Don’t Call It A Comeback: How America Can Bounce Back From the Greatest Economic Downturn in the History of the Industrialized World

There is no greater endorser of capitalism than I, that said, there is no arguing the cavernous wealth gap that has engulfed our nation over the past decade plus. In the fifty years following World War II, the United States built what was inarguably the strongest middle class in the world. So much so, that the lowest fifth of earners actually saw the greatest increase in average annual income. The middle class became America’s bedrock. A strong middle class is crucial in promoting the development of human capital and a well-educated population. It also creates a stable source of demand for goods and services. With so many people working, prospering, and cultivating the next generation of entrepreneurs, the country grew. Annual GDP growth rate actually exceeded 8% in both 1950 and 1951. It was 2.86% in 2019.

This type of entrepreneurialism, coupled with cheap capital and low interest rates, resulted in the dotcom boom of the aughts and Fourth Industrial Revolution. It’s also caused us to bear witness to the crippling of the middle class. What was once our country’s greatest asset, has become our greatest weakness and now, as the Corona virus threatens to wipe out job gains of the past decade, putting a quarter of Americans out of work, we collectively brace for what very well may be another Great Depression. In other words, 2020 might mark the greatest economic downturn in the history of the industrialized world. Covid-19 has consumed the news cycle, social media, and economy. There is an election half a year away, yet all political discourse points to the virus and what we can do to mitigate its spread.

It doesn’t have to be this way. I repeat…all this can change. We cannot get to a point where unemployment rivals that of the Great Depression. It took this country an entire decade to pick itself up out of that hole and return to prosperity, yet even with this historical analogue, economists and politicians are promising a V-shaped return. This is perplexing given the fact that Fauci and others have specifically warned against this type of instant rebound, instead pointing to the virtues of a gradual return to normalcy. In a recent interview with WSJ’s podcast, The Journal, Fauci admonished the idea that we will be able to, “jump back in with both feet.” Equally fictitious is the idea that there is pent-up demand and as soon as regulations like social distancing and public travel bans are lifted, the economy will get a shot of adrenaline. Although there certainly will be demand, the ability to act on that demand in the form of spending will be nullified by the fact that people, i.e. the middle and lower classes, will have no money to spend.

To further compound the issue, the government recently passed the $2 trillion-dollar Cares Act. The problem is that, of those $2 trillion dollars, only $300 billion is earmarked for direct payments to the middle and lower classes. Another $260 billion is supposed to be used for those filing for unemployment, but by all accounts, no one can actually get to that money as the states are nowhere near equipped to handle the massive surge of unemployment claims. Similarly, $377 billion is set aside to help small businesses, many of whom have reported nightmare scenarios while trying to get the right resource on the phone, forget about getting an actual check. Then there is the roughly $60 billion going directly to the airline industry, as a bailout. This makes sense however, as having a degree of air travel is necessary to ensure healthcare and pharmaceutical supply chains continue to move, in addition to essential military, health and government personnel. What’s more, there are 10 million jobs at stake in the aviation industry, many of which would be lost if air travel came to a screeching halt, or at least more so than it already has.

Deducting $60 billion from the $500, still leaves $440 billion dollars that will be managed and doled out at the discretion of treasury secretary, Steven Mnuchin. In the hundreds of pages that make up the Cares Act, there is language that lists restrictions on bailed-out companies — including retention of 90% of the workforce, pay cuts for executives earning more than $3 million a year, bans on outsourcing and offshoring, and even protections for collective bargaining agreements and union organizing campaigns. Like most legal documents however, it’s all in the fine print and the fine print requires Steve Mnuchin only to “endeavor to” create a program with the requirements just mentioned. Those requirements are dubiously enforceable however and end up being more like nice-to-haves. This may then result in the blank-check bailouts we saw in the great recession, where banks took government money only to reward CEO bonuses, pay dividends, or manage stock buybacks. These are all loathsome activities during both a recession and pandemic. To quote former republican representative Jeb Hensarling of Texas, in reference to the bailout of the banks in 2007, you can’t have “capitalism on the way up and socialism on the way down.”

