There’s capitalism, crony capitalism, and as of 2020, COVID capitalism. Since the coronavirus crisis shut down the U.S. and global economies the world’s billionaires have seen their net worth increase by an incomprehensible (to mere mortals) $637 billion. That’s in barely six months. Amazon founder Jeff Bezos leads the pack with an estimated increase of nearly $50 billion. It would take the average American employee – who according to the Census Bureau makes $48,672 a year – more than 986,000 years to earn that kind of money (sliced another way, over the past six months Mr. Bezos has made $182,149 per minute). And there’s no letup in sight. According to many estimates he will become history’s first trillionaire well before 2030.
Jeff Bezos deserves to be a billionaire, a few times over. In Amazon he’s built one of the half dozen most successful and transformational companies in a generation. Millions of Americans of all stripes benefit from not just the company’s online retail platform but offerings like Amazon Prime, Amazon Home Video, Whole Foods, and the Washington Post. Much of the Internet itself depends on Amazon Web Services, used by other tech companies like Netflix, Adobe, Airbnb, and Lyft. Even rivals like Facebook and Apple are dependent on Amazon’s cloud computing services for some of their core retail offerings.
But in the COVID era Mr. Bezos is playing a rigged game. With the closure of large and small traditional retailers Americans, not to mention the rest of the world, have little choice but to purchase many necessities online. Unknowable thousands of those businesses won’t ever come back, making much of the shift effectively permanent. Arguably it amounts to the greatest transfer of wealth in human history, and it’s happening at a head spinning pace. Moreover, since Amazon had a two decade head start as the go-to online retailer it’s all but impossible for new online competitors to catch up, much less challenge the company’s dominance.
Mr. Bezos isn’t just playing on an uneven field: His competition have been forced to cede the contest entirely. He’s just running up the score.
Putting it bluntly, Jeff Bezos doesn’t deserve his COVID windfall. While some 50 million Americans have filed for unemployment he personally has benefited from what contract lawyers call an act of God. That $50 billion is not the result of competition and superior products and services. Amazon hasn’t come up with new ideas or innovations, it’s just kept on keeping on. Yet the company’s second quarter profits were double last year’s. That’s not supply and demand. That’s not even a free market anymore. It’s COVID capitalism. It doesn’t seem like much of a coincidence that Mr. Bezos has gained roughly $1,000 per unemployed American.
To be sure, captains of industry have long benefited, often handsomely, from historical moments that inflicted suffering on the masses. In World War II aerospace executives got rich in part making bombers and fighters that played a part in the deaths of millions. But at least no one ever doubted whose side they were on: The young men flying B-17s into Hell knew that Bill Boeing’s name on their yokes meant they had the best fighting chance American industry could produce. When those four thunderous Pratt & Whitney Hornet engines spooled up they knew every ounce of domestic ingenuity literally was at their fingertips.
In contrast Mr. Bezos is watching the zeros spool up in his bank account. He’s not at the forefront of public health efforts like the Gateses, nor establishing nonprofits and charities to help those most devastated by the pandemic and economic shutdown – the working poor, struggling middle class families, the small business owners who’ve been forced to shut down as he cleans up.
Jeff Bezos is the most conspicuous but not the only example of COVID capitalism. Mark Zuckerberg’s accumulation ($28.7 billion and counting) is in its own way more unseemly: He’s benefiting from countless millions of families who’ve been unable to celebrate birthdays, weddings, graduations, funerals, religious services, and other life events. People are spending hours more time on Facebook each day not because the platform has adapted and changed and offered something better, but because they have no choice. There’s an emotional component to Facebook that doesn’t exist with Amazon, yet as with online retail people don’t have alternatives right now. The same can be said of Eric Huang of Zoom (enjoying a relatively modest $7 billion so far), perhaps the luckiest billionaire of all in terms of timing. Meanwhile Elon Musk ($13.6 billion) is the most inexplicable: Even as the domestic auto industry craters into a historic slump from which it will take years to recover Tesla’s stock continues to reach new record highs.
Nor is it a matter of these companies being in the right place at the right time. In a very real sense circumstances (with a solid assist from governments) have made Amazon, Facebook, Zoom, and other tech giants the only places to be during these times.
The new billionaire class aren’t just watching their net worth increase like the odometer on the Ferrari in Ferris Bueller’s Day Off: There’s an increasing recognition that they’re shoving it in people’s faces. As documented in a Vanity Fair article last week, they’re throwing lavish parties, snapping up real estate at historic rates, and even jetting from place to place to stay in areas where coronavirus numbers are lowest. Meanwhile, Joe and Jane America worry whether they can keep a roof over their families’ heads and prevent their children from falling behind educationally. It makes the Gilded Age look like the 1950s.
It is worth noting that there is another category of billionaires that soon will benefit from the pandemic: Institutional real estate investors who are eyeing the coming wave of foreclosures. The likes of Blackstone are positively salivating at the prospect of millions of homes going to auction in the coming months and years as individuals and families fall irrecoverably behind on their mortgages. They’ve already formed hydra headed LLCs to obscure their activities.
Today’s tech titans are household names because they built companies and in some cases created new technologies that benefit the masses. Of course, they didn’t do it out of the goodness of their hearts: As Adam Smith famously observed, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Jeff Bezos and Mark Zuckerberg are in their own way every bit as ruthless today as J.P. Morgan and Andrew Carnegie were in their day.
As President Teddy Roosevelt demonstrated sometimes it is necessary for the greater good that the government, and the people, prove equally ruthless. It’s time for a billionaire COVID tax. To paraphrase former President Barack Obama, “They didn’t earn that.”