'Heads we win, tails you lose': how America's rich have turned pandemic into profit

As 26 million Americans lose their jobs, the billionaire class has added $308bn to its wealth writes Dominic Rushe and Mona Chalabi in The Guardian


 

Jeff Bezos has seen his wealth increase from $105bn to $130bn. Photograph: Mona Chalabi


Never let a good crisis go to waste: as the coronavirus pandemic sweeps the world, America’s 1% have taken profitable advantage of the old saying.

Some of the richest people in the US have been at the front of the queue as the government has handed out trillions of dollars to prop up an economy it shuttered amid the coronavirus pandemic. At the same time, the billionaire class has added $308bn to its wealth in four weeks - even as a record 26 million people lost their jobs.

According to a new report from the Institute for Policy Studies, a progressive thinktank, between 18 March and 22 April the wealth of America’s plutocrats grew 10.5%. After the last recession, it took over two years for total billionaire wealth to get back to the levels they enjoyed in 2007.

Eight of those billionaires have seen their net worth surge by over $1bn each, including the Amazon boss, Jeff Bezos, and his ex-wife MacKenzie Bezos; Eric Yuan, founder of Zoom; the former Microsoft chief Steve Ballmer; and Elon Musk, the Tesla and SpaceX technocrat.

The billionaire bonanza comes as a flotilla of big businesses, millionaires and billionaires sail through loopholes in a $349bn bailout meant to save hard-hit small businesses. About 150 public companies managed to bag more than $600m in forgivable loans before the funds ran out. Among them was Shake Shack, a company with 6,000 employees valued at $2bn. It has since given the cash back but others have not.

Fisher Island, a members-only location off the coast of Miami where the average income of residents is $2.2m and the beaches are made from imported Bahamian sand, has received $2m in aid.

Its residents seemed to be doing fine even before the bailout. This month, the island purchased thousands of rapid Covid-19 blood test kits for all residents and workers. The rest of Florida is struggling. About 1% of Florida’s population has been tested for the coronavirus, behind the national figure of 4%. The state is also in the midst of an unemployment claims crisis, with its underfunded benefits system unable to cope with the volume of people filing.

The banks that were the largest recipients of bailout cash in the last recession have also done well, raking in $10bn in fees from the government loans, according to an analysis by National Public Radio.

“Heads we win, tails you lose,” said Chuck Collins, director of the program on inequality and the common good at the Institute for Policy Studies and co-author of the new report.

Collins said the pandemic had further exposed fault lines in the US body politic that have been widening the gap between the really rich and the rest over decades.

“The rules of the economy have been tipped in favor of asset owners against everyone else,” said Collins.

By 2016 – seven years after the end of the last recession – the bottom 90% of households in the US had still not recovered from the last downturn while the top 10% had more wealth than they had in 2007.

Throughout the recovery, stock market gains disproportionately favored the wealthy. The top 1% of households own nearly 38% of all stock, according to research by the New York University economist Edward Wolff. Even before the coronavirus hit, homeownership in the US – a traditional source of wealth growth – was well below its 2004 peak.

Nor did Americans earn more. Wage growth remained sluggish during the decade-long record-breaking growth in the jobs market that came after the last recession.

For black and Latin Americans, the situation is worse. The black-white wage gaps are larger today than they were in 1979.

Meanwhile, billionaires have been unable to put a well-heeled foot wrong. Billionaire wealth soared 1,130% in 2020 dollars between 1990 and 2020, according to the Institute for Policy Studies. That increase is more than 200 times greater than the 5.37% growth of median wealth in the US over this same period. And the tax obligations of America’s billionaires, measured as a percentage of their wealth, decreased 79% between 1980 and 2018.

So when the pandemic struck, those at the apex of the wealth pyramid were better positioned than ever to take advantage of the chaos. The rest, not so much.

Collins has been studying income inequality for 25 years and has seen the really rich win victory after victory. But even he was surprised by how quickly America’s billionaires have turned pandemic into profit. “I still get shocked,” he said.

