Oligarchy

Hello, and welcome to Oligarchy. We are tracking how Covid-19 and the world’s response to it is affecting the super-rich — and what that means for power and politics.

HEALTH HAVENS

I’ve always been fascinated by the kind of dystopian novels that imagine wealthy people suddenly facing scarcity, and their civilized façade collapsing in the face of their desperation to survive. Increasingly – as the UK and the EU squabble over vaccines – it feels a bit like we’re living in one. 

It’s not impossible to imagine the ego clash between Boris Johnson and Ursula von der Leyen spilling over into a full-blooded trade war, with knock-on effects delaying the world’s vaccination programs for months or even years. The prospect of lives being lost because politicians can’t get over themselves is a distinctly annoying one, so it’s nice to realize it is possible to escape it – provided, that is, you can afford it, and you know the right people.

• “People with connections came here and got vaccines that were provided on a ‘friends and family’ basis,” an anonymous investor in the United Arab Emirates told the FT. “Sheikhs have [access to] their own stashes — it’s all around the majlis for jabs.”

The UAE has had one of the world’s fastest vaccination programs, and realized early on that this success was an opportunity to make money from the citizens of countries without plentiful vaccines; or from the citizens of countries that vaccinate according to need, rather than according to wealth. As early as January, a London private members club was running trips to Dubai and India, at a total cost of around $50,000 per vaccination, to help people jump the queue.

• “We book [our members] into a beautiful villa with a swimming pool, chef and household staff. They land, have their first jab and wait for the second one. We’ve got some people that are going to India for the whole time and others are talking about flying in, having the first jab, flying out to Madagascar, and then coming back for the second jab later,” said Stuart McNeill, founder of Knightsbridge Circle (“the most ultra-exclusive concierge company in the world”).

Lucky beneficiaries of shots in the UAE have included Ben Goldsmith, whose brother is a minister in the British government; various executives from Softbank and Eni; and many wealthy citizens of India, Pakistan and Lebanon. They can stay in one of the emirates’ many luxury hotels, and dabble their feet in a swimming pool while they wait for the second injection.

It is this kind of thing that has helped propel the UAE into sixth place in a new index of countries compiled by the migration specialists Henley and Partners, better known as vendors of passports and golden visas, but now looking to find their clients not just travel documents, but also the best healthcare money can buy. Apparently, healthcare provision is the new must-have for the world’s wealthiest people, alongside low tax rates, a deferential government and all the usual mod cons. 

• “Within the next decade, we will witness the tax and wealth preservation havens of today transform into the longevity and HealthTech havens of tomorrow, with citizens, investors, and companies alike choosing to relocate to longevity-progressive regions,” the press release quoted Dmitry Kaminsky, co-founder and managing partner of Deep Knowledge Group (motto: “deep knowledge is transcendent power”).

Health havens are the new wealth havens, in short.

Of course, health-exiles – like tax exiles before them — do run the risk of angering people who lack their good fortune, as two Spanish princesses recently discovered to their cost. Their father (the ex-king) left Spain for Abu Dhabi last year as corruption allegations against him mounted, and it was while visiting him that Elena and Cristina received their injections, only to face criticism for jumping the queue.

• “The vaccination of the princesses is more news which contributes to discrediting the monarchy,” Equality Minister Irene Montero said. “For the public, this constitutes preferential treatment and privileges.”

Covid-19 has hit Spain hard, and the country’s vaccination program has been slow, so it is not surprising that many Spaniards were angry about two women in their fifties taking advantage of their connections in the UAE to be inoculated when others of their age lacked the opportunity. 

Still, there is a degree of irony in the anger considering that – by comparison with most countries, and despite the perception that it’s falling behind – Spain (and indeed all of Europe) is itself over-using vaccines that could be being spread more equitably and used more efficiently. Of around 450 million vaccines doses administered globally, almost half have gone into the arms of people in the US, the UK, or the European Economic Area. Globally speaking, that means all of us westerners are basically queue-jumping, which is just storing up trouble.

• “Some countries are racing to vaccinate their entire populations while other countries have nothing. This may buy short-term security, but it’s a false sense of security,” World Health Organization head Tedros Ghebreyesus Adhanom told reporters. “The more transmission, the more variants. And the more variants that emerge, the more likely it is that they will evade vaccines.

INEQUALITY

Of course, as soon as someone has had their vaccine – or as soon as a country is vaccinated – life will be able to resume in the free and easy way we used to take for granted, back in 2019. This means that those wealthy enough to afford one of the UAE’s vaccines (or one of the ones rumored to be available for €3,000 in Moscow) will be able to get back to living their best lives while the rest of us remain locked down. 

On top of other Covid-related effects, such as the fact that the children of the wealthy will have had access to better schooling than ordinary kids, and wealthier people are better able to work from home, this means that inequality will get even worse after the pandemic if we don’t do something about it.

• “A recent study on the effects of five pandemics between 2003 and 2016 finds that on average, income inequality in affected countries increased steadily over the five years following each event, with the effect being higher when the crisis led to contraction in economic activity, as is the case with COVID-19,” noted a blogon the World Bank’s website earlier this year. “The historical estimates probably understand the potential long-term effects of COVID-19.”

Studies (like this one) have already shown that the most unequal countries were worst affected by the pandemic, and that the best way to prepare society for future crises is to narrow the gaps between the very richest and poorest. In this light, it is heartening to see that Joe Biden’s administration has policies to combat child poverty and other blights that have been neglected in recent years. However, he’s bailing out a ship that’s filling with water fast, as recent wealth data shows.

• “The richest one percent of households saw their net worth rise by some $4 trillion in 2020, meaning that they captured about 35 percent of the extra wealth generated nationwide, according to the latest quarterly study of household wealth from the Federal Reserve. The poorest half of the population, by contrast, got about four percent of overall gains,” it says here. Not everyone has had a bad pandemic, to put it mildly.

WHAT I’M READING

Sometimes I like to read something completely different, which is why I picked up ‘River Kings, a new history of Vikings from Scandinavia to the Silk Road’, by Cat Jarman. I thought it would make a nice change to read about murderous Dark Ages lunatics attacking monasteries instead of my usual diet of Eastern European kleptocrats extorting wealth from their neighbors, trafficking in contraband, and stashing the proceeds in Scandinavian banks.

Funnily enough, it turns out that Vikings specialized in levying tribute from the inhabitants of eastern Europe, establishing power bases in Ukraine, trading in slaves and pelts, and earning vast quantities of silver which they then stashed in Denmark, Norway and Sweden. The book has in short been rather more reminiscent of my normal reading material than I anticipated.

See you next Wednesday,
Oliver