Why Women Are More Burned Out Than Men

Statistics show that stress and burnout are affecting more women than men en masse. Why – and what happens next?

When Jia, a Manhattan-based consultant, read Sheryl Sandberg’s bestselling book Lean In in 2014, she resolved to follow the advice espoused by the chief operating officer of Facebook.

“I’d just graduated from an Ivy League business school, was super pumped up and loved the idea of leaning in,” says Jia, whose last name is being withheld to protect her professional reputation. “Learning to self-promote felt so empowering, and I was 100% ready to prove that I was the woman who could have it all: be a high-powered career woman and a great mother.”

But today, the 38-year-old strikes a different tone. For years, she says, she feels like she’s been overlooked for promotions and pay rises at work on account of her gender, particularly after becoming a mother in 2018. Since then, she’s picked up the brunt of childcare responsibilities because her husband, who is a banker, has tended to travel more frequently for work. That, she adds, has given her a misguided reputation among her colleagues and managers – the majority of whom are male – for not being professionally driven.

Then when Covid-19 hit, it was as if all the factors already holding her back were supercharged. When her daughter’s day care closed in March 2020, Jia became the default caregiver while trying to stay afloat at work. “I was extremely unmotivated because I felt like I was spending all hours of the day trying not to fall off an accelerating treadmill,” she explains. “But at the same time, I felt like I was being trusted less and less to be able to do a good job. I could feel my career slipping through my fingers and there was absolutely nothing I could do about it.”

In early 2021, Jia’s therapist told her she was suffering from burnout. Jia says she’d never struggled with her mental health before. “But now I’m just trying to get through each week while staying sane,” she says.

Jia’s story is symptomatic of a deeply ingrained imbalance in society that the pandemic has both highlighted and exacerbated. For multiple reasons, women, particularly mothers, are still more likely than men to manage a more complex set of responsibilities on a daily basis – an often-unpredictable combination of unpaid domestic chores and paid professional work.

I could feel my career slipping through my fingers and there was absolutely nothing I could do about it – Jia

Though the mental strain of mastering this balancing act has been apparent for decades, Covid-19 has cast a particularly harsh light on the problem. Statistics show that stress and burnout are affecting more women than men, and particularly more working mothers than working fathers. This could have multiple impacts for the post-pandemic world of work, making it important that both companies and wider society find ways to reduce this imbalance.

Unequal demands

Recent data looking specifically at burnout in women is concerning. According to a survey by LinkedIn of almost 5,000 Americans, 74% of women said they were very or somewhat stressed for work-related reasons, compared with just 61% of employed male respondents.

A separate analysis from workplace-culture consultancy a Great Place to Work and health-care start-up Maven found that mothers in paid employment are 23% more likely to experience burnout than fathers in paid employment. An estimated 2.35 million working mothers in the US have suffered from burnout since the start of the pandemic, specifically “due to unequal demands of home and work”, the analysis showed.

Women tend to be dealing with a more complex set of work and personal responsibilities, leading to stress (Credit: Getty)

Experts generally agree that there’s no single reason women burn out, but they widely acknowledge that the way societal structures and gender norms intersect plays a significant role. Workplace inequalities, for example, are inextricably linked to traditional gender roles.

In the US, women still earn an average of about 82 cents for each dollar earned by a man, and the gap across many countries in Europe is similar. Jia’s firm does not publish its gender pay-gap data, but she suspects that it’s significant. Moreover, she thinks many of her male peers earn more than her, something that causes her a huge amount of stress.

“The idea that I might be underselling myself is extremely frustrating, but I also don’t want to make myself unpopular by asking for more money when I’m already pushing the boundaries by asking my company to make accommodations for me having to care for my daughter,” she says. “It’s a constant internal battle.”

Research links lower incomes to higher stress levels and worse mental health in general. But several studies have also shown more specifically that incidences of burnout among women are greater because of differences in job conditions and the impact of gender on progression.

In 2018, researchers from University of Montreal published a study tracking 2,026 workers over the course of four years. The academics concluded that women were more vulnerable to burnout than men because women were less likely to be promoted than men, and therefore more likely to be in positions with less authority which can lead to increased stress and frustration. The researchers also found that women were more likely to head single-parent families, experience child-related strains, invest time in domestic tasks and have lower self-esteem – all things that can exacerbate burnout.

Nancy Beauregard, a professor at University of Montreal and one of the authors of that study, said that reflecting on her work back in 2018, it’s clear that Covid-19 has amplified the existing inequalities and imbalances that her team demonstrated through their research. “In terms of [the] sustainable development of the human capital of the workforce,” she says, “we’re not heading in a good direction.”

A pandemic catalyst

Brian Kropp, chief of human resources research at Gartner, a global research and advisory firm headquartered in Connecticut, US, agrees that while many of the factors fueling women’s burnout were in play before the pandemic, Covid-19 notably exacerbated some as it forced us to dramatically overhaul our living and working routines.

When the pandemic hit, many women found that their domestic responsibilities surged – making juggling work even harder (Credit: Getty)

Structures supporting parents’ and carers’ lives closed down, and in most cases, this excess burden fell on women. One study, conducted by academics from Harvard University, Harvard Business School and London Business School, evaluated survey responses from 30,000 individuals around the world and found that women – especially mothers – had spent significantly more time on childcare and chores during Covid-19 than they did pre-pandemic, and that this was directly linked to lower wellbeing. Many women had already set themselves up as the default caregiver within their households, and the pandemic obliterated the support systems that had previously allowed them to balance paid employment and domestic work.

That’s exactly what Sarah experienced in March 2020, when schools across New York first closed. “Initially the message was that schools would stay closed until the end of April, so that was my target: ‘Get to that point and you’ll be fine’,” recalls the Brooklyn-based 40-year-old. Now, more than 18 months into the pandemic, her two sons, aged 6 and 9, are only just reacquainting themselves with in-person learning, and Sarah’s life has changed dramatically.

In April 2020, for the first time ever, she started suffering from anxiety. The pressures of home-schooling her children while working as marketing executive for a large technology company overwhelmed her. She couldn’t sleep, worried constantly and felt depressed. Worst of all, she felt like whatever she did was inadequate because she didn’t have enough time to do anything well.

Six months into the pandemic, it was clear something had to change. Sarah’s husband, a lawyer, was earning much more than her, and had done so since they got married in 2008. So, in August 2020 the couple jointly decided that Sarah would leave her job to become a stay-at-home mother. “Before this, I never really knew what being burned out meant,” she says. “Now I know beyond a shadow of a doubt.”

Sarah’s experience is emblematic of a much broader trend. In September last year, just as the pandemic was gaining pace, more than 860,000 women dropped out of the US workforce, compared with just over 200,000 men. One estimate put the number of mothers who had quit the US workforce between February and September last year at 900,000, and the number of fathers at 300,000.

As women lost crucial social lifelines during lockdown which may have been emotional and physical outlets for stress, it’s clear that the abrupt avalanche of extra domestic responsibilities pushed many who were already busily juggling home and work life further than they could go.

‘What’s the cost?’

One of the greatest concerns workplace experts harbour is that poor mental health among women in the workplace could discourage future generations from setting ambitious professional goals, particularly if they want to start a family. That could exacerbate the gender inequalities that already exist in terms of pay and seniority in the labour market.

Data indicate that this is indeed a legitimate concern; statistics collected by CNBC and polling company SurveyMonkey earlier this year showed that the number of women describing themselves as “very ambitious” in terms of their careers declined significantly during the pandemic. Data from the US Census Bureau shows that over the first 12 weeks of the pandemic, the percentage of mothers between the ages of 25 and 44 not working due to Covid-19-related childcare issues grew by 4.8 percentage points, compared to no increase for men in the same age group.

