Davos Man, page 12
“One lived, and one died,” he said. “If we could have gotten out there faster, chances are both would have lived.”
Individual budgetary problems were combining to make the result worse than the sum of the parts. Austerity had eliminated home health care, which meant that growing numbers of elderly people were being left at home unattended. The city had cut mental health services, so fewer staff were on hand to check on hoarders, who tended to amass stacks of old newspapers. Poor people were losing cash grants and falling behind on their electric bills, resorting to candles for light during hours of darkness.
Most of these concerns were not the fire chief’s problem. Collectively, they yielded an alarming increase in fire risk. Unattended elderly people plus piles of newsprint plus candles: no great powers of imagination were required to imagine wailing sirens.
“There are knock-on effects all the way through the system,” Stephens said. A few weeks later, he quit and moved to Australia.
Much as the United States took the Great Depression as the impetus for the New Deal during the 1930s, forging government programs like Social Security, Britain had produced defining social schemes, anchored by its National Health Service. The establishment of the medical system had been celebrated as a turning point, the moment when Britain sought to move past its historical legacy—its colonial barbarity, its role as a financial and logistical hub for the slave trade—applying its wealth and ingenuity toward more honorable pursuits.
“We as a country said, ‘We have been cruel. Let’s be nice now and look after everyone,’” said Simon Bowers, a general practitioner at a medical center in Liverpool. “The NHS has everyone’s back. It doesn’t matter how rich or poor you are. It’s written into the psyche of this country.”
When I visited him in 2018, Bowers’s clinic was packed with people waiting for hours for the chance to see a doctor. He saw the fingerprints of austerity on the stress-related ailments he was increasingly encountering—high blood pressure, heart problems, sleeplessness, anxiety.
This was not the result of reasoned health policy.
“It’s a political choice, to move Britain in a different way,” he said. “I can’t see a rationale beyond further enriching the rich while making the lives of the poor more miserable.”
As British voters went to the polls in June 2016 to decide whether to remain in the European Union, austerity was not on the ballot, but its impacts framed the question.
The Leavers claimed that a hidebound, rule-obsessed government in Brussels was preventing Britain from achieving its destiny as a swashbuckling global power. They promised that the country would forge trade deals with faster-growing nations like China, India, and the United States. Trade with these countries was unlikely to rise to more than a fraction of commerce with Europe, but symbolism had greater currency than math.
In calling the vote, Prime Minister Cameron was betting that, following a noisy campaign, Britons would back the sensible option to remain. But he and Osborne did not grasp the extent of the loathing that much of the electorate felt for their kind. They were creatures of the elite, Davos Man collaborators who had both been members of Oxford’s notorious Bullingdon Club, a private, male-only dining society with a reputation for excessive drinking, public vandalism, and other consequence-free hijinks reserved for people of extraordinary privilege. They had used their power to make Britain hospitable to people like Jamie Dimon.
Their miscalculation became apparent on the night of the vote, as the BBC began reporting the returns. The first results came from Sunderland, a city in the north of England whose largest employer was Nissan, the Japanese automaker. Nissan made cars in Sunderland and then shipped them across Europe duty-free, an arrangement imperiled by Brexit. The company’s CEO had publicly expressed a “preference as a business”32 that Britain remain within Europe. Surely, worries about paychecks would trump other considerations.
Instead, Sunderland voted heavily in favor of bolting Europe.
Months later, I took a train to Sunderland to try to understand what had happened. By then, the permutations of the Brexit vote were clear. Britain was headed into years of wrangling over its future relationship with Europe. Investment was slowing. Whatever damage resulted would surely hit Sunderland as hard as anywhere.
Why had people there voted for this?
I huddled with Nissan workers and talked to a restaurateur who had voted for Brexit as a way to limit welfare payments and was already experiencing “Regrexit” as he struggled to hire dishwashers. The Eastern European immigrants who typically took such jobs were abandoning England. But the truest thing I heard—and pardon the foreign correspondent cliché—came from a taxi driver.
“No one here really understood what Brexit was, or what would happen if we voted for it,” he told me. “We just knew that people in London had been fucking us for as long as we could remember. Thatcher fucked us. Then Cameron and Osborne fucked us. And then Cameron and Osborne came up here and asked us to help them by voting against Brexit. We weren’t voting with that lot. It was our chance to fuck them back.”
There were many other reasons why voters sent Britain toward the European exits. The Leave campaign catered to fears of terrorism, displaying photos of Muslim refugees arriving in Europe. They promoted Brexit as the means of shutting the door on immigrants. The campaign lied about the money that Britain would supposedly save by leaving the E.U., enabling spending on domestic priorities like the National Health Service. They withheld the fact that Britain received funds from the European bloc and would see its own coffers diminished by a hit to trade.
But the argument ultimately boiled down to whether voters bought into what Britain had become—an important component of a larger European bloc, increasingly multicultural, and integrated with the world—or preferred to chase visions of what the nation had been long ago: a stand-alone imperial power.
