The rising billionaire wealth amidst the pandemic

I have blogged here and here about how the pandemic exposed the elite capture of decision making processes and systems and have significantly increased economic inequality.  

Ruchir Sharma has a good essay in FT examining the rise of billionaire wealth in the top 10 each of the developed and developing economies. He writes about the pandemic.

As the virus spread, central banks injected $9tn into economies worldwide, aiming to keep the world economy afloat. Much of that stimulus has gone into financial markets, and from there into the net worth of the ultra-rich. 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. The billionaire population boomed last year as well. On the 2021 Forbes list, which runs to April 6, their numbers rose nearly 700 to a record total of more than 2,700. The biggest surge came in China, which added 238 billionaires — one every 36 hours — for a total of 626. Next came the US, which added 110 for a total of 724. The top 10 gainers in the US and China each saw already vast fortunes grow in just one year by sums that not long ago would have seemed impossible in a lifetime: from $25bn to more than $150bn for Tesla founder Elon Musk.

One of the largest increases has been in India, where billionaire wealth has soared to more than 17% of GDP, "with most of the gains accruing to a narrow set of families in industries prone to crony capitalism".

This is an excellent depiction putting the rise in billionaire wealth during the pandemic in perspective

Sharma classifies industries into good and bad, and inheritance, based on whether the wealth comes from clean and productive industries like IT, services, and Pharma, or from possibly corrupt sectors like real estate, infrastructure, mining, and oil. He finds that the largest share of the wealth of billionaires in developed countries and places like South Korea, Taiwan, and even China comes from "good" industries. 

This is interesting about the size of individual billionaire wealth, 

As the world’s richest man, Jeff Bezos’s $177bn may seem mind-boggling. But at 0.8 per cent of GDP, it is far from Rockefeller wealth, which at his peak amounted to 1.6 per cent of GDP. There are, however, many real Rockefellers in other countries, including five in Sweden, two each in Mexico, France, India and Indonesia, and one each in Spain, Canada, Italy and Russia. Top of the Rockefellers list are self-made fashion king Amancio Ortega of Spain, telecom titan Carlos Slim of Mexico and Bernard Arnault of France; each has a fortune equivalent to more than 5 per cent of his home country’s GDP.

Like with so many other things, where moderation is the need of the hour, Germany provides an example,

It has been boom times for German billionaires too. Their number rose by 29 to 136 last year, but their total wealth edged up only slightly as a share of GDP. Most keep a low profile, avoiding the superyacht scene in St Tropez, and there are no budding Rockefellers among them. The average wealth of the top 10 is $23bn, compared to $105bn for their American peers. Many large German fortunes classify as inherited, but often those tycoons arise from the Mittelstand; family-run, often small to medium-sized companies, which are the backbone of German industry and still a source of national pride.

Finally, he has a graphic on the countries with the highest proportion of billionaire wealth coming from inheritance, and good and bad industries.

Sharma argues that the preponderance of "good" billionaires may be keeping a lid on popular discontent against such dramatic inequalities.