Earnings of Big Companies, Super Rich Zooming – 2 Articles
Big Companies Earned Over USD 1 Trillion of Profit in 2022, Says Joint Oxfam and Action Aid Study
Abdul Rahman
A recently published joint study conducted by Oxfam and Action Aid claims that the total windfall profit of the world’s 722 top companies crossed USD 1 trillion for the second consecutive year in 2022. The study notes that this figure, which is higher than the GDP of a majority of countries in the world, reflects an “obscene” and “immoral” quest for higher profits by the rich, who have exploited the global crisis of energy and food price inflation and higher interest rates in the last two years caused by multiple factors including the COVID-19 pandemic and the war in Ukraine.
The study recommends that governments impose a windfall tax on these excessive profits and use the money raised to carry out social security programs to tackle a range of issues including the cost of living crisis, poverty, hunger, and climate change.
Windfall corporate profits
As per the study, “windfall profits are defined as those exceeding average profits [earned by the said corporations in the previous four years] in 2017-2020 by more than ten percent.” The study is based on the calculation of data published by Forbes magazine about the world’s top 2,000 companies.
According to the findings, the world’s top 722 companies, which includes giants in energy, food, banking, pharmaceuticals, etc., raked in a total profit of USD 1.09 trillion in 2021 and USD 1.1 trillion in 2022. The study notes that the rates of profits of the said companies in 2021 and 2022 was on average 89% higher than the average profits made by them in the previous four years.
Energy companies were the biggest beneficiary of rising prices as 45 energy firms earned an average of USD 237 billion in windfall profits in 2021 and 2022, which created 96 new energy billionaires with a total wealth of USD 432 billion.
As per the study, at a time “when 9,000 people die of hunger every day,” 18 global food and beverages companies recorded an average of USD 14 billion in windfall profits in 2021 and 2022 and 42 major retailers and supermarkets made an average windfall profit of over USD 28 billion.
When the majority of people in the Global South were struggling to access basic health care, 28 pharmaceutical companies earned an average of USD 47 billion in 2021 and 2022. The study also noted that nine aerospace and defense enterprises earned an average of USD 8 billion.
“Greedflation”
The rise in the profit of food and beverage corporations comes amid an unprecedented “cost of living” crisis in the developed world and at a time when soaring food prices have pushed millions of people towards hunger in the developing countries of Africa, Asia, and Latin America.
Global food prices rose by an average 14% in 2022, with some countries, such as Turkey, Egypt and Pakistan, recording even higher surges.
There is enough evidence to argue that large companies have used the crisis situation due to the pandemic and the war in Ukraine to increase their profits by artificially raising prices—a phenomenon termed as “greedflation” by some.
The International Monetary Fund (IMF) recently published a study which said that “corporate profits account for nearly half the increase in inflation in Europe over the past two years.”
The rise in profits also coincides with degradation of wages and conditions of work. According to Oxfam, the “top paid CEOs across four countries enjoyed a real term 9 percent pay hike in 2022, while workers’ wages fell by 3 percent.”
“One billion workers in 50 countries took an average pay cut of USD 685 in 2022, a collective loss of USD 746 billion in real wages compared to if wages had kept up with inflation,” the study noted.
Amitabh Behar, Oxfam’s international interim executive director, has said that “big business is gaslighting us all—they are hiking prices to make monster profits, plundering people under the cover of a polycrisis.”
The study proposes the introduction of windfall taxes across the board to “end the racket, where rich shareholders are rewarded at the expense of everyone else.”
Higher and progressive windfall tax is necessary
Calling these excessive rates of profits “immoral” at a time when millions of people “across the world are struggling to pay their bills and feed their families,” Katy Chakrabortty, Oxfam’s head of advocacy, called for immediate government action to check the unfair profiteering.
“People are sick and tired of corporate greed. It’s obscene that corporations have raked in billions of dollars in extraordinary windfall profits while people everywhere are struggling to afford enough food or basics like medicines and heating,” said Behar.
The study recommends that governments impose a windfall gains tax between 50 to 90% on corporations. It calculated that such a tax on the 722 top corporations would raise anywhere between USD 523 billion to USD 941 billion for both 2021 and 2022.
