The pandemic has forced untold hardships onto many Americans, with tens of millions of families now reporting that they don’t have enough to eat and millions more out of work on account of layoffs and lockdowns.
America’s wealthiest, on the other hand, had a very different kind of year: Billionaires as a class have added about $1 trillion to their total net worth since the pandemic began. And roughly one-fifth of that haul flowed into the pockets of just two men: Jeff Bezos, chief executive of Amazon (and owner of The Washington Post), and Elon Musk of Tesla and SpaceX fame.
Musk has quintupled his net worth since January, according to estimates put together by Bloomberg, adding $132 billion to his wealth and vaulting him to the No. 2 spot among the world’s richest with a fortune of about $159 billion. Bezos’ wealth has grown by roughly $70 billion over the same period, putting his net worth estimate at roughly $186 billion as the year came to an end.
The fortunes of both men owe largely to the stock gains posted by the companies they run, Tesla in Musk’s case and Amazon in Bezos’. Shares of Tesla are up roughly 800% this year after a five-to-one stock split in August. The meteoric rise is driven by a number of factors: its massive factory in Shanghai started churning out vehicles this year, the company began posting consistent quarterly profits, and demand for electric vehicles in general is expected to surge in 2021.
Amazon’s stock, on the other hand, rose around 70% last year, a figure that is modest only in comparison to Tesla’s gains. Much of Amazon’s performance is due to homebound Americans turning to the e-commerce giant to order products they would have otherwise purchased at retail outlets that were shut down by the pandemic. Amazon Web Services, a big profit generator for the company, has also experienced increased demand during the pandemic.
All told, the two men increased their net worth by a staggering $200 billion last year, a sum greater than the gross domestic products of 139 countries. A billion dollars — a radically life-changing sum in nearly any other context — becomes just “an entry in a database,” as Musk recently characterized his Tesla assets.
Such a rapid accumulation of individual wealth hasn’t happened in the United States since the time of the Rockefellers and Carnegies a century ago, and we as a society are only just beginning to grapple with the ethical implications.
What does it mean, for instance, that two men amassed enough wealth last year to end all hunger in America (with a price tag of $25 billion, according to one estimate) eight times over? Or that the $200 billion accumulated by Bezos and Musk is greater than the amount of coronavirus relief allocated to state and local governments in the Cares Act?
Of course, the wealth of Bezos and Musk exists largely on paper, as it’s mostly tied up in the company stock they own. In order to convert that stock to tangible assets, they would have to sell it, which could potentially crater the stock’s value on top of incurring tax obligations.
Beyond that, the task of ending hunger or plugging state budget holes is a lot more complicated than simply writing a check. If you have the money on hand, the challenge is delivering it in a useful form to the myriad places that need it. It’s a lot harder to spend billions in practice than it is in theory, or at least billionaires often say it is.
In 2018, for instance, the 10 wealthiest people donated an average of less than 1% of their net worth to charitable causes, according to an analysis by economist Gabriel Zucman.
Bezos last year announced he would give $10 billion to fight climate change, and in November he announced the recipients of the first $800 million in spending on Instagram. A Washington Post analysis in June of charitable spending by the wealthiest Americans — when Bezos’ fortune totaled $143 billion — showed he gave $100 million to Feeding America and up to $25 million for All in WA, a statewide relief effort in Washington state. For the median American, Bezos’ giving was the equivalent of donating $85 at that time.
Musk has given at least $257 million to his own charitable foundation, or less than one-fifth of 1% of his estimated wealth since founding it in 2002, according to an analysis by Quartz.
Representatives from Amazon declined to comment, while representatives from Tesla did not respond to a request for comment.
The evident difficulty of getting billionaire wealth to trickle down to everyone else is a challenge for policymakers in our new gilded era. The runaway accumulation of riches at a time of widespread deprivation and hardship is one of the widely recognized drivers of democratic decline. Most political scientists believe the erosion has already started.
Our ability to reverse that erosion will depend, in part, on whether the staggering amounts of money flowing to the top of society can be put to work to improve the lives of those at the bottom.