Peter S. Goodman, the global economics correspondent for the New York Times, has just released a new book called “Davos Man: How the Billionaires Devoured the World.”
Davos is, of course, a reference to Davos, Switzerland where the richest of the rich, business titans and elite celebrities gather each year to decide what’s important in the world and for themselves. The ticket to attend this year was $29,000, but only if you have an invitation. Goodman says, “They come to rub shoulders with corporate executives, heads of state, venture capitalists, hedge-fund managers and A-list celebrities who together aim to “solve the great crises of the age.”
Basically, Goodman chronicles and then contrasts the experiences of the likes of Jeff Bezos, Elon Musk and some other fellow billionaires with a former steelworker, a Seattle doctor fighting on the front lines of COVID, an Amazon worker in New York City along with other less fortunate middle-class types.
But some perspective is in order, especially for those of us who continue to struggle with rising commodity prices, dwindling bank accounts and skyrocketing rents. This trend of wealth centralization among the wealthiest has been trending for the past 50 years.
Today, according to Forbes, the top 1 percent of Americans own as much wealth as the bottom 90 percent. Another way of looking at it (Forbes again), “The top 1 percent of U.S. households hold 15 times more wealth than the bottom 50 percent combined.” Or yet another, “The top 1 percent of earners in the U.S. earn about 40 times more than the bottom 90 percent and about 33 million Americans (that’s about 10 percent), earn less than $10 per hour.”
According to the Institute for Policy Studies, “The world’s 2,365 billionaires enjoyed a $4 trillion boost to their wealth during the first year of the pandemic, increasing their fortunes by 54 percent.”
When analyzing income disparities in countries around the world, the gold standard is something called the “Gini Coefficient.” Its complex calculus is expressed in a range of 0 percent to 1 (100 percent). It measures the distribution of incomes across income percentiles with zero being perfect equality and one being perfect inequality.
According to the U.S Census Bureau, the U.S. Gini Coefficient is .484, the highest it’s been in the last 50 years. Among the wealthiest nations in the world, the G-7, the U.S. ranks last in income disparity. On a global scale, the U.S. falls between Mongolia and Uganda in income inequality, with South Africa having the greatest inequality.
According to the Bloomberg Billionaires Index, of the top 25 wealthiest billionaires in the world, 18 are from the U.S., two are from France, two are from India, one is from Mexico, one is from China, and one is from Spain.
Gas prices are a simple way of expressing how this growing disparity works, and it’s something we can all relate to. In 2019 in Ohio, gas prices averaged slightly over $2.00 per gallon for regular. In 2022, prices averaged about $4.00 per gallon across Ohio.
In a recent interview in the Wall Street Journal, the CEOs of Exxon Mobil, Chevron and Total “gave no indication that despite favorable market conditions, they have changed their thinking about boosting their production.” These CEOs say that “sustained pressure from investors to return more cash to shareholders is the primary factor holding back investment in growth (production). Big oil companies are continuing to reap the benefits of high commodity prices… while keeping production roughly flat.”
Exxon’s profit for the first quarter of 2022 was $5.5 billion. Chevron’s was $6.3 billion. Total’s was $4.9 billion. Wealth management groups with hundreds of millions of shares in Exxon did very well in the first quarter 2022. Billionaires’ wealth has surged during the pandemic years, but also for much of the past 50 years, and that cauldron of wealth “soup” heats up in the stock market.
So, what’s to be synthesized and realized from all of this? First, I have nothing against individuals accumulating wealth. Who doesn’t want to aspire to financial independence and security for self and family? But how much is enough, especially when you come to the mortal and existential realization that you can’t take a dime of the billion with you when you die, nor the yachts, the oceanfront estates, or the mansions in Monaco? The questions that are relevant here are to what extent billionaire wealth has been leveraged on the nation’s public health care systems, home prices, commodity prices or gas prices? What is a billionaires’ fair share in taxes? History is replete with examples of income inequality escalating eventually to calamitous social problems.
According to the Bloomberg Billionaires Index, U.S. billionaires among the top 50 of the world’s billionaires are worth about $1.65 trillion dollars. A 2 percent wealth tax of just those individuals would help the U.S. treasury to the tune of about $33 billion, and still leave Elon Musk with $251 billion. When you have that much, dare I say, there’s always a way of making more money, so where’s the hurt?
Peter Goodman concludes in his book about the Davos men that “Democracy has been warped by the billionaire class, its workings tilted toward private islands, offshore bank accounts, and secret meetings in Davos, convened to plot the next insider deal. (But) Reclaiming power from Davos Man requires no insurrection or revolution of ideas. It demands the thoughtful use of a tool that has been there all along: democracy.”
Bill Sims is a Hillsboro resident, retired president of the Denver Council on Foreign Relations, an author and runs a small farm in Berrysville with his wife. He is a former educator, executive and foundation president.