As an example, the study notes that “governments could have increased global investments in renewable energy by 31% had they taxed at 90% the massive windfall profits that oil and gas producers funneled to their rich shareholders last year.”
The money raised through the windfall gains tax could also be used to help people facing poverty, hunger, health crisis, or losses due to climate change.
According to Chakrabortty, taxes on the windfall profit could even help solve the hunger crisis in East Africa, where one person is likely to die of hunger every 28 seconds as estimated by Oxfam. Chakraborty stated that profits earned by 18 food companies in 2021 and 2022 was more than “twice the amount needed to cover the shortfall in life saving assistance to tens of millions of people facing hunger” in the region.
(Courtesy: Peoples Dispatch, an international media organization with the mission of highlighting voices from people’s movements and organizations across the globe.)
World’s Richest Added $852 Billion to Their Fortunes in First Half of 2023
Jerry White
The world’s richest people added $852 billion to their fortunes in the first half of 2023, according to data compiled by Bloomberg and released on Monday. Each member of the Bloomberg Billionaires Index made an average of over $14 million per day over the last six months—even as 47 percent of the world’s population barely survived on $6.25 a day.
The rise in the wealth of the world’s 2,640 billionaires was the largest six-month spike since the second half of 2020. The previous jump was the result of the trillions of dollars the U.S. and other governments around the world poured into the financial markets to protect the assets of the super-rich from the impact of the pandemic. In the three years between March 2020 and March 2023, all three of the New York Stock Exchange’s largest indexes have risen by 70 percent. They have continued to rise in the last quarter despite the growing signs of financial instability and warnings of economic recession.
“The gains,” Bloomberg noted, “coincided with a broad stock market rally, as investors brushed off the effects of central bank interest rate hikes, the ongoing war in Ukraine and a crisis in regional banks. The S&P 500 rose 16% and the Nasdaq 100 surged 39% for its best-ever first half as investor mania over artificial intelligence boosted tech stocks.”
Even as billions of people on the planet face soaring living costs, declining real wages and growing destitution, Elon Musk, the world’s wealthiest person, got $96 billion richer in the first six months of 2023. Mark Zuckerberg, the CEO of Facebook parent Meta Platforms (Number 10 on Bloomberg’s list of the richest 500 billionaires), saw the second highest jump in his fortune, up $58.9 billion in the first six months of 2023, to $99.2 billion.
Fifteen current and former employees at Musk’s Tesla factory in California describe, according to The Guardian, a work culture of “long hours under intense pressure, sometimes through pain and injury, in order to fulfill the CEO’s ambitious production goals.” Jonathan Galescu, a production technician at Tesla, describes to The Guardian witnessing “people pass out, hit the floor like a pancake and smash their face open.” He added, “They just send us to work around him while he’s still lying on the floor.”
[Photo: World Inequality Report 2022]
Last year Musk cut 10,000 workers at Tesla and another 3,700 at Twitter. For his part, Zuckerberg began his third round of layoffs at Meta in May, part of a cost-cutting plan to eliminate 21,000 jobs over two years.
Musk is followed on Bloomberg’s Billionaire Index by Bernard Arnault, who controls half of European luxury goods maker LVMH Moët Hennessy Louis Vuitton.
Arnault fell out of first place earlier after $11.2 billion was wiped out from his fortune in one day due to concerns that a potential U.S. economic slowdown would lessen demand for luxury goods. Even with the selloff, the French billionaire still has a net worth of $191.6 billion, according to Bloomberg, and has added $29.5 billion so far this year.
In 2012, Arnault tried to switch his citizenship to Belgium to avoid paying taxes. In April, workers protesting President Emmanuel Macron’s pension cuts stormed LVMH’s headquarters, saying if the government needed money to fund pensions it should get it from Arnault.
Amazon founder Jeff Bezos is the third richest with a fortune of $154 billion, up $47.4 billion over the first six months of this year. Amazon is currently under investigation by the Occupational Safety and Health Administration (OSHA) for repeated violations. In 2021, Amazon had a serious injury rate of 6.8 per 100 workers, more than twice as high as 3.3 for every 100 workers at all other warehouses.
