A recent report from Americans for Tax Fairness and the Institute for Policy Studies claims billionaires have gained $1 trillion in wealth since the beginning of the COVID pandemic. But this analysis, while it makes for a dramatic talking point on social media and cable news, confuses more than enlightens. It dramatically overestimates how well the super-rich have fared during this crisis.
The report measures changes in wealth from March 18 to
December 7. This is obviously a misleading timeframe because the pandemic was
already well underway by March 18. Schools and businesses were in the midst of
closing or going remote, and the first round of official lockdown orders was
less than a week away. Crucially, the stock market had been plummeting for an
entire month, with the S&P 500 falling by over 29 percent since February
19. The S&P would not recover these losses until mid-August, and it is only
up by 9 percent from its mid-February peak.
In fact, the report’s own data shows that billionaires were collectively $200 billion wealthier in February 2019 than they were by March 18, 2020. That’s because the February-March stock market freefall wiped out their 2019 gains. So no, billionaires have not increased their wealth by $1 trillion since the pandemic began. Rather, they have recouped the wealth they lost in the earliest stage of the pandemic and, collectively speaking, have only recently begun to make new gains. For sure, this is not a position that needs sympathy in a time of widespread economic hardship, but it doesn’t warrant alarm either.
Unfortunately, the authors seem determined to raise
alarm in their report by peppering their analysis with non-sequiturs designed
to elicit outrage. For instance, they note that billionaires’ “wealth growth
since March is more than the $908 billion in pandemic relief proposed by a
bipartisan group of members of Congress.” At no point, however, does this
report explain why it matters whether the wealth gained by billionaires is
higher than the proposed COVID relief legislation. In truth, America can pass
$908 billion in new COVID relief and have billionaires profit at the same time.
This isn’t a zero-sum game.
More curiously, the report is implicitly critical of
Elon Musk’s “$119 billion growth in wealth” because it is “more than five times
NASA’s $22.6 billion budget in FY2020.” The report seems incredulous that Elon
Musk could have profited so handsomely even while NASA’s current budget barely
clears $20 billion. But again, Elon Musk’s efforts to forge a new future for
space exploration aren’t stopping Congress from giving more money to NASA.
Congress has made that choice on its own for the past 50 years, in no small
part because Americans have been relatively unenthusiastic about space travel
since landing on the moon. So why even bring this up?
Here’s a simple answer: This report seems to work its way backward from animosity towards billionaires rather than providing a sober analysis of what the US economy needs. But billionaires-as-bogeymen arguments aren’t needed to make the case for more economic support or a relief package better focused to help those who have been disproportionately hurt during the pandemic. The wealthy didn’t cause the COVID recession (indeed, many, such as Amazon’s Jeff Bezos, have provided invaluable lifelines throughout this crisis), and trying to tear them down isn’t going to fix anything either.