In terms of [the] sustainable development of the human capital of the workforce, we’re not heading in a good direction – Nancy Beauregard

Equally, there are concerns about how new ways of working such as hybrid could impact on workplace gender equality. Research shows that women are more likely than men to work from home in a post-pandemic world, but there’s evidence that people who work from home are less likely to get promoted than those who have more face-time with managers. “Women are saying, I’m working just as hard and doing just as much, but because I’m working from home, I’m less likely to get promoted,” says Kropp. “That’s extremely demotivating.”

Dean Nicholson, head of adult therapy at London-based behavioural health clinic The Soke, suggests that perceptions of fairness – or otherwise – could impact on women’s workplace participation. “When the balance of justice is skewed against us in the workplace, then it’s invariably going to lead to negative feelings, not just towards the organisation, but in the way that we feel about ourselves and the value of our contribution, as well as where we’re positioned on a hierarchy of worth.”

To prevent an exodus of female talent, says Kropp, organisations must appreciate that old workplaces practices are no longer fit for purpose. Managers need to fundamentally rethink how companies must be structured in order to promote fairness and equality of opportunity, he says. That means pay equality and equal opportunities for promotion, as well as creating a culture of transparency where everyone – mothers, fathers and employees who are not parents – feels valued and can reach their professional potential while also accommodating what’s going on at home.

Steve Hatfield, global future of work leader for Deloitte, notes that mothers, especially those in senior leadership roles, are extremely important role models. “The ripple effect of what they’re seen to be experiencing right now has the potential to be truly profound on newer employees, and so it’s up to organisations to prove that they can accommodate and cater to the needs of all employees,” he says.

As such, Hephzi Pemberton, founder of the Equality Group, a London-based consultancy that focuses on inclusion and diversity in the finance and technology industry, emphasises the need for managers to be trained formally and to understand that the initiative to create a workplace that’s fit for purpose must come from the employer rather than the employee. “That’s absolutely critical to avoid the risk of burnout,” she says.

But Jia, who says she’s now on the brink of quitting her job, insists that notable changes need to happen in the home as well as the workplace. “What’s become abundantly clear to me through the pandemic is that we all have a role to play in understanding the imbalances that are created when stereotypical gender roles are blindly adhered to,” she says. “Yes, of course it sometimes makes sense for a woman to be the default caregiver or to take a step back from paid work, but we need to appreciate at what cost. This is 2021. Sometimes I wonder if we’re in the 1950s.”

By Josie Cox

Source: Why women are more burned out than men – BBC Worklife

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East Asia’s Economies Face Slowing Growth and Rising Inequality, World Bank Warns

HONG KONG—Most countries in East Asia face major setbacks in recovering from the coronavirus, the World Bank said, adding to concerns that the resurgent pandemic will widen the economic divide between the region and the Western world.

With the notable exception of China, economic activity across the region has sputtered since the second quarter amid outbreaks of the Delta variant of the coronavirus and relatively slow vaccine rollouts, leading some multilateral institutions to cut growth forecasts for most economies in the region and warn about longer-term problems such as rising inequality.

Overall, the economy of East Asia and the Pacific is on track to expand by 7.5% this year, according to forecasts released Tuesday by the World Bank Group, up from its April forecast of 7.4%. But that improvement is all China, now expected to grow 8.5%, up from 8.1%. The outlook for the rest of the region worsened, with the bank now forecasting growth of just 2.5% this year, down from 4.4% in April.

“The economic recovery of developing East Asia and Pacific faces a reversal of fortune,” said Manuela Ferro, an economist at the Washington, D.C.-based institution. The U.S. economy is expected to outpace the world as a whole by expanding 6% this year, the Organization for Economic Cooperation and Development forecast last week.

In Asia, meanwhile, the pandemic’s persistence threatens to deliver “an impoverishing double whammy of slow growth and increasing inequality,” the World Bank warned, calling it the first time the region has faced such an outlook since the turn of the century. The bank sees 24 million more people below the poverty line in Asia this year than it projected earlier.

Last week, the Manila-based Asia Development Bank cut its growth outlook for developing Asia to 7.1%, from 7.3% in April, in large part because Covid-19 outbreaks led to major lockdowns that slowed manufacturing activity in Southeast Asia, a regional export hub. The ADB now forecasts 3.1% growth this year for Southeast Asia, where countries have struggled to ramp up vaccinations, down from 4.4% previously.

Myanmar, Malaysia and Cambodia are among the countries that have imposed lockdowns and social-distancing rules in recent months as Covid-19 infections surged. That has exacerbated global supply-chain disruptions, delaying production of finished goods from clothes to cars as well as commodities, including coffee and palm oil.

Vaccination rates have picked up in Asia, though they still trail the West. As of the end of August, less than one-third of the region’s population had been fully vaccinated, compared with 52% in the U.S. and 58% in the European Union, according to the ADB.

The World Bank predicts that most Asian countries will push vaccination rates up to 60% by the first half of 2022, which it says will allow for a fuller resumption of economic activity—though it won’t be enough to eliminate infections.

Moreover, Asia’s advantage in the global goods trade—a bright spot for the region for much of the past year—is expected to fade.

Export demand for a range of goods, such as machinery and consumer electronics, has slipped as companies and individuals from richer Western countries shift their spending patterns. Supply capacity in those markets has also started to normalize, while higher shipping costs risk further eroding appetite for imports from Asia.

“Global goods import demand peaked in the second quarter of 2020 and regional exports face stronger competitions as other regions recover,” says the World Bank report.

MARKET TRENDS

We have revised our forecast for China’s 2021 growth from 8.4% to 8.2% to account for recent COVID outbreaks and economic underperformance.,China is experiencing a rash of COVID outbreaks driven by the Delta variant. New cases have emerged in cities across the country, such as Nanjing, Ningbo, and Wuhan.,Several indicators signaled a slowdown in July relative to June: industrial value-added growth fell from 8.8% YOY to 8.3% YOY; retail sales growth slowed from 12.1% YOY to 8.5% YOY; urban unemployment rose from 5.0% to 5.1%.

KEY DEVELOPMENTS

Xi Jinping is shifting the government’s focus away from pursuing growth at any cost toward sharing the fruits of growth more evenly across society. This push is reflected in the rising use of the phrase “common prosperity,” which has started to appear frequently in communications across the government, schools, and media.,While the details behind the “common prosperity” push are not yet clear and policy implementation timelines may be extended, the implications of this shift will be wide-ranging.

In the coming years, China’s leadership will show less forbearance to wealthy individuals and large corporations; instead, it will expect them to support its goals for social equality through measures like direct transfers, donations, program development, and tax changes.,China’s regulatory landscape will also shift in favor of industries that are seen to serve lower-income segments and against those seen to serve higher-income segments. For example, companies serving rural and less developed parts of the country are likely to receive a helping hand, while companies selling luxury items and high-end real estate are likely to face increased barriers in the market.

By: Stella Yifan Xie at stella.xie@wsj.com

Source: East Asia’s Economies Face Slowing Growth and Rising Inequality, World Bank Warns – WSJ

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The Global Housing Market is Broken, and It’s Dividing Entire Countries

Soaring property prices are forcing people all over the world to abandon all hope of owning a home. The fallout is shaking governments of all political persuasions.

