Davos Man, page 36
This was maddening to Asmo Saloranta, whose technology startup was struggling to hire workers. He was based in Oulu, a city of two hundred thousand people that no one would mistake for Palo Alto. Notched in low pine forests, only one hundred miles south of the Arctic Circle, it felt far removed from everything.
But the city had long been a hub of wireless communications—a major outpost for Nokia, before the company faded toward oblivion. The local unemployment rate sat above 16 percent. Scads of creative engineers were on hand and in need of work.
Saloranta’s company, Asmo Solutions, had developed a phone charger that drew power only when the device was plugged in. He had his eyes on a former Nokia employer who was a legend at developing prototypes. Saloranta only needed him part-time. He was offering 2,000 euros a month—less than the potential hire was bringing in via unemployment benefits.
“It’s more profitable for him to just wait at home for some ideal job,” Saloranta complained.
Under its basic income trial, the Finnish government planned to randomly select two thousand people who were drawing jobless benefits and commence sending them 560 euros a month, automatically, while exempting them from bureaucratic requirements. They would be permitted to earn money on the side.
The government was keen to see what would happen. Would more people join startups or launch their own? How many would pursue education that would position them for more rewarding careers? How many would drop out of life and dedicate their hours to vodka? The trial was as much a test of human nature as economic policy.
Saloranta was confident the results would be positive. “It would activate many more unemployed people,” he said.
Jaana Matila was the sort of person he had in mind. When I met her in the gray chill of an Arctic morning, she was twenty-nine years old and in possession of three degrees in computing. She had a borderline-obsessive interest in software. What she did not have was a real job. She had completed three unpaid internships. She was doing a bit of freelance work, having most recently designed a website for a hair salon. Sometimes she taught adult swimming lessons. But she had to limit these gigs lest she imperil her 700-euro monthly unemployment check. She had once failed to secure a receipt for one of the swim lessons. While she tracked it down, she lost her benefits for a month.
“I had to ask my boyfriend, ‘Can you give me some monthly money so I can buy some food?’” she told me. She spent most of her time taking her dog on walks through the forest while trying not to think about how her skills were falling behind the constant advances of technology.
“People in a disadvantaged position, they use a major part of their cognitive ability worrying about their lives,” Mikko Annala, a researcher at Demos Helsinki, a think tank, told me. “What if we have this potential there that is continuously worrying about life, about making it? What if we can get that into use by giving them something? That is a hypothesis that we should absolutely test.”
This was an aspect that tended to get lost in the basic income conversation. 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.
“Some people think basic income will solve every problem under the sun, and some people think it’s from the hand of Satan and will destroy our work ethic,” said Olli Kangas, who oversaw research at the Finnish government agency that administered social welfare programs. “I’m hoping we can create some knowledge on this issue.”
The results of the trial three years later would not settle the argument. The sample size was so small that the findings lacked authority, while offering a little something to validate every preconception.
Those who received basic income payments were only marginally more likely to be working than those who had started off in the traditional unemployment program. But those in the trial had shown a pronounced tendency toward greater personal satisfaction and happiness. They were less likely13 to be depressed, sad, lonely, or stressed out.
That alone was worth something.
Finland opted not to go14 ahead with basic income, instead imposing stricter work requirements on recipients of unemployment—a step in the opposite direction. But elsewhere, basic income was more in vogue than ever.
In March 2021, Stockton, California, released the findings15 of its experiment in which it had handed out $500 a month to 125 randomly selected people for two years. There, too, recipients were less prone to depression and anxiety. And they were more likely to be employed—especially women—as the extra money financed needed childcare, clothing for interviews, and transportation.
But one key limitation was at work: Basic income appeared most politically achievable in the places where it was needed the least.
Countries that already spent heavily on social welfare programs, like Norway and Finland, could reorient their budgets to produce some version of basic income. They could do this without demanding that someone pay higher taxes, and without cutting some other program to come up with the money.
But in places like the United States and Britain, where social programs had been dramatically reduced, basic income would demand a new tax, or cuts to some other spending. History suggested how this would play out: with reductions in support for the most vulnerable people.
In the United States, the demonization of welfare by President Reagan in the 1980s had produced the so-called welfare reform signed by Clinton in the mid-1990s, which dropped support to a pittance, yielding increased poverty. Poor single mothers were required to work, even as promised increases in subsidized childcare16 never materialized.
In the suburbs of Atlanta, I met a nineteen-year-old single mother who was unable to line up childcare for her infant daughter, which meant that she could not attend the job-training classes17 the state of Georgia required as a condition of her $235 monthly welfare check. Having lost those benefits, she was selling her body to come up with cash for diapers. Since the Clinton welfare reform, the number of poor families with children18 in Georgia had nearly doubled, yet the share of such families who were receiving cash assistance had plunged from 98 percent to 8 percent.
