Since the 1980s, the issue of inequality in European and American countries has been intensifying, becoming a complex challenge. Inequality has a negative impact on economic growth, social cohesion, crime rates, health status, educational inequality, social trust, and political participation. The COVID-19 has further exacerbated inequality. In response to inequality, European and American countries have introduced a series of transformative policies aimed at promoting the rebalancing of economic efficiency and social equity within the capitalist system, as well as the rebalancing of economic globalization.

1、 Basic facts of inequality in European and American countries before the COVID-19

The basic facts of inequality in European and American countries before the COVID-19 were discussed. Since the 1980s, the neoliberal capitalist economic theory has led to shareholder primacy becoming the norm, with large corporations, Wall Street, and wealthy individuals gaining significant market rule influence. This leads to a weakening of labor bargaining power, stagnant wage growth, while corporate executives and shareholders reap the majority of economic benefits. The productivity growth in the United States from 1979 to 2019 was 72.2%, but the wages of ordinary workers only increased by 17.2%, the wages of the top 1% increased by 179.3%, and CEO compensation increased by 1322.2%. The relaxation of redistribution policies and welfare cuts in Europe and America make it difficult to offset market income inequality. In the mid-1980s to mid-1990s, taxes and transfer payments offset nearly 60% of the widening market income inequality, but by the early 21st century it had dropped to 20%. Income and wealth inequality in European and American countries has continued to rise since the 1980s, mainly manifested by the widening gap between the top group and other groups. The median income in the United States has grown slowly, with high-income households experiencing much higher income growth than middle - and low-income households. The Gini coefficient has increased from 0.412 in 1979 to 0.521 in 2018. Although the overall income gap in European countries is relatively moderate, the level of inequality has also been on the rise in the past 40 years. Wealth inequality is becoming more severe, with wealth increasingly concentrated at the top in European and American countries. The proportion of wealth held by the top 1% in the United States has increased from 25% in 1980 to around 35% in 2020. Although the growth rate of upper class wealth in Europe is lower than that in the United States, it is also growing moderately, but wealth inequality may widen in the future.

2、 COVID-19 aggravates inequality in Europe and the United States

The epidemics of the past 20 years have led to an average increase of 1.1% in the Gini coefficient, an increase in the income share of high-income groups, and a decrease in the employment ratio of people with lower education levels. The COVID-19 has aggravated the inequality in Europe and the United States. The charity organization Oxfam reported that the epidemic may aggravate the inequality in almost every country. The impact of the epidemic on countries with weak social security systems is even more unequal. After the epidemic, the income and wealth gap between the wealthy groups in Europe and America and other populations has widened, and the degree of inequality in the United States has worsened. The epidemic has exacerbated the existing income inequality in European and American countries. The financial situation of high-income families in the United States is not significantly affected, but the CEO salary of companies with the lowest median worker wages has increased, and the income of middle and low-income families has decreased. Income inequality in the UK has been less affected by the pandemic, but the bottom 20% are more than twice as likely to experience economic difficulties as the top 20%. The income inequality situation in EU countries has also worsened, and public attention is focused on eliminating poverty and social inequality. During the epidemic, the wealth level of European and American countries has significantly increased, but not all households have benefited, leading to a widening gap between the rich and the poor. The total wealth and number of billionaires in the United States have increased, and the wealth growth of the top 1% of the population far exceeds that of the bottom 50% of the population. The growth of wealth in the UK mainly benefits middle and high-income families, while the growth of wealth for the poorest families is limited. The epidemic has caused serious erosion of social cohesion in Europe and America, with high levels of public dissatisfaction and frequent protests and demonstrations. European and American people hold a pessimistic attitude towards the future, social trust is facing a crisis, and public trust is showing a downward trend.

3、 Transmission mechanism of COVID-19 exacerbating inequality

The COVID-19 has had a profound impact on European and American countries, especially on the issue of inequality. The epidemic has caused economic activity to stagnate, society to fall into a vicious cycle, and exacerbated inequality. In the labor market, low-income groups face greater risks of employment loss, deteriorating income, and further widening the gap with high-income groups. Low income individuals are more likely to engage in "essential" occupations with high infection risks, such as nurses, cleaners, etc., but their job value is not socially recognized, with low compensation and high unemployment risk. In addition, low-income individuals have low potential for remote work and low wage premiums, further exacerbating income inequality. The economic recession has had a greater impact on low-income groups, resulting in severe job losses and weak employment prospects.

4、 The policy practice of European and American countries to deal with inequality under the impact of the COVID-19

European and American countries have adopted a series of policies and practices to deal with inequality under the impact of the COVID-19. Policy makers recognize the importance of economic prosperity in reducing inequality and are willing to take more measures to promote economic development. The primary task is to ensure the livelihood of the impoverished population and maintain social stability, and to incorporate the elimination of inequality into the post pandemic recovery plan. Policy measures mainly include: strengthening social redistribution mechanisms, such as expanding social security, implementing employment support programs, and directly distributing cash; Intensify industrial policy support to promote the return and re industrialization of manufacturing, such as the Chip and Science Act in the United States and the Chip Act in Europe; Reshaping the global economic governance system, shifting from free trade to fair trade, reforming the international tax system, and redistributing overseas profits of multinational corporations, such as the global tax reform agreement reached by the G7 and G20. These policies reflect the importance and actions of European and American countries in addressing inequality in the context of the pandemic.

5、 Conclusion

Historical experience has shown that laissez faire market forces can lead to widening wealth gaps and increasing inequality. After the 2008 financial crisis, the neoliberal ideology was questioned, and European and American countries faced problems such as populism and social polarization. The COVID-19 epidemic further exposed the limitations of the free market and exacerbated inequality. European and American countries have begun to realize the drawbacks of neoliberalism, recognizing that governments need to actively address the structural problems behind inequality, rather than just providing assistance in times of crisis. Social equity has once again become the focus of public policy, and the foreign economic policies of European and American countries tend towards economic nationalism and trade protectionism. The United States is promoting "friendly shore outsourcing", the European Union has proposed an "economic risk reduction" plan, and developed countries have become the main implementers of trade protection measures. Long term advocates of economic liberalism in European and American countries have become a driving force for anti globalization.