Opinion: Pandemic enriches U.S. billionaires
The United States is in its worst economic crisis since the Great Depression of the 1930’s. But the cause of our pitiful situation is not recklessness in the stock market, as was the case nearly a century ago, nor the easy access to credit, as was the case during the first decade of the 21st century. The menace that has disrupted the financial security of so many Americans is an invisible virus that has claimed about 15 million victims in the U.S. and brought about close to 300,000 deaths.
Now, after nine months of the virus running rampant, we still have no national policy to rein in its destructive spread. Its effect on the poor and the working classes has been devastating. After the virus was officially recognized in March, our unemployment rate soared from 3.5 percent in February to 14.7 percent in April. Since then, it has spiraled down to a current 6.7 percent, but it is likely to rise again after temporary workers for the holiday season are laid off and new COVID-19 cases dramatically increase as a result of Christmas and New Year’s celebrations when people will likely relax precautions against infection.
Yet, contrary to historic trends during crises, the stock market is doing well, with the Dow Jones Industrial Average hitting an all-time high above $30,000 this past week. How is that possible? The answer is that most Americans hold no stock or have infinitesimal holdings in the grand scheme of things. The market is really controlled by a relatively small number of fabulously wealthy people.
Since the beginning of the COVID-19 pandemic, the wealth of American billionaires grew by a third. And, while a great many people throughout the rest of the nation suffered from food shortage and fear of eviction, the collective wealth of our billionaires grew by more than a trillion dollars.
There were 614 billionaires in the U.S., and they had a combined wealth of $2.95 trillion in March, 2020. Since March, another 36 people became billionaires, and today’s 650 billionaires have a combined wealth of nearly $4 trillion. Another way of looking at the change is to analyze it in terms of average wealth per billionaire. In March, the average for the 614 billionaires was about $4.8 billion; at the end of November, the average for the 650 billionaires was a little over $6.13 billion.
But, averages don’t really tell the whole story. Certain individuals with truly obscene wealth have done much better than other billionaires. For example, before the pandemic started, Jeff Bezos (Amazon.com) was worth about $113 billion. A week ago, his wealth was estimated at $182 billion. This week, the estimate increased to $187 billion. So, in just one week, Bezos added more to his wealth than most of us can fully comprehend.
Try to imagine spending $20 million per year. After several years, you’d have your estates in southern France, Beverly Hills, and the South Pacific, your penthouse in New York City, and your hunting lodge in Idaho. You’d have your luxury cars, memberships in prestigious clubs, and yachts anchored in various harbors around the world. You’d have your Lear jet with pilot, co-pilot, and flight attendant, a staff of servants, wardrobes of designer clothes made specifically for you, and you’d use Patek Philippe watches as stocking stuffers at Christmas.
Now, try to imagine this. If you had the money that Bezos made just last week alone ($5 billion), in order to spend it all at a rate of $20 million per year, it would take 250 years to exhaust your fortune. Of course, that’s assuming that you were keeping your money sewn into mattresses in a few hundred warehouses. Otherwise, the money, itself, creates even greater wealth.
While you or I get a small fraction of one percent interest on our money in a local bank, people with a lot of money invest it. And the simple mathematics of the investment market is this: Money invested at 7 percent interest will double in about 10 years. So, let’s say that, if you’d held $1 billion of that Bezos windfall to buy all of the above-mentioned stuff over the next decade, you’d still have $800 million in your pocket, and you’d have invested the remaining $4 billion. Well, 10 years from now, that investment will have grown, and at the beginning of the eleventh year, it would be $8.419 billion.
So what? After all, Bezos earned that money. But much of the wealth of the nation’s richest people is not earned; it’s inherited. Let’s take a look at the wealth that has been produced by Walmart stores. Walmart, and later Sam’s Club, was founded by Sam Walton, a farm boy who worked his way through college, served in the Army during World War II, and saved $5,000 of his military pay. He used that, along with a $20,000 loan from his father-in-law, to open a small retail store. He built on the success of that first store to create Walmart.
When Sam died in 1992, the fortune that he had amassed was inherited by his children: Rob (technically, Samuel), John, Jim, and Alice. The current wealth of Sam’s kids rivals that of Jeff Bezos. Rob, Jim, and Alice have a combined wealth of $163 billion. John died in a plane crash in 2005, but his wealth passed down to his son Lucas, Sam’s grandson. Lucas Walton is worth $18.4 billion. John‘s widow, Christy, has $8.9 billion, and Sam‘s niece, Ann Walton Kroenke is worth $7.9 billion. None of these members of America’s wealthiest family have done anything to earn their fabulous wealth.
In a sense, our billionaires are treated like Britain’s royal family. They’re parasites, living off the wealth created by the work of others. And, like British subjects, we honor and defend them to the death.
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Jim Glynn is Professor Emeritus of Sociology. He may be contacted at email@example.com.