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No, the Pandemic Has Not Surged Billionaire Wealth

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No, the Pandemic Has Not Surged Billionaire Wealth

National Review Online July 1, 2020

The claim that billionaire wealth has surged ‘since the beginning of the pandemic’ is flatly untrue.

Over the weekend, ABC News claimed that “as 45 million Americans lost their jobs . . . between March 18 and June 17, as the pandemic raged, the combined wealth of the 614 U.S. billionaires increased by $584 billion, according to an analysis released late last week by the Institute for Policy Studies.”

ABC is not alone. This claim has made headlines in CNBC, Fox Business, Business Insider, CNN, Reuters, Newsweek, and the New York Post. It has also been shared tens of thousands of times on social media.

The source of this claim is a “study” from the Institute for Policy Studies (IPS), a liberal think tank, titled “US Billionaire Wealth Surges to $584 Billion, or 20 Percent, Since the Beginning of the Pandemic.” Every few weeks, the organization updates the data and receives another round of media headlines announcing that the pandemic has coincided with a massive surge in billionaire wealth. Social-media posts predictably follow with calls for socialism and videos of guillotines intended to mirror the French Revolution.

Yet the claim that billionaire wealth has surged “since the beginning of the pandemic” is flatly untrue.

The Institute for Policy Studies estimates billionaire wealth using constantly updated estimates from Forbes’s “Real Time Billionaires List,” which relies mostly on the growth of the S&P 500 and individual stocks held by the CEOs of top companies. The problem is that IPS seems to have deliberately narrowed the pandemic timeframe to support a dishonest claim.

The S&P 500 began the year at 3,230, before peaking at 3,380 on Thursday, February 20. The following Monday, pandemic fears slammed the stock market (CNBC: “Dow plunges 1,000 points on coronavirus fears”), and the S&P continued falling to 2,436 by the close of March 17. A few days later, it began rebounding to 3,113 through June 17, after which it dipped back to 3,009 through June 26.

A fair analysis of the stock market and the pandemic would roughly cover the time from February 20 to the present. Instead, IPS completely ignored the pandemic-driven 944-point drop between February 20 and March 17 and counted only the 677-point rebound that occurred between March 18 and June 17. There is no intellectual justification for manipulating the timeframe in this way.

IPS’s authors may assert that the pandemic began on March 18 because that week is when many Americans began quarantining. However, any economicanalysis of the pandemic must include the economic chaos that the pandemic had already brought over the previous four weeks, as a Chinese economic shutdown, thousands of American diagnoses, and fears of a resulting American recession had already caused a 28 percent stock-market collapse. IPS’s headline and data implausibly count none of these wealth losses against the pandemic.

The authors manipulated the timing window to build the dishonest narrative that the pandemic has made America’s billionaires $584 billion wealthier. It is the equivalent of saying the Cleveland Browns went 6–0 last season if you don’t count the ten losses. The pandemic pushed up stock values if you don’t count the collapsing part. The rich got richer if you don’t count the downturns. That is not how wealth-building works.

Steve Goldstein of Marketwatch has estimated that — if properly measured, from the February market peak shortly before the pandemic hit — U.S. billionaires had collectively lost more than $400 billion dollars in wealth as of late May. (Amazon’s Jeff Bezos has been an exception. Since that article posted the S&P has grown 4 percent and yet remains down during the pandemic, while the tech-heavy NASDAQ has grown 7 percent to be slightly up overall during the pandemic — nothing that could drive the claimed 20 percent increase in billionaire net worth.) The point is not to pity these billionaires. Rather, it is that so many reporters blindly accepted a partisan analysis that is so misleading as to border on intellectual fraud.

The persistence of these media stories reflects the increasingly narrative-based coverage of politics and policy. “The rich are unjustly getting richer” is one of the staple narratives that is guaranteed to generate Internet traffic and empower social-media outrage mobs. The idea that an economic collapse would coincide with $584 billion of new billionaire wealth should have raised skeptical red flags. Any basic investigative analysis or conversations with stock-market or other neutral experts would have exposed the absurdity of ignoring the earlier 28 percent stock-market collapse in any economic analysis of the pandemic.

Instead, several media organizations uncritically ran this claim with no evidence of objectivity or third-party verification. USA Today even ran a “fact check” rating IPS’s narrative as true — with a lengthy list of sources that did not include interviewing a single neutral outside expert who could address the timeframe issue. (The Fed is cited as a source, but it does not address this question.) Some narratives are apparently too good to check.

This piece originally appeared at the National Review Online (paywall)


Brian M. Riedl is a senior fellow at the Manhattan Institute and author of the recent issue brief, Coronavirus Budget Projections: Escalating Deficits and Debt. Follow him on Twitter here.

Photo by Evgen_Prozhyrko/iStock