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The Pandemic Profiteers

Billionaires have seen their fortunes skyrocket during Covid-19 while workers face wage cuts and layoffs – if we want to build a more equal society, we have to take them on.

With countries in various stages of reopening, the economic fallout of the pandemic is becoming apparent. The Eurozone’s economy shrank by 12.1 percent in the second quarter, while the OECD has warned the British economy will be the worst hit among developed countries. But the truly staggering number came from the United States, where GDP contracted by 32.9% in the second quarter – and those declines are hitting workers.

In the UK, a decade of austerity had already pushed wage growth to historic lows, but now the pandemic is expected to deliver the biggest drop in living standards since the oil shock of the 1970s. The situation is no better across the pond, where job losses reached similar levels to the Great Depression after the pandemic hit. Even though the US unemployment rate appears to be declining, other measures show that doesn’t mean many people are going back to work.

With eviction protections expiring in the United States and Congress refusing to extend the additional $600 per week in unemployment benefits, the social crisis is set to rapidly escalate. In the final weeks of July, 30 million Americans were already reporting they didn’t have enough to eat.

But while regular people struggle in the face of a historic crisis, many of the wealthiest people on the planet aren’t faring poorly at all. By mid-June, Britain’s billionaires had already seen their wealth grow by £25 billion, with James Ratcliffe, the founder of chemical giant Ineos, pegged as the biggest winner.

These billionaires are benefitting in part because as the real economy continues to crash, the stock market is recovering, especially in the United States. Underlying that US stock market rebound is the strength of its global tech giants, which is illustrated by the growing fortunes of their chief executives and pandemic-fuelled earnings.

On July 20 alone, Amazon CEO and world’s richest man Jeff Bezos added $13 billion to his massive fortune, which is up more than $70 billion since the beginning of the pandemic due to the soaring value of Amazon stock. MacKenzie Bezos, his ex-wife, could soon be the richest woman in the world because of her Amazon holdings, while Tesla CEO Elon Musk has seen his wealth more than double to $69 billion. The other tech CEOs are also seeing gains in the single- and double-digit billions.

The success of big tech during the pandemic is in large part due to their global market power. In a recent Tribune column, Grace Blakeley explained that “many of the world’s largest tech companies have become global oligopolies, and domestic monopolies.” These companies “use their relative size to push down wages, avoid taxes and gouge their suppliers, as well as lobbying governments to provide them with preferential treatment.”

This was on full display when Bezos appeared alongside Alphabet CEO Sundar Pichai, Apple CEO Tim Cook, and Facebook CEO Mark Zuckerberg on a video conference to answer questions from the US House Judiciary Committee for more than five hours about how they abuse their market power. Then, the very next day, the companies announced quarterly earnings that far exceeded expectations, with Amazon seeing its revenue increase 40 percent over the same quarter in 2019.

As lockdowns were put in place to contain the virus over the past six months, people naturally turned to online platforms to socialise, read the latest news, try to understand more about what was happening, and buy essentials without having to go to the shops. All of these actions served to benefit the tech giants. Now, even as businesses are reopening, many people are still relying on digital services more than in the past to avoid interactions that could spread the virus.

As Blakeley pointed out, the reliance on these companies is not good for workers or for the broader society because they are structured to keep the maximum benefit to the detriment of everyone else. Amazon workers turned to walk outs as the company refused to provide enough protective equipment, adequate space for social distancing, or even inform them when coworkers caught the virus. Workers had to start tracking cases themselves.

But it goes far beyond the pandemic. Amazon pays wages below the industry standard, to such a degree that the Economist reported that “flat or falling industry wages are common in the cities and towns where Amazon opens distribution centres.” Those warehouses also have higher rates of worker injuries than the industry average. Now, as Amazon ships more of its own packages, it’s shifting delivery work from unionised postal and UPS workers to low-paid contract workers.

And this isn’t just Amazon. Tesla factories also have higher rates of injury and safety violations than the average of automakers, while Musk opposes unionisation and more than 130 workers became infected with Covid-19 when he forced them back to work. More than half of Google’s workers are temp or contract workers, and they don’t get the same benefits or pay as permanent employees. Apple has a notorious relationship with Chinese manufacturer Foxconn, which exploits its workers to make iPhones, iPads, and many other tech products.

On top of making the lives of workers worse and capturing a greater share of the value they create by driving down their wages, these companies are also world leaders in tax evasion. Apple was a pioneer of many of these tax strategies, and Amazon is now deemed to be the worst offender. The top six tech giants are expected to have evaded more than $100 billion in global taxes over the past decade and the European Union is determined to make them pay up.

As much of the population is suffering as they try to cope with the rapid and unexpected changes in their lives as a result of the pandemic, these billionaires are consolidating their position at the top and sucking up even more of the wealth in our societies. Hoping for philanthropy from our overlords will not be enough – most it goes back into their own family foundations in exchange for big tax breaks anyway.

New tax regimes are necessary to make these companies and individuals pay much more to fund the recovery and ensure they can’t keep shuffling money offshore. Efforts to regulate and potential restructure the companies in the United States and the European Union are also welcome developments, but they will ultimately not be enough.

Instead of creating profits for shareholders, their goal should be to make products and services that generate social wealth and free up more of our time. That will require taking on the pandemic profiteers, embracing public ownership for key services, and giving workers more power to direct the future of the companies. The pandemic has clearly shown the status quo cannot continue.