‘Disaster Capitalists’ are Profiting from the Pandemic
Jess Pannese / March 7 / Covid-19
At the same time as millions are falling into poverty and unemployment, billionaire success is skyrocketing. While for many the pandemic has given rise to financial insecurity, mental health issues and physical health risks, to some wealthy elites it has presented new opportunities for profit. However, whether this is simply due to growing wealth disparities, a trend that started long before Covid, or as a result of governments and billionaires actively exploiting a global crisis, is a different question altogether.
In the three months leading up to September 2020, more than 6 million people in the UK were prescribed antidepressants - the highest figure on record. Meanwhile, in the US, 40% of adults have reported symptoms of anxiety or depression in January of this year, compared to just 10% in January 2019.
With the overwhelming majority clearly suffering in these lockdowns, it seems almost immoral that the world’s richest are enjoying incredible capital gains because of them. As of January 2021, collective US billionaire wealth has grown by $1.1 trillion during the pandemic alone, much of which can be attributed to private healthcare, pharmaceutical and insurance giants growing since March. This growth appears needlessly excessive when compared with the fact that 6.2 million Americans lost access to health insurance between March and August because of unprecedented levels of unemployment. The stats are just as staggering on a global scale; at the same time as Oxfam and the UN predicted that half a billion people could have been pushed into poverty and an extra 132 million could go hungry due to the pandemic, the top stock market winners added more than $3 trillion to their market value.
When taking a closer look at some of the individual gains, the figures become even more obscene. Between March and December 2020, Amazon’s shares increased by 90% as dependency on online retail grew due to restrictions on small, high street businesses, and subsequently grew Jeff Bezos’ individual wealth by 60.6%. In the UK, private companies’ chances of securing million pound PPE contracts have been bolstered by their links to the government. Rachel Reeves, the shadow Cabinet Office minister, claimed in early February that of the £23 billion public sector spend on the pandemic so far, £2 billion went to “Conservative friends and donors” via “crony contracts”. For example, Ayanda Capital (a private equity company) was handed a £252 million contract to provide face masks, which were subsequently decided to be unfit and went to waste. Coincidentally, the company is owned by Andrew Mills and his wife, who happens to be an adviser to Liz Truss, Secretary for International Trade. Health secretary Matt Hancock is currently also under fire for failing to disclose pandemic contracts that are usually required within 30 days of signature. His acquaintance, Alex Bourne, secured a lucrative contract with the health service back in spring to provide testing vials to the NHS. Clearly, private companies have benefitted massively from their cosy relationship with the Conservative Party, all the while more than 900,000 small UK businesses run the risk of bankruptcy by April, according to a new report by LSE’s Centre for Economic Performance and the Alliance for Full Employment. This relationship between government and large companies allows undemocratic room for cronyism, enabling these companies to exploit and profit off the same pandemic that is killing small businesses.
Hundreds of private companies have benefited from the UK governments pandemic budget
The super rich clearly remain unscathed by the economic blows of the pandemic that millions are trying to withstand. If Covid has exposed anything, it's that the wealth gap goes beyond something that merely divides us financially; it stratifies society into two entirely different worlds, experiencing two entirely different pandemics. One is characterised by the threat of unemployment, financial insecurity and mental turmoil, and the other simply presents an opportunity for profit.
These astonishing gains are being made at the same time as devastating losses because of two main reasons; unequal government handouts and exploitation of loopholes. The US Federal Reserve has historically protected, and arguably prioritised, banks, corporations and shareholders during times of crisis. Like after the 2008 crash, the Federal Bank has lowered short term interest rates for banks to near 0%, with promises to keep them as such until the economy is back to normal. While this seemingly is of benefit to the continual flow of the US economy as a whole, it will benefit the top 1% the most, enabling them to continue to make momentous profits as the stock market rebounds and thus extending the wealth gap even further.