Among conservatives, basic income was appealing precisely because it would provide justification for cutting other social welfare programs. What was sold as a comprehensive form of social insurance could become a single target in the mission to dismantle government.
Beginning in the 1970s, Washington had moved away from so-called entitlement programs in which anyone who satisfied basic criteria like income had a right to public assistance. In their place came so-called block grants given to states along with the freedom to determine how to use these funds. States took this as the impetus to tighten eligibility for relief, pushing people off their welfare rolls. More fell into poverty, prompting conservatives to attack remaining programs as ineffective—grounds for further cuts.
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 Britain, austerity included the consolidation of multiple social programs into one all-encompassing scheme known as Universal Credit. Osborne, then running the treasury, championed this refashioning as a way to cut spending while forcing people to work.
“For too long, we’ve had a system where people who did the right thing—who get up in the morning and work hard—felt penalized for it, while people who did the wrong thing got rewarded,” Osborne said in April 2013. “This month, we will make work pay.”20
Instead, Osborne engineered the reverse. Over the subsequent four years, employment edged up in low-income households in the United Kingdom, while average earnings rose by nearly 4 percent. But those gains were wiped out and then some by a 7 percent cut to state support for working age Britons, along with the elimination of tax credits for the poor. Overall, low-income people suffered21 a 3 percent drop in income in those years. By 2018, the share of British children22 who were officially poor had climbed from 27 percent to 30 percent.
Under the shift to Universal Credit, the government tightened eligibility to levels that were cruel and absurd.
In Liverpool, I met a woman with cerebral palsy who had been living on a disability check for the eight years after she lost her job answering the phones at an auto parts company. She had recently been summoned for an assessment of her continued eligibility.
The first question undercut any pretense that this was a sincere exploration of her situation: “How long have you had cerebral palsy?” From birth. “Will it get better?” No.
She was then sixty-one, and her bones were weakening. The man conducting the assessment dropped a pen on the floor and commanded that she pick it up—a test of her dexterity. Soon, a letter came informing her that she had been deemed fit for work—and, therefore, not entitled to her disability check.
“I think they were just ticking boxes,” she told me.
Basic income was a catch-all phrase that meant different things depending on who was using the term. It could clearly be designed to bolster economic security, allowing people to live happier, healthier, more prosperous lives.
It could improve working conditions, boost wages, and limit vulnerabilities to commonplace misfortunes like car trouble along with global disasters like pandemics.
But in the usage that had gained the greatest political traction—the one embraced by people like Benioff—it was an allowance proffered as justification for the status quo, a payment that indemnified Davos Man for having prospered at the expense of people in need, a substitute for billionaires submitting to meaningful sacrifices like progressive taxation.
Basic income held potential as a means of attacking inequality, but it had to be protected against hijacking by the beneficiaries of continued inequality. It had to be a complement to a robust social safety net—perhaps paired with a job guarantee—and not a substitute.
Biden gave it an important push. The $1.9 trillion stimulus spending package he signed into law in March 2021 included a provision that amounted to a version of basic income: Most American parents would receive23 a monthly check of $300 a month as part of an expansion of child tax credits.
That provision was authorized for only a year, but the Biden administration aimed to establish it as permanent. Researchers at Columbia University estimated that the policy could reduce child poverty24 by 40 percent.
Basic income had become mainstream.
Chapter 19
“At War Against Monopoly Power”
Davos Man Under Attack
Jeff Bezos looked vaguely annoyed. Despite his studious attempts to strike a genial pose, the tightness at the corners of his mouth betrayed him.
For more than a quarter century, he had managed to expand his business along with his personal fortune without having to justify himself to Congress. That run came to an end in a wood-paneled hearing room in the Capitol in late July 2020.
Given the continued dangers of the pandemic, he was appearing by videoconference, seated at a desk with sparsely occupied shelves behind him. His image filled a white square on a screen that was visible to the members of the House Judiciary Committee, and to millions of people watching on television.
His expression was forced, his body language uneasy, as technical glitches intermittently disrupted his audio. “Mr. Bezos,” a lawmaker said at one point, “I believe you’re on mute.”
Next to him, in the square to the right, was Mark Zuckerberg, the founder of Facebook, another man with a lot to explain. Below them and to the left sat Tim Cook, the CEO of Apple, and Sundar Pichai, who ran Google.
Here, assembled for public interrogation, were the leaders of four companies that had achieved such unparalleled dominance that they had destroyed any meaningful concept of competition. Collectively, they possessed personal wealth in excess of $265 billion—more than the annual economic output of Finland.
