How The Rich And Powerful Put Their Wealth Above Public Health
While millions are facing health and financial uncertainty and unemployment rolls are reaching record levels due to the novel coronavirus pandemic, a small group of wealthy elites are thriving. Not only do the rich and powerful seem to have access to otherwise near-impossible to obtain COVID-19 testing and enjoy better access to healthcare, they are also self-isolating at swanky vacation estates in the Hamptons, the Catskills, and Sun Valle – or, like billionaire David Geffen, on lavish private yachts.
All the while these billionaires and multi-millionaires are figuring out ways to maintain their wealth and even profit at the expense of everyone else who is struggling to stay afloat. Indeed, as J.C. Pan wrote for The New Republic: “The malfeasance of the ruling class has reached such a level of absurdity that it almost feels as if they’re trying to summon a mob.”
Here are some of the ways the country’s most rich and powerful are hoarding their wealth at the expense of everyone else during this crisis:
The billionaires that want you to get back to work no matter the cost to your health.
Dan Loeb, Kevin Griffin, Paul Tudor Jones, and Stephen Schwarzman
On March 24th the Trump administration held a call with some of the wealthiest investors on Wall Street to discuss how COVID-19 and state-by-state restrictions on public gathering and businesses were affecting stock market performance, financial markets, and the broader economy. The call reportedly included heavy hitters such as private equity giant Stephen Schwarzman from Blackstone (net worth $17.1 billion) and hedge fund managers Ken Griffin (net worth $12.4 billion) from Citadel, Dan Loeb (net worth $2.8 billion) from Third Point, and Paul Tudor Jones (net worth $5.1 billion) among others. The group urged the administration to set a specific date to ease public health restrictions in order to reassure markets.
Just hours after the call with the Wall Street elite, Trump went on air for a virtual town hall on Fox News and declared that he would like to see the economy “opened up and just raring to go” by April 12th. The arbitrary deadline set by Trump at the behest of these investors was much earlier than what health experts predicted would be necessary to mitigate the spread of the virus. A few days later – after Congress passed a stimulus bill that created a $500 billion slush fund to bail out big business – Trump walked back his commitment to having the economy “opened up” by Easter. However, the power dynamic had already become crystal clear – Trump’s billionaire backers are pushing him to prioritize financial markets over public health and the creation of a fair safety net for workers impacted by the coronavirus shutdown.
Of all of the Wall Street elites working to influence Trump, Stephen Schwarzman has the most weight. In 2016 we profiled his efforts to line up the support of Wall Street for the incoming Trump administration and his role as the head of the short-lived Strategic and Policy Forum, a group of wealthy CEOs hand-picked by Schwarzman to advise the president on economic policy. Although he did not directly contribute to his campaign, Schwarzman was over the moon about the Trump presidency early on, going so far as to say Trump would change the “architecture of the world.” Indeed, over the course of Trump’s presidency Schwarzman’s own net worth has grown from around $10 billion in 2016 to $17 billion in 2020. Like Trump, Schwarzman has a taste for opulence, most notoriously feting himself with lavish multi-million dollar birthday parties headlined by stars like Rod Stewart during his 60th and Gwen Stefani during his 70th.
Schwarzman’s private equity firm Blackstone is also positioned to influence the economic recovery in New York State, the financial capital of the United States economy as well as the US epicenter of the coronavirus pandemic. On March 23, New York Governor Andrew Cuomo announced that Blackstone senior advisory director William Mulrow would be in charge of developing the state’s economic recovery plan.
Lloyd Blankfein and Dick Kovacevich
After 12 years as CEO of Goldman Sachs, one of the largest investment banks in the world, and amassing a $1.3 billion personal fortune, Lloyd Blankfein now calls himself a “former CEO on a gap year.” What a gap year means to a 65-year-old billionaire is anyone’s guess, but for now it appears that Blankfein is spending at least some of his time crafting twitter quips. On March 12th, Blankfein tweeted support for social distancing measures and financial relief for individuals and small businesses, saying “I would welcome if we look back 3 months from now and think we over-reacted.”
But just ten days later Blankfein kicked off a cascade of calls from wealthy elites to put everyday workers at risk by forcing them back into the public sphere, tweeting that lower-risk workers should return to work in a “very few weeks.”
Extreme measures to flatten the virus “curve” is sensible-for a time-to stretch out the strain on health infrastructure. But crushing the economy, jobs and morale is also a health issue-and beyond. Within a very few weeks let those with a lower risk to the disease return to work.