It’s a phenomenon given wings by the pandemic. And it’s not just buyers — rents are also soaring in many cities. The upshot is the perennial issue of housing costs has become one of acute housing inequality, and an entire generation is at risk of being left behind.

“We’re witnessing sections of society being shut out of parts of our city because they can no longer afford apartments,” Berlin Mayor Michael Mueller says. “That’s the case in London, in Paris, in Rome, and now unfortunately increasingly in Berlin.”

That exclusion is rapidly making housing a new fault line in politics, one with unpredictable repercussions. The leader of Germany’s Ver.di union called rent the 21st century equivalent of the bread price, the historic trigger for social unrest.

Politicians are throwing all sorts of ideas at the problem, from rent caps to special taxes on landlords, nationalizing private property, or turning vacant offices into housing. Nowhere is there evidence of an easy or sustainable fix.

In South Korea, President Moon Jae-in’s party took a drubbing in mayoral elections this year after failing to tackle a 90% rise in the average price of an apartment in Seoul since he took office in May 2017. The leading opposition candidate for next year’s presidential vote has warned of a potential housing market collapse as interest rates rise.

China has stepped up restrictions on the real-estate sector this year and speculation is mounting of a property tax to bring down prices. The cost of an apartment in Shenzhen, China’s answer to Silicon Valley, was equal to 43.5 times a resident’s average salary as of July, a disparity that helps explain President Xi Jinping’s drive for “common prosperity.”

In Canada, Prime Minister Justin Trudeau has promised a two-year ban on foreign buyers if re-elected.

The pandemic has stoked the global housing market to fresh records over the past 18 months through a confluence of ultralow interest rates, a dearth of house production, shifts in family spending and fewer homes being put up for sale. While that’s a boon for existing owners, prospective buyers are finding it ever harder to gain entry.

What we’re witnessing is “a major event that should not be shrugged off or ignored,” Don Layton, the former CEO of U.S. mortgage giant Freddie Mac, wrote in a commentary for the Joint Center for Housing Studies of Harvard University.

In the U.S., where nominal home prices are more than 30% above their previous peaks in the mid-2000s, government policies aimed at improving affordability and promoting home ownership risk stoking prices, leaving first-time buyers further adrift, Layton said.

The result, in America as elsewhere, is a widening generational gap between baby boomers, who are statistically more likely to own a home, and millennials and Generation Z — who are watching their dreams of buying one go up in smoke.

Existing housing debt may be sowing the seeds of the next economic crunch if borrowing costs start to rise. Niraj Shah of Bloomberg Economics compiled a dashboard of countries most at threat of a real-estate bubble, and says risk gauges are “flashing warnings” at an intensity not seen since the run-up to the 2008 financial crisis.

In the search for solutions, governments must try and avoid penalizing either renters or homeowners. It’s an unenviable task.

Sweden’s government collapsed in June after it proposed changes that would have abandoned traditional controls and allowed more rents to be set by the market.

In Berlin, an attempt to tame rent increases was overturned by a court. Campaigners have collected enough signatures to force a referendum on seizing property from large private landlords. The motion goes to a vote on Sept. 26. The city government on Friday announced it would buy nearly 15,000 apartments from two large corporate landlords for €2.46 billion ($2.9 billion) to expand supply.

Anthony Breach at the Center for Cities think tank has even made the case for a link between housing and Britain’s 2016 vote to quit the European Union. Housing inequality, he concluded, is “scrambling our politics.”

As these stories from around the world show, that’s a recipe for upheaval.

Argentina

With annual inflation running around 50%, Argentines are no strangers to price increases. But for Buenos Aires residents like Lucia Cholakian, rent hikes are adding economic pressure, and with that political disaffection.

Like many during the pandemic, the 28-year-old writer and college professor moved with her partner from a downtown apartment to a residential neighborhood in search of more space. In the year since, her rent has more than tripled; together with bills it chews through about 40% of her income. That rules out saving for a home.

“We’re not going to be able to plan for the future like our parents did, with the dream of your own house,” she says. The upshot is “renting, buying and property in general” is becoming “much more present for our generation politically.”

Legislation passed by President Alberto Fernandez’s coalition aims to give greater rights to tenants like Cholakian. Under the new rules, contracts that were traditionally two years are now extended to three. And rather than landlords setting prices, the central bank created an index that determines how much rent goes up in the second and third year.

It’s proved hugely controversial, with evidence of some property owners raising prices excessively early on to counter the uncertainty of regulated increases later. Others are simply taking properties off the market. A government-decreed pandemic rent freeze exacerbated the squeeze.

Rental apartment listings in Buenos Aires city are down 12% this year compared to the average in 2019, and in the surrounding metro area they’re down 36%, according to real estate website ZonaProp.

The law “had good intentions but worsened the issue, as much for property owners as for tenants,” said Maria Eugenia Vidal, the former governor of Buenos Aires province and one of the main opposition figures in the city. She is contesting the November midterm elections on a ticket with economist Martin Tetaz with a pledge to repeal the legislation.

“Argentina is a country of uncertainty,” Tetaz said by phone, but with the housing rules it’s “even more uncertain now than before.”

Cholakian, who voted for Fernandez in 2019, acknowledges the rental reform is flawed, but also supports handing more power to tenants after an extended recession that wiped out incomes. If anything, she says greater regulation is needed to strike a balance between reassuring landlords and making rent affordable.

“If they don’t do something to control this in the city of Buenos Aires, only the rich will be left,” she says.

Australia

As the son of first-generation migrants from Romania, Alex Fagarasan should be living the Australian dream. Instead, he’s questioning his long-term prospects.

Fagarasan, a 28-year-old junior doctor at a major metropolitan hospital, would prefer to stay in Melbourne, close to his parents. But he’s being priced out of his city. He’s now facing the reality that he’ll have to move to a regional town to get a foothold in the property market. Then, all going well, in another eight years he’ll be a specialist and able to buy a house in Melbourne.

Even so, he knows he’s one of the lucky ones. His friends who aren’t doctors “have no chance” of ever owning a home. “My generation will be the first one in Australia that will be renting for the rest of their lives,” he says.

He currently rents a modern two-bedroom townhouse with two others in the inner suburb of Northcote — a study nook has been turned into a make-shift bedroom to keep down costs. About 30% of his salary is spent on rent; he calls it “exorbitant.”

Prime Minister Scott Morrison’s conservative government announced a “comprehensive housing affordability plan” as part of the 2017-2018 budget, including 1 billion Australian dollars ($728 million) to boost supply. It hasn’t tamed prices.

The opposition Labour Party hasn’t fared much better. It proposed closing a lucrative tax loophole for residential investment at the last election in 2019, a policy that would likely have brought down home prices. But it sparked an exodus back to the ruling Liberals of voters who owned their home, and probably contributed to Labor’s election loss.

The political lessons have been learned: Fagarasan doesn’t see much help on housing coming from whoever wins next year’s federal election. After all, Labor already rules the state of Victoria whose capital is Melbourne.

“I feel like neither of the main parties represents the voice of the younger generation,” he says.

It’s a sentiment shared by Ben Matthews, a 33-year-old project manager at a university in Sydney. He’s moving back in with his parents after the landlord of the house he shared with three others ordered them out, an experience he says he found disappointing and stressful, especially during the pandemic.

Staying with his parents will at least help him save for a deposit on a one-bedroom flat. But even that’s a downgrade from his original plan of a two-bedroom house so he could rent the other room out. The increases, he says, are “just insane.”

“It might not be until something breaks that we’ll get the political impetus to make changes,” he says. -Jason Scott

Canada

Days after calling an election, Justin Trudeau announced plans for a two-year ban on foreigners buying houses. If it was meant as a dramatic intervention to blind-side his rivals, it failed: they broadly agree.

