Where the Millions of New Millionaires Are Coming from

If anything has benefitted from the last 17 months of global misery, it’s “the existence of inequality”. As hundreds of thousands of people in the UK were plunged into poverty last year, millions across the world became millionaires, with the wealth gap continuing to open up into a gaping chasm from which none of us will ever escape. Someone pass me a £115 Gucci hanky to wipe away the tears.

According to figures from Swiss bank Credit Suisse, published this June, more than 5 million people became millionaires between 2019 and 2020, despite COVID screwing economies, businesses and our collective desire to party through to blue hour. The UK picked up 258,000 new millionaires, bringing our current total to 2.5 million. For the first time since records began, more than 1 percent of all global adults are dollar millionaires, meaning their fortune exceeds a million dollars.

It’s not just millionaires whose numbers are soaring. Forbes’ 35th Annual Rich List states that a new billionaire was minted every 17 hours in 2020, throwing 660 more lucky billionaires onto the pile since 2019.

Given that a large portion of the world has suffered throughout the pandemic, where are these money-rich men and women coming from? Honk honk: it’s real estate. Hello: houses, flats, buildings, landlords.

In their report, Credit Suisse say much of the wealth surge connects to rising asset prices (AKA, homeowners seeing their homes rocket in value, to 30 percent higher than before the 2008 financial crisis).

Whether they’re holding keys to an iceberg hotel or a house, property owners are likely to have seen their wealth escalate over the past year. See also: the fact that three of Britain’s current top ten billionaires amassed their fortunes through real estate (more than any other category in Forbes’ top ten), in what I’m calling the Billionaire Premier League. 

Mike Savage, Professor of Sociology at the London School of Economics, and author of The Return of Inequality: Social Change and the Weight of the Past, says, “People always push the lie that more money is a sign of a new dynamic of entrepreneurs making a big change. But a lot of wealth – most wealth – is accumulated from assets, like houses and financial stocks.”

Away from the financial whales and their mountains of stupid-cash-money, regular people are struggling more than ever. The cold facts are that, in 2020 – the same period Credit Suisse’s figures come from – Citizens Advice projected that 7 million people in the UK would end the year racked with debt.

Commenting on the increasing prevalence of debt in the UK, Dame Clare Moriarty, Chief Executive of Citizens Advice, said: “Many people will be counting the cost of the pandemic for years to come. For some, it has worsened problems they were already facing. For others, coronavirus has pushed them into difficulty when they were previously getting by.” 

You’d have thought any decent person wielding significant power would say, “Hey, shouldn’t we do something about the growing disparity in this country and across the world?” But famously, the cash-hungry Conservative Party – those able to actually enact change in the UK – have historically looked out more for the wealthy than those actually in need.

Obviously, this poses a problem for anyone who isn’t already increasing their wealth through owning an asset.

Savage puts it like this: “In terms of politics, if you already have a substantial amount of wealth, then you don’t need an effective political system or welfare state. You come to your own private solution. You can buy your own homes, education for your kids, private health insurance. The trend over time is that the growing divide between the rich and the poor isn’t about economics, it’s spilling over into politics.” 

This take-care-of-your-own approach is at the heart of the pandemic and how we recover from it. Homeowners – like 115 MPs, 90 of them Tories – were offered mortgage holidays, but renters were left hung out to dry without support.

Chris Wood, Assistant Director of Policy, Research and Public Affairs at Shelter, says, “Before the pandemic, private renters were up against it with expensive rents and the constant threat of eviction. Now, COVID has meant thousands are struggling with reduced hours, falling income, or they’ve lost their job altogether – leaving them with mounting debts and a battle to keep a roof over their head.”

Fun fact: Rishi Sunak – the man in charge of public spending – is married to a woman who, with shares worth over £430 million, is literally richer than The Queen, a woman famous for owning several castles and, technically, all land in England, Wales and Northern Ireland.

On this track, Savage continues: “Many politicians are wealthy. So when they’re active in public affairs, they’re doing it from the perspective that it doesn’t matter for them if things go bad. If you know you’re comfortably well off, it makes you think about things differently.”

In a world featuring headlines like “Wealthiest 10 men could pay for vaccines for all”, “One in 10 Londoners hold assets worth more than £720,000” and, probably, “Amazon CEO Jeff Bezos flies to space in midlife-crisis shaped rocket”, it’s hard not to feel a little bit screwed.

Nannette Hechler-Fayd’herbe, the Global Head of Economics and Research at Credit Suisse, said in a press release that their report found that “actions taken by governments to support individuals and businesses throughout the pandemic has largely averted a global scale crisis”. Which, sure – is true. Shout out stimmy checks and furlough pay.

But as we move further from the pandemic – as more billionaires fly their rockets into space, the climate melts and the Tory government keeps putting economic interests ahead of anything else – the divides between rich and poor will continue to grow at a worrying level. 

Thankfully, one group of millionaires, named The Patriotic Millionaires, are campaigning and lobbying the US government for change. Among their well-lavished ranks are Abigail Disney (related to Walt, of course), 1970s American sitcom writer Norman Lear and former Managing Director of Black Rock Inc, Morris Pearl. 

Speaking to VICE, Pearl has an economically balanced view: millionaires are welcome, but there needs to be more balance. “It’s not a question of whether we have more millionaires,” he says, as this trend will continue to happen with inflation. “It’s if we’re getting more inequality. Are we going to have more millionaires and more homeless people, or more millionaires and less homeless people, because they’re all going to be middle class?”

Noting that he’s “hugely more wealthy now than before the pandemic started” (there goes those assets increasing in value again), Pearl continues: “It’s not bad that people get rich. We’re in favour of people getting rich. But we don’t want to see a few people get rich while everyone else gets left behind.”

Whether it’s the Prime Minister flying to a climate change summit in a private jet, or the mega-rich building super-basements that rock London’s sewers, it’s clear that large portions of the extremely wealthy don’t care about the same issues as everyone else. Seeing this group rise is politically unsettling.

“Millionaires and multimillionaires stopped thinking about things in terms of public interest,” says Savage. “Because they’re very effective in the policy world, their thinking is going to influence governments – despite the fact that millionaires don’t reflect the interests, needs or views of people who are less well off.”

Should we be scared? “We need to address it,” says Savage. “It’s like climate change. Climate change gets worse every year, and you can’t say there’s one tipping point. It’s like that with wealth. The more you leave it, the worse it gets.”

@ryanbassil