Feminist emphasis on the everyday/lived experience can’t explain macroeconomics

(Brigitte, Emeritus Professor of International Political Economy at the Institute of Political Science at the Westphalian Wilhelms University in Münster, Germany COVID-19 and the gender dilemma: blind spots in both macroeconomics and feminist economics in

Handbook on Critical Political Economy and Public Policy Edited by Scherrer, Garcia, and Wullweber)

Once again, the COVID-19 pandemic has turned a spotlight on the low or even non-existent female representation in the top decision-making process of important global and EU institutions (Schuberth & Young, 2011). This time around, feminist academics, climate, digital and gender activists, social and print media have highlighted that the pandemic hit women hardest, widening the gender–wage gap, the gender–care gap, and the gender–position gap (Allmendinger, 2021; Bakker, 2020; Klatzer & Rinaldi, 2020). The numerous Zoom webinars organized since the outbreak of the pandemic by global, national, local feminist organizations, academic institutions, non-governmental organizations, think tanks, and political parties in national and EU parliaments have highlighted the need to focus on women’s unique needs and perspectives. Yet, while this public engagement is laudable, the feminist lens in ameliorating the social consequences of the pandemic is equally blind in its neglect of how the macroeconomy fundamentally influences the productive capacity of the economy. Much of the writing of feminist economists and sociologists is located at the micro-level of the care economy, focusing on the decline of public goods, shifting the burden to female household members to increase non-market production in terms of unpaid labor and care work (Bijl, 2020; efas, 2021; Gender5+, 2020; Isele & Dubois, 2020; Women’s Budget Group UK, 2020). I will first briefly highlight some of the changes in fiscal and monetary policy, how these policies are discussed in feminist economic texts, and subsequently show how monetary and fiscal policies are likely to impact women’s and men’s economic lives. Fiscal policy refers to the national parliaments’ power over taxation and expenditures as well as issuing debts for government deficit financing. Monetary policy, as defined in conventional economic textbooks, is set by central banks targeting the supply of credit, thereby influencing the resources available to financial institutions that extend credit and loans. Through targeting the rate of interest and the exchange rate, central banks influence aggregate demand (Heintz, 2019). Yet, these textbook prescriptions have lost their desired effects since the financial crisis. Targeting price stability has failed to come close to or near the 2 percent annual inflation target. In recognition of this failure, Jerome Powell, the Chair of the US Federal Reserve (the Fed), has recently announced a move to a ‘flexible average inflation targeting regime’ (Powell, 2021, n.p.). Flexible means that the Fed is no longer tied to a formula of 2 percent inflation annually, and that maximum employment is a broad and inclusive goal (ibid.). The shift to a largely privatized finance-dominated capitalism has not only resulted in the largest financial crash in 2007 since the Great Depression, but has also put into question the control central banks have over inflation targets. While there is much disagreement as to why the inflation rate has not responded despite central banks injecting the markets with huge amounts of liquidity, hoping to accelerate economic growth and financial stability, the fact remains that the ‘new normal’ (El-Erian, 2016) of low growth, rising inequality, political dysfunction, and social tension has been made worse as a result of the pandemic. Thus, it is imperative that feminist economists link the everyday gender challenges of high unemployment and rising inequality, the disintegration of trust in political institutions and the growth of right-wing radicalism to the changing landscape of macroeconomics to understand how the shift to a finance-dominated capitalism has affected different classes of women and men in dissimilar ways (Bakker, 2020; Young, 2019). In response to the introduction of quantitative easing (QE) by the Fed, its former chair, Ben Bernanke, pointed to a possible link between the increase of asset prices and inequality: The claim that Fed policy has worsened inequality usually begins with the (correct) observation that monetary policy works in part by raising asset prices, like stock prices. As the rich own more assets [on average more men – B. Young] than the poor [on average more women – B. Young] and the middle class, the reasoning goes, the Fed’s policies are increasing the already large disparities in wealth in the United States. (Bernanke, 2015, n.p.) We can thus assume that boosting equity prices drives wealth inequality in times of unconventional monetary policy measures (Domanski, Scatigna & Zabai, 2016). Only a detailed analysis can demonstrate that in the euro area, the UK and the US, bonds, stocks, and mutual funds may figure more prominently in the portfolio of high-income quintiles than in low-income quintiles. Given the large changes in the arena of macroeconomics and finance, it is startling that in a recent publication, Advanced Introduction to Feminist Economics, Jacobsen (2020) states in a sparse two-page overview of fiscal and monetary policy that ‘monetary policy consists of changes in the interest rate, which are caused by increasing or decreasing the supply of money or by direct regulation of the interest rate’ (p. 104). Such a mechanical explanation of monetary policy can be found in any introductory traditional economic textbook. It should have become apparent to any feminist economist that since the financial crisis of 2007–08, central banks in industrial countries have been confronted with a zero-bound interest rate and have largely run out of ammunition to regulate it, except for unconventional monetary policies such as QE. QE is used when the interest rate is close to zero, and when the normal tools of monetary policy are no longer effective. Buying government and commercial bonds on the secondary market adds new money to the economy to provide banks with more liquidity. At the same time, the fall in interest rates has reduced banks’ profitability, measured in terms of net interest income over total assets (Braun & Deeg, 2020) and has also led to virtually zero interest rate returns for deposit owners, negatively affecting many small savers (Metzger & Young, 2020; Young, 2021). In fact, bank customers had to shoulder additional costs since many financial institutions did not lower their overdraft interest rates despite the fact that the prime market interest rates had been close to zero for some time. Given the shift to unconventional monetary policy and its distributive impact, it is thus bewildering why feminist economists have not included these huge macroeconomic shifts in their analyses. A loose monetary policy has rather different effects on women and men than a restrictive or austerity policy. Yet, Seguino (2020) in her recent publication on the gender impact of macroeconomics refers to the handful of papers that have explored the impact of contractionary monetary policy on gendered outcomes. While Seguino mentions that monetary policy is one of the feedback loops that explains gender inequality, there is little information on how finance-dominated capitalism in times of zero-bound interest rates and huge liquidity infusion into the market has changed the distributive effects for women and men. While the increase in asset prices is not exclusively triggered by unconventional policy, nevertheless, studies show that QE may have contributed to higher wealth inequality. Given the uneven distribution of assets within private households and with higher-income households accumulating a disproportionate share of total assets, QE may increase wealth inequalities. Considering that ownership of stocks is in the hands of around 5 percent of the EU population, it may well be that wealth inequality is more prevalent for women and minority groups. If we assume that the rich own more assets than the poor, unconventional monetary policy benefits the wealthier quintile (on average, comprising more men) at the expense of the poorer strata of society (on average, comprising more women; Metzger & Young 2020; Young, 2021). Accordingly, the distributional impacts of QE should be of concern to central banks, but also to feminist economists, since the role of money is one of the most important transmission channels between monetary policy and household wealth. That more work must be done on monetary policy to understand the transmission channels that affect women and men differently is surely an understatement (see Heintz, 2019; Jacobsen, 2020; Seguino, 2020). The theoretical and structural neglect of gender and intersectional linkages needs to be explored further to deepen our understanding of the transmission channels of monetary policy, and in particular QE, to identify the different impacts it has on income and wealth inequality among different gender and minority groups, different countries and regions, and different economic structures. (70-2)