The prime minister thought he was going to fight the election — set for Monday — on the back of his handling of the pandemic, but instead housing costs are a dominant theme for all parties.

Trudeau’s Liberals are promising a review of “escalating” prices in markets including Vancouver and Toronto to clamp down on speculation; Conservative challenger Erin O’Toole pledges to build a million homes in three years to tackle the “housing crisis”; New Democratic Party leader Jagmeet Singh wants a 20% tax on foreign buyers to combat a crisis he calls “out of hand.”

Facing a surprisingly tight race, Trudeau needs to attract young urban voters if he is to have any chance of regaining his majority. He chose Hamilton, outside Toronto, to launch his housing policy. Once considered an affordable place in the Greater Toronto Area, it’s faced rising pressure as people leave Canada’s biggest city in search of cheaper homes. The average single family home cost 932,700 Canadian dollars ($730,700) in June, a 30% increase from a year earlier, according to the Realtors Association of Hamilton and Burlington.

The City of Hamilton cites housing affordability among its priorities for the federal election, but that’s little comfort to Sarah Wardroper, a 32-year-old single mother of two young girls, who works part time and rents in the downtown east side. Hamilton, she says, represents “one of the worst housing crises in Canada.”

While she applauds promises to make it harder for foreigners to buy investment properties she’s skeptical of measures that might discourage homeowners from renting out their properties. That includes Trudeau’s bid to tax those who sell within 12 months of a house purchase. Neither is she convinced by plans for more affordable housing, seeing them as worthy but essentially a short-term fix when the real issue is “the economy is just so out of control the cost of living in general has skyrocketed.”

Wardroper says her traditionally lower-income community has become a luxury Toronto neighborhood.

“I don’t have the kind of job to buy a house, but I have the ambition and the drive to do that,” she says. “I want to build a future for my kids. I want them to be able to buy homes, but the way things are going right now, I don’t think that’s going to be possible.”

Singapore

Back in 2011, a public uproar over the city-state’s surging home prices contributed to what was at the time the ruling party’s worst parliamentary election result in more than five decades in power. While the People’s Action Party retained the vast majority of the seats in parliament, it was a wake-up call — and there are signs the pressure is building again.

Private home prices have risen the most in two years, and in the first half of 2021 buyers including ultra-rich foreigners splurged 32.9 billion Singapore dollars ($24 billion), according to Singapore-based ERA Realty Network Pte Ltd. That’s double the amount recorded in Manhattan over the same period.

However, close to 80% of Singapore’s citizens live in public housing, which the government has long promoted as an asset they can sell to move up in life.

It’s a model that has attracted attention from countries including China, but one that is under pressure amid a frenzy in the resale market. Singapore’s government-built homes bear little resemblance to low-income urban concentrations elsewhere: In the first five months of the year, a record 87 public apartments were resold for at least SG$1 million. That’s stirring concerns about affordability even among the relatively affluent.

Junior banker Alex Ting, 25, is forgoing newly built public housing as it typically means a three-to-four-year wait. And under government rules for singles, Ting can only buy a public apartment when he turns 35 anyway.

His dream home is a resale flat near his parents. But even there a mismatch between supply and demand could push his dream out of reach.

While the government has imposed curbs on second-home owners and foreign buyers, younger people like Ting have grown resigned to the limits of what can be done.

Most Singaporeans aspire to own their own property, and the housing scarcity and surge in prices presents another hurdle to them realizing their goal, says Nydia Ngiow, Singapore-based senior director at BowerGroupAsia, a strategic policy advisory firm. If unaddressed, that challenge “may in turn build long-term resentment towards the ruling party,” she warns.

That’s an uncomfortable prospect for the PAP, even as the opposition faces barriers to winning parliamentary seats. The ruling party is already under scrutiny for a disrupted leadership succession plan, and housing costs may add to the pressure.

Younger voters may express their discontent by moving away from the PAP, according to Ting. “In Singapore, the only form of protest we can do is to vote for the opposition,” he says.

Ireland

Claire Kerrane is open about the role of housing in her winning a seat in Ireland’s parliament, the Dail.

Kerrane, 29, was one of a slew of Sinn Fein lawmakers to enter the Dail last year after the party unexpectedly won the largest number of first preference votes at the expense of Ireland’s dominant political forces, Fine Gael and Fianna Fail.

While the two main parties went on to form a coalition government, the outcome was a political earthquake. Sinn Fein was formerly the political wing of the Irish Republican Army, yet it’s been winning followers more for its housing policy than its push for a united Ireland.

“Housing was definitely a key issue in the election and I think our policies and ambition for housing played a role in our election success,” says Kerrane, who represents the parliamentary district of Roscommon-Galway.

Ireland still bears the scars of a crash triggered by a housing bubble that burst during the financial crisis. A shortage of affordable homes means prices are again marching higher.

Sinn Fein has proposed building 100,000 social and affordable homes, the reintroduction of a pandemic ban on evictions and rent increases, and legislation to limit the rate banks can charge for mortgages.

Those policies have struck a chord. The most recent Irish Times Ipsos MRBI poll, in June, showed Sinn Fein leading all other parties, with 21% of respondents citing house prices as the issue most likely to influence their vote in the next general election, the same proportion that cited the economy. Only health care trumped housing as a concern.

Other parties are taking note. On Sept. 2, the coalition launched a housing plan as the pillar of its agenda for this parliamentary term, committing over €4 billion ($4.7 billion) a year to increase supply, the highest-ever level of government investment in social and affordable housing.

Whether it’s enough to blunt Sinn Fein’s popularity remains to be seen. North of the border, meanwhile, Sinn Fein holds a consistent poll lead ahead of elections to the Northern Ireland Assembly due by May, putting it on course to nominate the region’s First Minister for the first time since the legislature was established as part of the Good Friday peace agreement of 1998.

For all the many hurdles that remain to reunification, Sinn Fein is arguably closer than it has ever been to achieving its founding goal by championing efforts to widen access to housing.

As Kerrane says: “Few, if any households aren’t affected in some way by the housing crisis.”

By Alan Crawford

Source: https://www.japantimes.co.jp/

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The Psychological Toll of Wanting Your Kid To Be Perfect

It’s called “other-oriented perfectionism,” and it can have a negative effect on children. Here’s why it happens.

Joliene Trujillo-Fuenning, who lives in Denver, Colorado with her two kids, ages 3 and 22 months, has some pretty clear perfectionist tendencies. If she sends an email with a typo in it, she says, “It will drive me nuts for a solid week or two.” After her husband cleans the bathroom, she has to fight the urge to criticize. (Sometimes she’ll just clean it again.)

And when it comes to her 3-year-old’s education, Trujillo-Fuenning says, “I have been very much struggling with the fact that she doesn’t want to write letters,” and finds herself thinking, “You are supposed to be at this point by three and a half or four, and if you don’t do it, you’re never going to.”

What Trujillo-Fuenning struggles with is something called other-oriented perfectionism. (You may have seen a shorter piece I wrote about the phenomenon for the Atlantic back in July.) Other-oriented perfectionism bears similarity to self-oriented perfectionism, when a person puts tremendous pressure on themselves to be perfect and then self-flagellates when they can’t be.

It’s also a little bit like socially prescribed perfectionism, where one internalizes the need to be perfect thanks to perceived pressure from others. The big difference is that with other-oriented perfectionism, unrealistic expectations are directed at, well, others.

