Among the countless infographics circulating social media, one of the most common is the wealth gains of America’s richest businessmen and women. As the millions of Americans, and people worldwide for that matter, struggle to navigate a pandemic stricken world, the sight of massive wealth gains for a select few people is a painful sight.
For many, it is yet another disillusioning sign of the drastic, accelerating trend of wealth inequality in the Western World. At this very moment, there are millions of people bracing for homelessness and even more people preparing for bread lines. How, then, does a suffering society allow people like Amazon’s Jeff Bezos see his net worth to rise a combined to over $200 billion by August 2020.
The answer is less political, and less to do with taxes than the infographics and screenshot twitter threads would suggest. Understanding the root of the growth is crucial to crafting and advocating for an actual solution, not simply one appealing on media infographics.
The driving force behind such gains, even in the face of COVID-19, is simply an acceleration of phenomena we’ve been seeing for decades: the death of the “Ma and Pa store”. First, a correction of a common misconception. The billionaires who have seen their collective net worth’s jump an alleged 637 billion dollars during the pandemic did not receive billions more income. These individuals are not sitting on billions more in cash, but rather, own shares in companies that have grown exponentially.
Now that we have made this important distinction, we can understand the massive growth in a handful of already large corporations. The best example is Amazon, owned by Jeff Bezos who has gained over 50 billion thus far since March.
Amazon is the ultimate winner in this pandemic, and nobody quite comes close. Their market capitalization has skyrocketed to almost 1.59 trillion dollars, making them among the top five globally, only behind Saudi Aramco and Apple Inc.
NO LINES ONLINE
For all intents and purposes, Amazon has replaced shopping as we knew it. The days of crowds huddled around malls is over as crowds opt to stay home, and shop from the comfort of their computers. With rapid shipping, excellent customer experience and a massive network of consumer items, Amazon has been thriving. When the pandemic struck, and physical stores were shut for health concerns, Amazon stepped up as the only viable alternative to shopping.
Amazon recorded its massive growth when the unemployment and stimulus checks cashed. While much of the money went to rent, food and necessities, many others took their extra cash and went directly to the only method of shopping available: online retail.
As it stands today, online retail is dominated entirely by Amazon, only rivaled across the world by Jack Ma’s Alibaba. Therefore, with such a simple observation, the massive growth in Bezos’s wealth is logical. As for the other billionaires and their corporations, the same rule applies.
Amazon’s ability to mass produce and distribute at industry low prices is unique in the online retailing industry, Other companies, such as Microsoft, Zoom and even pet food supplier Chewy offer similar amenities and have therefore grown at a comparable rate. It is important to note however, that each of the companies who have undergone massive growth share a similar characteristic; they are either monopolistic or exact monopolies.
This is a phenomenon not new to America, and its effect on wealth inequality has been previously observed. The late 19th century, known in the U.S. as the Gilded Age was the age of massive monopolistic companies.
EQUAL IN WHOSE EYES
In this period, American wealth inequality steadily reached its zenith. The wealth inequality only began to decrease when the Sherman Antitrust Act was enacted by Congress and the monopolies were toppled and broken up. Today, instead of Standard Oil and barons such as Andrew Carnegie, we are faced with monopolies such as Google and modern barons such as Mark Zuckerberg.
This should provide us a significant idea as to where to begin if we are to tackle wealth inequality in the U.S. While increased taxation on the rich is certainly a good method for evening inequalities, it wouldn’t have any effect on the phenomena that sickened millions through this pandemic.
VALUE NOT INCOME
Raising taxes, even Capital Gains taxes, won’t do much in lowering the mammoth gains seen by any of the aforementioned billionaires. As previously mentioned, the wealth they accrued was through stock value, not income. Therefore, we must look back to the history of economic inequality in the US and understand its roots and solutions.
COMPETITION IS GOOD
It is incumbent on us to use the tested solution of trust-busting to tackle the unchecked growth of the richest individuals and corporations in America. By creating a more competitive, even playing field, small market stores, “Ma and Pa shops”, can remain competitive as we emerge from the pandemic.
If the few, market share consolidating companies are beaten back and divided, wealth inequality could decrease to levels seen from the 60s until the 80s. While maybe not the most popular slogan, “Break up big business” would certainly better address our modern economic issues than more convenient, known slogans such as “tax the rich”.
About the Article
A impact of Covid-19 on furthering the economic spread between rich and poor.