I’ve never been invited to the World Economic Forum in Davos, and if you are reading this post, I suspect neither have you. But New York Times reporter Peter Goodman has attended the prestigious pow wow seven times, and in his book, Davos Man: How The Billionaires Devoured the World, Goodman shares a concept globalist billionaires feign to hold most dear. It’s called “stakeholder capitalism,” and it was pioneered and promoted by Klaus Schwab, the founder of the World Economic Forum.
First, a quick primer. The term “Davos Man” was coined in 2004 by political scientist Samuel Huntington to describe “those so enriched by globalization and so native to its workings that they were effectively stateless, their interests and wealth flowing across borders, their estates and yachts sprinkled across continents their arsenal of lobbyists and accountants straddling jurisdictions, eliminating loyalty to any particular nation.”
Stakeholder capitalism” holds that corporations must be more touchy feely in their pursuit of profits, taking into account all “stakeholders” impacted by business decisions: employees, communities, the environment, just to name a few. So-called ESG, or socially responsible investing, is an extension of stakeholder capitalism as its based on measurements that Wall Street has created to gauge the companies who have best aligned their operations to serve the greater good.
A billionaire proponent of stakeholder capitalism is Davos A-lister Marc Benioff, founder and CEO of Salesforce. Here, fresh off the internet as it was posted just hours ago, is this story in CEO Magazine featuring Marc Benioff waxing on about “why social responsibility is every CEO’s responsibility.”
And here’s Benioff on Twitter, extolling the same message.
It seems reasonable to assume that Benioff would surround himself with like-minded individuals who believe that a company’s role is to make the world a better place. So, it’s hardly a reach to speculate that Bret Taylor, who Benioff tapped to be his co-CEO, passionately shares Benioff’s values. Taylor also is chairman of Twitter, so I’d expect that he’d make certain that any sale of the company ensured the preservation of the company’s stated mission and values and its previous commitments to stakeholders.
That doesn’t appear to be the case.
According to this Wall Street Journal report, Twitter’s board did an immediate about face allowing Elon Musk to acquire the company after the company’s investment bankers advised them that Musk’s offer was a pretty good deal. (There were previous reports saying these same bankers earlier maintained Musk’s offer was too low, but no matter.) Taylor connected with Musk and an agreement was quickly hammered out. The Journal story makes no mention of Taylor attempting to get Musk to commit to the principles and goals that Twitter publicly committed to, likely because he never did.
At the end of the day, Twitter’s board based its decision exclusively on how much cash Musk claimed he could bring to the table for shareholders. Other stakeholders be damned.
I took the time to read Twitter’s “2020 Global Impact” report and surprisingly I was taken aback. Most corporate mission and ethics statements are just a putrid stew of PC-correct phrases written by HR hacks with input from legal and PR. I recently wrote about the ethics statements of American Express and Centene and how both companies make a mockery of them.
Twitter’s impact statement was among the most professional and polished I’ve come across. The company committed to some ambitious goals: By 2025, Twitter promised that women would comprise half of the company’s global workforce and that underrepresented minorities would comprise 25 percent.
These diversity goals are impressive, given that women and underrepresented minorities haven’t fared too well in Silicon Valley. Musk’s record dealing with minorities should have given Taylor pause; according to California’s labor department, Tesla’s manufacturing plant some 60 miles away from Twitter’s headquarters engaged in racial discrimination practices so heinous that in reporting them the Los Angeles Times carried a disclaimer, warning readers of disturbing content.
Twitter’s impact report noted the commitment of the company’s board to ESG measurements and goals.
It shouldn’t come as a surprise that Taylor didn’t live up to the values that Benioff espouses. For all Benioff’s talk about social responsibility, Goodman notes in Davos Man that in 2018, when Benioff was championing a San Francisco corporate tax initiative to deal with the city’s homeless problem, Salesforce paid zero federal taxes on $13 billion in revenues.
Musk also deserves credit for publicly confirming that he backed away from a charitable initiative proposed by Bill Gates after learning the Microsoft founder had shorted Tesla’s stock. Gates is supposedly “obsessed with developing clean tech through his philanthropic work,” yet he was hoping to profit from a decline in the stock price of the only company so far to make electric vehicles a viable business.
This, too, shouldn’t come as a surprise: Gates is a big proponent of stakeholder capitalism.
Musk admirably sides with critics who call out the increasing squishiness of ESG metrics. In response to a March 7 tweet by famed Silicon Valley investor Marc Andreessen noting the hypocrisy of ESG investing, Musk replied, “ESG rules have been twisted to insanity.”
Musk sharpened his criticisms of ESG investing earlier this month, tweeting: “I am increasingly convinced that corporate ESG is the Devil Incarnate.”
I’m obviously delighted that someone as brilliant as Musk shares the ESG position I expressed three years ago, but I’m not CEO of a company that’s the fifth largest holding in Vanguard’s ESG fund.
What I’ve also come to appreciate about Musk is that he knows how to skate close to the line without crossing it. In January, Musk was sued by some Tesla shareholders for allegedly using undue influence to force the company’s board to approve the 2016 acquisition of SolarCity, a company in which Musk and his cousins were major shareholders in that cash-strapped enterprise. Delaware Chancery Court Judge Joseph Slights III issued a ruling today declaring that Musk didn’t breach his fiduciary responsibility to shareholders.
As an aside, among Tesla’s directors is Kimbal Musk, Elon’s brother, who in 2017 was named a social entrepreneur by the Schwab Foundation, a sister organization to the World Economic Forum.
At the Solar City trial, Lee Rudy, an attorney representing Tesla shareholders, asked Judge Slights to consider Musk’s contempt for the deposition and trial process, in which he repeatedly clashed with and insulted shareholder attorneys. Musk called Randy Baron, another Tesla shareholder attorney, “a bad person” and said he didn’t respect him.
A pattern has emerged with Elon Musk. He’s on record as saying he doesn’t respect the SEC. Musk flouted the SEC’s disclosure rules in acquiring his 9.2 percent stake that initially allowed him to get a seat on Twitter’s board. He disrespects U.S. auto safety regulators. He’s been accused of showing contempt for the U.S. legal process. Tesla has been been accused of violating California’s labor laws. Musk has publicly referred to President Biden a “damp sock puppet.”
In my readings about Musk, the only uniformly positive admiration and respect he’s consistently shown is for Communist China and its leadership, with whom Musk has partnered to help that country achieve electric vehicle supremacy. Global Times, a propaganda arm of China’s government, has hailed Musk’s acquisition of Twitter, so Musk has that country’s blessings.
The Wall Street Journal has previously reported that Xi Jinping, China’s leader for life, regards Musk as a “technology utopian with no political allegiance to any country.” It would be nice to know that Musk’s ultimate loyalty is to America, but it would be hypocritical to suggest he’s any less loyal than Davos Man.