When a parent sets exacting standards for their child and assumes a critical attitude, it can change how they parent (to their child’s detriment) and leave the parent bitter, resentful, and sometimes even wishing they’d never had children. That’s particularly problematic in light of new research suggesting that both parental expectations and parental criticism have been on the rise.

The impulse behind child-oriented perfectionism comes mostly from early life experiences and societal forces outside individuals’ control, but understanding — and interventions — can help thwart it, improving the wellbeing of both parent and child.

Natalie Dattilo, Ph.D., a psychologist at Brigham & Women’s Hospital and instructor of psychiatry at Harvard Medical School, has a patient roster made up mostly of young doctors, some of whom are the targets of other-oriented perfectionists who are “looking around and wondering why everybody [they] work with is incompetent.” For a supervisor like that, she said, “There is going to be an over-reliance on control, especially wanting to control how people do things.”

The other-oriented perfectionist seems self-assured. They always know the best way to do things and everything would be splendid if only others weren’t so flawed.

“On the surface it looks like grandiosity,” said Thomas Curran, Ph.D., an assistant professor of psychology at London School of Economics and Political Science, “but at root, it’s really a profound insecurity about place in the world and whether you’re worth something.” The other-oriented perfectionist’s judgment, he said, is actually just “my way of projecting the things that I dislike in myself onto other people.”

People become other-oriented perfectionists in a variety of ways discussed in the book “Perfectionism: A Relational Approach to Conceptualization, Assessment, and Treatment.” Oftentimes a cocktail of other types of perfectionism is to blame. Trujillo-Fuenning worries about her daughter’s progress because she wants the best for her, but there’s something more than that.

“I had a friend who pointed out that her language, her enunciation, her knowledge is pretty advanced for her age,” she explained, “And immediately, I had this sense of like, ‘Ha!’ It had nothing to do with me! Yet you still have a part of your brain that’s like, ‘She speaks well. That means I did my job right.

If she reads early, I did my job right.'” The pressure Trujillo-Fuenning feels to be perfect requires being — and being perceived as — a perfect parent. “How you’re doing as a parent is a reflection of who you are,” she said, “There’s no separation there in my head.”

In a paper published in 2020, Konrad Piotrowski, Ph.D., an assistant professor of psychology at SWPS University in Poland, reported that both mothers and fathers there “tend to accept to a greater extent the mistakes and ‘imperfection’ of their children than those of their partner.” But sometimes they don’t.

John Lockner’s experience supports that idea. He was a stay-at-home dad for years and told me, “I kind of still am,” since he works part-time and spends the rest of it with his two teenage sons. “It’s definitely a struggle not to be on them all the time,” he said, but he knows that’s more about him than them. “I never wanted to be a manager, because I know I would expect my employees to do their best, and it would be very hard for me when they don’t,” he told me.

As one of just a handful of dads involved at their old school, Lockner said, “I felt this pressure to be better, and because of that my kids needed to be better.” With up-to-the-minute access to their assignments and grades through an online portal, he’d issue reminders on the drive to school: “You have to be sure to check on that and make sure it was turned in” or “You’re going to ask for that extra credit, right?” And he’d grill them on test results as soon as they got into the car at pickup.

But now, he said, “I’m kind of working on myself, to let some of that go.” What seems to be the key determinant is which relationship—the romantic one or the parental one—is more strongly associated with the parent’s self-esteem. Those who hang their identity on their parental role, like Trujillo-Fuenning, are more likely to experience child-oriented perfectionism than those who do not, Piotrowski theorized.

The impact of other-oriented perfectionism on children

That’s likely a good thing for his kids. Curran, the British perfectionism researcher, looked at a questionnaire that’s been given to cohorts of young people for decades. He and his team found that current college students perceive that their parents were more expectant than past generations — which is problematic, because studies (old and new) tie a caregiver having performance-oriented goals to controlling, critical parenting.

Though the research is murky, because different forms of perfectionism both overlap and function in distinct ways, children of parents who are perfectionists likely have higher odds of developing psychological distress, including anxiety and depression. Even when the impact falls short of clinical classification, children whose parents expect them to be perfect often grow up in homes characterized by conflict and tension. “It’s going to be a pressure cooker,” Curran told me.

The end result is often another generation of perfectionists. A 2017 study of 159 father-daughter dyads found a tie between “controlling fathers who demand perfection” and perfectionist daughters. And Curran’s own research has found that as parents’ expectations and criticism have increased, so too have rates of adolescent perfectionism.

We make jokes about perfectionism. (Did you hear the one about the perfectionist who walked into a bar? Apparently, it wasn’t set high enough.) But it’s a truly stressful way to live, Dr. Dattilo said, “Always striving to prove that you are capable, to prove that you are worthy, prove that you are successful based on other people’s evaluations.”

It should come as no surprise then, that there are, in Curran’s words, “huge, uncharacteristically strong correlations” between perfectionism and psychological distress, including anxiety, depression, suicidal ideation, and anorexia.

“The data’s never that clean,” he told me. Gayani DeSilva knows what it feels like to be one of those data points. “My parents really did put a lot of pressure on me as a kid to be perfect,” recalled the child and adolescent psychiatrist who practices in Southern California. “I had to have straight As, couldn’t have an A-minus.”

When she carried a D in Calculus at one point, “I was so afraid that I actually thought that my parents were going to kill me.” Now looking back with a therapist’s eye, she said, “I couldn’t imagine them actually physically harming me, I just knew that I was gonna die.”

She internalized their exacting standards, “There was just no room for anything other than what they expected.” And when she couldn’t meet them, she said, “I faced all this guilt, like, ‘Why couldn’t I do it?'”

Josh McKivigan, a behavioral health therapist based in Pittsburgh, Pennsylvania, sees an impact at both ends of the economic spectrum. For kids of highly educated, well-off parents, he said, “You’d see them well put together, amazing grades, but behind the scenes, they’re barely holding it together. The only type of school they feel is acceptable is an Ivy League. They say things like, ‘I couldn’t imagine going to UCLA.'”

McKivigan also works with a refugee population. With these kids, he sees pressure to make something of a parent’s dangerous immigration journey. They end up saying, “I gotta make this right. I can’t let them down,” McKivigan told me.

But some kids don’t develop perfectionism of their own, instead responding to a parent’s pressure by rejecting their goals. After all, if someone is impossible to please, why bother trying?Nicole Coomber, Ph.D., an assistant dean at the University of Maryland’s Robert H. Smith School of Business, said research on motivation explains why.

“Autonomy is an important piece of this where you have to actually buy into whatever the goal is,” she notes. Requiring that a child practice piano for hours each day when they’d rather be playing soccer “can really backfire,” she added. Kids can end up feeling like their parent’s project or product — and push back by quitting. No matter how much bravado accompanies that move, there’s often also a sense of having let themselves and their parents down.

DeSilva failed her first year of medical school, she said, “because I just didn’t know how to ask for help.” After a car accident, she quit residency and then spent two years in therapy: “Once I was able to admit, ‘I’m not perfect,’ I was successful at pretty much everything I wanted to do, and I didn’t have to be anxious about it. I knew I could do it, whereas before, when I had to be perfect, I was really insecure.”

After she worked through her perfectionism, she said, “I was trying for my own standard, my own goals, my own desires, instead of somebody else’s standard for me.”

Other-oriented perfectionism is bad for parents too, but they can change

Child-oriented perfectionist tendencies aren’t just bad for kids. Trujillo-Fuenning started to feel burned out by her high standards in the parenting realm. The cumulative effect of a thousand little maximizations, like “trying to make sure they were eating the right things every meal,” became overwhelming and depleting. “To be honest, that’s part of why I went back to work,” she told me.

