The Economist - USA (2020-11-21)

14 Leaders The EconomistNovember 21st 2020

2 favours reducing interest rates or delaying repayments over cut-

ting the stock of debt. That bias should change. It typically re-

flects accounting conventions in creditor countries rather than

any strong economic rationale. Indeed, investment and growth

respond more vigorously when debts are reduced, rather than

payments lightened or lengthened. And if private creditors resist

doing their share and pursue full payment in the courts, g20gov-

ernments should pass additional legislation to cap the gains that

vulture funds can obtain from litigation. Such laws may look like

clumsy infringements on creditors’ rights. But they can be justi-

fied if a creditor’s prospects for a favourable legal settlement de-

pend on debt relief provided ultimately by taxpayers.

Debt crises can spur innovation in financial instruments as

well as institutions. The Latin American debt crisis of the 1980s,

for example, was ultimately solved only when illiquid bank

loans were turned into tradable “Brady” bonds, named after

Nicholas Brady, then America’s treasury secretary. To ward off fu-

ture crises, the imf and its sister organisations could help pro-

mote further innovations in the kinds of debt a country can offer.

Uncertain times have, for example, inspired new interest in

bonds that automatically pay less when commodity prices tum-

ble or natural disasters strike. Other instruments might pay out

extra when gdpgrowth exceeds a threshold. Some of these in-

struments might need an independent institution to help stan-

dardise terms and referee disputes. Another idea worth explor-

ing is “bendy bonds”, which would let the borrower lengthen

their maturity in a pinch (and defer interest payments) in return

for extra interest at the end of the bond’s extended life. Similar

bonds already exist in the corporate-debt markets, which might

make a sovereign version easier for investors to accept and price.

Mr Brady’s clever idea revolutionised the market for developing-

country debt. The time is ripe for another transformation. 7

C

ovid-19 is notcolour-blind. In England a black man is nearly

four times more likely to die from the disease than a white

man of a similar age. In the state of New York, in the first months

of the pandemic, black and Hispanic children were more than

twice as likely to lose a parent or caregiver to covid-19 than those

who were white or Asian. Few countries publish health data fil-

tered by race or ethnicity, but in those that do the pandemic

seems to be killing more people from racial minorities. 

That confirms public-health officials’ worst fears. Covid-

has laid bare countries’ broad racial inequities in health and ex-

acerbated them (see International section). The virus has also

highlighted the scarcity of decent data on ethnicity or race. Most

governments do not know if the pandemic is hitting particular

groups harder, let alone why. In April a mere 7% of reports pub-

lished in leading journals about covid-19 deaths

recorded ethnicity. In western Europe most

countries collect information only on people’s

“migrant status” (often, where parents were

born), a flawed proxy. 

Covid-19 should be a wake-up call. As in the

debate about gender inequality, awareness of

racial gaps has grown. Both suffer from too

much intuitive argument and too little data. But

whereas there has been something of a gender-data revolution,

many remain uneasy about gathering data on ethnicity and race.

Some countries, such as France, prohibit collecting such data. In

Germany members of the Green party want to remove the word

Rasse, a loaded term for “race”, from the constitution.

Such anxieties should not be ignored. It is no coincidence

that the countries and communities, including Jews and Roma,

most opposed to registering race or ethnicity have often seen

how it can be used to facilitate discrimination, segregation and

even genocide. More recent reminders of the harm that such in-

formation can do in the wrong hands include the war in Ethiopia

(see Middle East & Africa section). 

Yet these are arguments for anonymising data, not ignoring

them. Race itself is not the cause of most health differences, but

it is often closely correlated with policy failures, such as access

to education, health care or jobs, that do cause such disparities.

It is only by understanding the roots of these failings that gaps

can be reduced. Data should be carefully safeguarded and their

use tightly regulated. Although recognising the sensitivity of in-

formation is crucial, so is gathering and sharing it.

Inequalities and injustices can be tackled efficiently only

once they become statistically visible. It was fear of inequality

that led Britain, Finland and Ireland to make sure public bodies

regularly gathered this data. Colombia, New Zealand and Ameri-

ca, among the few places that collect statistics on indigenous

people, use them to distribute federal funding. After Brazil start-

ed collecting data in the late 1990s by five different skin-colours,

the gulf in infant mortality between indigenous and white ba-

bies became apparent. Public outrage led to seri-

ous efforts to start narrowing the gap. The Bra-

zilian example shows that the data need to be

granular. Catch-all terms such as “bame” (Black,

Asian or Minority Ethnic), used in Britain, are

unhelpful. “Non-Western migrant” or “foreign

born” contain even less information.

The data also provide a baseline. This lets you

make comparisons and monitor progress. Cana-

da makes regional ethnicity data available, in part, so that local

employers can see whether their workforce is representative. 

The relationship between ethnicity and other factors, such as

health or school performance, can change over time. The chil-

dren of migrants are often better off than their parents were. And

although the health of black Americans is still worse than that of

whites, the gap is narrowing. The health of poor Americans, by

contrast, remains much worse than that of rich ones and the gap

is widening. So it is crucial also to have data on other characteris-

tics, such as deprivation, education and parental income.

Collecting data is just the start. Governments must then re-

solve to use the information to grapple with the underlying

causes of inequality in health, education or the labour market.

But ignorance should not be a reason to hold back. 7

Wanted: more data

To tackle inequalities, governments need to overcome qualms about collecting information on ethnicity

Race and health

England, covid-19 death rate

Relativetowhitepopulation,logscale

Indian

Bangladeshi

Black African

4x

higher

Twice

as high

Same

rate

Women Men