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With uncharacteristic speed and decisiveness, European leaders ditched their budgetary strictures to yield action. The pandemic was so alarming, its potential dangers at once enormous and incalculable, that it eclipsed the usual rancor that frequently divided the nations of Europe, supplying one fundamental objective: limiting the damage. The austerity-minded governments of Northern Europe for the moment had something greater to fear than public debt, so they assented to a suspension of the rules, permitting the worst-hit countries to borrow as needed. The European Union transcended its legacy
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Davos Man was happy to see an aggressive expenditure of public money, cognizant that it could be used to bail out his troubled investments in the name of protecting jobs.
The United States had employed a Rube Goldberg contraption, with Mnuchin’s slush fund funneled through Jamie Dimon’s bank, and Larry Fink’s firm buying bonds on behalf of the Fed, allowing Steve Schwarzman’s private equity empire to borrow for free. All of this was supposed to trickle down through the rest of the populace. European governments cut out the Davos Man intermediaries and stepped directly into the fray, essentially nationalizing payrolls. Instead of rescuing billionaires, they rescued workers. From Denmark to Ireland, governments agreed to pay the lion’s share of wages25 for
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In theory, governments could raise taxes to amass what was needed. Indeed, as Britain’s treasury overseer, Rishi Sunak, announced a new budget in March 2021—extending relief programs for workers through the fall—he said the bill would eventually have to be collected by lifting corporate taxes. But Davos Man was skilled in wielding influence to deflect the burden elsewhere, raising the possibility that the debt would ultimately be paid in a fashion that had become ritual—through cuts to government services and greater burdens on rank-and-file workers.
Less public spending spelled less need for taxes—which meant more for Davos Man.
The Bank of England published a list of companies whose debt it was buying—a tab that reached £19 billion by the fall of 2020. EasyJet, a discount airline35, tapped the central bank for £600 million in support, even as it outlined plans to lay off 4,500 people. Still, the company found £174 million to cover dividends for shareholders
British Airways, the nation’s largest carrier, received a £300 million infusion37 from the central bank, even as it outlined designs to terminate twelve thousand jobs.
the classic private equity play, using their new assets as collateral for unrestrained borrowing to finance expansion.
In Italy—as in Europe in general—the medical know-how and facilities were both sophisticated and abundant. But they were no longer organized predominantly for the benefit of public health. That consideration operated alongside an increasingly decisive objective that frequently posed a conflict—enriching shareholders.
Across Europe, part of the explanation for the lethality of COVID-19 was indeed that health care services had been diminished to finance tax benefits for Davos Man.
In dismissing the threat of the pandemic as fake news, Trump had effectively sabotaged the workings of the American public health infrastructure, leaving the United States far down whatever standings for preparedness one might imagine.
The backlash to Davos Man’s monopolization of wealth had placed belligerent nationalists like Trump in power,
“This is an unconscionable abuse5 of a program designed to incentivize research and development of treatments for rare diseases,” declared a letter sent to O’Day from fifty-one consumer advocacy groups led by Public Citizen. “Calling COVID-19 a rare disease mocks people’s suffering and exploits a loophole in the law to profiteer off a deadly pandemic.” Taxpayers had already paid for the drug through “at least $60 million in grants6 and innumerable contributions from federal scientists,” Public Citizen noted. A broader study identified $6.5 billion’s worth7 of federally funded projects that had
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Between 2000 and 2018, thirty-five of the largest pharmaceutical companies reported total revenues of nearly $12 trillion9 and profits of almost $2 trillion. They achieved these gains in part by pricing their medicines beyond reach of ordinary people. Insulins, for example, had nearly quadrupled in price10 over the previous decade, while multiple sclerosis drugs had risen more than fivefold.
In 2014, its first year on the market, Sovaldi racked up sales of $10.3 billion. But its price was so high that state governments—which covered much of the bill for Medicaid patients—were prescribing it only for the most serious cases16. Roughly seven hundred thousand Medicaid patients suffered from hepatitis C, but less than 3 percent17 were able to obtain the drug. The next year, Gilead sold nearly $14 billion’s worth of another hepatitis C drug, Harvoni, which had a price tag of $94,500, for a twelve-week course. These two blockbusters largely explained how Gilead was able to direct more
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Gilead was exploiting tax loopholes18 to stash its lucre overseas, neatly avoiding taxes on nearly $10 billion in profits.
classic Davos Man maneuver, minimizing his role in human suffering by confessing to communications mishaps, or a misunderstanding.
