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When We Were Socially Distant, Money Brought Us Closer

When We Were Socially Distant, Money Brought Us Closer

Saturday, 19 March, 2022 - 06:00

As the Covid-19 pandemic shattered lives and livelihoods, experts somberly anticipated a decline in philanthropic donations. The World Bank predicted an alarming drop of 20 percent in global emigrant remittances as a result of the economic crisis. After all, the 2008 Great Recession led to reductions in charitable giving as well as a downturn in those crucial monetary transfers that immigrants send home. Yet remarkably, both forecasts failed, as monetary donations surged during the early days of the pandemic and the flow of immigrant remittances proved resilient.


Why did direct cash donations surge and remittances remain stable at a time of such economic fragility and employment precarity? The best explanation is that money took on new social meanings during the pandemic. At a time of excruciating social distancing, when quarantine rules separated us from one another, money became a tangible social connector, bridging the physical gap by allowing us to express concern for intimates and strangers. Notice the paradox: cold cash, the ultimate transactional medium, alchemized into a warm social currency, strengthening multiple social bonds and affirming community solidarity.


Consider the wave of pandemic-inspired charitable giving. In 2020, donations in the United States by individuals, bequests, foundations and corporations reached a record high of $471.44 billion, according to a study by the school of philanthropy at Indiana University. On top of gifts to traditional nonprofits, there was a noticeable surge in direct money transfers, as people gave digital cash gifts to struggling kin, friends, neighbors and small businesses, including more generous tips to workers risking their health, such as grocery delivery workers and even store clerks.


Many others gave money indirectly, ordering takeout from neighborhood restaurants, purchasing gift cards from local stores or continuing to pay workers for services they could no longer provide, such as housecleaning, day care and hair cutting. Crowdfunding campaigns also proliferated to support health workers or help families pay for food, living expenses, medical bills and funerals.


Some Twitter personalities jumped in the fray, offering to pay their online followers’ most urgent bills. Frequently, these pandemic donations involve small sums. Consider, for instance, the author and Times Opinion contributing writer Roxane Gay’s Twitter invitation: “If you are broke and need to stock up on groceries, I will Venmo you $100.”


Newly energized informal mutual aid groups likewise multiplied. Students around the United States created such networks to help their peers pay for housing, medical care or food during the pandemic. Outside any formal university structure, these students raised thousands of dollars in small donations, distributing them to recipients via Venmo or other apps.


The US stimulus checks triggered their own novel gift economy. While for most recipients the government-issued subsidy provided urgently needed funds to cover ordinary household expenses, in 2020 an estimated 11 million to 13 million Americans gave away some or all of their stimulus checks or planned to do so by donating money to charity or family members. Grass-roots organizations like Pay It Forward directed donors’ relief funds to a wide range of worthy causes, such as rent support for those facing eviction and relief for undocumented immigrants. Attempts to quantify how much money Americans gave in this expanded charitable landscape are still in progress.


The resilience of remittances is notable. A 2021 World Bank report of 2020 remittance flows showed that despite economic hardship, remittances to low- and middle-income countries were down by just 1.6 percent from the year before. According to some estimates, a few countries registered increases in remittance flows. The remittance survival matters because in aggregate, these small transfers constitute the most significant capital source for developing economies, ahead of foreign direct investment.


Even in ordinary times, remittances often take priority over emigrants’ own bills and expenses. Indeed, research suggests that most people at both ends of migration streams attach moral significance to remittances and shame to those who fail to pay what’s expected. The financial commitment hardly wavered as the 2020 economic crisis intensified.


As Elias Bruno, a 31-year-old construction worker in Panama City, Fla., who supports five relatives in Mexico, explained it to a Times reporter: “We are struggling here, but it’s worse in Mexico. You have to make every sacrifice to feed your family.” It is fitting that a World Economic Forum report called remittance senders the “frontline workers of economic security.”


How should we make sense of these pandemic money puzzles? Why did pandemic money break the precedent established by the Great Recession dip in donations and remittances?


Jonathan Meer, an economics professor at Texas A&M University who focuses on charitable giving, told me that this time was different because “between government transfers and reductions in discretionary spending, many households found themselves in a much better financial situation during the pandemic.” As a result, many people were more able to donate. And certainly, virtual payment systems such as PayPal, Venmo, Apple Pay and Cash App and sites like GoFundMe, which were not available or not as widely adopted in 2008, allow for cheaper, faster and more personalized money transfers.


But neither technology nor economics can fully explain why, amid financial uncertainty and physical peril, people would part with their money. Why give money away, even without an urgent immediate need for funds? Why not just save it?


Because in our bizarre pandemic world, money served as an unexpected social bridge. After all, despite the profound class, race and gender disparities of the pandemic, everyone became physically vulnerable. This created a collective trauma that did not exist in the 2008 financial crisis and may have resulted in greater solidarity. Heads of government, movie stars and other prominent figures got Covid-19, as did people’s friends, family and colleagues.


In the case of remittances’ resilience, those international monetary transfers persisted not only as financial lifeboats for families abroad but also as powerful monetary representations of nonnegotiable kin and ethnic solidarities.


Money worked so well as a social connector because it is malleable. Pandemic money could serve as ordinary charity, a kind of politicized mutual aid, a personal gift or just a large tip, depending on the social connections between giver and recipient.


According to a paper by Benjamin Soskis, a researcher on philanthropic history at the Urban Institute, the expansion of person-to-person cash transfers with few strings attached can encourage norms supporting “solidarity and trust in the decision making of recipients.” By dropping the suspicion and demands for surveillance and accountability that comes with monetary grants, pandemic donations are another of the ongoing experiments in direct cash aid that could promote a more respectful and effective way to help others.


These charitable donations and remittances preceded the Covid-19 crisis, and these private flows of cash often serve as a stopgap for the dismal limitations of state safety nets. And we still don’t have enough research to predict if and how long pandemic trends will persist. Nor should we dangerously oversentimentalize private transfers, lest it start to be seen as a replacement for dignified state provision of aid.


Yet we can hope that the surprising monetary generosity during the pandemic might lead to more sustained and enduring economic solidarity. Perhaps, “in the use of money to maintain connection,” the anthropologist Bill Maurer speculated, “we might be able to discern a new ethics of exchange.” Imagine if the money that flowed during the pandemic could be a model for how we can be brought closer together and how we can transcend rather than reproduce our nation’s entrenched political partisanship.


Bloomberg


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