The sideways hustle of billionaires that inequality has created
By now, many people are familiar with the obvious side effects of the nearly half-century-long explosion of economic inequality in the United States: most notably, the creation of a small class of super elites rich who can twist our politics and grab a huge chunk of our national wealth and our tool in penis-shaped spaceships while everyone languishes in a pandemic. But in today’s particular environment, we have also created a situation in which the ultra-rich can become even richer in the most socially and economically wasteful way possible.
Reasonable people who accept that wild inequality at America’s Golden Age level is a bad thing tend to agree on a very basic set of actions that would help fix the problem. We should tax the rich more; we should set our laws to empower workers more and capital less; and we should build an adequate social safety net to protect everyone from poverty. Simple enough, right? You may notice, however, that even if (for example) the Democratic Party controlled all of Congress and the White House and theoretically wanted to pass measures like these, Congress would have to act to make them happen. Congress could tax the rich and give money to everyone else.
But of course Congress won’t, because of the filibuster and our generally broken political system more broadly. Thus, in America, since the financial crisis of 2008, desperately turned to the Federal Reserve to pump money into our economy, as a crude and less effective approximation of what Congress should have done. Instead of using the crises of 2008 and the pandemic to adjust our system to favor the less wealthy in the future, we just printed a ton of money and hoped its boosting economic effects would help the needy after everyone else took their skim. Even the direct-aid bills during the first wave of the pandemic — which were, in fact, an example of helpful congressional action — will not close the long-term inequality gap, because we have chosen to provide workers with only temporary assistance, rather than with permanent social programs and stricter regulations on the power of capital.
Anyway, this boring prelude brings me to what I want to highlight for you today, which is the fact that billionaire hedge fund manager Daniel Ochs just won a super $100 million as follows: In 2019, he bought a sprawling Central Park South penthouse apartment for $93 million, then he let a few years pass (probably enjoying his nice apartment from time to time), and now he’s sold that same apartment for $190 million.
What does this little story of rabid class warfare tell us about America in 2022? He tells us that we have created an economic environment in which the ultra-rich can essentially print money themselves simply by buying rare luxury assets coveted by other ultra-rich people, and knocking them down. This applies not only to penthouse apartments, but also to art, rare jewelry, and anything that has both an extremely high entry price, limited quantity, and high demand. Daniel Ochs is not even in real estate, but he just made more money than your family will make in three generations by doing nothing but sitting on his ass for a remarkably short period of time and watching the price of his rare commodity inflate.
In theory, this kind of speculation could happen at any time. But it is happening now because of the political approach America has chosen to take in response to our continued and slow collapse of neoliberalism. For Daniel Ochs to withdraw his $ risk-free100 million flip flats, there are a few necessary ingredients: A) A sizable population of billionaires willing to bid $200 millions on an exclusive apartment, B) A well-developed luxury market producing ultra-high-end goods for this incredibly wealthy segment of society, and C) The expectation of the super-rich and those who care for them that their wealth will continue to increase, making the buying and selling of $200 million apartments a transaction that does not endanger the long-term preservation of anyone’s wealth. As long as billionaires are confident that financial markets will be protected and financial asset prices will continue to rise, they aren’t too worried about a falling dollar.200 million on an apartment, because someone like them will be there to pay $300 million for it down the road.
It’s one of the poisonous little whirlpools that our roaring river of capital has created. Money controls Congress to such an extent that it is impossible to enact the kind of targeted social spending that would make our society more equal. Instead, out of desperation, we simply pump money into the financial system. This inflates the prices of all assets, from stocks to real estate, which has the main effect of making the already rich people – the people who hold the most assets – even richer. This is where we are today. And this fountain of money, which has doubled the wealth of the ten richest men in the world during the pandemic without any effort on their part, has also created an exclusive luxury market in which, if you can afford the dollar100 Starting price of a million dollars, you can make an extra fortune trading top-notch collectibles with your fellow plutocrats the same way sneakerheads trade Air Jordans.
America does not guarantee a dream to anyone today. If you want to succeed here, you need a helping hand. Why not try selling penthouse apartments to hedge fund managers? Oh, you can’t quite raise the capital for that? Well, drive Uber then. I’m sure your hard work will also be rewarded anyway.