Written By: Rohin Patel
For over a year now, the novel coronavirus has been ravaging our lives and stealing every sense of normality and social freedom. Shortly after its first few cases in the western world, the contagious COVID-19 had earned itself the title of being a pandemic after world governments had not taken enough action against the spread and severity of the virus (8). Since its arrival, the pandemic has caused a shakeup in the world economy and, subsequently, in the lives of people all across the globe. Or has it? Has the pandemic truly been bleak and unfavorable for everyone? Or has it only had these harsh effects on the poor?
Over the past year, many billionaires all over the world have seen large gains in their net valuations, primarily due to opportunities that came about as a result of the pandemic. Of course, this is not true for all billionaires as there were different impacts on each major industry. However, from the start of the pandemic, March 18th 2020, till June 4th 2020, seven of the world’s 50 richest people, increased their net worth by over 50% (7). While these capital gains may not reflect their change in liquidity, it is fair to say the pandemic has been a boon for the ultra-rich.
To highlight the incredible gains the ultra-rich have realized over the course of the pandemic, it is imperative to point out the extreme cases. In particular, the well-known Jeff Bezos and Elon Musk.
According to Forbes, Jeff Bezos, the former CEO of Amazon, had a net worth of $113B in April 2019, and currently has a net worth of $194.7B, as of February 2021 (6). Essentially, Bezos has realized a 72% increase in his net worth, so far, since the beginning of the pandemic. As seen on the line graph above, Amazon’s share price raised from $1830 in March 2020, at the beginning of the pandemic, to $3352 in February 2021. Amazon’s market cap has also soared to $1.69T throughout the pandemic (1). The pandemic has meant Amazon benefited from stronger demand for both its online store and cloud computing services.
Elon Musk, the CEO of Tesla, SpaceX and The Boring Company, is sitting pretty on the top when it comes to capital gains post-COVID. According to Forbes, Musk had a net worth of $24.6B and currently has a net worth of $184.3B, as of February 2021 (3). Compared to Bezos’ 72% increase, Musk has realized an enormous 649% increase in his net worth. In addition, Tesla’s share price skyrocketed from $81 in March 2020 to $852 in February 2021 (9). Bizarrely, it seems as though Musk’s wealth is still far from its potential as it is being buoyed by American politics as the Democrats now control the US Senate. A, potentially, more green-driven agenda is likely to benefit the tycoon and his electric car company.
The Not So Rich
For most of those who are not in the higher tax brackets, the pandemic has offered nothing but financial struggles in its varying intensities. According to a paper published by the Congressional Research Service, the unemployment rate peaked at an unprecedented rate that had not been seen since their data collection started in 1948. It reached a staggering 14.8%, leaving over 44 million people unemployed, meaning it is more comparable with the estimated sizable unemployment rates of the Great Depression than the relatively more recent recession caused by the subprime mortgage crisis (4).
A recent survey conducted by the BBC provides further insight into the struggles faced by not only North Americans, but by people worldwide. The systematic inequalities that have been formed through poor governing over centuries certainly increased and caused more adverse effects for some over others. Poorer countries face the greatest hardship as nearly 70% of people living in non-OECD countries reported drops in income compared to 45% of people living in OECD countries (2).
The inequality does not stop there. There are multiple kinds of inequalities that are being highlighted and even worsened by the pandemic. According to the World Economic Forum, the pandemic is causing income, gender and ethnic inequalities to increase too. The combined wealth of American billionaires increased by over $637B to a total of $3.6T over the course of the pandemic, which is significantly greater than the entire GDP of the African economy (5).
As this pandemic is hitting consumer-facing industries, such as restaurants and small shops, the hardest, women are being hit harder than in previous recessions too. Previous recessions usually hit the manufacturing industry hard, causing unemployment among men to be higher. This time, however, it is different. In the US, 55% of all unemployment was borne by women even though they account for less than 50% of the total workforce (5).
Black-owned businesses generally have weaker underlying finances and far weaker contacts with financial institutions that offer emergency loans and grants. Within a month of the pandemic hitting the US, 22% of small businesses went bankrupt. Of these collapsed small businesses, only 17% were white-owned businesses whereas over 40% were black-owned businesses. This disparity is primarily due to the way pandemic hotspots concentrated more in poorer areas (5).
What is Being Done and is it Enough?
Governments all over the world have been faced with the seemingly impossible challenge of controlling the spread of the virus as well as ensuring their economies can continue to prosper. Richer countries, such as the US, Canada and Australia, have offered stimulus packages to individuals and businesses in their countries. But what of the poorer countries? They simply do not have to capacity to offer stimulus programs to their people. As such, these countries will not only be hit the hardest, they will also have the lengthiest economic recoveries.
Even with the richer countries being able to offer stimulus packages, it is argued that the amounts are not enough to support households and small businesses. Working-class people in these countries that have lost their jobs or are on furlough schemes are still struggling to make ends meet and require more help from their governments.
As billionaires around the world substantially increase their fortunes through these tough times, working-class people are struggling to keep their heads above water. It is vital, now more than ever, for governments to attempt to bridge the ever-growing inequalities by taxing the rich and helping the poor to ensure their survival against this horrible pandemic.
- AMZN Interactive Stock Chart – Yahoo Finance. (n.d.). Retrieved February 07, 2021, from https://yhoo.it/2YRbdrz
- Coronavirus: BBC poll suggests stark divide between rich and poor countries. (2020, September 10). Retrieved February 07, 2021, from https://www.bbc.com/news/world-54106474
- Elon Musk – Forbes. (n.d.). Retrieved February 07, 2021, from https://www.forbes.com/profile/elon-musk/?sh=d233c2b7999b
- Falk, G. (2021, January 12). Unemployment Rates During the COVID-19 Pandemic: In Brief. Retrieved from https://fas.org/sgp/crs/misc/R46554.pdf
- Goldin, I., & Muggah, R. (2020, October 9). COVID-19 is Increasing multiple kinds of inequality. Here’s what we can do about it. Retrieved February 07, 2021, from https://www.weforum.org/agenda/2020/10/covid-19-is-increasing-multiple-kinds-of-inequality-here-s-what-we-can-do-about-it/
- Jeff Bezos – Forbes. (n.d.). Retrieved February 07, 2021, from https://www.forbes.com/profile/jeff-bezos/?sh=1557178e1b23
- Scipioni, J. (2020, June 16). These 7 Billionaires’ net worth is up more than 50% since start of the Covid-19 pandemic. Retrieved February 07, 2021, from https://www.cnbc.com/2020/06/16/billionaires-net-worth-grew-amid-covid-19-pandemic-from-market-lows.html
- Timeline: WHO’s Covid-19 Response. (n.d.). Retrieved February 07, 2021, from https://www.who.int/emergencies/diseases/novel-coronavirus-2019/interactive-timeline
- TSLA Interactive Stock Chart – Yahoo Finance. (n.d.). Retrieved February 07, 2021, from https://yhoo.it/2YUrtIe