The men who made billions during COVID-19

Washington: The pandemic has been a boom time for America’s richest billionaires.

The wealth of nine of the country’s top titans has increased by more than $360 billion in the past year. And they are all tech barons, underscoring the power of the industry in the US economy. Tesla’s Elon Musk more than quadrupled his fortune and jockeyed with Amazon’s Jeff Bezos for the title of world’s wealthiest person. Facebook’s Mark Zuckerberg topped $100 billion. Google co-founders Larry Page and Sergey Brin gained a combined $65 billion.

Nearly all of this wealth accumulation was tied to the share price in the companies the men cofounded or lead, and in which they remain significant shareholders. Amazon benefited while consumers shopped from home, as many of its bricks-and-mortar rivals struggled to keep pace. Google, Facebook and Microsoft helped power the new work-and-learn-from-home reality.

Unemployment and evictions

But the staggering rise in their gains contrasts with the economic devastation of millions of Americans, amid soaring unemployment and evictions, drawing attention to issues of inequality and distribution of wealth. In fact, the $360 billion increase in top billionaire wealth approaches the $410 billion the US government is spending on the latest round of $1,400 stimulus checks, passed with the $1.9 trillion pandemic relief package this week.

“In my view, we can no longer tolerate billionaires like Jeff Bezos, Mark Zuckerberg and Elon Musk becoming obscenely rich at a time of unprecedented economic pain and suffering,” Sen. Bernie Sanders, I-Vt., said in an email to The Washington Post.

The scrutiny of tech billionaires’ wealth is also driven by the role their companies played during the pandemic. Social media including Facebook appeared to make the situation worse because it was used to spread disinformation about covid-19 and the vaccines, undermining efforts to control the virus. Musk railed against stay-at-home mandates and reopened Tesla’s factory in defiance of local orders, arguing that Tesla should be allowed to continue building cars during California’s lockdown.

Alarm about safety

In Bezos’s case, profits were possible in part because Amazon hired more than 500,000 workers to stow, sort, pick and pack goods in 2020, even as warehouse workers sounded alarms about safety and nearly 20,000 Amazon employees in the United States tested positive for the coronavirus by October. (Bezos, Amazon’s chief executive, owns The Washington Post.)

“There is no doubt that big-tech billionaires and the companies they own have endangered our democracy and control far too much of our economic and political life,” Sanders said. “The time has come to tax their wealth and break up tech giants and other huge conglomerates that have monopolised nearly every sector of our economy.”

This month, Sen. Elizabeth Warren, D-Mass., revived her proposal for a wealth tax, which polls show has wide support across party, gender and educational lines.

Bezos, Zuckerberg, and Brin declined to comment. Musk and Page did not respond to requests for comment.

Since the late 1990s, Silicon Valley has cultivated the ideology that “the pursuit of innovation and capital is and of itself a social good,” said Megan Tompkins-Stange, a public policy professor at the University of Michigan.

Tech stocks began dominating the top spots in publicly traded markets around 2014, knocking off names such as ExxonMobil, Johnson & Johnson, and Walmart as technology outgrew industry after industry. But the rise in share prices of reigningcompanies over the past year was often a direct result of executives attempting to expand their empire during the pandemic.

In the early months of the pandemic, Big Tech’s defenders and critics seemed to agree on one thing: the urgency of the covid-19 crisis might offer Silicon Valley a chance to shine. After four years of backlash over election interference, privacy and misinformation, politicians and consumers seemed open to tech swooping in and saving the day.

While the Trump administration downplayed the risks of contracting the virus, companies such as Facebook, Google and Microsoft pitched in with tech-oriented initiatives to help the public and urged their white-collar employees to work from home, long before states ordered residents to hunker down. Almost overnight, tools such as video conferencing, online classrooms, food-delivery apps, streaming services and social media became necessary to safely work, learn and socialise for those who could afford them.

Even sceptics suspected that the need for tools to make life in a shutdown liveable could be a turning point in America’s love-hate relationship with screen time.

In April, the national unemployment rate jumped to 14.7%, reaching the highest level since the Great Depression after 20.5 million Americans lost their jobs. The covid-19 recession reflects the inequality of the pandemic itself: It has disproportionately affected low-wage earners and people of colour.

To illustrate this widening divide, Peter Atwater, an adjunct professor at William & Mary, popularised the phrase “K-shaped recovery” to show the privileged ascending, while workers facing disparities in race, gender, incomeand access to health care are pushed further down by the pandemic.

“While millions are out of work and being evicted, the billionaire class thrived and prospered as they seldom have in any year,” said Anand Giridharadas, author of the 2018 book “Winners Take All: The Elite Charade of Changing the World.”

Just six tech stocks — Apple, Facebook, Amazon, Netflix, Microsoft and Google — were responsible for more than 60% of the S&P 500’s return in 2020, according to Yardeni Research.

Stock market fully unhinged

As summer turned to fall, economists switched from reminding people that the stock market is not the same as the economy to declaring that the stock market had become fully unhinged from reality. Meanwhile, the shift to working, communicating and buying from home enriched the tech giants.

Wealthy consumers, who were less likely to have lost their jobs during the pandemic and who had more disposable income by staying home, were part of a rally that helped Tesla’s stock balloon 525% during the past year.

