Wealth Inequality Virus Spikes During the Last Days of 2020

Photograph by Nathaniel St. Clair

In my article, The Wealth Inequality Virus is Surging, written less than two weeks ago, I relied on the Bloomberg Billionaires Index which “is a daily ranking of the world’s richest people.” Using the Bloomberg figures, during the last eight days of 2020, the gains of the U.S. wealthiest ten increased an additional $26.5 billion bringing their total gain in wealth for the year to $346.08 billion, an increase of 47.9%.

As of December 23, the combined wealth of the ten wealthiest was needed to reach the “magic” sum of one trillion dollars. As of December 31, the combined wealth of the nine wealthiest is now more than a trillion. This change was helped by Buffet’s loss for the year shrinking during the last eight days of the year from $4.62 billion to $1.62 billion, and Musk’s wealth increasing another $15 billion.

Here is the Bloomberg amount comparing the figures used on December 23 with those as of December 31.

The wealth of most of these folks is presumably heavily tied to the stock value of a single company such as Amazon, Tesla, Microsoft, Facebook, or Google. Were the stock to have a downward adjustment or crash, much of their current wealth would vanish. This happened in the first quarter of 2020, the beginning of the pandemic, when the wealth of the 1%, according to the Federal Reserve Board, declined by more than $3.3 trillion, almost 10%, from where it stood at the end of 2019.

Here is the change in the price (rounded off) of the stock of some of these key companies. The March price is the lowest price during the year.

The price on Dec. 31 is not necessarily the high for the year. At one point during 2020, a share of Facebook sold for $305, Amazon $3,552, and Tesla $718. Additionally, unlike the other companies listed, owners of Microsoft and Walmart receive small dividends.

The wealth of these folks cannot necessarily be easily and quickly turned into cash. About 44 million shares of Tesla are sold on a typical day the stock market is open. Based on the current price, this comes to $31 billion, limiting how many shares Musk could sell in a given day without causing a likely decline in its price, something he would probably want to avoid. Bezos is in a similar situation in that on a normal day the market is open, 4.4 million shares of Amazon are sold which, based on the closing price on December 31, comes to $14.3 billion.

Why Has the Wealth of the Big 10 Increased During the Pandemic?

There are many factors to account for the rise in the wealth of the big ten as a group, and the increasing stock prices. They include the market dominance of their companies, the new needs that have developed during the pandemic, and government actions including the Trump Tax cut, the stimulus bills and the Federal Reserve Board keeping interest rates extremely low. With interest rates low, people with money to invest are inclined to move it out of certificates of deposits, savings accounts, and bonds into stocks putting upward pressure on their prices.

Growth in Musk’s and the Big Ten’s Wealth During 2020

In my previous article, I pointed out the increase in Musk’s wealth for the year per day, hour, minute and second based on where it stood on December 23 as representing a whole year. With the increase in his wealth in the next eight days, the changes in these numbers as of December 31 are higher, and actually represent the whole year.

What Should Happen?

Much of the increase in wealth of the big ten represents an increase in the value of their assets which will not be subject to taxation unless the assets are sold. With so many people suffering, how could the government not enact a windfall wealth tax on their obscene increases of wealth during the pandemic, and also go after the indecent amounts of wealth they held before the pandemic? This is money they obviously do not need in order to meet their excessive consumption habits. Just think of how much relief could be provided by accessing this wealth and using it to meet the needs of those who were hurting before the pandemic, and the larger numbers facing greater difficulties now.

Rick Baum teaches Political Science at City College of San Francisco. He is a member of AFT 2121.