Felix Salmon


Felix Salmon
Jan 26, 2012 10:56 UTC

It’s time to move the World Economic Forum away from the Swiss enclave with which it has become synonymous, at least for one year. A Greek island — Arianna Huffington suggests Patmos, while Andrew Ross Sorkin is more partial to Santorini — would be perfect: a change of climate, a change of scenery, and an opportunity to bring the forces of global plutocracy to bear exactly where they can do the most good. Davos has billionaires, but it doesn’t have any yachts.

Patmos 2013: you know it makes sense.

Update: More recruits!


Patmos, the island where the Book of Revelations was written, predicting the Apocalypse with its talk of scorpion tailed locusts sounds perfect venue for the rich to gather.

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Esther Dyson’s hopes for Russia

Felix Salmon
Jan 25, 2012 18:49 UTC

In the general atmosphere here in Davos of worry and apprehension, it was great to be able to sit down with Esther Dyson this afternoon and get a dose of refreshing optimism — and about Russia, of all places. There’s an elite group of Russian technologists here — Dyson, a lifelong Russophile who’s fluent in the language and on many boards of Russian technology companies, introduced me to both Arkady Volozh of Yandex and Anatoly Karachinsky of IBS. And she’s convinced that the success of the Russian technology sector can not only make for thriving companies but also for a much improved country.

I was skeptical, but Dyson made a number of good points. For one thing, it’s really hard to build a successful software company through corruption and bribery and other dark arts — especially when you’re creating websites which are judged on their broad popularity. And while natural resources can be stolen, human resources really can’t be.

More importantly, a whole generation of Russians is growing up on the internet, freely using Russia-developed websites which are every bit as good as their US counterparts. Their life online is transparent and not controlled by large and oppressive bureaucracies, and Dyson is convinced that once they’ve experienced that much freedom online, they’re going to start demanding it in real life as well.

Not immediately, of course: Putin is going to win the next election, and he’s going to do so legitimately. But at some point a majority of the Russian population will have no memories of the Soviet era. And already that younger generation is both demanding change and driving growth.

They’re fantastic engineers, for one — look at the way, for instance, in which Boeing does a large part of its engineering work in Russia. Or, more generally, at the Israeli technology sector, much of which is powered by Russian emigres. Russia has many problems, but there’s no doubt that its computer-science colleges are churning out a lot of smart graduates, and that the likes of Karachinsky are hiring those people at a rate of thousands per year. And they’re not robots, either: these kids are creative.

Dyson is intimately familiar with projects like Digital October in Moscow, and she’s a huge fan. Meanwhile, of course, there are the much larger phenomena which get a lot of global attention — things like Mikhail Prokhorov’s bid for the presidency, or the massive Skolkovo science park. If these things fail — and there’s a good chance that both of them will — that’s not necessarily a bad thing: free and successful societies have lots of failure. And importantly, when you look at both of them, you see hope and optimism. Which are not what you might call classic Russian traits.

I’m not entirely convinced. The population of Russia has been declining for the past 20 years, and is continuing to shrink: there are 14.2 deaths per 1,000 people per year, and just 12.6 births. And if you look at the weirdly-shaped population pyramid, you can see that the post-Soviet generation is dwarfed by its more conservative elders. It’s going to take a very long time indeed before they can or will effect any real change.

Still, if there’s any hope for Russia, it’s in the idea that democracy will percolate up from youth and the internet, rather than being demanded in some kind of revolution. As Prokhorov says, “every time we have a revolution, it was a very bloody period”. Russian democracy is not going to mean a US-style free-market economy: Russia tried that, in the 1990s, with disastrous results for the broad population. But a wired country is, by its nature, always going to be a little less corrupt. And a little more hopeful.