In his 2020 study, Piotrowski found that parents who target their children with other-oriented perfectionism tend to display higher levels of stress, dissatisfaction with parenthood, and feeling so burdened by the parental role that they regret parenthood entirely. He explained, “For mothers characterized by increased other-oriented perfectionism, family life is probably associated with many frustrations and stress, hence the focus on alternative visions of themselves that seem to be better than [being] a parent.”

When she starts trying to work on literacy again, Trujillo-Fuenning said, “I have to pull back and remind myself, if she’s fighting you, just let it go.” The same thing goes for micromanaging her kids’ appearance. “I’m catching my own insecurities of like, ‘You don’t look well put together. People are going to look at you and think I’m not taking care of you.'” But to avoid acting on those impulses requires “a constant mental check,” she told me.

Every now and then Lockner’s wife would say, “You’re being too hard on them. You are expecting too much.” But that doesn’t seem to be what made him change. His sons are at an all-boys school now, and, Lockner said, “Being around other groups of dads made a difference. Listening to how they act, and how their kids are, made me think, ‘Maybe I can ease up a little. My kids really are pretty good.'”

This sort of shift is what Curran sees happening in society as a whole—only in reverse.Other-oriented perfectionist parents aren’t the only ones ratcheting up expectations and pressure. Some parents don’t want to push, Curran said, “but they feel like they have to in this world where elite college is harder to access, where you basically have an economy where the middle class is downwardly mobile with increasing costs of living and stagnated income, and you’ve got chronic and increasing inequality.”

And the pressure can be even more intense for parents like Eric L. Heard, author of “Reflections of an Anxious African American Dad.” He described feeling “the need for immediate feedback” from his son’s teachers: “I always held a fear that I would not address some problem and he would head down a well-worn road of destruction” for Black men, he wrote. “My mind was haunted by the crippling thought of how I would be judged …. I would wear a permanent brand … a large white D for being a deadbeat dad who couldn’t save his son.”

If you’re a parent ruminating on the odds stacked against your child, it is rational to drive them to work harder, achieve more, and be better. Other parents react the same way, the result of which is a frenzied, fearful “rug rat race.” Once that starts to kick in, Curran said, “it’s really hard to stop, at a societal level. It creates an echo chamber where everybody’s engaging in unhealthy behaviors and no one wins.”

He doesn’t just mean that we all lose when we succumb to perfectionism. It also just plain doesn’t work. “Everybody’s engaging in this frantic upward comparison, and no one gains an advantage,” he said. “We just move the average of what’s expected further and further. It’s looking bad.”

But individuals can push back against a trend of overwhelmed young people and parents who, like the old Lockner, feel no choice but to be “the bad guy.” Now that he’s backed off, he said, “It’s easier on me. It’s easier on them.” They do more for themselves, and “they seem more willing to do stuff if I’m not on them all the time.” Truth be told, he likes himself more now.

Therapists can help their clients get there. Dr. Dattilo would tell an other-oriented perfectionist they need to believe it when someone says, “I’m doing the best I can.” Parents can interrogate their perfectionism in psychotherapy: Why is having a perfect child so important to me? Where did this need come from? And cognitive-behavioral therapists push people to fact-check their anxiety: What level of pressure is really necessary to prepare your child to live a good life? Is parental pressure truly the most effective way to forestall your fears? What will happen if you just back off?

When it came to parenting her son, DeSilva, the perfectionist-turned-psychiatrist, said she made a conscious decision. “I was going to raise him to have his own ideas and his own set of standards and really, for me to learn about and help him develop his strengths. And also, to really be comfortable with his weaknesses and vulnerabilities.” That puts her at odds with her own parents. When it comes to her son’s homework, they think, “It’s your job.

You have to make sure his homework is done,” she said. His grandparents even tell her to fix it for him “so it’s correct.” Instead, she explained to her son the consequences of not doing homework, or not doing it well, and let him decide. “He didn’t like it that his teacher was upset with him. So the next time he did his homework, he did it as best he could.”

Tying it all together

Yet individual parents can’t reverse course alone. Putting aside economic inequality for a minute, Curran said, “I think if the pressures of things like standardized testing — for young people to perform perfectly in school at such a young age — could be recalibrated downwards” it would take pressure off parents too. He called online grade portals “even scarier.”

If kids were just allowed to learn, to be, without all the tracking, assessing, and ranking, maybe more parents would feel like they can afford to break — and encourage their kids to break — the link between one’s accomplishments and one’s worth.

As Curran talked, I realized that much of the ground we’ve covered in my Are We There Yet? column is more related than I’d thought. Pressure on parents, including around the “one right way” to parent, produces intensive parenting and lack of autonomy for kids, and it also contributes to parents’ perfectionism and even abusive behavior, all of which lead to faltering mental health in adolescents, often with their own perfectionism as the mechanism. It’s a perfect storm for stressed out, sexless parents who worry they don’t measure up raising stressed out, helpless kids who worry they don’t measure up. To borrow Curran’s words, “It’s all interconnected.”

By Gail Cornwall

Gail Cornwall works as a mother and writer in San Francisco. Connect with Gail on Twitter, or read more at gailcornwall.comMORE FROM Gail Cornwall

Source: The psychological toll of wanting your kid to be “perfect” | Salon.com

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Did Inequality Increase During Pandemic?

It is widely believed that the Covid-19 pandemic and the reactions to it by governments and businesses accelerated an already-strong trend toward increasing economic inequality in the U.S. People on the political left think this and people on the political right do too, a heartwarming exception to the political polarization of our age.

This belief is also based on some actual evidence. Thanks to big increases in the prices of stocks and other assets after the initial shock of the pandemic, the nation’s billionaires have in fact added many billions to their net worths, while lots of affluent homeowners and 401(k)-holders have added hundreds of thousands.

The risks of both Covid-19 infection and job loss have been higher for those who can’t work from home, and those who can work from home tend to have more degrees and earn more money than those who can’t. Poorer children have struggled much more with remote schooling than richer ones. And so on.

So yes it’s possible, maybe even likely, that when the dust settles and all the relevant data are available, we will conclude that economic worsened over the course of the pandemic. But I wouldn’t be sure of it. Pandemics are one of the “Four Horsemen” of economic equalization described by historian Walter Scheidel in his acclaimed 2017 book, “The Great Leveler: Violence and the History of from the Stone Age to the Twenty-First Century” (the other three being war, revolution and state collapse).

Scheidel did have more devastating diseases in mind than what Covid-19 has proved to be so far, but as of January, Nobel-prize-winning economist Angus Deaton found that economic inequality among countries had decreased during the pandemic, although this didn’t hold on a population-weighted basis because the of India, the largest country in the bottom half of the world’s income distribution (it’s “lower middle-income,” according to the World Bank), had suffered greatly even before this year’s rise of the Delta variant.

Within the US, the very real forces pushing toward more inequality have been counteracted by an unprecedented outpouring of government aid, while trends boosting wages in the lower part of the distribution that were apparent before the pandemic seem to be accelerating now. The numbers available so far, while preliminary and in some cases a bit contradictory, aren’t really telling a story of exploding inequality.

Perhaps the simplest of these numbers, from the distributional financial accounts that the Federal Reserve began releasing quarterly in 2019, is the wealth share of the bottom 50 per cent of the wealth distribution. It bottomed out in the second quarter of 2011 at a barely-there 0.4 per cent of household wealth and has been rising most quarters since, reaching 2 per cent in the first quarter of this year for the first time since just before the Great Recession started in December 2007.

