The Billionaire’s Pandemic

Sourav Baksi

The current pandemic is bringing forward the reports of ‘care’-ing billionaires and corporates making ample donations to charities or newly revamped government relief funds spawned in the midst of the crisis. Some are even lending out their private jets to transport medical equipment, others charter planes for the evacuation of migrant workers stuck in Dubai.¹Their generosity is widely celebrated through their own media houses round the clock. We acknowledge that any kind of benevolence is welcome but this billionaire philanthropy is a regressive trend as the amount donated by these ultra-rich are a meagre 0.00001 percent of their accumulated fortunes to help the world. This remind us that for ‘every $1 a billionaire donates to charity, we the taxpayers chip in roughly half or more of that donation in lost tax revenue’.² Amidst this news of donations what we forgot or rather never want to look is the ‘art of hidden wealth accumulation’. These billionaires hire the ‘army of wealth fencing’, which includes lawyers, accountants, portfolio managers, for millions of dollars to defend taxes on their accumulated trillions. Our friendly and generous billionaires have evaded taxes worth $21 trillion in offshore tax heavens, trusts, and shell companies³.

The United States has the highest number of millionaires, about 18.6 million or nearly 40% of the whole world population⁴. Japan (6%) this year has moved to the third position as the second position is taken by China (10%). The United States added more than half of this number – 675,000 new millionaires – to its sizeable stock. All these are our new millennials who emerged as a new social class and a popular vote bank for our leaders, and among these individuals both white-collar employees and their entrepreneurs are the forerunners of the new age inequality matrix. The dream of the CEO based life standard and owning properties in numerous countries is slowly widening the gap with the Ultra High Net worth individual. We must not forget that these rising classes are the new benchmark of progress and sustainability as witnessed in the global pandemic scenario where the governments are more concerned in the bailouts for these sectors. The official government bailout programmes in India, for instance, is concerned with giving more liquidity and credit to these sectors while being aloof to the distress of the migrant workers as they are not recorded anywhere in the Government databases, their role played no importance in the global image of the country. The bailout of these debt strapped middle class urban masses play a key role in squashing the voice to raise the most inevitable questions, like ‘why not wealth tax?’, ‘Why is Corporate tax reduced?’, ‘Unemployment gaps?’ and the cherry on top ‘Why is Inequality rising?’ But all these questions are handled by the government’s well managed butlers-cum-administrations with the help of the private owned news channels (mostly by a single entity) and the social media giants which roll out propaganda for the tech-savvy generations each evening; their main jobs are to make those issues or causes to go ‘viral’. In the darkness of these social webs when each and every concerned citizen is literally fighting a virtual war over arguments, the Ultra-rich are busy saving taxes worth trillions. The inequality index is stretching beyond imaginations, but the bot-life society is happy with the news of a billionaire Indian not increasing his salary for a decade and certainly not in this pandemic scenario.⁵

If the increasing growth of the billionaires’ fortune was beneficial to every strata of the society, then we could have afforded to be least concerned with the concentrated hidden wealth. The real scenario is such that the other side of the coin has already lost its shine and is only surviving on the edge with negative or zero wealth. A huge percentage of the population in developed countries like the USA and Britain are living only on the pay-check with the majority adopting austerity like not taking milk and skipping nutritious foods as the insecurity of job retention looms large over them. The billionaires are evading taxes worth billions which was one of the prime sources of earning for the governments; since the dawn of neo-liberalism the politicians whom they backed are reducing their taxes and blocking the public investments in various sectors like health, education and other social reality. According to a recent survey billionaires in USA paid only 23% of their income in federal, state, local taxes in 2018 while an average American pays 28%.⁶ The billionaires modified the world in their own ways, as they claim that capitalism harnesses human greed for greater deed and tax is a hindrance to it; so avoiding it is the smartest outcome. But who pays the deficit? The insult is further pronounced when the survey revealed that the entire deficit is being recapitalised from the tax paid by the working class who now pay a higher proportion of their incomes as tax. The billionaire investor Warren Buffett wrote in The New York Times in 2011 that the percentage of his income that he pays in taxes has plummeted in recent decades, claiming that he pays tax at a lower rate than his secretary.⁷ But this attitude has also changed in the present scenario when the billionaire real estate developer cum American President Donald Trump boasted of not paying any federal income tax for decades by simply saying ‘that makes me smart’. Trump’s boast revealed a failure in our system as well as the society because the affluent do not contribute to the public casket which ultimately points towards the collapse of the country’s tax regime. Even as their incomes boomed and profits reaped through globalization the ultra-rich, most aptly described as the ‘fortunate citizens’ deployed several agencies to make their taxes fall. Meanwhile the condition of the not-so-fortunate citizens remains frozen and even deteriorates with wages fixed, deteriorating working conditions, and mounting debts with a rise in taxes. These agencies are the outbreak of a tax avoidance industry that masks both income and wealth by exploiting several loopholes of the transnational corporations. The global markets of reducing tax also play their part in obscuring the billionaire’s wealth by declaring them as ‘tax-heaven’ in order to draw more Foreign investors to their emerging markets; this spiral of international tax competition had forced the countries to reduce their taxes. In order to accommodate the surplus individual capitals these markets of emerging economies are playing the dirty game of lobbying the barons of various sectors to fit their requirements or current geo-political situations. India recently opened up its defence sector to 100% FDI in the midst of the Covid-19 pandemic and the ongoing tension with the Chinese army in its northern borders.⁸

