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

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.

Impact of COVID-19 on the Income of Entrepreneurs Who Borrowed from SHG

“…This is akin to Marx’s idea of power within a group of people with common economic interests (Marx, 1996). Microfinance became the baton for female entrepreneurs supported by self-help organizations to overcome the epidemic’s doom, especially from a feminist stance (Armendariz & Morduch, 2010; Gopal & Malliasamy, 2022; Neely & Carmichael, 2021; Onuka, 2021; Pitt & Khandker, 1998). Microfinance in the form of SHGs allowed small entrepreneurs to get loans without physical collateral by utilizing social capital, trusts and relationships (King & Levine, 1993; Maclean, 2010; Morduch, 1999; Weber, 2004).…”

Early Career Leadership Advancement: Evidence of incongruity penalties toward young, single women professionals

“…While scholarly attention to women’s lower commitment dates back more than five decades (Becker, 1985), studies continue to support this expectation, highlighting how compared to men, women work fewer hours (Bertrand, Goldin, & Katz, 2010), opt for jobs supportive of work-life balance (Barbulescu & Bidwell, 2013), and publicly eschew role expectations of long work hours (Lupu, Ruiz-Castro, & Leca, 2022). Recently, commitment expectations were evoked to explain the differential impact experienced by women from the pandemic—even with both parents at home able to handle household responsibilities (McQuilkin & Chakbarti, 2020; Neely & Carmichael, 2021).…”

Spatial accessibility assessment to healthcare facilities: urban and rural areas

“…Hospital price growth in the healthcare sector has surpassed the total price growth in 2016 since the pandemic started but the gap has widened since then. In the light of emerging evidence that patient behaviour has changed and those alternative admissions such as home care and remote monitoring are more acceptable to patients, new hospital admissions with lower baseline values could result in the future [36,37].…”