— Lloyd Blankfein (@lloydblankfein) March 23, 2020
Former Wells Fargo CEO Dick Kovacevich provided a more direct version of Blankfein’s sentiment:
“We’ll gradually bring those people back and see what happens. Some of them will get sick, some may even die, I don’t know.”
While much is still unknown about the novel coronavirus, medical experts agree that it is highly contagious and easily spread even between people who are considered low risk and showing no symptoms. “If we let up now, we can be virtually certain that health care will be overwhelmed in many if not all parts of the country,” Marc Lipsitch, the director of the Harvard Center for Communicable Disease Dynamics told the Washington Post.
The billionaires sacrificing workers to protect their fortunes
A very small number of corporate leaders, such as Columbia Sportswear CEO Tim Boyle and Texas Roadhouse CEO W. Kent Tayor, have pledged to forgo their own pay in order to keep paying their employees during the coronavirus shutdown. But many more corporate leaders – including some of the richest people in the world – are refusing to pay their employees while sitting on billions of dollars.
Orders to self isolate and stay at home have put a huge demand on Amazon, a popular go-to for quick deliveries of essential goods. Demand for deliveries from Amazon’s warehouses have skyrocketed to such an extent that Amazon took a step of delaying all purchases deemed non-essential to prioritize deliveries of certain products. However, in the midst of this boon for the company, workers report that while warehouses remain crowded and busy, the company is only offering two weeks of sick leave if an employee tests positive for the virus. Acquiring testing for COVID-19 is notoriously difficult.
A spokesperson called Amazon’s warehouse workforce “heroes fighting for their communities.” However, Amazon workers who may be showing symptoms but have not been able to obtain a test for the virus are forced to take unpaid leave and must rely on GoFundMe pages set up to crowdsource resources to support them. Many facilities where workers have tested positive for the virus remain open.
Amazon founder and CEO Jeff Bezos is the richest person in the world with a personal fortune over $113 billion. Indeed, Bezos has so much money that even he acknowledges that he does not know how to spend it all. In an interview for Business Insider he said:
“The only way that I can see to deploy this much financial resource is by converting my Amazon winnings into space travel. That is basically it.”
The Jacobs Family
Jeremy Jacobs Sr. is the founder of Delaware North, a multibillion dollar multinational conglomerate that controls stadium concessions, restaurants, hotels, and national park amenities. Jacobs’ three sons (Jerry Jr., Lou and Charlie) run the day-to-day operations at Delaware North in various capacities while Jacobs Sr. serves as Chairman. According to Forbes, Jeremy Jacobs Sr and his family are worth $3.4 billion. Jacobs lives in a 35,000 square-foot mansion on Deeridge Farm, a 250-acre estate designed by Frederick Law Olmsted in the tony Buffalo suburb of East Aurora. Jacobs also owns a 200-acre estate in the billionaire playground of Wellington, Florida with the same name.
Delaware North has more than 55,000 full-time and part-time employees. In a press release on March 25th, Delaware North announced that it was placing two-thirds of the company’s 3,100 full-time employees on temporary leave with only one single week of pay. The press release emphasized that “great attention was given” to make sure employees had medical benefits for eight weeks despite only receiving pay for one week. Moreover, those who were lucky enough not to outright lose their jobs will now be expected to work for less pay.
The tens of thousands of part-time Delaware North employees are getting nothing from the company or its billionaire owners.
In addition to his concessions empire, Jacobs owns the NHL’s Boston Bruins and TD Garden, where they play. All part-time TD Garden employees were laid off as part of Delaware North’s culling while 45% of the full-time salaried staff were given the one week of pay and eight weeks of benefits outlined in the company’s general statement. Bostonians are rightly rising to the occasion and calling out their billionaire sports owner’s egregious behavior.
Apollo Global Management co-founder and Philadelphia 76ers co-owner Josh Harris is worth $4.2 billion. Last week, Harris announced plans to cut some 76ers employees’ pay by up to 20% while the NBA is on hiatus due to coronavirus. After fans blasted the move and 76ers star player Joel Embiid pledged he would help Sixers’ employees whose salaries were set to be cut, Harris reversed his announcement.