This measure, which I’ve written about before, has its limitations. The Fed estimates wealth by combining household-level data on assets and liabilities from its triennial Survey of Consumer Finances, most recently conducted in 2019, with aggregate numbers from its quarterly Financial Accounts of the United States, and lumps the entire bottom half of the wealth distribution together because it doesn’t have enough information to do otherwise. It is able to slice things more finely within the top half, where the top 1 per cent gained wealth share since the end of 2019 while those between them and the 50th percentile lost ground.

So yes it looks like wealth inequality increased during the pandemic within the top half, and most of the bottom half’s gains came from those just above it in the wealth distribution rather than the very richest. The bottom half did enjoy a bigger percentage wealth gain than the top 1 per cent —30.3 per cent versus 20.7 per cent since the end of 2019 — although because it had so little wealth to start with, that amounted to just $609 billion in new wealth versus $7.1 trillion for the 1 per cent. Still, the total wealth of the bottom 50 per cent in the first quarter of this year amounted to 6.3 per cent of that of the top 1 per cent, up from 5.8 per cent at the end of 2019 and the highest such percentage since 2007. In that sense, at least, inequality between the top and bottom decreased.

That sense may not be enough for most people who are concerned about inequality, but improved conditions for the less-well-off are worth celebrating in any case, and it’s not just the Federal Reserve that’s detecting signs of them. Researchers at the Urban Institute estimated last month that, thanks to big job gains and the benefits included in the American Rescue Plan approved in March and earlier pandemic-aid legislation, the share of Americans below the poverty line would fall to 7.7 per cent this year from what they estimated using the same methodology to have been 13.9 per cent in 2018.

These estimates use what’s called the Supplemental Poverty Measure, a decade-old metric that attempts to better incorporate all the resources available to poor families, and the Urban Institute’s number for 2018 is a bit higher than the 12.8 per cent SPM rate estimated by the Census Bureau and the 12.7 per cent estimated by Columbia University’s Center on Poverty and Social Policy based on Census data. Measuring poverty is complicated, especially over time. But the trend does seem to be headed in the right direction.Because the expected drop in poverty in 2021 owes so much to federal aid, some of it could prove temporary. But gains for the lower part of the income distribution are also coming from the private sector in the form of higher wages.

It’s hard to know what to make of the 2020 data, which may be skewed by low response rates to government surveys and big job losses among low-wage workers. But the high wage growth before the pandemic and so far this year seems to be for real, and all the anecdotal evidence from the job market points to it continuing. In previous economic expansions the wage gains at the bottom of the scale came only after years of job growth; this time it seems to be the norm from the get-go.

A full picture of the pandemic’s impact on income and wealth inequality will have to wait on more data. The most recent income-distribution numbers available are from 2019 in the case of Census Bureau survey data and 2018 for tax statistics from the Internal Revenue Service. The Census Bureau’s estimate of the Gini coefficient, a measure of how equally incomes are distributed that comes out to one if one person gets all the money and zero if everyone earns the same amount, has been rising at a somewhat slower pace in the 2000s than in the 1980s and 1990s. It even fell slightly in 2018 and 2019, although it seems too early to make much of that.Such broad measures of inequality have taken something of a backseat in recent years to the statistics on income and wealth at the very top compiled from tax data by economists Thomas Piketty, Emmanuel Saez, Gabriel Zucman and others. Saez and Zucman’s most recent updates of the data (and revisions in response to critiques from other economists), show a decade-long plateau in the share of income going to the top 0.1 per cent and a more recent halt in wealth-share gains.

Given what we know from other sources it seems pretty likely that the income and wealth shares of the top 0.1 per cent rose in 2020, and given that I don’t have a great explanation for why inequality was declining — or at least somewhat on hold — before the pandemic, I’m not going to make any confident predictions here about what it will do after.

One thing that is clear from the above chart is that inequality can decline, and decline by a lot. Amid the great equalization of the mid-20th century, economist Simon Kuznets (another Nobel winner) wrote an influential paper in 1955 speculating that it might be in the nature of economic modernization and industrialization for inequality to at first increase and then decline. After decades of rising inequality in the US and other rich countries, such examinations are now more likely to conclude that a growing gap between rich and poor is an inevitable trait of capitalist economies (Piketty’s “Capital in the Twenty-First Century”) or human society in general in the absence of calamity (Scheidel’s book). They may be right! But again, I wouldn’t be sure of it.

By: Justin Fox | Bloomberg Opinion

Source: Did inequality increase during pandemic? Wait for more data to get answers | Business Standard News

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Dysfunctional Financial Markets Are Making Inequality Worse All The Time

Toy man looking up at another toy man standing on big pile on coins

The global market in government bonds has been bleeding red lately. “Bond market screams for help but no one answers”, says Bloomberg. It is “the worst start to a year in bonds since 2015”, according to the Financial Times.

Though bonds have been declining since last summer, the sell-off became a lot more violent in February. This meant that the yield on ten-year US Treasury bonds, which is inversely related to the price, rose by around 60% to peak at over 1.6% a couple of days ago, before falling back to 1.5% at the time of writing.

The US ten-year strongly influences the price of everything from mortgages to business loans in the US, and by extension around the world, so such a sharp rise has the potential to reduce borrowing and weaken the economic recovery from COVID –especially when there is so much debt in the global system. The world’s rampant stock markets responded by going into reverse in February as they factored in higher interest rates, as well as higher production costs because of surging commodity prices.

Bond prices can fall for several reasons. It can mean that the market thinks that economic growth is going to pick up (meaning investors shift their money into riskier investments). But it can also reflect fears that inflation is on the way without much accompanying economic growth, meaning that interest rates need to go higher so that lending is still profitable.

In the present case, it is a bit of both: the rollout of the vaccination programmes has made many observers more optimistic about the prospects of a recovery. But the rise in the price of commodities like oil, copper and coffee is more about pandemic-related supply issues than because this optimism has prompted a step-change in demand.

When Fed Reserve Chairman Jay Powell failed to announce any immediate intervention to put a floor under the sell-off in bonds during a public appearance in early March, it appeared to trigger more selling – a sign that falling bond prices have been more a reflection of fears than optimism.

Interestingly, in the hours since the new US$1.9 trillion (£1.4 trillion) US stimulus package has been agreed by Congress, the bond market and stock market have both been rising. Though there have been fears that sending US$1,400 stimulus cheques to most Americans will cause a further surge in inflation, the extra consumer demand will also prop up the economy. On balance, then, this appears to have been received as a net positive by the markets.

QE and perverse consequences

Any attempt to explain what is happening in the markets needs to be in the context of quantitative easing (QE). Shortly after the first wave of lockdowns in early 2020, central banks stepped in to help their national economies. They announced huge new QE plans in which they would create new money with which to buy government bonds and other financial assets. This drove up bond prices and hence kept yields (and interest rates) at very low levels to encourage as much borrowing from consumers and businesses as possible.

Most central banks originally began QE programmes after the 2007-09 financial crisis (besides the Bank of Japan, which began a few years earlier). This was primarily to help companies get access to capital to boost their business, in the hope that they would then hire staff, which would help to reduce unemployment rates that had been sent soaring after the crisis.

However, some companies took advantage of these low interest rates in another way: they borrowed cheaply and invested it in the stock market. With investors doing likewise, this has helped to drive the relentless rise in global stock markets over the past decade. It also helps to explain why these markets have been mainly climbing ever since the COVID panic sell-off of March 2020.