The hearing had been anticipated like a prizefight. It was the culmination of a yearlong probe by the subcommittee into allegations that the four companies were prospering at the expense of American society. They had erected monopolies that were unfairly crushing competitors and ripping off consumers through higher prices, while extracting personal data without the consent of their unwitting customers. They stood accused of warping the functionality of the marketplace, stifling innovation, destroying jobs, eviscerating privacy, and wielding control of technology to redouble their supremacy.
Their Orwellian proclivities and lust for scale had been on display before anyone had heard of COVID-19, but the pandemic had enhanced their primacy. With Americans sequestered in their homes, and with the internet central to the basic dealings of commerce, the companies that controlled the digital sphere appeared to have seized modern life itself. They seemed certain to emerge from the pandemic with greater market share, and weakened competition.
Much like in the age of Robber Barons, their dominance demanded corrective action from the government. The hearing was the opening act of a process that would end with attempts to break up1 some of these companies into smaller pieces, in what amounted to the most sweeping assertion of antitrust authority in decades.
For months, Bezos had sought to avoid the committee like a man putting off a trip to the urologist. Talk of a subpoena had eliminated his room for maneuver. So here he was, cast uncomfortably as a leading defendant in the prosecution of a crime against representative government.
“American democracy has always been at war against monopoly power,” declared the chairman of the subcommittee on antitrust, David Cicilline, a Democrat from Rhode Island, in his opening statement. “Our founders would not bow before a king, nor should we bow before the emperors of the online economy.”
When Bezos got his turn to talk, he resorted to his well-honed origins story in a counterclaim for historical affirmation.
“I was born into great wealth, not monetary wealth, but it was the wealth of a loving family, a family that fostered my curiosity and encouraged me to dream big,” he told the committee.
Bezos talked about his mother, how she had been a teenager when he was born. He noted that his adoptive father had come to the United States from Fidel Castro’s Cuba. He described abandoning his “steady job on Wall Street” for the Seattle garage where he had started Amazon. He worked in a reference to the recently departed civil rights hero John Lewis.
Bezos was wrapping himself in the American flag as a defense against his company’s systematic pillaging. Amazon was not a monopolist whose profits were extracted through labor exploitation, invasive data mining, and cosmic scale. It was a red, white and blue success story, the outgrowth of a smart idea pursued by a hardworking risk taker who had harnessed the virtues of his freedom-loving country. This was the real American narrative, he was implicitly asserting, not the diversionary nonsense about rejecting the monarchy.
“More than any place on earth, entrepreneurial companies start, grow and thrive here in the U.S.,” Bezos said. “The rest of the world would love even the tiniest sip of the elixir we have here in the U.S. Immigrants like my dad see what a treasure this country is.”
The interrogation that commenced would continue for more than four hours as members of the committee sought to pry into the crevices of the four businesses.
Bezos was forced to defend his company against disclosures that it had habitually violated its own policies by examining the sales of independent merchants who sold their wares on its site, and then destroying those sellers with its own products. He had to answer questions about how Amazon had purchased a major competitor that sold diapers and then dramatically increased prices; how it tolerated sales of counterfeit products on its platform.
He suffered the withering cross-examination with a posture of patience and deference. “I appreciate that question,” Bezos said repeatedly. “I don’t know the answer to that question,” was another phrase that gained a vigorous workout. “I don’t remember that at all,” he said at one point, while carefully adding words of pacification. “I would like to understand it better.”
His tone suggested that he was laboring to stifle his exasperation, offering a reminder that Bezos was accustomed to demanding answers from others, and not the other way around. Pressed to explain what he had done to investigate claims that Amazon was abusing companies that sold on its platform, he said: “It’s not as easy to do as you would think.”
His ultimate defense could be boiled down to this: Amazon was giving the people what they wanted.
“Customer obsession has driven our success,” he said.
This was a hardwired Davos Man maneuver, the assertion that had enabled generations of American corporate chiefs to vanquish efforts to constrain their monopoly power going all the way back to the Robber Barons.
Davos Man used this argument—in combination with copious campaign contributions, and energetic lobbying—to persuade Washington to look the other way while he completed increasingly audacious mergers, manipulated financial markets, and exploited working people. He was doing right by the customer. No harm, no foul.
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.
Such depictions typically involved the selective harnessing of data. Bezos had come prepared. He told the panel that Amazon’s sales amounted to less than 1 percent of a global retail market worth $25 trillion a year, and less than 4 percent of the retail realm in the United States. The committee countered by focusing on the relevant space—American e-commerce. There, Amazon controlled nearly three-fourths of the market, giving it the power to dominate the terms of trade.
