A year ago, on Martin Luther King Day, Otis Rolley, former senior vice president of The Rockefeller Foundation’s Economic Equity Initiative, wrote:
Over these past brutal 12 months, while the 10 wealthiest men in the world have added $347 billion to their collective net worth, the poor have become poorer, with nearly 8 million Americans falling into poverty since this summer.
If Dr. King were here today, witnessing the national response to the pandemic and the economic gutting of so many American families, I believe he would not mince words. He would call out America for its hypocrisy.
We may be economically rich, he would say, but we are morally destitute.
The billionaire bonanza since the outbreak of the COVID-19 pandemic was not exclusive to the United States. Using data compiled by Forbes, the anti-poverty group Oxfam reported that the total wealth of billionaires around the world increased by more than $5 trillion—from $8.6 trillion in March 2020 to $13.8 trillion in November 2021. It was a bigger increase than in the previous 14 years combined.
“Billionaires have had a terrific pandemic. Central banks pumped trillions of dollars into financial markets to save the economy, yet much of that has ended up lining the pockets of billionaires riding a stock market boom,” Gabriela Bucher, Oxfam’s executive director, said in a press release.
“Inequality at such pace and scale is happening by choice, not chance,” she added. “Not only have our economic structures made all of us less safe against this pandemic, they are actively enabling those who are already extremely rich and powerful to exploit this crisis for their own profit.”
According to a March 2021 report released by the Institute for Policy Studies, which has been tracking the wealth of America’s billionaires, the combined wealth of the 657 American billionaires increased by more than $1.3 trillion, or 44.6%, since the pandemic lockdowns began a year earlier. Almost 80 million lost work between March 21, 2020, and March 20, 2021, and 18 million were collecting unemployment on Feb. 27, 2021. Chuck Collins of Inequality.Org reports:
“Never before has America seen such an accumulation of wealth in so few hands,” Frank Clemente, executive director of Americans for Tax Fairness, said in a Dec. 9, 2020 Inequality.org report. ”As tens of millions of Americans suffer from the health and economic ravages of this pandemic, a few hundred billionaires add to their massive fortunes.”
From March 2020 to March 2021, the numbers of U.S. billionaires increased from 614 to 657. In 2022, the number of U.S. billionaires reached 735, according to Forbes. But the numbers later dropped slightly due to declines in the stock market. Among the former billionaires is Kanye West, whose net worth fell from $2 billion to $400 million after companies and individuals cut ties with him because of his antisemitic comments, according to Forbes.
In 2022, the world’s billionaires lost $1.9 trillion, putting their collective wealth at $11.9 trillion as of Dec. 9 according to estimates by Forbes. This was due to stock market declines, the war in Ukraine, and soaring inflation. The biggest losses were suffered by the world’s 300 or so tech billionaires. American billionaires lost $660 billion. But there’s no need to shed any tears for the world’s billionaires since collectively they are still ahead by more than $3 trillion since the start of the pandemic.
And in the U.S., as of Nov. 21, U.S. billionaires had a combined wealth of $4.48 trillion, an increase of $1.5 trillion compared to mid-March 2020, drawing on Forbes’ billionaire database. Combined U.S. billionaire wealth prior to the pandemic was just under $3 trillion, according to a report by Inequality.org, a project of the Institute for Policy Studies.
And all of that was on top of the huge benefits for billionaires from the 2017 Trump tax cuts. New York Times op-ed columnist David Leonhardt wrote in Oct. 2019:
”For the first time on record, the 400 wealthiest Americans last year paid a lower total tax rate — spanning federal, state and local taxes — than any other income group, according to newly released data.”
Inequality.org said that among the billionaires gaining the most from the pandemic were those “profiting from increasing dependence on cloud-based technologies, online retail, drug research, telemedicine, video-conferencing – services that have become essential services during the pandemic.”
The poster child for the billionaire pandemic bonanza, of course, is Elon Musk. In March 2020, Musk was in no position to even dream of buying Twitter, with Forbes estimating his real worth at a paltry $24.6 billion. A year later, in March 2021, Forbes estimated that Musk’s real wealth had soared to $162.1 billion, a 559% increase. Musk’s fortune to date peaked in November 2021 at $340 billion making him the world’s richest man, according to Bloomberg’s Billionaire Index.
After Musk’s $44 billion Twitter purchase fiasco and the corresponding plunge in Tesla share prices, Musk now must get by on a fortune of $132 billion, according to the latest data from Bloomberg’s Billionaires Index. That makes Musk the first person in history to lose $200 billion, according to Bloomberg.
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So how did U.S. billionaires pull off this huge increase in wealth in the midst of the pandemic? The Trump administration’s response to the pandemic itself was an unmitigated disaster (except for vaccine development) as the U.S. suffered through some of the highest infection and death rates among developed countries. But Trump was successful in shoring up the stock market—in large part out of self-interest because he felt a strong market would bolster his chances in the presidential election.
On March 16, 2020, as the coronavirus pandemic took hold, the Dow Jones Industrial Average plunged 3,000 points in a single day, according to Investopedia, which noted the following milestones:
—Nov. 16, 2020: The Dow returned to its pre-COVID-19 high, jumping to a level of 29,950.44.
—Nov. 24, 2020: The Dow exceeded 30,000 points for the first time, closing at 30,046.24.8.
— Jan. 5, 2022: The Dow hit its all-time high of 36,952.65.
