Coronacrisis Turns Buyback Billionaires into the Trillion-Dollar Dozen
Coronacrisis Turns Buyback Billionaires into the Trillion-Dollar Dozen by David Haggith for The Great Recession
The Coronacrisis has been a boon for America’s wealthiest dozen, taking their aggregate wealth over the top of a trillion dollars. One think tank refers to them as the “Oligarchic Dozen”:
“The rich get richer” doesn’t even begin to tell the story these days. According to the Institute for Policy Studies, the wealth of the top 12 billionaires in the U.S. recently exploded to more than one trillion dollars — yes, 13 digits…. “This is simply too much economic and political power in the hands of twelve people. From the point of view of a democratic self-governing society, this represents an Oligarchic Dozen….”
Since the pandemic first blew up in the U.S. back in March, the “Oligarchic Dozen” has enjoyed a 40% surge in its combined wealth…. “The total wealth of the Oligarchic Dozen is greater than the GDP of Belgium and Austria combined,” said Omar Ocampo, a researcher for IPS’s program on inequality and the common good. “Meanwhile, tens of millions of Americans are unemployed or living paycheck to paycheck….”
And it’s not just Bezos and the bunch who have seen fortune smile upon them lately. CEO compensation, overall, climbed to its highest level in seven years last year, and it is positioned to rise once again in 2020…. In fact, the pay ratio between chief executives and workers at America’s 350 biggest companies has widened to 320-to-1, the researchers found.
The Buyback Billionaires
These are the Buyback Billionaires, some of the elite whose wealth has been expanded by the deregulation that allowed companies to buy back their own stocks and by the low capital-gains tax that gives the most benefit to those who expand their wealth through stock buybacks — the tax that Trump now wants to lower even more, thus exacerbating the extreme difference between the wealth of the rich and the survival of the rest.
Some billionaires see through it and have spoken out strongly against the buybacks that have made this leap possible and that have, again, been fueled by cheap Fed credit.
Back in March, when the Fed and feds went on their bailout binges, Mark Cuban implored the government not to allow buybacks at any corporation that received this year’s Fed bailouts.
Ostensibly still disgusted from The Great Recession, where zero executives were held accountable and most of the Fed’s TARP money went to line the pockets of executives and widen the inequality gap, Cuban had some choice words – and some good ideas – for what life should be like post-bailouts and after the coronavirus crisis ends….
Cuban lamented bailouts in the past that have ignored the middle class and sought to place accountability on the executives that have put their companies in such precarious positions, mostly through buybacks, that they can’t weather the storm of an economic slowdown on their own.
“”We already know what’s going to happen,” Cuban said. “A year after this plays out, and it will, we’ll look back and say why didn’t we consider the workers? The everyday hourly worker. The people making minimum wage. Why didn’t we reward them as well?”
Well, the government did dole out some to the proletariate this time around to cauterize their losses, and it did place some window-dressing restrictions on buybacks. However, the Buyback Billionaires still benefited by far the most, getting rocketed into the new Trillion-Dollar Dozen.
Congress in its infinite trickery pretended to listen to this concern by stating in its various bailout acts that none of the money from the bailouts could go to buybacks. So what? Companies then take that cheap or free money and spend it on what it is meant for so that they can free up other funds to do buybacks, which they would have otherwise had to use just to save themselves.