To reiterate, it doesn’t have to be this way, instead consider the following: There are 607 billionaires in the U.S. and 14 of the world’s richest 20 billionaires are Americans. Jeff Bezos, Bill Gates, Warren Buffet and Larry Ellison makeup numbers one, two, four and five, respectively. The only foreign billionaire in the top five is the Bernard Arnault family, who own LVMH. If you add up the wealth of Bezos, Gates, Buffet and Ellison, you’d get $337 billion. If you were then to add the wealth of Zuckerberg, the Walton family, Steve Ballmer, Larry Page, Sergey Brin, Bloomberg and the Koch’s, you’d total $832.4 billion dollars. That’s $272 billion dollars more than the $560 billion dollars currently earmarked for lower and middle class Americans battling Covid. And that’s just the top 20 billionaires, if you were to include the top thirty, there are another six Americans, including Elon Musk and Phil Knight. The collective wealth of the world’s top thirty billionaires who are American, total a sum greater than a trillion dollars.

This isn’t to suggest these billionaires devote 100% of their wealth to bailing out the American middle and lower classes. Instead, considering the fact that every single one of these billionaires accrued their wealth by positively exploiting (and in some instances negatively exploiting) the lower and middle classes of America, what if they gave only a portion. Ten percent? What about twenty-five percent? Prior to Covid, Warren Buffet and Bill Gates had already taken the giving pledge, meaning that they’ve committed to giving away half their fortunes. In light of Covid, Gates has pledged another 125 million, along with Mastercard and Wellcome, that will go towards Covid research. In addition to these billionaires, celebrities like Madonna, Rhianna, George Clooney, Leonardo DiCaprio, Jay-Z, Dolley Parton and many others have donated money towards research or food banks. Still, this just won’t cut it. Even the wealthiest Hollywood, sports and media celebrities don’t have nearly enough to make a dent in the massive need displayed by American middle and lower classes, many of whom have little to no savings, and will remain unemployed for the foreseeable future.

This is a call to the billionaires — you 607, incredibly lucky Americans. Many of you have worked incredibly hard to reap the fruits of your labor. But you’ve forgotten that your success is engendered by our capitalist system and forged by the hard-working middle classes that have toiled for decades on your behalf. As time has passed, the rules of that capitalist system have skewed to favor the class with money and resources, while ostensibly running afoul of the American middles class. The resulting system is less capitalist and more plutocracy, underscored by deep currents of technocracy.

The time has come for billionaires across America to unite. The wealth gap is giving way to a despair gap. To the 25% of this country in the midst of losing their job, with no end to the pandemic in sight, it’s no wonder you are losing hope. Add to that, the other 25% of the country who have had their wages cut and are holding on by a thin thread. Billionaires must not look the other way. You have an ability to seriously change this. Not with millions of dollars, but with billions of dollars. Just like Gates and Buffet have taken the giving pledge, so too should you. But instead of spacing your contributions out over a lifetime, we need your help right now. To stop this country from falling into a hole we may not be able to dig ourselves out of. To stave off the greatest threat our nation has even seen. For years you have taken advantage of and profited off minimum government oversight and free market economies. In the process, you’ve paid less taxes, gotten bigger bonuses, been granted access to cheaper capital and dramatically increased your sphere of influence — all completely fair within a capitalist society, but the time has come to step up to the plate for the greater good of America, or there may not be an America left to profit from.

There is a reason that half of the world’s top fifty billionaires are American citizens. The reason is because America creates the ripest and most fertile environment within which to succeed. That is why I have faith in this country’s billionaires — faith that they can come together and do what the government is struggling to do right now, which is to get money into the hands of the Americans who need it most, prop up small businesses and create new jobs for those who have been laid off as a result of Covid. With all the private collaboration, business evolution and innovation that has taken place in this country the past decade, I am willing to believe that these same billionaires can work together to bail out the America people. If they work equally as hard at finding a solution to Covid, as they have at building their companies and accreting wealth, we will all be in a much better position than we are today. That is why I am calling on billionaires across this country to take part in the #BillionaireBailout. I don’t know what this program looks like and I haven’t thought through all the logistics. I leave that up to you. But if you 607 American billionaires each donated $1 billion dollars and then dedicated your resources, your companies and your minds to coming up with a smart solution to bail this country out — I for one, would be behind you all the way. #BillionaireBailout

*Since writing this Jack Dorsey, CEO of Twitter and Square, has donated $1 billion dollars, or 28% of his wealth to help fight Covid. Will it make a big difference in his life, the answer is resoundingly no. But will it make a difference in the lives of many Americans — I believe it can.