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Billionaires Are Eating the Economy

As millions brace for the coming recession, the wealthiest people in the world are only getting richer. That’s a crisis of another kind.

Jim Watson/AFP/Getty Images

Earlier this week, public health researchers projected that one in four Americans would experience hunger and food insecurity in the coming months as a result of the economic crash and mass unemployment set off by the pandemic. Even now, up to 71 percent of people who applied for unemployment benefits haven’t yet received them, and food bank lines are overextended, with car lines stretching for miles in some cases. In the new economic downturn, which so far shows every sign of approaching or even surpassing the Great Depression in severity, the poverty rate in the United States could reach levels not seen in over half a century. 

“The bills are still coming. I’m approaching $2,000 in debt,” Angi Hampton, a newly unemployed hospitality worker, told The New Republic last month. “As soon as this is over, that’s going to be three months of rent, three months of phone bill, and you’ve been out of work.” There is a disaster unfolding—and more disaster coming—for millions of people across the country.  

Yet over a span of three weeks in March and April—right as hospitalizations and deaths were climbing sharply in the U.S.—the country’s billionaires managed to increase their combined net worth by about 10 percent. According to a report from the Institute for Policy Studies, during the same period that more than 22 million people lost jobs, the wealth of America’s billionaires rose by an astonishing $282 billion. “Already, the combined wealth of U.S. billionaires is higher than a year ago, according to our study,” institute scholar and study co-author Chuck Collins wrote. “At least eight of these billionaires have added another $1 billion to their wealth during the pandemic.” Among the billionaires who have gotten richer since the Covid-19 crisis began are a number of health care industry investors, Zoom founder Eric Yuan, and, of course, Amazon CEO Jeff Bezos.

Though $282 billion is a nearly incomprehensible sum of money, for some general context, consider the following: Last week, New York Governor Andrew Cuomo threatened to cut $10 billion in funding to public schools, health care services, and other programs. He also applied for a $4 billion loan from the federal government to replenish the state’s unemployment benefits, now strained by mass layoffs. In April, the postal service, an institution now embroiled in a bitter dispute with the Trump administration over funding, asked for $50 billion to stay afloat. Several states are now anticipating budget shortfalls ranging from $1.1 billion in Arizona to as much as $15 billion in New York. And in 2018, Supplemental Nutrition Assistance Program and other food assistance benefits cost $68 billion in total. Billionaires’ earnings on paper over the period of less than one month, in other words, could have covered all of these programs, with money left over.

Over the last few weeks, Republican legislators, egged on by a handful of fringe but vocal demonstrators, have petitioned for a swift end to statewide stay-at-home mandates in order to restart the economy. But the vast gulf between the rich and poor—now made all the more apparent by the uneven effects of the pandemic—will likely be more detrimental to the country than any extended shutdown. Though the federal government did temporarily loosen its purse strings to pass a relief package, the usual deficit hawks have already started to circle, even as the stimulus has fallen short for small businesses and workers. If they have their way, a post-pandemic program of austerity only promises to exacerbate the already miserable consequences of the coronavirus for millions.

Even in the face of this grotesquely unequal distribution of money and resources, at least one billionaire has enjoyed a recent blitz of good press. In recent weeks, Bill Gates, who warned about the possibility of a coming pandemic a few years prior in a TED Talk and several papers, and has donated at least $250 million through his foundation to coronavirus testing and vaccine research, has emerged as a kind of benevolent billionaire. (Move over, Warren Buffet!) Just this week, in fact, Governor Cuomo announced a new partnership with the Gates Foundation to “reimagine education” through the development of new forms of education technology and digital learning tools in the aftermath of school closures. “The last few months have been an incredibly stressful time full of change, but we have to learn and grow from this situation and make sure we build our systems back better than they were before,” the governor said in a statement. 

But public-private partnerships in education have notoriously undermined public schools, and billionaires, judging by all evidence so far, are quite bad at redistributing their own wealth. While a few have pledged small percentages of their fortunes to fight the virus, most have held fast to their wealth. And as Theodore Schleifer recently wrote in Vox, foundations—billionaires’ preferred vehicles for giving away their money—tend to spend only a tiny fraction of their bloated budgets—often no more than 5 percent, or their legal obligation. Philanthropy, no matter what its opportunistic champions might insist, won’t save us. 

Prior to the outbreak of the coronavirus, though, there was some percolating public interest in soaking the rich—rather than simply pleading for their crumbs—and a number of Democratic candidates, most notably Bernie Sanders and Elizabeth Warren, floated plans to do just that. (Even if modestly.) Over the last several years, economists including Thomas Piketty, Emmanuel Saez, and Gabriel Zucman have risen to prominence for their work on economic inequality and have helped policymakers craft plans for redistributing wealth. In their 2018 book, for instance, Saez and Zucman argued that billionaires paid an effective lower tax rate than the bottom half of American households, and proposed sharp increases in tax rates for both corporations and wealthy individuals to counter growing inequality.

It’s hard to take seriously the pundits who have described large tax hikes as unfairly punitive when the life and death consequences of failing to act are so clear. Just as the horrific toll of the pandemic on the most vulnerable is less an inevitable consequence of nature than it is the product of an unequal economy, the surging wealth of the top 0.01 percent during the coronavirus is little accident. And they know that, too. In an April letter to Amazon shareholders addressing the coronavirus, Jeff Bezos quoted the late author Dr. Seuss, who once wrote, “When something bad happens you have three choices. You can either let it define you, let it destroy you, or you can let it strengthen you.” Bezos was presumably speaking of Amazon’s profits, but as Amazon workers risk their lives and die to feed that purpose, it’s clear that, at least for them, he’s chosen destruction.