January 25, 2021

Reporting on wealth: ‘The virus isn’t a leveller. It has made the rich richer’

https://www.theguardian.com/membership/2020/nov/29/wealth-inequality-rich-richer-pandemic

As wealth correspondent, which stories have most informed your thinking on the topic?

In my reporting, I’ve been interested in how the hobbies and lifestyles of the super-rich affect everyone who isn’t well-off. I wrote an investigative piece on superyachts, and how their billionaire owners often spend £200m or more on what is essentially a floating palace on the ocean, but staffed by people who are entirely unsupported, working up to 24 hours a day.

Three young British people died on superyachts, and their families never provided with compensation or even an apology from anyone. It’s complicated, not least because the yachts can operate in international jurisdictions, so coroners are prevented from calling people as witnesses, and it’s incredibly hard to hold anyone to account.

Another story that affected me was the day I spent at a food bank in Tower Hamlets, London, in 2019. The area has one of the highest concentrations of wealth in the country but also one of the greatest rates of child poverty. There were people badly struggling – all in the literal shadow of the skyscrapers of the world’s biggest banks, paying their bosses tens of millions a year. There are projects that are looking at relocating people out of the city to more rural areas, which has its own problems, of course. Both stories were very different, but stark examples of inequality.

Which stories have most stood out from the last year?

Among so many people losing their lives, and others losing their jobs, the inequality gap has widened further. The very richest people have benefited financially – in fact, it’s been a very good year for the super-rich. That group – including people such as Jeff Bezos of Amazon and Elon Musk of Tesla – are able to take financial risks. Tech firms are doing brilliantly on the stock market. We’re all at home using Zoom, Google, Amazon and so on, so they are sitting pretty. The market value of Zoom is up over 500% this year!

The other big story is how small businesses have been affected by the pandemic. Apart from the US, I think Britain’s been among the worst for supporting small and medium-sized businesses. If you look at Germany, they’ve already got infrastructure, mechanisms and a culture in place for supporting people, whereas we haven’t really. It feels like the bigger a company is, the more likely it is to survive. So far from it being a “leveller”, coronavirus is highlighting the wealth divisions across the world. If you’re rich, you can afford not to be out there being exposed to the virus, and you’re more likely to have a healthy lifestyle to begin with.

Will 2021 be a year of tax increases?

Yes – and I don’t think there’ll be a wealth tax. I imagine there will be more cuts, too, but Rishi Sunak has said they are not seeking to make these changes imminently, so I imagine all this will come later in 2021 when people have recovered from the immediate impacts of the crisis. The government is providing a lot of support to people and companies now because it needs to prop up the economy, and there would be public outrage if it didn’t. However, a central ambition of most Tory governments is to bring down the national debt, which is now the highest it’s been since the 1960s.

A woman photographed from behind pulling a shopping trolley at a pedestrian crossing, with two large skyscrapers behind the low-rise urban street
A food bank client in Poplar, east London, in the shadow of the towers of Canary Wharf. Photograph: Martin Godwin/The Guardian

Will we see an increase in offshore tax havens?

It’s been a problem for so long, but nothing is ever going to happen until all the world’s countries unite and come up with a fair tax system, and ensure everyone sticks to it. It seems simple, but the Organisation for Economic Co-operation and Development has been trying to do so for years with little success.

A recent UBS report talked about how the super-rich’s fortunes have almost doubled in the last three years, and by more than a quarter during the recent market turmoil. Wealth is as concentrated now as it was in the US Gilded Age, when a few billionaire families – the Carnegies, the Rockefellers, etc – had monopolies on the biggest industries, before public pressure forced the government to split up the tycoons’ companies.

Has the pandemic property boom come as a shock to you?

It’s been gradual, but fascinating. The changes to stamp duty have encouraged a lot of people to buy – and the move to the suburbs, to houses with gardens, away from city centres, has been quite apparent. Meanwhile, there’s been a big rise in the purchasing of Downton Abbey-style estates, costing upwards of £25m, where people who formerly lived in Mayfair or similarly expensive urban locations have relocated to get more space, more land, in order to escape the pandemic and house more family members. And about half of those high-end purchases have been made by Russian, Chinese, Far East nationals and Americans. Britain has been a relative bargain since the Brexit referendum result and the fall in the pound, and it continues to be.

Where is the wealth gap changing?

It’s spoken about surprisingly little, but in addition to its billionaires, the US has huge numbers of people who are struggling – whole families who would previously have been decidedly middle-class are queuing up for food banks. The average pay of chief executives has surged far beyond that of the average worker. Just before lockdown, there were a number of chief executives who forewent their pay, but they’ll recoup it elsewhere, whereas their employees certainly won’t.

China, of course, now has quite a sizeable wealth gap for a historically communist country. The oil price, though, has crashed, so some super-rich whose money is tied up with that have lost out.

How will a Biden presidency affect the global wealth gap?

It will definitely narrow. Trump was good if you had money – he cut regulation, taxes and red tape. He looked at the stock market every day and judged his success from how it was doing. In the US, employees take a more active role in managing their pensions, which are invested in the markets, and investments are much more a part of people’s everyday thinking. Biden and Harris are both centrists, but Harris in particular makes me feel hopeful we’ll see a drive towards more equality.