Generation Y: why young voters are backing the Conservatives

 Young people are supposed to be left-leaning idealists, but polls tell us that today's under-34s don't believe in handouts and high taxes – and they're voting for David Cameron

• 
• • John Harris
  • The Guardian, Wednesday 26 June 2013

David Cameron at a secondary school in Bury in 2010. Photograph: Oli Scarff/Getty Images

If you want a good idea of where Britain might be headed, go to Peterborough. The city centre is smattered with the usual high-street names, and scores of empty shops (51, at the last count). Plenty of people complain about youth unemployment. The area of the city around a thoroughfare called Lincoln Road is a little Poland, smattered with businesses that also see to the needs of people from Portugal, the Baltic states, and more. Mention immigration, and you tend to get two kinds of response: tributes from recently arrived people to the kind of life that's possible in the UK, and angry, sullen opinions from locals who think advantages and opportunity are flowing in the wrong direction.

I spent a few days in and around the city a couple of months ago, and as well as all those issues, I was reminded of another very modern syndrome: the fact that as you progress down the age range, opinions about the job market and welfare state tend to harden, to the point that droves of twentysomethings sound like devout Thatcherites. In my regular trips around Britain for the Guardian's Anywhere But Westminster series, this has become almost a given. Quiz people under 30, in short, and you're more than likely to hear echoes of the kind of on-yer-bike, sink-or-swim values that decisively embedded themselves in British life when they were mere toddlers.

So it was in Peterborough, where I stopped for a chat with a young woman – born and raised in Cambridgeshire, it seemed – who was selling subscriptions to LoveFilm, next to a row of empty retail outlets and a branch of Caffe Nero. "British people are rubbish," she said. "Lads especially need to be pushed into jobs more."

"I think they need to stop letting people into the country, to start with," she went on, and then paused. "And stop jobseeker's, as well. I don't think it's right."

This was a reference to jobseeker's allowance, the benefit that pays unemployed people under 25 the princely sum of £56.80 a week. "There are hardly any people that are willing to go and get any job that's out there, just to say: 'I've earned that money'," she continued. "They want the best, don't they?"

At this point, my lefty, bleeding-heart soul could take no more, and I blurted out a riposte. Don't they just want to be paid seven or eight quid an hour and be treated with some respect?

"I was on £6.55 in my last job," she said. "If you don't want to go to college, start at the bottom and work your way up."

Such are the prevailing opinions of what pollsters call Generation Y, the millions of people born between 1980 and 2000, who have grown up in a country in which postwar collectivism is increasingly but a distant memory, and the free-market worldview handed on from Thatcher, to Major to Blair and Brown and now Cameron, is seemingly as ordinary and immovable as the weather. I have heard much the same stuff in Manchester, Birmingham, Swansea, Brighton and beyond. This is not a view of things, moreover, solely borne out by random vox pops: careful, long-term research highlights exactly the same things, in spades.

Earlier this year, the polling company Ipsos MORI began to publish the fruits of its work on 17 years' worth of polling results, spread across four generations, starting with those born in 1945 or before, and ending with Generation Y. Among the most striking examples of a yawning gap between the generations was their respective responses to the claim that "the government should spend more money on welfare benefits for the poor, even if it leads to higher taxes" – a signifier for the principle of redistribution, support for which has fallen among all generations over the past 20 or so years. Here, though, is the remarkable thing: whereas around 40% of those born in 1945 or before still agree, the numbers tumble as you move down the age range, reaching around half that figure among those aged 33 and under. Similarly, among Gen Y, the claim that "the creation of the welfare state is one of Britain's proudest achievements" is now supported by around 20% of people; when it comes to the prewar cohort, the figure always hovered at around 70%.

 Adele said her tax bill made her: 'ready to go and buy a gun and randomly open fire'. Photograph: Jason Merritt/Getty Images

This, says Ipsos MORI's accompanying blurb, "clearly raises important questions about the future of the welfare state". It certainly does, and the point is fleshed out by poll after poll. In research done by ICM in March, for example, the idea that most unemployed people receiving benefits were "for the most part unlucky rather than lazy" was rejected by 48% of 18- to 24-year-olds, and 46% of 25- to 34-year-olds, who apparently agreed with what we now know as the striver/skiver divide.

Look at the polling data relating to other issues and one thing becomes clear. In many ways, Gen Y is admirably socially enlightened: its support for gender equality and gay rights is overwhelming, and on such ideas as the wearing of traditional dress in state schools, its live-and-let-live mores tower over those of older generations. Moreover, among its younger members, the fusty, nostalgic politics of Ukip seems to have very limited appeal: when the party scored its highest ever ICM poll rating back in May, though its support among the 25-34s stood at 21%, the figure for the 18-24s was a comparatively paltry 8%.

