In 1971, a German economist named Klaus Schwab called the first meeting of what would become the World Economic Forum in Davos, Switzerland. Mr. Schwab wanted business leaders, government officials and nonprofit leaders to discuss his idea of ”stakeholder capitalism”: the concept that business leaders have a duty to pursue the interests not only of to shareholders, but stakeholders. What is a stakeholder? Basically, it is any individual or group allegedly affected by company decisions.
The idea caught on. Fifty years later, around 3,000 billionaires and millionaires, heads of state, rock stars and addicts flock to the annual gathering. (The 2021 Forum was held remotely, and this year’s meeting was postponed to the spring.) The language of stakeholder capitalism permeates politics and economics. Mr. Schwab has done more than build an institution. He created a social type: the globe-trotting, well-connected, extremely wealthy benefactor the late political scientist Samuel P. Huntington called “Davos Man.”
New York Times business correspondent Peter S. Goodman has spent years chronicling Davos Man. He is not impressed. He wrote a long diatribe against global capitalism and its biggest winners that explains why. In Mr. Goodman’s account, Davos Man is a “predator” who belongs to a “greedy cabal”. Davos Man has been responsible for just about everything that has gone wrong in the world since Mr Schwab first uttered the word ‘stakeholder’ in German. The Italian deficit, rent increases in Sweden and deaths from Covid-19 are all the fault of Davos Man. “Rising economic inequality, heightened public anger and threats to democratic governance,” Mr. Goodman writes, “have all resulted from the depredation of Davos Man.” Broken dishwasher? Davos Man is behind it all.
Davos Man: How billionaires devoured the world
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Mr. Goodman’s tone is feverish, his descriptions grim. Davos The man feasts, seizes, plunders, ransacks, plunders, plunders. He works with “collaborators” to achieve his nefarious ends. He is a shapeshifting bogeyman whose rapacious appetites are insatiable and whose human sympathies are non-existent. It would be terrifying if it existed.
The book scores a few points against its targets – excuse me, subjects. Jeff Bezos’ Amazon has labor issues. Blackstone’s Stephen Schwarzman throws ostentatious parties. Salesforce’s Marc Benioff blundered last year when he called CEOs “heroes” of the pandemic. Larry Fink’s BlackRock played hard to recoup its losses on Argentine debt. All proclaim their citizenship while pursuing their personal interests. No one will deny that Davos Man can be overly self-righteous. But Mr. Goodman’s criticism is so relentless and one-sided that the reader cannot help but feel a touch of sympathy for these Masters of the Universe.
Mr. Goodman is a skilled journalist whose stories of private wealth and public misery are filled with detail and human interest. But his conclusions are confused. It evades the distinction between tax evasion and tax avoidance. He writes that “the cardinal principle at the heart of globalization as organized by Davos Man” is the primacy of shareholders, despite long discussions of Davos Man’s commitment to stakeholder capitalism. In the span of a few lines, he goes from calling the massive 2020 pandemic relief bill “a prime example of monetary interests exploiting a catastrophe for elaborate gain at the expense of the public.” , to the admission that it “would eventually prove to be very effective, providing the means for families to avoid eviction, bankruptcy, and other calamities. Well, which one is it?
The confusion persists when Mr. Goodman talks about the welfare state. He presents the social democracies of Northern and Western Europe as examples of enlightened redistribution of wealth. But his descriptions of Italy, France and Sweden undermine his argument for a union-dominated, high-tax economy. He concedes that Italian labor law contributes to economic sclerosis. “Laying off workers in France,” he writes, “was costly and time-consuming, involving lengthy legal and dismissal procedures.” He acknowledges that Sweden repealed its wealth taxes because they were difficult to enforce. It touts high marginal tax rates but includes only one flippant mention of the regressive value added taxes that provide the bulk of European duty revenue.
The book is a master’s course in selective outrage. In this narrative, public sector failure does not exist. All evil is the fault of the private sector. Debtors do not have an agency, unlike creditors. Davos Man can’t take a break: According to Mr Goodman, Amazon’s spring 2021 wage hike didn’t really count as a raise because it was done “more as a way to hurt competitors than to fix unfair treatment”. A prominent Davos man, liberal billionaire George Soros, appears only briefly in the story. Mr Goodman identifies him as “the financial trader and defender of democracy”. Then there is Mexican billionaire Carlos Slim. Government connections made him one of the richest men in the world. At one point he was the largest individual shareholder in Mr Goodman’s newspaper. It doesn’t appear at all.
By the time Mr Goodman writes that Italy experienced a high death rate early in the pandemic because a regional government “disregarded basic preventive care”, you’re ready to give up. No amount of preventative care will stop a new coronavirus in the absence of vaccines and therapeutics. And no amount of evidence to the contrary will persuade Mr. Goodman that the story of Davos Man is more complicated than a morality tale. His proposals for solutions to inequality — local co-ops, mass unionization, universal basic income, hipster antitrust, and high taxes on income, inheritance and wealth — will be familiar to anyone familiar with the left side of the political spectrum. They will not achieve their goals without unintended harmful consequences.
One of the ironies of the book is that Mr. Goodman’s medicine for the global economy is exactly the kind of fashionable political speech one might hear at the World Economic Forum. Davos Man, for all his faults, deserves treatment that is fairer, that pays more attention to the role of government, and that is reasonable and fair.
Mr. Continetti is a senior fellow at the American Enterprise Institute. His book “The Right” will be published in April.
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