Russian Total Fertility Rate has been steadily growing (from 1.16 in 1999 to 1.54 in 2009, even higher now) and mortality falling (life expectancy at birth went up from a rock bottom of ca. 65 years in early 2000es to estimated 70.3 years in 2011). Correspondingly, natural decline went from about 6.5 ppm in early 2000es to likely 1 ppm in 2011. Even with grossly under-counted migration, the population was essentially stable in the last three years. Latest Census (2010) found about 1 million more people in the country than expected (0.7% of expected population), in contrast to Latvia where Census discovered 158 thousand missing (7% of expected number). It is much more likely than not that in the next decade to population will be either stagnant or increase marginally.

While upwards of 1.54 TFR is much lower than replacement rates, in Europe this number is beaten only by Scandinavian countries, Netherlands, Belgium, UK, France, Ireland, couple of Baltic countries, and Serbia. The rest of Europe has it worse.

So, the demographic trends are unambiguously positive, unlike in many other places. On immigration – whatever the way local population looks at it, this is fact of life. Immigration-related tensions are causing the rise of right wing parties across the whole of Europe, which makes Russia not exceptional at all. A normal (and improving) country.

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Fear in Davos

Felix Salmon
Jan 25, 2012 13:24 UTC

It’s highly unscientific and anecdotal, but the winner by far of the most-talked-about-person-in-Davos award, at least when it comes to people in my earshot, is George Soros.

Soros is out of the investing game, living now as a full-time philanthropist and sage, while still keeping an eye on the fund company which bears his name and which provides him with a ten-digit income each year. Because he doesn’t have a financial book to talk, because he’s happy being brutally honest, and because he’s giving voice to the plutocrats’ darkest fears, Soros seems to encapsulate Davos 2012 like no one else.

Sitting in his 33rd-floor corner office high above Seventh Avenue in New York, preparing for his trip to Davos, he is more concerned with surviving than staying rich. “At times like these, survival is the most important thing,” he says, peering through his owlish glasses and brushing wisps of gray hair off his forehead. He doesn’t just mean it’s time to protect your assets. He means it’s time to stave off disaster. As he sees it, the world faces one of the most dangerous periods of modern history—a period of “evil.” Europe is confronting a descent into chaos and conflict. In America he predicts riots on the streets that will lead to a brutal clampdown that will dramatically curtail civil liberties. The global economic system could even collapse altogether.

No one but Soros will actually say these things, at Davos — but everybody here fears them, which is one reason why we have the slightly ludicrous sight of billionaires bellyaching about the global burdens of inequality.

Security this year is tighter than ever — the first rule of security at these events is that it can only get ratcheted up, rather than loosened at all — and there’s a besieged feeling to this Alpine town I haven’t felt before. The financial crisis concentrated minds and was seen as a big problem to be addressed and even maybe solved. But the current breakdown of trust in global institutions cuts at the heart of the World Economic Forum’s founding principle — that if you get a bunch of important people together in the same place, they can actually make a difference.

There are fewer heads of state here than there normally are; even Bill Clinton is giving Davos a miss this year. And a theme running through many of the discussions so far seems to be the question of how one manages chaos, in a world where the risk of a chaotic breakup of the European Union can be ignored no longer. To take just one example: if you’re a European bank, with loans and funding sources and depositors in many different European countries but just one unified currency, what happens if one or more of those countries decides to go its own way and leave the euro? It’s almost impossible for a bank to prepare for such an eventuality, but it represents a huge legal and financial risk.

The WEF itself, for all its efforts at internationalization, remains a very European organization, and will naturally decline in importance and relevance as Europe fractures and loses its standing on the international stage. Last year, there were crowds around television screens showing live coverage of Tahrir Square in Cairo, as delegates turned into spectators, watching the world change with no regard at all to what the plutocrats might think. This year, the feeling of powerlessness remains. Davos hubris is dissipating, to be replaced by risk management protocols. Europe risks falling apart — and there’s nothing that anybody here can do about it, if it happens. Never have the masters of the universe seemed so very human.


Our direct taxes (not counting corporate income taxes, business real estate taxes, sales tax, or employer FICA taxes) came in around 25% for 2010. Agreed that it would be difficult to push that to 50% through direct taxes.