The Leavers coalesced around the mantra that Brexit was about taking back control. It was a cynical play for nostalgia pressed by a renegade faction of Davos Men who ran hedge funds and gambled on real estate. They waved the Union Jack in pursuit of control over one area that was of unique benefit to them—financial regulation. Their nostalgia was a yearning for a time when they could draw on English social networks to write the rules without the intrusions of European bureaucrats.
“We want out of burdensome, unnecessary regulation,” Richard Tice, a London property magnate who cofounded the Leave campaign, told me when I went to see him a month before the vote. The economy would be in for “a bit of bumping and boring” in the years ahead, he acknowledged. “Life’s not just about money,” he said.
Tice’s firm managed a hoard of real estate worth in excess of $750 million. He filled out a double-breasted blue suit as he occupied a bench above the lobby of the upscale May Fair Hotel, where a two-bedroom suite ran $4,300 a night. “It’s like an extension of my office,” he said. Waiters raced fearfully, bearing trays laden with flutes of champagne. A red Maserati sat parked in front of the entrance.
European Union regulators had responded to the financial crisis with rules that restricted the operations of hedge funds. They were subject to a blizzard of paperwork, required to disclose their reserves, limited in their borrowing, and forced to adhere to curbs on their compensation. Most ominously, they could sell only to “professional investors,”33 with retail customers walled off for their own protection.
These new rules posed a threat to the pursuit of the next chateau. Brexit offered a way out, a return to the golden age in which hedge fund managers could run their operations however they desired.
One hundred executives34 from within British finance signed a letter backing the Leave campaign. “We worry that the EU’s approach to regulation now poses a genuine threat to our financial services industry,” it declared.
Among the most prominent signatories was the hedge fund manager Crispin Odey35, whose wealth was estimated at £825 million. He had once sunk £130,000 into outfitting his country estate with the world’s most indulgent chicken coop, a Palladian-style gray zinc temple adorned with an Athenian statuette that was soon known as “Cluckingham Palace.”36 He had also contributed nearly £900,00037 to the Leave campaign. Another signer was the hedge fund manager Paul Marshall38, possessor of a fortune estimated at £630 million.
These were the people financing a campaign that was saturating Britain with bombastic talk of reclaiming sovereignty, ending the indignity of European marginalization, and returning money to the people.
The real story of how Brexit came to dominate British life was similar to how Trump had ridden the anger of steelworkers into the Oval Office, putting him in position to shower billionaires with tax cuts. It was a rebellion of the dispossessed against Davos Man, whose gluttony had yielded austerity, one fomented by a subset of Davos Men who sought the freedom to resume the recklessness that had started all the trouble.
Brexit would prove hazardous to its overseers, a witches’ cauldron whose poisonous fumes wafted unpredictably over the landscape.
The day after the mortifying rebuke of the Brexit referendum, an ashen-faced Prime Minister Cameron resigned. He was replaced by the politically hapless Theresa May, who had publicly opposed Brexit during the 2016 campaign, yet inherited the unenviable job of making it reality.
May suffered through three years of ritualized parliamentary torture in a failed effort to craft something that could technically qualify as Brexit without disrupting important elements like membership in the single market, all the while menaced by rebellions from within her party. After a lifetime’s worth of humiliation, she handed the unfinished business of Brexit to her successor, Boris Johnson.
Johnson was another product of posh English society—a classmate of Cameron’s at Eton College, the elite school that had yielded no fewer than twenty British prime ministers. He was a political cartoonist’s dream, with a globular face fringed by a mane of studiously wayward hair, and a physique that attested to intimate familiarity with the inside of a steakhouse. He had started his career as a journalist, making his name in Brussels with a series of factually creative attacks on the E.U. He took power with a mandate to “get Brexit done.” Conventional wisdom had it that he would be devoured like May.
But Johnson possessed the advantage of being unburdened by any definable set of beliefs. He appeared beholden only to his desire to continue in residence at 10 Downing Street. And he was bestowed a magnificent political gift: his opposition party interlocutor, Jeremy Corbyn, was as beloved as wet socks.
Stylistically and politically stuck in another era, Corbyn had served as a member of Parliament since 1983. He had long nursed antipathy to the E.U. from the left. This undermined his party’s potential appeal as a gathering place for the growing number of citizens who were appalled by Brexit. Even as a majority of voters shifted to thinking that Brexit was a mistake, Johnson capitalized on Labour’s weakness to wrest an overwhelming majority in national elections in December 2019.
Johnson’s triumph signaled the end of the first phase of the civil war. Brexit was going to happen. Would it happen via a deal with Europe, or in a chaotic plunge into uncharted waters? No one knew. But some version of Brexit lay ahead.
Yet Johnson’s victory was tempered by recognition that the path forward was perilous. He owed his office in large part to communities in the north of England, where traditional Labour voters had flipped Conservative. If he wanted to hang on to their support, he was going to have to liberate them from austerity. He had to unleash spending on rail lines and roads to put people to work. He needed to dramatically increase funding for the National Health Service. All of this would require money.
But Johnson also owed a debt to his Conservative Party base, which demanded a real Brexit. Not the soft kind that May had tried to finesse, but a clean break with Europe. That was going to take away money by disrupting trade.
