Understand how the rich got richer in the pandemic

On the one hand, increased inflation among the poorest, families looking for food scraps in the garbage, new jobs with lower wages.

On the other, greater concentration of income, an increase in the number of billionaires and performance records in international markets.

The two antagonistic scenarios mark the gap in income, performance and opportunity between the bottom and the top of the pyramid — a gap that managed to grow even wider during the new coronavirus pandemic.

In the middle of the year, the Credit Suisse bank announced that inequality had grown in 2020, in the midst of the health crisis, and the richest 1% now concentrates half of the country’s wealth.

In this regard, Brazil was only behind Russia, in a ranking of ten countries. A year earlier, the richest Brazilians held 46.9% of the wealth — with the pandemic, that percentage rose to 49.6%.

A similar movement occurred in most countries analyzed by the institution. The share concentrated by the top fell only in France and Germany.

The bank’s survey also pointed out that Brazil was the country analyzed with the biggest drop in income and total assets of the population. Income is considered the flow of money — like remuneration for a job, for example. Equity is the stock, which is accumulated.

Furthermore, even with the challenges posed by the pandemic crisis and its consequences in the loss of steam for the Brazilian economy, the country gained 40 new representatives in Forbes magazine’s 2021 billionaire list. The publication attributed this increase to the heating of the capital market, which favored the richest.

“During the pandemic, the top managed to profit, despite the moment of economic pessimism. Some of these people felt the appreciation of the capital market, which often has a performance detached from the concrete reality”, says Jefferson Nascimento, Research and Incidence coordinator in Social and Economic Justice at Oxfam Brasil.

While most workers saw the job market melt and came to depend on temporary programs to transfer resources, such as emergency aid, retail giants, ecommerce and pharmaceutical companies increased their profits in the period, which was reflected in the appreciation of assets of billionaires.

Jeff Bezos, president of Amazon]is richer today than before the pandemic, recalls Nascimento.

“Since we live in a period of low interest rates worldwide, this has resulted in an increase in the value of shares”, says Matias Cardomingo, a researcher at Made/USP (Research Center in Macroeconomics of Inequalities).

“We saw stock exchanges rising all over the world, with monetary incentives. After the first shock, when everything fell, the recovery did not take long to happen for the rich.”

In addition, some of the richest are linked to sectors that were not directly affected by the pandemic’s dynamics, says the researcher.

“The services with higher qualifications even had an increased demand, such as strategic consulting and distance learning, and this is opposed to what was happening at the base, in services with cheaper labor.”

Nascimento adds that, in addition to investing in “opportunistic” areas, another reason for the increase in wealth of the richest is related to the greater ease of diversification of investments and businesses that the owners of large fortunes have, which ends up working as a cushion of protection.

“Taking the billionaires’ fortune as measured by Forbes in February 2020 as a basis, the wealth of the wealthiest dropped from 100% to 70% at the start of the pandemic, in March and April of last year. But in November 2020, they they had already regained what they lost, while most people were scared of Covid-19 and we didn’t even have vaccines yet.”

The report published by Oxfam earlier this year pointed out that the pandemic generated nine new billionaires linked to the pharmaceutical sector — some of them were related to companies that produced vaccines against Covid-19.

As part of the development of immunization agents, it had public funds, for research and capital support, it is as if governments had indirectly collaborated to make these people even richer.

At the same time, the average standard of living of Brazilians —measured by GDP (Gross Domestic Product) per capita— is expected to remain practically stagnant for the next four decades, according to a projection by the OECD (Organization for Economic Cooperation and Development).

The organization, known as the club of rich countries, also estimates a drop in the number of Brazilians active in the labor market and in the country’s occupancy rate during this period.

The pandemic affected the family plans of Vagner Benedito, 67. Now he goes to the Municipal Market of São Paulo (central region of the capital) in search of fish and pieces of meat that would be discarded by merchants.

Unemployed for over a year, he is no longer able to buy food as he used to.

“I come from Vila Prudente [na zona leste] to the central region in search of something different to take home. We prepare food carefully and I’m not ashamed to say that I keep coming to get donations, as life has become too expensive. I try not to complain, but it didn’t have to be that way.”

Despite the difficulties of recent months, Benedito still says he believes that life can get better again. He tries to return to the job market, despite seeing the few opportunities he finds being filled by younger candidates.

“What moves me is the desire that my daughter, who draws as a professional even though she has never studied drawing, can have a better life.”

The most recent estimates, from 2020, indicate that the increase in hunger is also worrying, recalls Nascimento, with 55% of the population living in food insecurity (no guarantee that they will have something to eat) and 9% hungry — a situation that returns to the 2004 level.

It is as if there were two pandemics at the same time: one that served to destroy low-paid jobs, lower wages and affect prices of basic products for the survival of the poorest, while another that helped the rich to become even richer.

For Cardomingo, the end of the pandemic will pose even greater challenges than the previous ones, in terms of reducing inequality.

“Around the world, what is being discussed is an expansion of essential public services and this is divided into identifying the importance of education and also care services. This is happening so much in the United States, that now they talk about plans to eradicate poverty child in a year, as in Europe.”

“Our answer should be through tax reform, as part of the diagnosis that the super-rich are even richer, while the others are fighting for survival at the base, and the former should contribute more to society, paying more taxes”, defends Nascimento.

A Datafolha survey for Oxfam Brasil, published in May, found that most Brazilians supported raising taxes to reduce inequality. A closer look at the numbers showed, however, that this willingness to pay more taxes was lower among the richest (35%) than among those earning up to the minimum wage (61%).