Amazon’s gains of 86% since the beginning of the pandemic came as consumers shifted in droves to online shopping, worried that running to the store to grab basics endangered them. The demand at the dawn of the pandemic was so great that Amazon, like many retailers, struggled to stock such items as toilet paper and disinfectant. Global retail e-commerce sales grew 27.6% in 2020, even as total worldwide retail sales declined by 3%, according to research firm eMarketer.

As companies shifted to remote work, they relied even more heavily on cloud-computing services, where customers rent data storage and processing capabilities over the Web instead of running their own data centers, from companies such as Amazon, Microsoft and Google, whose stocks soared. Google and Facebook benefited from a faster-than-expected rebound in online advertising, as well as the need for communication tools including Google Classroom and Facebook’s WhatsApp.

Apple’s market capitalisation crossed the $2 trillion threshold last year, making its chief executive, Tim Cook, a billionaire.

By August, stocks hit a record high, marking the fastest rebound from a bear market in history, The Post reported.

'Dickensian conditions'

Tech billionaires invested comparatively little of that increased wealth back into the public sphere for the pandemic. Bezos donated $150 million, or roughly 0.26% of the profits he accrued during the pandemic, to covid-related causes, “while also having his workers work in Dickensian conditions,” said Tompkins-Stange, the University of Michigan professor. Musk reportedly gave $5 million, or 0.004 per cent of his newfound gains, to covid-19 research, in addition to donating ventilators built to help patients with sleep apnoea.

Amazon added 500,000 jobs in 2020, including 400,000 in the United States, Amazon spokeswoman Lisa Levandowski said via email. Those jobs “pay twice the federal minimum wage, and provide employees with benefits like health insurance, 401(k) company matching, and up to 20 weeks of paid parental leave,” she added. The company offered hazard pay from March to May 2020.

Through the Chan Zuckerberg Initiative, an LLC, the CEO of Facebook and his wife, Priscilla Chan, gave $104 million, or 0.36%, of the $29 billion he accumulated during the pandemic to support covid-19 research, testing and treatment, and to assist the people and communities most affected by the pandemic, building on Zuckerberg’s earlier pledge to try to “cure all disease.”

Among tech founders removed from the day-to-day of their company’s operations, few have commented publicly on the pandemic, even as their personal fortunes skyrocketed. Google’s founders, Page and Brin, remain controlling shareholders, board members and employees at Alphabet, Google’s parent company. Page made no public philanthropic commitments. Brin donated $104 million to covid-19 relief efforts through his family foundation, according to a person with knowledge of his giving, or 0.24% of the wealth he accrued during the pandemic.

Larry Ellison, who serves as executive chairman and chief technology officer of Oracle, and saw his wealth grow by $28 billion, may have had the most sway among tech billionaires on the Trump administration during the pandemic. He urged President Donald Trump to consider the malaria drug hydroxychloroquine as a miracle cure for the virus, according to the New York Times, and planned to build a database for doctors to register every covid-19 case as part of a wellness laboratory on his island in Hawaii, Forbes reported in April. Ellison declined to comment.

Michael Dell, the CEO of Dell Technologies, who gained $18 billion during the pandemic, also declined to comment.

Bill Gates, a co-founder of Microsoft, was the most influential philanthropist on the global response to the pandemic. He shifted much of the focus of the foundation he runs with his wife, Melinda, to address the pandemic, donating $1.75 billion in pandemic-related philanthropy, or 7.3% of the $24 billion he added to his net worth.

“COVID-19 is making existing inequalities even worse, with people living in extreme poverty bearing the brunt,” Gates said in an email to The Post. “I believe philanthropy has an important role to play proving new ideas can work, with governments and businesses scaling the most promising ones.”

Gates had warned about the potential for a pathogen-spread pandemic since 2015, in a TED Talk, lectures and medical journal articles. Since the coronavirus emerged, Gates has appeared on news programs, late-night talk shows and a global charity event to push for science-based solutions.

His outsize role in public health decisions elicited both baseless claims that he had engineered the pandemic and investigative critiques about how his financial influence and political power perpetuate a market-oriented approach to vaccines, despite pushback from countries such as India and South Africa.

The accumulation of such wealth has little precedent, and there are few models to follow. In the Gilded Age, robber barons such as John D. Rockefeller and Andrew Carnegie used philanthropy not only to launder their reputations but also to amass public good will. In this case, giving extravagantly when the need is so great could confer legitimacy and undermine critiques against the undemocratic nature of billionaire donations.

Tax exemption code

Tompkins-Stange said the idea of a benevolent billionaire is a uniquely American phenomenon and a function of the country’s tax exemption code for foundations. In European countries with a developed social safety net, or China, where there are restrictions on donations, philanthropy has very little power compared with the state, she said.

As an example for a more promising type of tech billionaire to emerge from the pandemic, Tompkins-Stange pointed to Bezos’s ex-wife, MacKenzie Scott, and Twitter and Square CEO Jack Dorsey. They also saw their wealth balloon during the pandemic and responded by giving away massive amounts as unrestricted funds to those in need, rather than moon shot investments aimed at reshaping the future.

Some of the inequities exposed by the pandemic were tech-related, such as the lack of broadband access for millions of children to do distance learning.

“You just start to realise that everything the tech billionaires promise is premised on a healthy, functioning society,” said author Giridharadas. “When the pandemic came, we found out that we weren’t going to be saved by apps. We were going to be saved by good, old-fashioned public support, and I actually think that’s going to have a lasting effect on the American memory.”