Following Bezos on the list is Microsoft founder Bill Gates ($134 billion, up $24.4 billion). Last year, Gates sold off $940 million of his shares in Canadian National Railway Co. but still has a 9 percent stake in CN Rail. It is one of North America’s top seven Class 1 railroads, which have carried out a savage cost-cutting attack on workers and cuts to infrastructure that have resulted in repeated derailments, including in East Palestine, Ohio.
Number seven on the list is Warren Buffett ($113 billion, up $5.6 billion), who owns BNSF railroad, along with Berkshire Hathaway, the investment group that owns Geico, Clayton Homes and Dairy Queen, and has stakes in Coca-Cola and American Express.
This is the anti-social character of just a few of Bloomberg’s list of billionaires whose wealth has ballooned during the pandemic as some 22 million have died and tens of millions more suffer long-term debilitation.
[Photo: World Inequality Report 2022]
According to a report released by the Oxfam charity ahead of the World Economic Forum earlier this year:
- The richest 1% have grabbed nearly two-thirds of the $42 trillion of wealth newly-created since 2020. This is nearly twice as much money as gained over the same period by the remaining 99% of humanity. During the past decade, the number and wealth of the billionaires has doubled and richest 1% of people captured around half of all new global wealth.
- The ‘average’ billionaire has gained roughly $1.7 million for every $1 of new wealth earned by a person in the bottom 90%. The collective wealth of the world’s super-rich is increasing by $2.7 billion a day.
- Over the next five years, three-quarters of the world’s governments are planning public spending cuts of $7.8 trillion.
- More than 820 million people are now going hungry, most of them women who have to eat last and least. In addition, 339 million people now need humanitarian aid, including emergency food rations, clean water and shelter—the most ever.
Every aspect of life in the United States and around the world is subordinated to the enrichment of this social layer, whose parasitism and decadence was highlighted in the TV series Succession.
In the United States, the Supreme Court declares it is unconstitutional to provide the slightest debt relief to working class and middle class college students. At the same time, the Biden administration and Congress find endless resources to bail out the banks, prop up the stock markets and wage war against Russia and China to extend control over the world’s resources to the same corporate and financial oligarchy, which is waging war against workers at home.
The irreconcilable conflict between the ruling elite and the great mass of working people is fueling an explosive resurgence of the class struggle around the world. This includes the mass protests against pension cuts and police violence in France, the strikes and struggles by railway, postal, airline and other workers in the UK, Germany, Italy and Spain, the wave of Latin American teacher strikes and the mass protests against austerity and privatization in Sri Lanka.
In North America, 7,400 Canadian dockworkers and 1,500 National Steel Car workers in Hamilton, Ontario, have struck. In the U.S., 15,000 hotel workers are striking in the Los Angeles area, more than 160,000 actors are striving to join the ongoing writers’ strike, 1,600 Wabtec locomotive workers are striking in Erie, Pennsylvania, West Coast dockers and New York City transit workers are opposing union-backed sellout agreements, and more than a half million UPS and auto industry workers are pressing for strike action this summer.
Within the ruling class there is a growing fear over the revolutionary implications of the ever-greater militancy and political radicalization of the working class. The Guardian recently reported about an investment conference organized by Spear’s wealth management magazine in London, where “members of the global elite and their financial teams were told by progressive advisers that there was a ‘real risk of actual insurrection’ and ‘civil disruption’ if the yawning inequality gap between rich and poor was allowed to widen as a result of energy and food price hikes hitting squeezed households.”
A radical redistribution of society’s wealth, however, will not be achieved through appeals to the ruling class to pay more taxes or any of the other reformist proposals by Bernie Sanders, Jeremy Corbyn, Jean Luc Mélenchon and other pseudo-left defenders of capitalism.
The ruling class and its system are historically outmoded. For the very survival of society, the financial oligarchy must be expropriated and its vast wealth redistributed to meet human needs. The productive forces that they privately own must be put into the hands of the international working class.
The growing movement of the working class, which is taking its most conscious form through the expanding network of rank-and-file committees under the direction of the International Workers Alliance of Rank-and-File Committees (IWA-RFC), must be fused with the conscious political struggle for workers’ power and socialism.
[Courtesy: World Socialist Web Site (WSWS), the online publication of the International Committee of the Fourth International.]