A large share of Generation Y seems to build its opinions around a liberalism that is both social and, crucially, economic. This, conveniently, also forms the core of the modern Toryism espoused by David Cameron and George Osborne.

Which brings us to the next revelation, which reached the media last week. Though the under-34s are less keen on the idea of political loyalty than older cohorts, latter-day Tories have apparently managed to speak to a creditable swath of Gen Y, and pull off an amazing political feat. When Cameron took over the Tory leadership in 2005, the party's support among Generation Y stood at 10%. It has since more than doubled, to 20.5%: when Osborne gets up to deliver his latest spending review and serve further notice that the state must be hacked back, and the economy must somehow be rebalanced between private and public, large numbers of young people will apparently be in full agreement.

One recent YouGov poll put support for the Tories among the 18-24s at 31%, with Labour trailing at 27%. By way of a contrast, Tory support among those aged 40-59 was at 29%, with Labour on 40%. In other words, the time-worn wisdom about politics and the young may be in the process of being turned on its head. Welcome, then, to yet another element of the New Normal, and a sobering fact: when it comes to questions about the welfare state, work and the like, the younger you are, the more rightwing you're likely to be.

At which point, some caveats. I'm a comparatively ancient 43, and it has always seemed to me that my own generation – X, the pollsters call it – has been something of a washout. We seemed to be rendered punch-drunk by Thatcherism, holding on to a vague affection for the postwar welfare state – we could get the dole with no questions asked, after all – and being stunned into silence by the social and political revolution that began in our childhood, and was firmly embedded by the time we reached our 20s. For a time, many of us switched off from politics altogether. On that score, I have always liked a sentence written by that eminent Gen X-er Zadie Smith: "I saw the best minds of my generation accept jobs on the fringes of the entertainment industry."

At least part of Generation Y, by contrast, seems to be not just angry with the ever-rightward drift of politics, but more than prepared to take the kind of action at which most of my lot would have balked. It seems outraged by such issues as the marketisation of higher education, the position of the super-rich, and the all-pervasive effects of austerity. If you doubt this, consider the events of November 2010, when all those students laid siege to the Conservative party's HQ at Millbank, and trashed it, along the way spurning the kind of tepid politics espoused by the leadership of the NUS. Note also the fired-up voices who have given Generation Y a huge political visibility: the columnist and author Owen Jones, the left-feminist Laurie Penny, the people who have clustered around such brilliantly trailblazing groups as UK Feminista, People and Planet and UK Uncut.

And yet, and yet. Might the true views of Gen Y have been better summed up by 23-year-old Adele Adkins, whose response to the brief era of a 50% top rate of tax oozed the stuff of post-Thatcher individualism? Just to recap: "I'm mortified to have to pay 50%. I use the NHS, I can't use public transport any more. Trains are always late, most state schools are shit, and I've got to give you, like, four million quid – are you having a laugh? When I got my tax bill in from [the album] 19, I was ready to go and buy a gun and randomly open fire." Lovely. 

Not that one should set huge store by the often frazzled views of mere pop stars and celebs, but it may also be worth noting that Harry Styles (19) issued a mournful tweet about the death of Margaret Thatcher, and that the Marx-like oracle Rylan Clark (24) described her as a "legend" before affecting to think better of it. At the upper end of the Gen Y age range, consider also the infamous views of Frank Turner, the 31-year-old old-Etonian singer who apparently thinks that when it comes to the relationship between government and the individual, there should be an emphasis on "minimising the impact on ordinary people's lives … allow[ing] them to get on with their lives and not be bothered by the state. Then you've suddenly got a range of things to talk about that are achievable. Like everything from not having ID cards and trying to dismantle the surveillance system we've put together in this country on the one hand, trying to remove government from people's lives, social services. Letting people be freer, health and safety, whatever it might be." On the face of it, that all chimes brilliantly with the aforementioned polling.

But never mind pop stars and singer-songwriters. In the real world, what's often most remarkable about the Gen Y worldview is the way it extends even to people who, on the face of it, might have very good reason to think that economic liberalism and hostility to the welfare state have done them very few favours at all.

Last year, I went to Warrington, the sprawling Cheshire town that shares with Peterborough the sense of somehow being modern Britain incarnate. I was there to have a look at the local version of the Work Programme, the government initiative that aims to get people suffering long-term unemployment back into work, apparently by convincing them that joblessness is usually the result of character failings rather than the state of the economy.

