Meanwhile, extreme global poverty is set to rise for the first time in twenty years.
In general, pandemics and lockdowns aren’t good for the bank balance. The UK went into its first lockdown on the 16th March, and by the 7th April nearly half of all Britons said they were having to tighten their belts. Stopping most businesses from running as normal has left the UK government facing down a looming unemployment crisis, which is likely to get much worse if the government continue tapering down their initial relief measures such as the furlough scheme.
For billionaires, however, it’s been a different story. Their overall wealth increased by 27.5 percent between April and July 2020. Those whose fortune is tied up in technology, healthcare or industry did particularly well. Most of the money boost came from shares increasing in value. Shares are a type of financial investment which gives their holders part ownership of a company. They can be swapped on a stock exchange, and they go up or down in value depending on how well the company is doing.
Shareholders make money either by selling their shares for more than they bought them or via dividends. These are the payments companies make to their shareholders as a reward for investing in them. The more profitable the company, the larger the dividends usually are. Anyone who owned shares in Zoom or a mask-masking factory before the pandemic is likely to have seen their shares go way up in value.
Plenty of people will consider it unfair that the uber-wealthy are getting richer at a time when many others are struggling to make ends meet. They’d probably like their government to increase taxes on the very rich as a way of redistributing the money around the economy a little more. But others disagree with this approach because they say it disincentives investment. If it wasn’t possible to make much money from shares, rich people might decide not to bother giving their money to promising companies in the first place. Without this capital, businesses might struggle to grow or develop their products. That means the consumers who currently enjoy them would lose out.
We live in the same neighbourhood, area, country, and planet with about seven billion other people, and our economies inevitably overlap all the time. That means the economic choices we make might have consequences outside our control, and someone else’s choices might have a direct effect on your economy – even if you’ve never met them before…