The Buzz

Death of a Davos Man

In a muscular 2004 article in these spaces, Harvard social scientist Samuel P. Huntington warned of a “denationalization of the American elite.” He noted a growing gap between the vast majority of the American public and its intellectual, political, and economic leaders. While ordinary people held strong patriotic attitudes, favored the general preservation of American culture and identity, and wanted protection of American jobs to be a high priority for the government. Yet at the top of society,

these concerns are secondary to participating in the global economy, supporting international trade and migration, strengthening international institutions, promoting American values abroad, and encouraging minority identities and cultures at home. The central distinction between the public and elites is...nationalism versus cosmopolitanism.

Huntington reserved most of his ire for the influence of the cosmopolitan elite on the government, warning that policy had diverged so much from public preference that it had created “an unrepresentative democracy,” with attendant costs for the public’s faith in the political system. But he also noted “an emerging global superclass” of “Davos men” or “economic transnationals,” consisting of

executives of multinational corporations, large NGOs, and comparable organizations operating on a global basis and . . . individuals with skills, usually of a highly technical nature, for which there is a global demand and who are thus able to pursue careers moving from country to country.

The Davos men have made their living off the globalization of the world economy. They call Berlin in the morning and teleconference with Beijing in the evening. They trade in Indonesian coffee from Chicago or insure Panamanian ships from London. They work for multinational companies headquartered in New York or Paris, but with assets across the globe, companies that answer to no higher sovereigns than the share price and the board of directors. When your livelihood is everywhere, your home can be anywhere—and can be halfway around the world next week if needed. And so they

have little need for national loyalty, view national boundaries as obstacles that thankfully are vanishing, and see national governments as residues from the past whose only useful function is to facilitate the elite's global operations. In the coming years, one corporation executive confidently predicted, "the only people who will care about national boundaries are politicians."

The quintessential Davos man was Marc Rich. Born in Belgium, which he left for the United States to escape the Nazis, he revolutionized the world trade in commodities. Markets emerged where none had existed—most consequentially, for oil. Breaking the grip of the big producers required creativity, both in business and in law. He carried out transactions that a more nationalistic—or merely more ethical—trader would have spurned. As the Economist notes in its obituary,

Mr Rich found his way round any political or moral obstacle. He sold Soviet oil to apartheid South Africa, despite a UN embargo, and between 1979 and 1994 made profits of around $2 billion there. He sent Soviet and Venezuelan oil to Cuba in exchange for sugar, ignoring America’s ban on trade. He sold on the global market surplus Iranian oil that had flowed to Israel down a secret pipeline, and kept the arrangement going seamlessly despite the Iranian revolution of 1979, another embargo, and the American hostage crisis.... He was soon the world’s largest independent oil-trader, with a turnover in 1980 of $15 billion.

Such practices angered U.S. authorities, who eventually caught up with him.

In 1980-81 he violated America’s domestic oil-price controls by relabelling Texas crude from old fields as new-found, jacking up the price by as much as 400%. He made profits of $105m and shipped them abroad, avoiding taxes of $48m. Once federal prosecutors were after him for that, they charged him with 64 other crimes, including racketeering and “trading with the enemy”. In 1983 he fled to Switzerland with his family, having also tried to spirit away two trunks of subpoenaed business papers.

Yet for a Davos man, prosecution in your home country need not be the end. Other identities, other markets and other opportunities beckon.

He remained—until 1994, when he sold his stake and his company became the vast, tentacular Glencore—the world’s biggest trader of metals and minerals, while darting between Spain, Switzerland and Israel, a citizen of all three. In Marbella or St Moritz, beside a $9.5m swimming pool or among his Braques and Picassos, with a fortune estimated at $2.5 billion, he reconciled himself to exile.

This made Rich a test case for the power of the elite transnational identity. Is the pull of globalization so strong, the joy of wealth so overwhelming, that a man can abandon his home entirely? The Economist’s obit suggested that for Rich, the loss of nationality had been painful, but bearable: “You cry a little, you move on.” This prompted a letter to the editor from R. James Breiding, an author and businessman, himself a dual citizen of Switzerland and the United States:

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