March 2021 – Reflections on development and governance

The Lancet Commission has urged the global community that rapid vaccination on a global scale is essential in tempering and, finally, prevailing over COVID-19. This in turn requires equitable access to available vaccine supplies across the world. Alas, such a requirement has not been met.

There has been an unseemly rush by rich countries of the world to acquire vaccine supplies on such a scale that the population of these privileged nations can be vaccinated multiple times. Ten countries of the world apparently account for 75 percent of the world’s vaccine stock. UK ‘pre-ordered’ doses of such magnitude that it can vaccinate its population at least five times. (see Figure 1 below). Meanwhile, 30 countries of the world have not had the opportunity to acquire even a single dose of available vaccines. If the status quo prevails, developing countries will take about three to four years before a significant proportion are vaccinated to reach herd immunity. COVAX , the global mechanism via which poorer parts of the world are, in principle, able to access vaccine doses, has only managed to ‘…acquire over 31 million doses (which has been delivered) …to 57 countries.’ This is pitifully small.

There is also the issue of the cost of these vaccines – with two of the most effective ones being so prohibitively expensive that they are outside the reach of the typical developing country. Vaccine producers are also protecting their intellectual property rights through stringent application of patents, making it difficult, if not impossible, for producers in developing countries to replicate vaccine supplies through the dissemination of locally made, generic products.

In sum, there is every reason for critics to be full of rage and allege that the rich countries of the world have, once again, failed to act as true global citizens who care both about the welfare of their citizens as well as others. They have, in effect, acted as unethical ‘hoarders’. WHO was compelled to issue the warning that vaccine inequality is becoming ‘grotesque’ with each passing day.

Intellectual and civic activism against an inequitable and unfair global order must continue. COVID-19 in rich countries cannot be defeated unless it is effectively tackled in the developing world. Accepting the harsh global reality of ‘business-as-usual’ in sullen silence will be tantamount to a failure of our ‘moral imagination’.

Figure 1

In a typically insightful piece, leading MIT economist Daren Acemoglu (he of the ‘Why nations fail’ fame), has cautioned his readers that widening inequality – or lack of ‘shared growth’ – will be the major challenge to crafting an inclusive digital future. This is because automation, shaped by the rising market power of a few very successful tech companies and the current global policy environment, has turned out to be one of the forces fostering greater inequality. Epithets such as the ‘digital divide’ captures these concerns, but there is more to this than just unequal access to digital infrastructure.

Defining automation as ‘…the substitution of machines and algorithms for tasks previously performed by labour’, Acemoglu notes that this process has unfolded throughout history. While there have been job losses, new technology has harnessed sustained improvements in human productivity and engendered new employment opportunities. Yet, this beneficial process can no longer be taken for granted. To start with, a few tech giants, such as Amazon, Alibaba, Alphabet, Facebook and Netflix, are responsible for 66 percent of global expenditure on machine learning and artificial intelligence (AI). They set the agenda on automation which, while privately profitable, is socially suboptimal. Second, the prevailing US-led policy environment has reinforced this misguided agenda. Current estimates suggest that, in the USA, investments in software and equipment are taxed at an effective rate of 5 percent and, in some cases, benefit from net subsidies. On the other hand, labour income is taxed at an effective rate of more than 25 per cent. Such distorted factor prices, combined with the systematic weakening of the bargaining power of organized labour and the dilution of the social welfare state, has led to the baleful configuration of a dearth of good jobs, precarious working conditions and ‘excessive automation’. At the same time, the rise of ‘AI-powered social media’ has incubated disinformation and conspiracy theories on a large scale (see Figure 1 below), as current and recent events have shown. This has fuelled social discord and a weakening of democratic discourse.

These unfortunate developments are not destined to happen. One cannot simply wish them away as the inevitable price of prosperity that a digital future is supposed to engender. One would need a shared global agenda in which there is a determined effort to attenuate distorted factor prices – which is why the effort by US Treasury Secretary (Janet Yellen) to aim for a common, cross-national approach to corporate taxation is so important. It is also necessary to temper the collective market power of a few tech giants, boost the bargaining power of organized labour, invest in the social welfare state and attenuate the digital divide.

Figure 1

Month: March 2021

Coping with COVID-19: the perilous case of vaccine inequality

Are we facing a dystopian digital future?

Share this:

Like this:

Share this:

Like this: