Pandemic Made the Rich a Lot Richer
By: Aravind Sanjeev
Tags: Coronavirus, Wealth, Inequality, Corporate Culture, Capitalism

Pandemic Made the Rich a Lot Richer

While 40 million Americans filed for unemployment, the world’s billionaires combined wealth increased to $10.2tn. Nothing is fair if the system genuinely favors the wealthy at the expense of the poor. Aravind Sanjeev Follow Dec 21, 2020 · 5 min read

An illustration in protest to capitalism. Image for representational purpose only.

Read the original post in humaneer.org

Earlier this year, UK-based charity group Oxfam put together a study that came to some eye-opening conclusions. 22 richest people in the entire world have more wealth than the entire women in Africa. In the entire globe, women and girls put 12.5 billion hours of unpaid work each day. This “unpaid” work contributes to over $10.8 trillion every year to the global economy. That’s more than three times the size of the global technology industry.

This study came out in Jan 2020 and ever since then, it has been an upward rollercoaster for the world’s richest while a big spiraling down for the common and poor. During the height of the pandemic from April to July, billionaires’ net worth increased by over 27.5%. By the end of July, billionaires’ net worth has peaked at over $10.2 trillion. The previous peak was $8.9 trillion reached at the end of 2017. Tens of millions of people across the world lost their job filed for unemployment during the same period. In America alone, billionaires’ wealth increased by $637 billion while over 40 million Americans filed for unemployment.

The richest person in the world, Jeff Bezos’ net worth rose by over $48 billion. Former Microsoft CEO Steve Ballmer’s net worth increased by over $17.2 billion. Elon Musk increased his net worth by $17.2 billion.

Although this might look like lucky people going through lucky times, that is only partially true. The world’s capitalist system allows the richest to thrive on the top floor and deliberately as a matter of policies. Between 2009–2012 in the United States, income gains of the bottom 99% only grew by 0.4% while that of the top 1% grew by over 31.4%. This is after the 2008 financial crisis. Govt spend over $700bn to buy non-performing assets from banks and corporations while only $75bn was spent on homeowners to reduce interest payment.

When the stock market finally bounced back, the wealthy had a lot more fortune to invest in. Their wealth allowed them to take much bigger risks. While the commoners were stuck with bad loans and interests. The top 1% reinvested their amount to buy out stocks which were skyrocketing after the 2008 downfall.

This created a strong upward trend in stock price that lasted until the pandemic hit in 2020. Now the cycle is repeating. The government is pouring hundreds of billions of dollars to banks and corporates to ease their troubled assets. The rock bottom stock prices that have been hit during the pandemic have allowed the riches to acquire it on a massive scale. Now the economy is back on track, their wealth will grow disproportionately high while the people at the bottom will struggle for ages to even recover back to normalcy.

But if we don’t bail out multi-billion-dollar companies, wouldn’t it bring down the whole economy? First of all, no. Second of all, if that is the case, then the capitalist system doesn’t seem to be so reassuring. Multi-billion dollar establishments take more share of the pie mostly because of their resources to lobby with the government. They are well connected to people on the top, they can afford to hire expensive lobby firms, and they can afford to pay the most intelligent lawyers. These are the machinery they use to receive favors from the govt. Common people’s ways to lobby with the top is at best a well-coordinated protest, the chance of it happening is pretty low.

The same Oxfam study also estimates that just taxing 0.5 percent extra on the world’s richest for the next 10 years would equal an investment that is required to create 117 million jobs in sectors such as elderly and childcare, education, and health. A 0.5 extra tax sounds like a measly sum, and it is. This proves that the richest can be taxed way more while still being handsomely rewarded for any kind of success they have achieved.

A study put together by economists in IMF and other institutions found that an individual from the 75th percentile of wealth distribution who invested $1 in 2004 will earn $1.50 by end of 2015. But if an individual from the top 0.1% of wealth distribution invests the same amount, it will yield about $2.40. The top 0.1% gets 90% more return than the bottom 75% on the same invested amount. These high returns allow the rich to grow richer while also preventing them from leaving the top.

This doesn’t stop here. Over $12 trillion of the world’s wealth is hidden off-shore by multinational corporations and wealthy individuals. These come through investments in empty corporate shells. Citizens of unstable oil-producing countries make the most of this with about $7tn of personal wealth stashed in tax havens. This figure is larger than the net worth of all the billionaires combined which is currently at $10.8 trillion.

A lot of ordinary people tend to think that life is not fair. Yes, life is definitely not fair. But there is a difference in fairness affected by the nature of life compared to deliberate unfairness that is instilled in us by the system. Capitalism might help lead innovation and generally improve the quality of life for everyone. But it is only fair when everyone can compete on the same level. Every single person should have the same access to govt programs. Every single person should get the same risk-adjusted rate of return. Every single person should receive impartial access to financial data. Yes, large investors get better and more lively access to financial data with their institutions.

Currently, we are in a system where the rich is stuck in the top 1%. If large companies fall dramatically, it will affect the entire economy. So the government is forced to lend billions of dollars because these corporates are too big to fail. Then this cycle continues. The people on the bottom receive next to nothing and are told to be self-made. Even worse, we are asked to sympathize with the richest for the path they have traveled.

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