It is hardly news that some people have had a “better” pandemic than others. Rocketing demand for online shopping has seen Amazon boss Jeff Bezos top up his fortune by $31bn since the end of 2019, according to the Bloomberg Billionaires Index, a leading global ranking.
In fact, of the 10 people in the index whose fortune has grown the most in 2020, eight are in technology. Chinese-American Eric Yuan has enjoyed one of the biggest rises, of 140 per cent to $8.5bn, but then he is the founder and part-owner of Zoom, the online-conferencing company.
Elsewhere, despite losses in the energy sector, the very wealthy as a class have recovered well. A report with the catchy title Billionaire Bonanza 2020, by US think-tank the Institute for Policy Studies, notes that between March 18 — near the bottom of the pandemic financial dip — and April 10 US billionaire wealth rebounded by $282bn to $3.229tn.
This is not driven entirely by tech. Graeme Hart, New Zealand’s wealthiest man, has added almost $4bn to his wealth in 2020, to achieve a net worth of $11bn. He is an investor who focuses on the paper and packaging sectors, and likes strong cash flow.
That said, there have been some serious losers, notably in industries such as oil, gas and luxury goods, where demand has dived. They include Bernard Arnault, chief executive of French luxury group LVMH; Amancio Ortega, founder of fashion group Inditex; and US investor Warren Buffett. According to Bloomberg, Arnault had lost just under $22bn by early June, Buffett $18bn and Ortega about $20bn. Buffett has said he believes the US will recover, although he has ditched his airline stocks. One of his typically folksy comments was: “You can bet on America, but you’re going to have to be careful about how you bet.”
Buffett’s view — that in the longer term, most investors will be fine — hints at the bigger picture. If we look at recent global crises before the pandemic, the “merely” rich as well as the ultra-rich have done pretty well.
According to the Pew Research Center and the Survey of Consumer Finances, both in the US, the wealth of the US family at the median point — the middle of the income ladder — was lower in 2016 than in 1998. Those lower down the ladder did even worse. By contrast, upper-income families “were the only income tier able to build on their wealth from 2001 to 2016”, adding 33 per cent.
The very rich have benefited from cheap-money policies adopted by the US Federal Reserve and other central banks after 2008 — which has helped fuel asset prices, including in financial markets and property. People in the middle-income band have not done as well because some of the biggest gains have been in newer products such as private equity where the rich have had first dibs.
On top of this, the rich have capitalised on the combined forces of digitisation and globalisation, which have rewarded the owners of capital — and their legions of bankers, lawyers and other advisers — while wage-earners in developed countries have been left behind. It is early days in the pandemic, but the rich still look better placed. Crucially, central banks have, as before, pledged to do whatever it takes and have steadied market nerves.
We have the usual dynamic of the wealthy being ready to ride the rebound. In May, the FT reported that big US hedge fund platforms such as Izzy Englander’s Millennium Management and Ken Griffin’s Citadel look set to emerge from the crisis as some of the industry’s biggest winners.
This is only part of the story. Higher-paying knowledge economy jobs have proved (often surprisingly) adaptable to working from home. Thus, we have the phenomenon of consultants and lawyers — often advising wealthy investors — working happily from the homes they own.
Meanwhile, hospitality and retail staff, many living in rented accommodation, are furloughed or worse. Manufacturing workers look threatened by the shock in key industries such as air travel. While it is true that some lower-paid jobs such as delivery drivers and nursing have held up, the pandemic has brought increased health risks.
So, do crises ever hurt the wealthy? The crash of 1929 caused some of the rich to suffer horribly. Robert Searle, president of the Rochester Gas and Electric Corp, gassed himself after losing $1.2m, while James J Riordan, president of the County Trust Company, shot himself in the head.
But go back to the 14th century, and we find a genuine great leveller in the Black Death. It significantly rewarded the poor at the expense of the rich by raising peasant wages, though at the cost of wiping out a third of the population.
However, it seems highly unlikely coronavirus will do either. Rather, says the IMF, 21st-century epidemics have tended to raise inequality and favour the better educated. The IMF adds that the solution is some sort of “New Deal”, which could involve measures such as expanding social assistance systems, boosting public work programmes and progressive tax measures. Unless this happens, those who have a “good pandemic” will be those who have a good year nearly every year.
Rhymer is reading . . .
Uncanny Valley by Anna Wiener. The memoir of a young liberal arts major working in technology, it takes in everything from ubiquitous sexism and rising inequality to indifference to privacy. Another chapter in the souring of the American dream, it is nicely observed and, in places, bleakly funny.
Follow Rhymer on Twitter @rhymerrigby