Gilead had applied similar shamelessness in extracting profits from the HIV epidemic. It exploited a technique developed by the Centers for Disease Control that blocked transmission of the virus. The government had patented the technique in 2015, and Gilead had used it to develop a drug, Truvada, that it was selling for $20,000 a year. Its sales had reached $3 billion in 2018, but Gilead was not paying a dime in royalties19 to the government, while arguing that its patent was invalid. The government eventually sued Gilead to try to collect a return.
In 1989, the National Institutes of Health declared that it would demand “reasonable” prices for drugs24 produced through the aid of government research. But the pharmaceutical industry lobbied fiercely to scrap that rule, wielding the argument that astronomical drug prices were a requirement for innovation. Either Davos Man got paid or people died. In 1995, with the government led by corporate fund-raiser par excellence Bill Clinton, and with pharmaceutical industry contributions flowing liberally, the NIH rescinded its rule
India was the world’s largest producer32 of generic drugs, from antibiotics to painkillers; Chinese manufacturers supplied India with nearly 70 percent of the raw materials for pharmaceuticals.
Covax had been launched by Gavi, an immunization alliance forged at Davos in 2000 along with the World Health Organization. It was supposed to function as a global clearinghouse for vaccines, a rational arbiter of the world’s needs, ensuring that the most critical populations in every country—the elderly, the infirm, frontline medical workers—received immunization first. It was engineered to prevent the very scenario that was unfolding: young, healthy people in the United States and Britain gaining full vaccination even as medical caregivers in sub-Saharan Africa and South Asia continued to
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time-tested Davos Man argument: extravagant profits were inseparable from lifesaving innovation.
“At Pfizer, we believe that every person deserves to be seen, heard and cared for,” said Bourla, the company CEO, in a press release. “We share the mission60 of Covax and are proud to work together so that developing countries have the same access as the rest of the world.” The same access was a shameless piece of Davos Man obfuscation, a lie wrapped up as a gift to humanity. Less than two weeks later, Bourla would tell stock analysts that Pfizer was on track61 to deliver 2 billion doses worldwide by the end of 2021. Pfizer’s sales to Covax—at undisclosed terms—represented a mere 2 percent of
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Just as Chancellor Merkel had prioritized the balance sheets of German banks over European solidarity during the debt crisis a decade earlier, she now gave primacy to the profits of a domestic pharmaceutical company over global public health. Biden showed no signs of applying pressure on Merkel to alter that stance.
From the era of colonialism through the crafting of modern trade agreements, leaders in wealthy countries tended to regard the rest of the globe as sources of raw materials to be mined and low-wage laborers to be exploited, and not as places where fairness and equality required more than nominal consideration.
From Indonesia to Bangladesh to South Africa, pharmaceutical manufacturers professed readiness to make vaccines, if only the existing manufacturers would help them. That would not happen through magnanimous gestures or stakeholder capitalism.
Argentina, of all places, represented a willful denial of history. If the country’s travails with default had proven anything, it was that opportunists always came back offering the next infusion of money.
We can either have democracy in this country or we can have great wealth concentrated in the hands of a few, but we can’t have both. —U.S. Supreme Court Justice Louis Brandeis, 1941
expand Davos Man’s empire, delivering tax cuts, eviscerating regulations, and opening up vast frontiers to private equity.
The norm over the last four decades was Davos Man using his money to purchase influence over the political sphere, crafting rules that allowed billionaires to keep more of their earnings.
Reagan had begun the push to dismantle government and distribute the savings via tax cuts, turning trickle-down into the central principle of economic policy. Successive administrations representing both parties had denigrated social welfare spending and catered to the shareholder class while tolerating inequality as the by-product of prosperity. Clinton had celebrated the restorative powers of cutting budget deficits, while affirming the logic that innovation required unlimited rewards. He and Obama had centered their economic designs on finance and technology, allowing Davos Man to add zeros
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A higher minimum wage would destroy jobs, the lobbyists warned, though the economic literature said otherwise: put more money in the pockets of workers and they would spend it, creating jobs for other people.
how can democratic societies attack inequality when democracy itself is under the control of the people who possess most of the money?