But that’s not the only way Harris has put Philly families at risk during the pandemic. His private equity firm, Apollo Global Management, financed Joel Freedman’s takeover of Hahnemann Hospital. Freedman shuttered the hospital less than 18 months later. The loss of Hahnemann posed a threat to Philadelphians’ – especially poor Philadelphians’ – health even before the COVID-19 crisis and became a national symbol of the country’s broken healthcare system. When the city wanted to re-open the hospital to care for people during the pandemic, Freedman demanded the city pay him an exorbitant leasing fee – almost $1 million a month. The city declined to pay Freedman and is instead partnering with Temple University to open a temporary hospital.
John Paulson, founder of New York-based hedge fund Paulson & Co., made a fortune betting against subprime mortgages right before the housing market collapse triggered the financial crisis in 2008. He is now worth $4.2 billion and spends his money snapping up luxury beach-front real estate and office buildings in Puerto Rico. It was reported that by 2015 Paulson had already invested around $2 billion in Puerto Rico, a U.S. colony that Paulson said would become “the Singapore of the Caribbean”, in reference to the Asian country known for its tax exemptions and offshore companies.
Recently, it was announced that 2,000 employees from seven hotels in Puerto Rico were fired due to the economic impact of the COVID-19 pandemic and the establishment of a curfew by the Puerto Rican government. Two of the hotels, La Concha Resort and the Condado Vanderbilt, are wholly owned by Paulson. These employees were laid off in the middle of Puerto Rico’s most recent crisis, a country that is still recovering from the destruction brought by Hurricane María.
Terry and Kim Pegula
As the owners of the two major sports teams in Western New York, the NFL’s Buffalo Bills and the NHL’s Buffalo Sabres, the Pegulas typically enjoy accolades for their role in the local economy. Terry Pegula made his fortune in the oil and gas industry after he sold his fracking company to Shell and he and his wife are now worth over $5 billion.
Since the coronavirus pandemic began to sweep New York and the NHL and NFL were forced to suspend their seasons, the Pegulas have joined the ranks of owners who are unabashedly throwing their workers under the bus. The Pegulas announced that they were laying off all hospitality staff – leaving them without income or healthcare – and would not guarantee that these workers will have jobs once the pandemic subsides.
Shortly after announcing they were laying off their hospitality staff, Pegula Sports and Entertainment announced they were pledging $1.2 million – 0.024% of the Pegula family’s $5 billion net worth – to Western New York’s response to the outbreak. That pledge is the equivalent of an average Buffalo household pledging $8.97.
The billionaires figuring out how to exploit the crisis to make even more money
Hedge funder Bill Ackman, the billionaire founder and CEO of Pershing Square Capital Management, just made a fortune by hedging his investments in case the coronavirus tanked the market. On Wednesday March 18th Ackman called in to CNBC and took to Twitter in what appeared to be an earnest attempt to impress the seriousness of the impending collapse and to implore Trump to “shut down the country” for 30 days. Meanwhile Ackman was sitting on $27 million in hedged bets on corporate default, wagering that financial markets would collapse. When the markets did just that, his $27 million wager turned into a $2.6 billion windfall.
Bill Ackman has a net worth of $1.5 billion and is a major investor in charter schools.
While millions are wondering when they will see another paycheck and watch helplessly as their personal savings and retirement funds are decimated, notable vulture investor Seth Klarman (Net worth $1.5 billion) is on a spending spree. Klarman is the billionaire founder of Baupost Group, a Boston-based hedge fund that has come under scrutiny in recent years for its contribution to the Puerto Rican debt crisis as a major bondholder.
As a vulture investor Klarman looks at crises and instability as exploitable opportunities; the current public health and financial crises brought on by the COVID-19 pandemic have him asking for more capital from his investors to help him scoop up troubled assets.
What is your local billionaire up to?
The good news is that people across the country are challenging these billionaires. People are taking action, demanding financial relief from rent, mortgages, and student loans, demanding that they be able to care for their children, and demanding that their health and safety be taken seriously.
Workers from Amazon, Whole Foods, and Instacart, who are doing essential, life-saving work in the midst of the pandemic, are walking off the job to demand basic personal protective equipment and hand sanitizer, access to paid sick leave, and better pay for their high risk jobs. Sanitation workers in Pittsburgh, PA held a wildcat strike to demand safety gear and hazard pay. Workers at GM plants are demanding that their jet engine production plants be used to produced needed ventilators.
How is your state’s billionaire contributing to this crisis? Find their name in the spreadsheet below, given them a google, and let us know what you find at @twittlesis! CLICK HERE TO FIND THE SPREADSHEET.