Now contrast this rapid recovery with what happened in the Great Recession of 2008. The Dow fell by 54% from October 2007 to March 2009. It wasn’t until March 2013 that the Dow fully recovered, according to Forbes. U.S. billionaires saw their fortunes decline during the Great Recession along with everyone else.
But economists came up with a new term—a “K-Shaped Recovery”—to describe what happened in 2020. The diverging strokes of the letter K represent the differing fortunes of the haves and have nots. Peter Atwater, a lecturer at William & Mary University in Virginia, described it as “stacked inequity on one side and stacked privilege on the other.”
Anyone who lost their job and had to deplete their 401K retirement account to make ends meet had to pay income taxes on the withdrawal. But affluent Americans who were able to work from home and didn’t have to dip into their retirement accounts saw their assets increase in value. Billionaires saw their fortunes balloon from the increased value of stocks and other assets they owned which were not counted as taxable income unless they sold them.
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Trump managed to avert a stock market meltdown when he signed the $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act in late March. New York Times columnist Paul Krugman wrote in August 2020 that it was actually “very good policy” because some of the key provisions reflected Democratic proposals.
The Federal Reserve adopted a monetary policy to stabilize financial markets, which spurred the stock market’s dizzying rise. These included cutting the federal funds rate to near zero to lower the cost of borrowing for households and businesses., low interest loans to securities firms, and quantitative easing—large purchases of U.S. government and mortgage-backed securities to keep credit flowing.
The COVID-19 pandemic has only deepened the income and wealth inequality gap in the U.S., which was already higher than in almost every other developed country. President Joe Biden tried to address the inequality gap with his ambitious Build Back Better economic agenda, but many of the key anti-poverty proposals such as expanding the Child Tax Credit got blocked in the Senate.
The bonanza for billionaires since the start of the pandemic is good cause for adopting a wealth tax as advocated by Sen. Elizabeth Warren and other liberal Democrats in a March 2021 news release. Warren said the proposed Ultra-Millionaire Tax would bring in at least $3 trillion in revenue over 10 years—without raising taxes on the 99.95% of American households that have net worth below $50 million.
“The ultra-rich and powerful have rigged the rules in their favor so much that the top 0.1% pay a lower effective tax rate than the bottom 99%, and billionaire wealth is 40% higher than before the COVID crisis began. A wealth tax is popular among voters on both sides for good reason: because they understand the system is rigged to benefit the wealthy and large corporations,” Warren said.
A year ago, Indivisible SF posted an essay titled “Let’s Keep Pursuing Dr. Martin Luther King’s Dream of Economic Justice.” On April 4, 1967, in a speech at Riverside Church in New York City, Dr. King said: “We must rapidly begin the shift from a ‘thing-oriented’ society to a ‘person-oriented’ society. When machines and computers, profit motives and property rights are considered more important than people, the giant triplets of racism, materialism, and militarism are incapable of being conquered. … A true revolution of values will soon look uneasily on the glaring contrast of poverty and wealth.”
The essay noted that in January 1944, President Franklin D. Roosevelt outlined an Economic Bill of Rights for the American people, but he died three months later, so it was never implemented. FDR said Americans should enjoy the right to earn enough to provide adequate food, clothing, and recreation; to have a decent home, adequate medical care and a good education; and the right to adequate protection from the economic fears of old age, sickness, accident, and unemployment.
In his 1944 State of the Union address, FDR said:
“It is our duty now to begin to lay the plans and determine the strategy for the winning of a lasting peace and the establishment of an American standard of living higher than ever before known. We cannot be content, no matter how high that general standard of living may be, if some fraction of our people — whether it be one-third or one-fifth or one-tenth — is ill-fed, ill-clothed, ill-housed, and insecure. …
“We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. ‘Necessitous men are not free men.’ People who are hungry and out of a job are the stuff of which dictatorships are made.
In 1968, Dr. King and the Southern Christian Leadership Conference organized the Poor People’s Campaign to carry on FDR’s vision with an updated Economic Bill of Rights. Indivisible SF wrote:
In the more than 75 years since FDR proposed the original Economic Bill of Rights, Democrats have continued to advocate for those goals. While Republicans have spent billions to depict the idea of spending our taxes to help our fellow citizens as outlandish, unaffordable, and even evil, a century of experience has proven that investing in people lifts the economic prosperity of the entire nation and pays for itself many times over in the long run.
Because economic proposals like Biden’s are so popular, Republicans resort to racism to oppose it. They convince their voters that people-oriented spending would give too much help to people of color, and that therefore Republican voters should be willing, even happy, to suffer as long as it means “those people” don’t benefit. This “divide-and-conquer” political agenda has led to profound income inequality.
In 2018, the Reverend Dr. William Barber II and the Reverend Dr. Liz Theoharis, inspired by Dr. King’s vision, launched a new Poor People’s Campaign in an effort to build a broad, multiracial movement for economic justice. On Nov. 30, 2020, they published a piece titled “Moral Policy = Good Economics“ about the programs needed to lift up 140 million poor and low-income people further devastated by the pandemic. They wrote:
“If America does not address what’s happening with visionary social and economic policy, the health and well-being of the nation is at stake. If poor and low-income people don’t vote and determine who is in office, and if policymakers don’t change course from one-shot policy activism, we will face even greater economic peril. What we need is long-term economic policy that establishes justice, promotes the general welfare, rejects decades of austerity, and builds strong social programs that lift society from below.”