The growing inequality is a cause of concern for countries. But COVID-19 pandemic has led to a rise in this inequality not just among countries but within countries as well, agreed former RBI governor Raghuram Rajan during an interview with Foreign Policy.
Rajan along with Professor in the Economics of Innovation and Public Value at University College London Mariana Mazzucato spoke about economic inequality and its impact. During the interview, Rajan warned that the biggest hurdle for poorer countries will be the educational divide the pandemic has brought along with it.
Professor of Finance at the University of Chicago Booth School of Business said, “In poorer countries, education has been a way out for poor people. This pandemic has set back education unequally — poorer kids in crowded rooms without access and some struggling with cell phones — they (poorer kids) have been set back a couple of years. If you put these kids with rich kids and expect them to be back on track, it is impossible.
The way to find a solution to the problem will be that governments of these countries and all stakeholders will have to think about this differently. “We need to spend more on this (education) to make recovery more effective.”
He added the differential response to the problems of different countries across the world led to different outcomes. He claimed that in the industrial countries, they are in a position to bring about a reform and during such reform it should be ensured that economic activities are more egalitarian among other things.
He also stated both the big powers, the US and China, need to recognise that they need to have a more equal world if they are to prosper. He suggested that global institutions need a desparte change that allows them to fix big problems that face the world like climate change, inequality etc. “Hopefully, the pandemic is a wake up call,” he stated.