The Financial Times has an interesting piece this week by Ruchir Sharma on the now-familiar theme of how Covid has made the world’s most wealthy people even wealthier.
Sharma has spent two decades tracking the fortunes of billionaires, concerned that rising inequality would lead to political instability.
He argues that the colossal $9tn – that’s 9 trillion – injected by central banks has massively helped those he terms the “ultra rich, and that the “the total wealth of billionaires worldwide rose by $5tn to $13tn in 12 months, the most dramatic surge ever registered on the annual billionaire list compiled by Forbes magazine.”
As noted on Gript previously, some of those who have most benefited have been China’s billionaires, though at the top of the list were US gainers like Elon Musk who saw his net worth grow from $25 billion to $150 billion according to Sharma.
Sharma writes that:
I started tracking billionaire wealth in my home country, India. Back in 2010 anger against the new wealth elite was growing, and my first parsing of the Forbes lists helped explain why. Although India is relatively poor, billionaire wealth had soared to the equivalent of more than 17 per cent of gross domestic product, one of the highest shares in the world, with most of the gains accruing to a narrow set of families in industries prone to crony capitalism.
He says that in the 2010s America’s billionaire class looked “surprisingly well balanced” with billionaire wealth totalling about 10 per cent of GDP at that time, in line with the average for wealthy countries. By 2015, it had surged to 15 per cent of GDP, however and the wealth gains of 2020 have accrued mostly to tech companies and their founders. Now US billionaire wealth is at nearly 20 per cent of GDP.
In France, he reveals, billionaire wealth also jumped to 17 per cent last year.
While Sharma distinguishes between what he describes as “bad” and “good” billionaires based on how their wealth is derived, what is most remarkable is the acknowledgment that this boom for billionaires is “easy money pouring out of central banks”.
There will come a time when that easy money needs to be repaid of course – by the ordinary taxpayer who is not benefitting from the Covid boom, and who face an uncertain future.