Still, if total government spending at all levels is 40% of GDP, then there are likely some people who directly or indirectly end up paying 50%.

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Davos’s status levels

Felix Salmon
Jan 19, 2012 00:01 UTC

Here’s my infographic on the badges at Davos, put together with the invaluable help of Alex Leo and Juno Lee.

I actually snapped a photo of the white-with-hologram badge — pretty much the top badge you can get at Davos — a couple of years ago, although I didn’t know what it meant at the time. Technically, the purpose of the hologram is to let the Davos security people know who’s allowed into IGWEL meetings. But the real purpose is to make everybody who doesn’t have a hologram feel a little bit left out.

Wonderfully, in his piece on why he isn’t going to Davos, Mohamed El-Erian calls for even more layers of exclusivity: “To be more productive, and more useful,” he writes, Davos meetings “need to be much less inclusive at some key moments. Very difficult (and highly delicate) decisions have to be made about who to involve in certain meetings and who to exclude. This would require additional (and closely monitored) status levels for participants.”

I can assure Mohamed that the WEF already spends a mind-boggling amount of time making difficult and delicate decisions about who to involve in certain meetings — none more so than IGWEL. And one of the wonders of Davos is the way that every time you go back, you discover a whole new level of secret and exclusive meetings and dinners and get-togethers which you had no idea even existed: the badge-color layers are only the beginning. Maybe Mohamed should actually go, next year. But only if he gets a hologram.


Ugh. So there’s secret orders within secret orders. Its getting all very New World Order all out in the open isnt it. No doubt the “Illuminati are the 2 or 3 at the top of this pyramid of secrecy who are getting their minions to plan the next stage fo corporate globalisation and elimiation of the nation state. UGH!

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Adventures with job titles, Davos edition

Felix Salmon
Jan 11, 2012 00:17 UTC


This is a word cloud of the job titles of the 2,623 official delegates to the World Economic Forum in Davos this year. It’s pretty clear what’s going on: while the most important people at the forum are still the ministers and heads of state, there are only 24 ministers in all. (I’m not sure about the presidents, they get mixed up in all the executive vice-presidents and the like.) Meanwhile, there are 674 CEOs, from Mustafa Abdel-Wadood to Jaime Augusto Zobel de Ayala. And, of course, 490 Chairmen and Vice-Chairmen (but only two Global Chairmen).

There are also two Archbishops; 133 Founders; one Novelist; three Candidates; six Mayors; one Technical Support Superintendent; 109 Heads; three Hosts; six Artists; one Theorist; 11 Fellows; one Leader; six Economists; one Singer (not including Wyclef Jean, who’s coming as “Ambassador-at-Large of the Republic of Haiti”); one Curator; 27 Deans; one Executive Geek; four Consultants; two Activists; four Researchers; and four Global Heads.

And then, of course, there are the Media Leaders: 1 Journalist, 1 Blogger, 1 Photographer, 4 Writers, 18 Anchors, 19 Columnists, 19 Correspondents, 33 Editors-in-Chief, and 152 Editors of all stripes, including the Billionaires Editor at Bloomberg.

There are 40 instances of the word Global, 15 of International, and 0 of Local or Domestic. Asia appears 7 times; Africa 8; America 10; and Europe 19.

What all of this means, I cannot say. But I’m quite glad there’s only one Chief Change Officer, even though she does have one particularly wonderful line in her bio. After listing the various advisory boards she’s on, it just says “recipient of award”. All bios, surely, should say that.


Hmm, I really get the feeling that maybe there should be a way of including the inputs of a few people without titles as well at Davos. Or perhaps some of the Chief whatever’s should go and spend same time in the Occupy igloos. The Wisdom of Crowds etc???

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When plutocrats collect artists

Felix Salmon
Feb 3, 2011 20:19 UTC

The 4th Davos Philanthropic Roundtable, held in Davos during the World Economic Forum, was one of the more surreal events to happen last week. Sponsored by Ukrainian oligarch Victor Pinchuk, it ostensibly served to examine the role of art in social transformation, both in theory and in practice. But the real message of the panel was that if you get a bunch of art-world types to sit on a panel and intone vapidly, you will produce no light and precious little heat.