Now the pandemic situation has forced many to believe in the philanthropic attitude of the twenty-first century billionaires. Numerous articles and databases track the billionaires’ donations and often garland them as ‘agents of change’.⁹ But these charitable organisations can never be an excuse for the super-rich to donate generously and aquire a benevolent public image. The government subsidized charitable organisations cannot substitute the fair and equal share which is due from the super-rich in lieu o taxes and contributing towards the proper funding of the public institutions and infrastructures. Community thrives on co-operation and collective utility. These charitable institutions helped the affluent to save huge amounts of tax benefits without even spending a penny. These charity houses are donor-advised funds in which the word ‘giving’ has no intrinsic support. Traditional charitable organisations have an obligation to spend a notable portion of their assets each year but there is no such compulsion in case of donor-advised funds. Currently an estimated $120 billion is siphoned into them.¹⁰

Billionaire Money and the Pandemic

“The world’s richest are not immune to the devastating impact of the coronavirus,” insisted Kerry Dolan, the Forbes assistant managing editor of Wealth. “The drop in the number of billionaires this year reflects the economic impact the pandemic is already having.’¹² The sympathetic tone of the editor was perhaps to pacify its ‘target readers’ that this sudden pandemic has left a ‘tragic’ impact on some billionaires who were dropped from the current list and were feeling stressed and were left out like the ‘others’. A total of 267 individuals dropped out of the list because their net worth fell below $1 billion (not to forget 21 individuals who left their wealth to heirs and left the world). The silver lining (pun intended) is that among the 2095 individuals listed nearly 49% have experienced increase in wealth from the previous year. By April 5, 2020 the cumulative wealth of the US billionaires rose back to $3.017 trillion and by the first week of April their wealth surpassed the 2019 level and stood at $3.229 trillion. Thus the editor’s empathy overlooks the rebound of US billionaire wealth by $282 billion within a span of 22 days (March18- April 10, 2020).

The Jeff Bezos wealth surge startled the market analysts who got glued to their screens as the Amazon stocks keep on piling every hour. ‘Bezos’ wealth has increased over $25 billion since January 1, 2020 and $12 billion since February 21st, 2020, the beginning of the Covid-19 pandemic’¹³. In the Indian subcontinent market the billionaires did not suffer losses either; despite the initial hiccups many regained their little hampered vanity through market deals. The highest gainer in this corona stressed markets just can’t be bestowed on anyone other than the ‘vaccine-king’ Dr. Cyrus Poonawallah. Poonawalla’s wealth grew the fastest among Indian billionaires and fifth fastest in the world during the COVID-19 pandemic because of the strong business potential of his company, Serum Institute of India, according to a report by Hurun Research. His unlisted company is already the world’s largest manufacturer of vaccine and the recent agreement with Astra Zeneca to manufacture 1 billion doses of coronavirus vaccine being developed by Oxford University.¹⁴ Mukesh Ambani still manages to hold the numero uno position among the richest Indians; though the initial months of the pandemic gave out some tough results, the consequent months saw a turn in fortune with wealth surging $18 billion on the back of over Rs.1.69 lakh crore worth deal by selling substantial stakes in his telecom entity, Jio.¹⁵.