Johnson either could deliver on his mandate to take Britain out of the European orbit, or he could expand the economy to come up with funds to make life less miserable in the industrial communities that had embraced him. It was difficult to see how he could do both.
Decades of economic strife for ordinary people had produced Brexit. The messy process of negotiating Britain’s separation from Europe threatened to stretch on indefinitely toward Brexiternity. Which perpetuated the economic strife.
After months of histrionics and threats to walk away from the negotiating table without any sort of trade deal, Johnson finally struck a minimal agreement with Europe in December 2020 preserving key aspects of commerce across the Channel. But the deal pointedly left out finance, prompting Dimon to envision a day when his bank might abandon Britain altogether.
“Paris, Frankfurt, Dublin and Amsterdam will grow in importance as more financial functions are performed there,” Dimon wrote in a letter to shareholders released in April 2021. “We may reach a tipping point many years out when it may make sense to move all functions that service Europe out of the United Kingdom.”
On the other side of the English Channel, another Davos Man collaborator eyed the discord in Britain and saw an opportunity to entice some of its bankers to decamp for Paris.
Chapter 5
“It Had to Explode”
Davos Man’s President
In a nation famous for its sneering hostility to business, Emmanuel Macron—a former investment banker with starstruck eyes for billionaires—centered his presidency on the proposition that gratifying the wealthy would yield greater opportunities for France.
“For our society to get better1, we need people who succeed,” he said in 2017, in the first months of his tenure. “We shouldn’t be jealous of them. We should say ‘fantastic.’”
Macron’s allegiance to the Cosmic Lie both shaped his policies and imperiled his tenure. He slashed taxes on the wealthy, and then affixed a new levy on gasoline, enraging working people and provoking the furious protests known as the Yellow Vest movement.
As he reconfigured the national pension system, Macron treated one billionaire like an oracle—BlackRock chairman Larry Fink, the Davos Man who managed more money than anyone, and whose counsel influenced the French approach to retirement savings. When the public learned about Fink’s involvement, Macron absorbed withering accusations that he was selling out the interests of the French populace for the pleasure of billionaires.
In seeking to turn France into a refuge for Davos Man, Macron threatened the habitat for all.
Macron had spent most of his life marinated in the thinking and social conventions of the wealthy. He had worked in the investment banking division at Rothschild, a company uniquely intertwined with the history of globalization, having financed the construction of railway lines across Europe, and the British government’s military adventures.
Nakedly ambitious, Macron had prepared to lead France all his life. He had written an undergraduate thesis on Machiavelli and then secured a master’s degree from Sciences Po, a breeding house of the French elite, whose alumni included seven French presidents and thirteen prime ministers. Then he trained for a career in the civil service at another preparatory ground for the ruling class, the National School of Administration. It had been founded by his hero and role model, Charles de Gaulle, the leader of French forces against the Nazis, and the dominant national figure during the first decades of the postwar era.
Macron’s self-assurance, English fluency, chic suits, and admiration for billionaires put him in good stead at the World Economic Forum, where he projected a sense of representing an updated version of France long before he captured the presidency.
His election was celebrated among the moneyed as a signal that France was shaking off decades of antipathy toward business.
“We believe that this presidency2 is favorable for France and above all Europe,” Larry Fink said in June 2017. “France will energetically change its economy.”
At a gathering to promote Paris as a financial center, Jamie Dimon said Macron would prove a spur for “entrepreneurship, growth and jobs,” laying out the welcome mat for the affluent.
“It’s nice to be wanted,”3 Dimon added.
At a mere thirty-nine years of age, Macron was the youngest president in the history of the republic. He was well versed in the realities of the digital age, a seeming curative for the antiquated state of French life, which was too often romanticized as respect for tradition.
He had captured office by distinguishing himself as the least objectionable alternative to the doomed candidates presented by the French establishment. The Socialist Party had imploded. Its standard-bearer, the incumbent president Francois Hollande, was too unpopular to even muster a run for reelection. Macron had served as Hollande’s economy minister before bolting as the party careened toward irrelevance. The center-right was rife with internal discord.
Macron had run as a technocrat who would pragmatically fix what needed fixing. He built a new party from scratch, En Marche, deploying it as evidence that he was beholden to no camp. He raised a campaign war chest of nearly 16 million euros, an astonishing haul that was proffered as evidence of a popular groundswell.
But this missed the point. From inception, Macron cultivated power by extending himself as a Davos Man collaborator.
Nearly half of his campaign funds4 were harvested from a mere eight hundred donors. Far from a popular revolt storming the Bastille, he represented the palace court elevating one of its own. Macron’s fund-raising operation was run by a former executive of BNP Paribas, a major French bank. It included Emmanuel Miquel, a former senior leader at JPMorgan Chase. A Rothschild director, Philippe Guez, hosted a fund-raiser at his Paris apartment, offering a venue for other bank executives to meet with Macron. The bank’s managing partner, Olivier Pecoux, organized a fund-raiser on the Champs-Élysées.
