Amazon CEO and richest person in the world, Jeff Bezos, just bought a new mansion! According to The Wall Street Journal, Bezos set a record in Los Angeles by purchasing a 9-acre property, formerly owned by entertainment mogul David Geffen, for $165 million. That’s in U.S. dollars. WSJ says this breaks the previous Los Angeles real estate record set at the end of 2019 by Lachlan Murdoch, who paid $150 million to buy the Bel-Air estate that was used in the show The Beverly Hillbillies. David Geffen set the record in Los Angeles, back in 1990, when he originally bought the estate for $47.5 million.
The divide between the haves and the have nots is central to most of our country’s ills. The campaigns of Sens. Bernie Sanders and Elizabeth Warren have been the most open about the need for a redistribution of the wealth to begin the process of fixing our rigged system. However, while it may seem obvious to many of us, there are still lots of people, not even remotely wealthy enough to be considered “rich,” who are under the impression that the good economy everyone on television is talking about is benefiting them in a real way. One of the reasons for this perception is the inability to truly fathom how wealthy the wealthiest among us are and how adversely it affects all of us. One way to understand our current problem is to look at the true purchasing power that is created by the perverse income inequality levels we are seeing right now.
Last year, Jeff Bezos purchased about 17,000 square feet of loft space in New York City, comprised of three apartments along Fifth Avenue down near the FlatIron building in Manhattan. This adventure reportedly cost him around $80,000,000. Appraiser Jonathan Miller told the WSJ at the time that it was the most expensive deal ever closed in New York “south of 42nd Street.”
If a homeowner puts down 20%, with a mortgage rate of 3.79%, you would need to have an annual salary of $59,288.91, in order to pay things off over a decade or two, according to consumer mortgage resource HSH. That’s the national average. The most expensive areas to own a home would be San Jose, San Francisco, and Los Angeles. In Los Angeles, where the median home price is $649,600, one would need to have an annual salary of $124,079.80 to get by with that mortgage. And so, of course, you couldn’t purchase a multimillion dollar home.
But the market, as it is, isn’t simply a 1 to 1 proposition. It’s not simply that you cannot afford to spend $165 million on a residence because you don’t have the money! The real sickness of skyrocketing income inequality isn’t that some people can buy expensive and luxurious things while others cannot. The real sickness is that those with money aren’t buying “expensive,” anything. The level of wealth the top echelon in the world has means that nothing is even remotely “expensive,” to them.
Together in the last year, Jeff Bezos spent roughly one-fifth of 1% of his estimated wealth on these two “homes.” Now, let’s pretend you or I are worth an estimated $20,000,000. We aren’t, but we can dream, can’t we? So, now we are feeling pretty good, as we are worth about $20 mil (just think about how awesome your kitchen would be!!!!). If we had the same purchasing power as Jeff Bezos, we could buy both luxurious places for a grand total of around $37,121. Not a bad deal. But even at $20 million, a number we would all agree would make us “wealthy,” if not “rich,” we are exponentially less powerful financially than the billionaires of our world.
In 2001, Michael Bloomberg ran and became mayor of New York City. At the time his estimated net worth was $5 billion. By 2007, he was worth over $11 billion. The following year, he doubled that. He is now worth almost $70 billion. Since November he has been openly trying to buy his nomination in the Democratic primary. According to some estimates, he has spent around $300 million of his own money since entering the race a few months ago.
If we were $20 millionaires—I would have a great clawfoot tub with a center pouring faucet—who could spend the same percentage of our wealth and buy our way into being seriously discussed as a candidate for president of the United States, it would cost us less than $1 million. If you want to try to be president, $1 million would be pretty easy to part with, knowing you still have $19 million to cushion your big gamble.
Bloomberg reportedly donated $5 million to Stacey Abrams’ voting rights PAC in January. Bloomberg’s net worth is estimated at around $61.8 billion, give or take a few hundred million any given or taken day. Five million dollars will go a long way to help Stacey Abrams and her PAC do the work and build out the infrastructure they need. It’s a huge amount of power. In 2019, CNBC reported that the median net worth of U.S. families was $97,300. Bloomberg’s donation of $5 million to a PAC cost him the same amount of wealth that about $8 would cost the median American household.
In 2017, the city of New York paid out $11 million in legal fees and other costs due to long-standing litigation surrounding the stop-and-frisk policy, deemed unconstitutional in how it targeted communities of color. While stop-and-frisk proponent Mike Bloomberg would obviously not have to pay that money out of his own pocket, if he had, it would be the equivalent of the median American household parting with about $15.74 of their net wealth. That’s a very tiny price tag for a whole lot of pain and anguish. In fact, Mayor Bloomberg could have covered the city’s costs and thrown in a few bucks to cover Milwaukee’s $3.4 million payouts for its racist stop-and-frisk policy, and Bloomberg wouldn’t have noticed.
Monday Bezos announced in an Instagram post, that he would be “committing $10 billion to start and will begin issuing grants this summer.” This is great. It is a little under 8% of Bezos’ total net worth. If you make $100 and give someone 8 of those dollars, that is nice, and means something to you, having only $100. If you are worth $130 billion, it is hard for me to get particularly excited. Like an old joke from many years ago, boasting that you are doing something that you should already be doing, doesn’t make what you are doing extraordinary. And when you are living in a rigged system with truly perverted wealth inequality, the amount of money you are making is immune from trifling shows of philanthropy.
On Thursday, Jan. 30, 2020, Amazon.com Inc. “surged 12% to $2,100 in extended trading at 4:16 p.m.” In the reported 15 minutes that this “surge” took place, Jeff Bezos’s personal wealth grew by $13,200,000,000. That’s over 13 billion dollars. Or you might be able to more easily digest this if I write it in the standard AP, “$13.2 billion.” Remember how warm and fuzzy you felt at the end of January this year? That was the invisible hand of the market massaging your bank account as all of that gold rained down on us plebs. Maybe you didn’t notice?
As of Feb. 19, 2020, Jeff Bezos’ ranking at the very top of Bloomberg’s Billionaire Index*, is at $130,000,000,000. He is down over 800 million the last few days, and 2 billion down since Thursday. He is still up over $15 billion since the beginning of January. He may lose half-a-billion dollars by tomorrow, but who knows?!?!? The suspense is just killing me and every human being on the planet outside of the roughly 2,500 billionaires in the world.
* Michael Bloomberg is not considered for the Bloomberg Billionaire Index.