But this is not new. The billionaires’ wealth always tend to rebound during the market meltdown. This crisis has never been a tough call for the ‘fortunate investors’ and there are numerous citations to this claim. In the last massive global economic crisis of 2008, the combined wealth of the billionaires declined by $300 billion from $1.57 trillion in 2008 to $1.27 trillion in 2009.¹⁶ The rate was quite fast as the majority of the lost fortunes were recovered within 30 months of the crash and by 2012 billionaire wealth hit the $1.7 trillion mark surpassing the 2008 mark. There was always a nexus among the policy makers to bail out the billionaires with the taxpayers’ money through institutionalised funding like loans, tax cuts and by other measures of inflated government orders. Thus wealth tax always plays a negative impact among the potential investors of any country and indeed the discussions about solutions to numerous social problems are side-tracked by the stories of beneficent billionaires and their charitable deeds. The 25^th wealthiest man in the world Michael Dell expressed his discomfort on the new American proposal to tax the ‘super-rich’ at the billionaire clubs’ annual meeting at World Economic Forum at Davos. Dell said he was ‘much more comfortable’ giving aid through his private foundations than “giving …to the government”.¹⁷ However, he is not the first billionaire to deny his obligations to society by a refusal to pay taxes by hiding behind ‘charity’.

‘Abolish Billionaires’

In recent times, as the social battles against inequality gather steam, this slogan can be heard: ‘Shun the billionaires’. Approximately one third of the billionaires’ wealth is inherited, the economic utility of which is highly debatable. Apart from undermining the social mobility and economic progress this wealth creates a new line of aristocracy where rich remain rich simply because their parents were rich. A generation of self-centred off-springs who are aloof from the social perils is hard to see as a good force for society. The super-rich have the money to spend on the best investment advice, and billionaire wealth has increased by an average of 11 percent a year since 2009.¹⁸ Bill Gates’ net worth is nearly $113 billion dollars in 2020, almost twice what he weighed when he retired as a head of Microsoft. This is despite his gracious commitment to philanthropy.

The next one-third comes from crony connections with governments and monopoly. The existence of cronyism becomes visible when elites use personal influence to leverage the power of the state for private gain. Government officials and top businessmen connive to bend the rules for mutual benefit and at the expense of ordinary consumers and taxpayers. This was widely seen in India during the days when the current Indian government’s demonetisation decision crippled the small business, economy and the common people were left standing in front of the bank for hours to withdraw or exchange their money. Its effect can still be felt today and resonate along with other draconian decisions like the introduction of Goods & Service Tax (GST). But there are many who became billionaires and whose wealth multiplied many times during the demonetisation. One such was Paytm founder, Vijay Shekhar Sharma and his peers including 19 digital payments startups which clearly gained from note ban. These founders are in close relationship with the bureaucrats and politicians; so they knew about this decision beforehand. Sharma was quick to capitalise on this. On the morning of 9^th November (the day following PM’s announcement) Paytm released a front page advertisement in most Indian newspapers, thanking the PM for note ban while most of the country cribbed and clamoured for cash. According to reports, Paytm saw 200% increase in downloads on the night of demonetisation. The annual valuation of Paytm on August 2016 was $5billion which rose to $6billion the following year and in this current pandemic situation its estimated value is around $16 billion. Sharma has amassed a net worth of 20,400 crores. The use of card and wallet increased in the transaction but its link with demonetisation was still not clear. In March 2015, Paytm received its huge stake from Chinese e-commerce company Alibaba Group, after Ant Financial Services Group, an Alibaba Group affiliate, took 40% stock in Paytm as part of a strategic agreement. The founder was so pleased with the Chinese billionaire’s backing that he touted Alibaba and his relationship with its co-founder Jack Ma as his biggest strengths. Paraphrasing a popular Hindi movie line, he said in 2015, “Mere pass ma hai… Jack Ma”¹⁹. But this eloquent man has somersaulted since then and praised the Indian government’s latest ‘strategic strike’ of banning 59 Chinese apps from India. Vijay Sharma termed the move as ‘bold’; ²⁰ perhaps he is dreaming that Jack Ma will forego his invested money or a deal has been chalked between him and the government to handle his investment scenario and prospects.

All this raised a serious concern when a similar survey by the Economist placed India on the 9^th position in the crony capital index.²¹ An observation: ‘India’s new mega corporations, Tatas, Jindals, Essar, Reliance, Sterlite, are those that have managed to muscle their way to the head of the spigot that is spawning money extracted from deep inside the Earth.’²² Here also the monopoly businessmen benefited by securing the exclusive right to sell commodities which they have never owned.