In the coming months, economies are going to reopen, but interest rates are to stay low. Fed Reserve Chairman Jay Powell may have declined to announce any new interventions to date, but it is fairly clear that he will only let yields rise so far.

This gives investors a great opportunity to continue taking advantage of the situation. So long as the gain from your investment in stocks is greater than the interest rate you have to pay on your borrowings, you are a winner. Better still, buy stocks in a company such as Apple whose bonds central banks have been buying as part of their QE activities. Apple is still trading at over double the lows of March 2020, even after the February correction.

But if you are not in a position to take advantage of this one-way bet, you are a loser. The central banks have already created a situation where major institutions like the biggest hedge funds and investment banks are achieving record earnings while many families are sinking into poverty on the back of the pandemic.

The endless stimulus is in danger of creating an ever more divided society. While it is true that the latest US package (and the support measures announced in the UK budget) will temporarily help those struggling during the pandemic, the shot in the arm is also another way of propping up markets that seem too overvalued to fail.

And if they can no longer survive without central bank life-support to keep bond yields low, the question is how to prop up the markets without exacerbating inequality. It’s not clear that anyone has the answer. It might be that a shift to a much more redistributive politics to offset the widening gap between rich and poor is about the best that we can hope for.

 

By: Lecturer in Finance, University of Bath

Source: Dysfunctional financial markets are making inequality worse all the time – here’s what to do about it

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Coronavirus Pandemic Reveals Our Economic Inequality

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The coronavirus crisis reveals deep fissures that have long existed in our country. “Economic Dignity,” a new book by Gene Sperling, a former national economic advisor to Presidents Bill Clinton and Barack Obama, provides important insight into some of those chasms related to economic inequality. In a vivid and timely way, Sperling’s book highlights the “dissonance between our nation’s labeling of workers as ‘essential’ and ‘heroes’ and their limited wages, benefits and ability to organize.”

The numbers Sperling presents tell some of this story. Almost half of nurses and home health care workers don’t have a single day of paid sick leave, and a million health care workers lack health care coverage themselves. Nurses and orderlies, including those treating Covid-19 patients, are risking their lives every day for an average hourly wage of $14.25. Home health care workers are paid much less, averaging only $11.63.

The concept of dignity is an essential element of the modern human rights landscape. The core international human rights document, the Universal Declaration of Human Rights, adopted by the United Nations in 1948 under Eleanor Roosevelt’s bold leadership, starts with “recognition of the inherent dignity and of the equal and inalienable rights of all members of the human family” as the “foundation of freedom, justice and peace in the world.” Though not an explicit part of the U.S. constitutional tradition, human dignity has been invoked as central to our conception of rights by several Supreme Court Justices in the modern era, including William Brennan and Anthony Kennedy.

Sperling’s test for economic dignity rests on three common sense pillars. First, the ability to care for one’s family without economic deprivation or desperation. Second, the opportunity to pursue one’s potential with a sense of purpose and meaning. Third, the ability for each of us to contribute and participate in the economy with respect, free from domination or humiliation. This third pillar, in particular, deserves much greater attention in our world, where economic inequality has become the order of the day.

Many forces contribute to the significant gap between rich and poor. Automation, for example, has displaced millions of mid- and low-wage workers here and abroad. The outsourcing of labor is also a major driver, both in this country and through ever-expanding global supply chains. While both strategies yield significant cost savings to companies and consumers, and can offer jobs to workers around the world, businesses often fail to dedicate sufficient attention and resources to offsetting the negative consequences. Limited government oversight and regulation has contributed to the wealth gap as well. And so has the gospel of shareholder primacy.

Shareholder primacy holds that the central purpose of any business is to maximize shareholder value. Though it now drives investment and business decision-making, shareholder primacy didn’t dominate until the 1970s, when Milton Friedman and his colleagues at the University of Chicago asserted its centrality as a part of the Chicago School’s broader free-market economic ideology. They premised their arguments generally on the belief that markets are fundamentally efficient and, to the extent they fail to maximize broader social welfare, these are problems for governments to solve. Over the last 50 years, shareholder primacy has become the organizing principle of American business, codified in laws that effectively impose on corporate officers and directors a fiduciary duty to maximize shareholder returns.

While prioritizing shareholders’ interests may make sense in theory, the coronavirus pandemic should lay to rest any doubts about the inadequacies of Friedman’s mantra in practice. The pandemic has shown us that some of our most valuable workers are also our most vulnerable and least compensated. This is partly because the principal drivers of our financial system are not individual investors but huge institutional intermediaries, like the major investment firms and public pension funds. Many individual investors, for example retirees, would favor long-term, socially valuable business practices. But too often institutional investors focus on the more readily measurable dimensions of corporate performance, such as quarterly earnings, which may also serve their own shorter-term investment priorities. The current economic crisis presents an opportunity to address this disconnect and rethink the role of corporations in our society.

This shift was already beginning—at least rhetorically—before the pandemic decimated our economy. In August 2019, the Business Roundtable, a group of 180 CEOs of the largest corporations, called for a “modern standard of corporate responsibility” reflecting “a fundamental commitment to all of our stakeholders,” not just shareholders. Before that, investor Warren Buffett and Jamie Dimon, the Chairman and CEO of J.P. Morgan Chase, rejected what they termed “an unhealthy focus on short-term profits at the expense of long-term strategy, growth, and sustainability.” In 2017, the International Business Council of the World Economic Forum wrote that “society is best served by corporations that have aligned their goals to serve the long-term goals of society.” And Leo E. Strine Jr., the former Chief Justice of the Delaware Supreme Court, has advocated for a more nuanced understanding of shareholder interests and responsibilities than Friedman’s doctrine has come to represent. According to Strine, “to foster sustainable economic growth, stockholders themselves must act like genuine investors, who are interested in the creation and preservation of long-term wealth, not short-term movements of stock price.”

For all of this to change, law and policy must shift. Legally, corporations must be protected from lawsuits when they pursue the long-term interests of the company, its workers, and society, even at a cost to near-term shareholder returns. As Sperling suggests, making decisions “for the welfare of the workers and surrounding community” should not be “damning evidence in a lawsuit” charging a violation of fiduciary duty to shareholders. As he rightly observes, the current structure guarantees that “virtue will not go unpunished.” Instead, virtue must be valued.

To that end, institutional investors will need to be more ambitious in how they evaluate companies and represent the diverse interests of the individuals whose money they invest. So-called ESG strategies that seek to integrate a broader set of environmental, social, and governance concerns offer a promising approach. But the social category needs to be fundamentally re-conceptualized to better measure companies’ efforts to address economic inequality.

In the midst of this horrible health crisis, we have a golden opportunity to reassess our market systems and usher in a new era of longer-term stakeholder capitalism. We owe nothing less to those on the lower end of the economic scale, including our heroic essential workers.

I am the Jerome Kohlberg professor of ethics and finance at NYU Stern School of Business and director of the Center for Business and Human Rights. I served in the Obama Administration from September 2009 until March 2013, as the assistant secretary of state for democracy, human rights and labor. Prior to that I was the longtime executive director and president of Human Rights First, a U.S.-based human rights advocacy organization. I also was a visiting lecturer at Yale and Columbia law schools. I played a major role in shaping U.S. policy from inside and outside of government on issues ranging from refugee and asylum law and policy, to national security and human rights, to Internet freedom, and most recently on a range of business and human rights issues. I chair the board of the Fair Labor Association, which addresses supply chain labor issues in the apparel, athletic footwear and agriculture sectors.

Source: https://www.forbes.com

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