
Speaker 1: may have gone to Japan or Thailand or South Korea,
Speaker 1: and now can't go to those places because you know,
Speaker 1: they still have cases there and so they're stuck at home,
Speaker 1: so they're traveling domestically. I think a lot of the
Speaker 1: poor people in the country, they're not traveling. You know,
Speaker 1: they lost their jobs. Maybe they maybe there's only for
Speaker 1: a few months or six months, but they still lost
Speaker 1: their job. They didn't have any income for that period,
Speaker 1: and so they're not obviously going to be able or
Speaker 1: willing to to sort of spend money now in this period.
Speaker 1: So there is a recovery, but I think, you know,
Speaker 1: it's it's the kind of a case shaped recovery that
Speaker 1: other people are talking about. The wealthy who were able
Speaker 1: to work from home for the last six months or
Speaker 1: whatever are doing okay, and now they're spending and they're
Speaker 1: out shopping. The poorer people, the people who lost their jobs,
Speaker 1: that people who are really struggling, they're still going to
Speaker 1: be struggling and not spending as much. And we're seeing
Speaker 1: that in the data. Retail sales data is not really
Speaker 1: coming back at all. So there it is again, the
Speaker 1: K shaped recovery. There's a lot of people going on
Speaker 1: holiday in China this week, but just as we heard
Speaker 1: earlier in the US, there's a big chunk of the
Speaker 1: population that isn't celebrating and has been hit pretty hard.
Speaker 1: Before we go, James, I should say we were interrupted
Speaker 1: when we first tried to start this interview by someone
Speaker 1: coming to take your temperature in the hotel you're staying
Speaker 1: in for two weeks quarantine. Can you explain what's going on?
Speaker 1: So my family and I flew back to China about
Speaker 1: about ten days ago now from Australia, where we've been
Speaker 1: for the last few months. And prior to flying we
Speaker 1: had to have a COVID test and then as soon
Speaker 1: as we arrived at the airport, we had another test.
Speaker 1: Then we were taken to our hotel. Since then, we've
Speaker 1: had another COVID test, So now three times people have
Speaker 1: shoved things up my nose um. And then we also
Speaker 1: had a blood test to see if we had antibodies
Speaker 1: for the virus, to indicate whether we had had it
Speaker 1: in the past and have recovered. And then every day
Speaker 1: someone comes to my hotel room and takes the temperature
Speaker 1: of my my wife, myself, and our two kids, so
Speaker 1: morning and night. So we're we're in this hotel for
Speaker 1: for two weeks. So I mean that's an indication of
Speaker 1: how seriously you know, the government is taking this. Everyone
Speaker 1: who comes to China has to go through this, Everyone
Speaker 1: who wants to travel internationally has to do this when
Speaker 1: they come back. And I think it's that kind of
Speaker 1: effort that the government is putting into this to really,
Speaker 1: you know, control. It is one of the things that
Speaker 1: is making people now confident that they can go out
Speaker 1: and they can enjoy themselves. Well, we will be very glad,
Speaker 1: Blueberg will be glad to have you back in Beijing.
Speaker 1: We should say that this was all before you were
Speaker 1: even going to be allowed to be back in Beijing,
Speaker 1: but I hope we will talk to you when you
Speaker 1: are James Mago, thanks very much, Thank you, very much.
Speaker 1: Thanks for listening to Stephanomics. I should probably go back
Speaker 1: to that story about Wimbledon, because it's not entirely a
Speaker 1: happy ending for the All England Lawn Tennis Club. After
Speaker 1: they had that big payout this year, the head of
Speaker 1: the club as confirmed that he's not expecting the club
Speaker 1: to get pandemic insurance at any price for one. We'll
Speaker 1: be back next week with more on the k shape
Speaker 1: recovery around the world and more on the ground reporting
Speaker 1: an analysis. Remember you can always find us on the
Speaker 1: Bloomberg Terminal, website, app or wherever you get your podcasts,
Speaker 1: and for more news and analysis from Bloomberg Economics all
Speaker 1: the time, follow as Economics on Twitter and you can
Speaker 1: also find me on at my Stephanomics. This episode was
Speaker 1: produced by Magnus Hendrickson. Sean Donand's report from Cleveland, Ohio
Speaker 1: was based on an article for Bloomberg Business Week, which
Speaker 1: was edited by Robert Friedman, Christina Lindler. Special thanks to
Speaker 1: Baroness Minus Chafik of the London School of Economics and
Speaker 1: James Megan. Lucy Meekan is the executive producer of Stephanomics
Speaker 1: and the head of Bloomberg podcast is Francesco Levy, m