Ted Howard. The founder of a nonprofit called the Democracy Collaborative, Howard was a believer in the power of cooperative companies to create jobs at livable pay, even in the face of Davos Man pushing wages lower. He and his colleagues had launched a series of cooperatives in the United States, among them a laundry service based in a low-income neighborhood in Cleveland. The company paid wages that were adequate to finance a middle-class standard of living, including health care and profit sharing. It had secured a contract to wash linens for
Freed from the compulsion to hand dividends to shareholders, it could afford to pay workers enough to cover their expenses while still winning business from rivals.
Howard’s idea had taken inspiration from the Mondragon Group, a collection of cooperative businesses in the Basque region of Spain that was the workplace for more than seventy thousand people, making it one of the ten largest employers in the country. The group owned one of Spain’s largest grocery chains, a bank, and factories that exported auto parts and other components around the world. Mondragon was governed by an agreement that the top management salary was limited to six times the wages of the lowest paid worker, as compared to a ratio of more than 300 to 12 among publicly traded
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Howard was also pursuing another promising idea that had gained traction in the United States—a consortium of forty-five nonprofit and government medical systems that operated more than seven hundred hospitals across the country. As a group, the members of the Healthcare Anchor Network spent more than $50 billion a year while managing $150 billion in assets. Much like the Preston model, alliance members had promised to direct their spending to generate local jobs.
Basic Income: And How We Can Make It Happen. “It should be a goal of everyone who genuinely wants to build a good society rather than one that facilitates the aggrandizement of a privileged elite who knowingly gain from the insecurities of others.”
“the commodification of everything,” along with “the systematic dismantling of all institutions and mechanisms of social solidarity,” Standing said. Basic income was a way to right the balance.
By the middle of the eighteenth century, the American revolutionary agitator Thomas Paine was advocating the creation of a national pool of money, financed via inheritance taxes on landholdings, and distributed to every adult, as a means of ensuring what we now call social justice.
If Paine were around today, he would presumably favor some form of wealth tax to finance a comprehensive system of social insurance. And he would reject philanthropy and stakeholder capitalism as untenable substitutes for a meaningful redistribution of wealth.
Milton Friedman, the godfather of shareholder maximization, also embraced a variant of basic income—negative
Basic income was frequently described in shorthand as money for nothing, a dose of socialism for the masses, but Finland was testing it as a way to improve capitalism.
Between 2000 and 2017, Congress cut funding19 for thirteen block grants that were a source of support for low-income people by more than one-third. Trump administered further reductions to help finance his tax cuts for Davos Man.
In placing consumers at the center of the action, Davos Man cast other incarnations of humanity—workers, tenants, people desiring clean air—as impediments to the public interest. Consumers were aligned with shareholders: both benefited from ruthlessness in the pursuit of lower costs. Which made Davos Man an agent of good, and anything that added cost—from regulations to collective bargaining—the enemy of progress.
The billionaires had mastered a recipe for moral alchemy, passing off what was lucrative for them as beneficial for society, even as the evidence mounted that they were accumulating their wealth at the direct expense of the rest of the populace.
The glorification of the unhindered market and the denigration of regulatory authority was insinuated into the workings of American democracy by a band of true believers headquartered at the University of Chicago—the hothouse for neoliberalism. The Chicago school, whose disciples included Milton Friedman, relentlessly attacked the New Deal as
Traditional conceptions of American antitrust law regarded scale as inherently dangerous. A company that was too big and deeply financed had the power to prey on smaller competitors, putting them out of business by dropping prices, and then raising them once it had the market to itself. It could corner the supply of raw materials, suffocating rivals. A prodigious scholar, Bork argued that these ideas were not only wrong, but anathema to the free market—a shackling of productive power that would limit innovation.
The movement would achieve a substantial victory in 1975, as Congress invalidated so-called fair-trade laws that had allowed manufacturers to set the prices for their finished goods. These laws—in force in many states—had been a fixture of the New Deal. They had been crafted to protect manufacturers and local distributors against predatory forms of discounting by national chains that dropped prices below profitability to destroy competitors and seize the marketplace. In signing the repeal of fair-trade laws in December 1975, President Gerald Ford endorsed the logic of the Chicago school:
Walmart was the logical extension of the Chicago school unleashed on the business landscape—an enterprise meticulously organized to supply customers with the lowest prices, without consideration for the attendant social costs.