Perhaps even more punishable is the federal government’s shortfall on its promise to support small businesses via The Coronavirus Aid, Relief, and Economic Security Act (CARES). Of the $350 billion intended for vulnerable businesses, $243 million went to large corporations, and subsequently, only 5% of small businesses received the first round of the Paycheck Protection Programme (PPP) loan. The Bill has also included $651 billion in tax breaks, which was unsurprisingly largely distributed to companies that haven’t been badly affected by the pandemic. These mechanisms that we’re told alleviate the struggle and inequity that the average earner faces are only serving to stratify society further and concentrate wealth among the super rich, forcing us to question the agenda of capitalist governments.
Over the course of the pandemic, both the state governments and large companies have neglected their workers and prioritised shareholders - in other words, keeping the rich rich and the poor poor. For example, the billion dollar oil company, Chevron, announced cuts of 10-15% of its 45,000 global workforce in May of last year, yet still managed to spend more cash on dividends during the first quarter of the year than they generated from business. The Oxfam International Executive Director Chema Vera argues that the current economic crisis is being “fuelled by a rigged economic model. The world’s largest corporations are making billions at the expense of low wage workers and funnelling profits to shareholders and billionaires.”
One of the most significant acts of exploitation is the use of offshore tax havens. It is now estimated that $32 trillion is currently held in offshore accounts, a grotesquely unfair amount when looking at the fact that, according to the World Bank in a 2013 report, an expenditure of just $3.4 billion annually would have enabled developing countries to build robust pandemic prevention mechanisms. Unsurprisingly, the ‘Tax Justice Network’ ranks the US as the second most complicit country in helping individuals to hide their assets and keep them free from tax, after the Cayman Islands.
Tax Havens were a major source of financial exploitation, even before the pandemic (Graphic from 2020)
The undeniable allegiance between the wealthy elites and politicians is mutually beneficial, making it disappointing but not surprising that the ‘revolving door’ just keeps on spinning in a pandemic. This concept describes the close relationship that those in industry have with legislators in government. Giant corporations are afforded undemocratic levels of influence over policy due to their wealth, to the point where the pharmaceutical industry in the US was able to lobby the coronavirus bill to ensure they would be able to profit on any vaccines. It is no news that the class of ‘elites’ hold an unfairly advantageous position within the political system, but this has become more apparent than ever during the pandemic, exposing the government’s unequal treatment of society. This relationship is also strengthening the stranglehold that the wealthy elites hold over the rest of society; the inextricable link between wealth and power allows them to exponentially increase both, thus gaining more influence over policy and legislation, and in turn are able to entrench social stratification, keeping them at the untouchable top - and the cycle continues.
This phenomenon is unfortunately not a new one. Naomi Klein’s ‘The Shock Doctrine’ puts forward the theory that during times of crisis, amidst all the suffering and turmoil, governments use ‘shock therapy’ to implement controversial and often harmful policies that will ultimately only benefit the rich. After Hurricane Katrina struck New Orleans in 2005, Joseph Canizaro, real estate developer, literally described the devastation as bringing “very big opportunities”, and between 2009-12, home owners received just 10% of the relief that banks and corporations did, despite the market crash. Clearly, profit is prioritised over human welfare for large corporations and their political allies, and it is no surprise that the pandemic has been used as yet another “opportunity” to accelerate the growth of the billionaire class. If such growth wasn’t made off the backs of the ‘rest’ of society, this behaviour could perhaps be less repellent. However, the capitalist economic system is not exactly one known for being founded on fairness and justice.
So, can billionaire success simply be attributed to their working harder than the rest of us on an ‘even’ playing field, or is the reality much more complex than this? Giant corporations have time and time again viewed times of mass suffering as a ‘business opportunity’, worlds away from the reality that so many of us are faced with, and the pandemic is no exception from this. The same lockdown that is punishing and punitive for so many is of benefit to billionaires, forcing the question of whether there is any incentive for the situation to change for them. However, it is hard to place blame solely on individuals. Instead, we must recognise that the current economic system is the fuel behind the accelerating wealth gap, and is fundamentally unfit to fairly resolve a global crisis. To quote Naomi Klein, the pandemic has revealed that ‘disaster capitalism’ is at full force, pushing society towards an oligarchy where the suffering of many becomes an opportunity for the few.