Almost all the sectors of the global economy are dominated by monopoly powers. Whether food, pharmaceuticals, telecom, oil, finance or technology each sector is dominated by a handful of huge corporations. These monopolies impose hidden taxes on every consumer which enables them along with their wealthy shareholders to extract maximum profit at the expense of ordinary citizens. The mega corporations are committed to deliver their shareholders and for each dollar returned to its rich shareholders, one dollar less is invested for better wages, training, providing better healthcare and for research and social development. Even during this pandemic the dividends have reached a new high from the previous margins of 2017-2019, while wages are stagnant in most countries.²³Between 2011 & 2017, average wages in G7 countries grew by less than 3 percent, while dividends to the share of the wealthy grew by 31%. As a result of wage stagnation and decline, the share of employed people in G7 countries at risk of poverty has been increasing in the last decade, reaching 9 percent in Germany, more than 7 percent in France, 12 percent in Italy and almost 9 percent in the UK. In India the condition is even worse, 60 percent of India’s workforce is self-employed, and 90 percent of India’s labor force works in the unorganized sector²⁴. The risk of inequality and the rise of shareholders’ profit and the way in which it affects the workers are exposed throughout the global chains. As an example one can cite the luxury fashion companies from G7 countries which have let out their contracts to cheap outsourcers, who, in turn employ women and girls from the most marginalised communities in the countries of the South. They toil for as little as 15 cents (11p) an hour in homes across India. Child labour and forced labour are rife and wages regularly suppressed.²⁵

The shareholder-first model also deepens inequality by widening pay disparities between average workers and CEOs. While wages for average workers are stagnating or declining, top executives enjoy increasing rewards. The hourly compensation gap between the CEO to their employee is nearly a thousand working hours. The hourly compensation of Disney’s CEO Robert Iger was $31,500 per hour whereas the average salary of its employee ‘Disney Princess’(irony) is that of $13.50 per hour.²⁶ The Indian CEOs are not left far behind, the recently deceased Y C Deveshwar, Chairman at ITC Ltd drew 439 times the median salary of employees.²⁷

The pandemic also reveals another dark side of these shareholder based private equity firms. They are venturing into distressed companies and are offering to re-engineer them to make them profitable again. Here the role of e-commerce giants like Amazon, Flipkart, Walmart raises deep suspicion. They are preparing to engulf the entire retail sector which includes the livelihoods of millions of workers both directly and indirectly. The private equity firms did not have any industry-specific knowledge as they believe that they did not need it. They venture into a new company and change its culture. They are always looking for opportunities to capitalize on tragedy. At first they lobby with the government to secure the bailout stimulus by portraying themselves in small business categories and shedding crocodile tears by saying that ‘the virus doesn’t discriminate, and we’ve all been affected’. Then they set up numerous charitable funds to collect money from their employees claiming to help them out of distress; such regressive is the parasitic character of ‘Corporate Care’.

Today’s extreme levels of inequality are not inevitable; they are the result of our political choices. The policies need to be pro-people and a specific time- bound action plan is needed for their strict enforcement. The expectation on government to provide proper data of consumption, wealth and income has ceased. Therefore it is high time to raise our voices against the 1%. The demand that the richest people and corporations must pay their share of the tax and not bypass this through the CARE jumlas is an absolute priority. We can’t move out from our claim of increasing investment in universal and public services, including healthcare, education and social protection such as child benefits and pensions that are designed to meet the needs of people from all strata of the society. Termination and withdrawal of the labour laws imposed by various State Governments in India is a crucial demand and connected with the others. We need proper disaster management funds to fight the global pandemic and not any corporate or individuals’ empathy towards a nation. All the corporate expenses need to be brought under the umbrella of independent audit agencies. It’s a long battle which we need to fight if we are to survive.

The author is a left-wing observer of present times

References:

Chuck Collins, Josh Hoxie, Helen Flannery, ‘Warehousing Wealth: Donor-Advised Charity Funds Sequestering Billions in the Face of Growing Inequality’, Institute for Policy Studies, July 25, 2018.
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https://www.theguardian.com/global-development/2019/feb/01/major-western-brands-pay-indian-garment-workers-11p-an-hour
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