Three of the richest people in the world — Amazon (AMZN) CEO Jeff Bezos, Tesla (TSLA) CEO Elon Musk, and Facebook (FB) CEO Mark Zuckerberg — have each added billions to their fortunes amid the coronavirus outbreak, part of a nearly $1 trillion rise in wealth for U.S. billionaires, USA Today reported earlier this month.
The boon owes to a stock market rally that has disproportionately benefited the wealthiest Americans, while tens of millions remain unemployed and on the brink of eviction as the economic recovery slows.
In a new interview, author and former Labor Secretary Robert Reich sharply criticized economic conditions that produce gains for the wealthy and deprivation for the vulnerable. He called for higher taxes on the wealthy and antitrust laws to rein in big tech, but warned that wealthy Americans would “do everything they can” to prevent such policies from making their way into law.
“You have a very distorted economy in which people at the top are riding this stock market wave while almost everybody in the bottom 90%, especially the two-thirds who don’t have a college degree, are in real jeopardy,” says Reich, a professor of public policy at the University of California at Berkeley who endorsed Bernie Sanders in the Democratic presidential primary.
“In fact, we’ve got at least in recent memory, recent history, a record number of Americans facing eviction or foreclosure, and also hunger,” Reich adds.
The disparity between the stock market and the ‘real economy’
A jobs report released last Friday showed the economy added 245,000 jobs in November, which marked the lowest gain of any month since the economy lost a record 20.5 million jobs in April.
Meanwhile, a report published in October by the nonprofit Feeding America found that 50.4 million Americans are food insecure, meaning they do not have consistent access to sufficient food. The number of food insecure Americans rose from 37.2 million in 2018, the organization found.
On the other hand, the Dow Jones Industrial (^DJI) crossed a record threshold of 30,000 points late last month, and has risen more than 11% since Election Day. Most of the gains from the market rally accrue to the wealthy. A Federal Reserve study conducted in the first quarter of 2020 found that the top 10% of Americans by net worth own more than 87% of U.S. stocks.
Reich said that rich Americans would like the real economy to recover, but will oppose measures to broaden growth such as a tax on the rich, which President-elect Joe Biden has proposed for earners who make more than $400,000 per year.
“I think they generally want a recovery because an economic recovery is good for them, as well as everybody else,” he says. “It means more money to buy more stuff; it means higher profits.”
“Are they going to be happier about reinvigorated antitrust or much stronger unions? Not a chance,” he adds. “Are they going to be happy about Biden’s proposals for raising taxes at the top? Quite the contrary.”
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