Profiting on Crisis: How Predatory Financial Investors Have Worsened Inequality in the Coronavirus Crisis

Megan Tobias Neely*, Donna Carmichael

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

A once-in-a-century pandemic has sparked an unprecedented health and economic crisis. Less examined is how predatory financial investors have shaped the crisis and profited from it. We examine how U.S. shadow banks, such as private equity, venture capital, and hedge fund firms, have affected hardship and inequality during the crisis. First, we identify how these investors helped to hollow out the health care industry and disenfranchise the low-wage service sector, putting frontline workers at risk. We then outline how, as the downturn unfolds, shadow banks are shifting their investments in ways that profit on the misfortunes of frontline workers, vulnerable populations, and distressed industries. After the pandemic subsides and governments withdraw stimulus support, employment will likely remain insecure, many renters will face evictions, and entire economic sectors will need to rebuild. Shadow banks are planning accordingly to profit from the fallout of the crisis. We argue that this case reveals how financial investors accumulate capital through private and speculative investments that exploit vulnerabilities in the economic system during a time of crisis. To conclude, we consider the prospects for change and inequality over time.
Original languageEnglish
JournalAmerican Behavioral Scientist
Number of pages22
ISSN0002-7642
DOIs
Publication statusPublished - 24 Mar 2021

Bibliographical note

Epub ahead of print. Published online: 24 Mar 2021.

Keywords

  • Inequality
  • Financialization
  • Neoliberalism
  • Crisis
  • Covid-19
  • Financial services
  • Shadow banking

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