YOr you may have already forgotten, but there was a brief moment during the pandemic when hopes for a new “roar 20s”. Yale sociology professor Nicholas Christakis he predicted that, as in the 1920s, after the Spanish flu of 1918, society would embrace indulgence, with an increase in “sexual licentiousness” and a “reversal of religiosity”. We were about to come out of the confinement crazed and red hot. We certainly weren’t supposed to plunge, as we did in Britain, into political crises and strikes, have three prime ministers in as many months, and sit at home too skinny to turn on the heating or socialize.
But there’s actually a roaring 20s going on, just not for most of us. According to by oxfam annual report on inequality, released to coincide with the World Economic Forum meetings in Davos, the richest 1% of people have captured almost twice as much new wealth as the rest of the world combined since the pandemic. his wealth skyrocketed to $26 billionincreasing their share of the new wealth from 50% to two-thirds.
Breaking down these figures exposes how, globally, extreme wealth is accumulated not by innovating or increasing production, but by taking advantage of rising prices and exploiting labor. In this endeavor, the wealthy are empowered by a lack of regulation and taxation. The result is a looting bonanza with no sheriff in town.
This has been going on for a while, but the pandemic accelerated the trend. The rich benefited from it all: every positive state intervention and negative impact of the crisis somehow ended up increasing their wealth. They profited from increased costs by using them as an alibi to collect prices higher than inflation, and then distribute the rewards as dividends instead of higher salaries. Food and energy corporations made a killing, earning $306 billion in windfall profits in 2022, and then distributing 84% to shareholders.
They benefited from stimulus packages that pushed up asset prices. They benefited from low interest rates that helped them expand their real estate empires. According to According to Credit Suisse, lower interest rates and government support programs resulted in “a huge transfer” of wealth from the public sector to private households, which saw their debts reduce and the value of their assets rise. actions and properties.
The obscenity of the system is made possible by the drastic decrease in the bargaining power of labor. Weak labor is cheap labor. More profitably, the world’s workers can be increasingly mobilized according to the precise needs of employers, so not a penny is wasted. The purpose is to transform the human worker into a machine that can be turned off when not in use (although at least the machines are taken care of with maintenance). In 2020, Amazon’s UK sales halved to £19.4bn. In 2021, year research in Britain found that the company was flouting its own employment standards by recruiting thousands of zero-hour workers through agencies. These workers have no job protections, their shifts can be canceled at the last minute, and there is no guarantee that they will stay on the job.
But successful tax avoidance is the strongest pillar underpinning global inequality, and dismantling it would be the quickest fix. There is little chance of that happening anytime soon. Tax regimes, like much of the conventional economic wisdom about the benefits of wealth creation for all, are increasingly out of step not only with the needs of the poor, but also with what is required for the health of our economies. The political class has been captured by the outdated ideology of the trickle down economy. And if any of those politicians have dissenting thoughts and consider raising taxes, the financial elites threaten to abscond with their wealth or protest that their entrepreneurial ambitions will be extinguished. The media that frames redistributive policies as radical or destructive is also a powerful shock collar. oxfam found that 143 of 161 countries actually froze tax rates for the rich during the pandemic, and 11 countries reduced them.
What is most striking about the post-pandemic earnings boom is the truly global nature of the problem. It is not just the hope of a world recalibrated by Covid towards a stronger public infrastructure that is turning to dust in our mouths. An older dream is also dying: a post-Cold War globalization that was supposed to bring us all closer would usher in a utopia of free trade, growth, jobs, and sustainable development. What this model of globalization ended up achieving was standardizing ways for the rich to pay as little as possible, concentrating economic activity on those with purchasing power and letting the rest dry up. In fact, our lives are becoming more similar all over the world. In the global south, wealthy people now have access to the same consumer goods and services, from Netflix to Vitamix, and live in new construction developments with names like Beverly Hills (Cairo) and Bel Air (Nairobi). The poor are pushed to the margins, the public services they depend on are dismantled.
None of this has happened by accident, according to Peter Goodman, author of Davos Man: How the Billionaires Devoured the World. “It’s not an accident,” he tells me, “that our economies have concentrated more wealth in fewer hands. Quite simply, rich people have used their wealth to buy democracy, to distort democracy in their own interest. They have done it through a global template that involves cutting taxes, privatizing previous public attempts to address common problems, liquidating spending that went to things like social services, and then putting that money into their own pockets”. The main power of the billionaire class, says Goodman, is in its creation of values, not values, that maintain a friendly political climate. Davos, he says, is “a prophylactic against change, an elaborate reinforcement of the status quo served as the pursuit of human progress.”
But the disparities are becoming too stark for these branding efforts to work as well as they used to. Even right-wing politicians are beginning to point out that the promise of social mobility no longer holds. Last week, in a speech that sounded a lot like the remarks of someone awakened from a decades-long slumber, UK Cabinet Minister Penny Mordaunt saying that “many people think that things don’t work, at least for them”, adding that “for those who have less, the whole system can seem rigged against them”.
So close and yet so far. the system does not look to be rigged. It’s rigged. I guess it’s a step in the right direction that terms that in the past would have relegated a speaker to the pile of conspiracy theorists and communists are making their way into the mainstream. Mordaunt went further. “The very continuation and success of capitalism,” he said, “hangs by a thread.” But for the small and powerful minority that owns half of the world’s wealth, this type of capitalism is succeeding more than ever. At stake, as billionaires’ riches rise, is their ability to make the case that it works for us too.