There, I met a 27-year-old man who had just managed to re-enter the world of work, though the only thing he could find was a temporary contract delivering sofas. Around us were shelves peppered with self-help books; the people in charge assured me that even if work seemed thin on the ground, the people they supervised could always look for "hidden jobs". So I wondered: did he think that the fact he was unemployed was his fault?

His reply was just this side of heartbreaking. "Yeah," he said. "I do. I think I should have applied for more. I should have picked myself up in the morning, got out, come to a place like this – tried more. When you're feeling down, you start blaming the world for your mistakes – you feel the world owes you. And it doesn't. You owe the world: you have to motivate yourself, and get out there, and try."

There it was again: the up-by-the-bootstraps Conservatism of Norman Tebbit and Margaret Thatcher, largely unchallenged during the New Labour years, and now built into millions of young lives as a simple matter of fact. Oh, Generation Y. Why? 

Who takes the harshest anti-welfare line? Those on state benefits

I talked to families directly affected by the cuts and many wanted benefits themselves – yet resented anyone else getting them

• 
• • Fern Brady
  • guardian.co.uk, Tuesday 12 February 2013 16.57 GMT

'Many interviewees had internalised a Thatcherite every-man-for-himself mentality'. Photograph: Matt Cardy/Getty Images

 

Recent polls indicate attitudes towards benefits recipients have softened as more information comes out about the impact of the changes to the welfare system. However, having just completed a project with the Joseph Rowntree Housing Trust where I interviewed about 150 families who will be directly affected by the cuts, I found the majority held the kind of attitudes that make the Daily Mail's headlines look positively leftwing.

While the latest British Social Attitudes Survey reflected less support among the overall population for unemployment benefits, what it doesn't tell you is that these anti-welfare attitudes are often held by those most in need of a comprehensive welfare state.

At JRHT I was given the unenviable task of informing people how welfare changes would personally affect them. Often people on the housing scheme were due to lose several benefits – losing their out-of-work employment and support allowance (ESA) as well as having to pay extra money for unusable box rooms as part of the bedroom tax, for example.

Logically, I'd expect those on the sharp end of things to be pro-welfare. But if anything, many interviewees had internalised a Thatcherite every-man-for-himself mentality, wanting benefits for themselves but resenting anyone else getting a handout.

There are almost too many examples to list but the kind of attitudes I heard daily went along these lines: the disabled man thinks it's wrong the drug user down the road gets methadone. The drug user is outraged that the large family next door gets a spare room and hopes they are hit by bedroom tax. The large family is sick of elderly people getting big houses they don't need. The elderly woman hopes these large families are forced to stop having kids once the money dries up. On and on it went in a circle, anger constantly directed at other victims of the coalition government's Welfare Reform Act instead of the politicians and policymakers responsible.

On being told of the cuts, one young mum exclaimed "Good! That means her down the road'll get her money taken away" referring to a resident with severe mental health issues (people with less visible disabilities like hers were all too frequently dismissed as "chancers").

Another tenant vented her frustration that her permanently disabled brother was having his support cut while in the same breath bitterly complaining about fraudulent disability living allowance (DLA) claimants (I contemplated having the comparatively low statistics for fraud tattooed on my face to save time repeating it).

One of the sentences I regularly heard – and was no less startled by each time – was "We're not on benefits." On a daily basis I spoke to people who were in receipt of tax credits, child benefit, ESA, DLA, income support and housing benefit yet still told me matter-of-factly "we don't claim benefits". Over time I understood that what this really meant was that they were striving to define themselves as something other than the endless media presentations of "scroungers".

The value of influencing attitudes towards social inequality is deeply underestimated. If you manage to persuade everyone that poverty is a moral condition and claiming benefits is the symptom, it's a guaranteed way to ensure those handing out the money treat recipients as guilty until proven innocent. Shame is being employed as an ingenious tool to ensure people feel constantly stigmatised. And if you feel undeserving you're hardly going to be forthcoming about what you're entitled to.
This isn't just about votes. The less people believe they're entitled to this money – and they are entitled – the less likely they are to maximise their income through benefits. It's ideal for the government because it fosters an environment in which people are less likely to appeal when their claim is rejected and less likely to support those around them who may be suffering as a result of the welfare changes.

In a way you have to marvel at it. How do you get people to accept a policy that's inexcusably prejudiced against the most vulnerable in society? Make sure they take on the same mean-spirited, self-serving attitude that influenced that policy in the first place. Genius.