The real fun was happening in the corridor outside the panel, where Damien Hirst and his assistants were helping make spin paintings for anybody who wanted one. (I’ve got two sitting by my desk — a heart that I made, and a skull my wife made.) The process was streamlined and effective:

And while insights into philanthropy were hard to find, insights into the psychology of the art market abounded. I finally got an answer, for instance, to the question of why someone like Pinchuk would go around spending hundreds of millions of dollars on shiny, evanescent art.

It’s all part of the same drive which brought Pinchuk to Davos in the first place, and which got him onto the boards of the IIE or the Global Business Coalition against HIV/AIDS—the desire for international recognition and respect. Buying art gets you some small measure of that, and the more expensive the art, the more respect you get, in the art world at least. But the art world is small, while the number of people who admire philanthropic ventures is higher—so Pinchuk is trying to combine the two, as improbable as that might sound. He even commissioned an utterly bizarre video laying out his vision of art changing the world.

The Davos lunch was an impressive demonstration of the power of money and patronage. Pinchuk held his own shindig on the sidelines of the WEF and rivalled it for star power: Damien Hirst and Jeff Koons even turned up in town just for this event, without any WEF credentials at all. And it goes to show how the art market has evolved since the war, from a realm of connoisseurship surrounding dead painters of brown portraits to one of living brand names who can be schmoozed and dined and even flown up an alp.

On the flight back from Davos I read Art of the Deal , a new book by Noah Horowitz taking a deep look at the art market in general and art funds in particular. It’s definitely not for a general audience — Horowitz writes, for instance, about “desubjectivization as a challenge to the ‘capitalist character of aesthetic relationships’ and networks as an anticommodification avant-gardist strategy,” and that’s only a little bit of a single sentence — but he did help me think more about the way in which the art market has become less and less about art, and ever more about people. That’s why and how artists can make good money from careers which are spent making virtually uncollectible art, like cooking Thai food or getting kids to stop gallery-goers and ask them questions.

In a world where plutocrats collect artists rather than art—where Pinchuk can show off Hirst like he might a new Rolex, or where Dakis Joannou can get Jeff Koons to do his yacht-painting for him—the aesthetic content of the art doesn’t matter nearly as much as the fame of the artist, and the degree to which the art is instantly recognizable.

Once upon a time, artists painted in schools, and it took a certain amount of education and taste just to be able to distinguish one artist’s work from another’s. Those days are long gone: all the most successful contemporary artists have their own unique schtick, and could never be mistaken for anybody else. It’s a necessary condition for success in the art world today: you need to do something no one else has done, and which can be recognized as being your work and nobody else’s in a fraction of a second. It’s not sophisticated, but it’s effective. And it has helped drive the art market to the point at which Koons editions are selling for vastly more money than old master paintings he’s buying for himself. It’s unsustainable, but it’s fun while it lasts.


Lets face it: art, as well as all other investments, are at least, partly, about marketing. In the investment business, itself, about 99% of the people are marketers, from brokers to securities analysts. In the art world, dealers and critics are the marketers, and there has been a lot of art that I personally believe people have been snookered into appreciating over the last century: it’s just a variation on: “The Emperor has New Clothes”.

The general investment market has proven over and over again that fools can easily be parted from their money. The “new” art market just gives them another place to be fooled.

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Chris Hayes on fractal inequality at Davos

Felix Salmon
Jan 31, 2011 21:28 UTC


“there are so many ways that the typical family earning $80-$100k could save an additional $5k”

Median family income in the US is $51k. Your “typical” family has an income twice as large. If you are so out of touch w the circunstances of actual working people you have no business commenting on how they should go about paying for their kids education.

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The triumph of Davos

Felix Salmon
Jan 30, 2011 09:04 UTC

Davos, in 2011, was the year when the cynics were finally proven wrong. Long derided as a sybaritic alpine gabfest, the World Economic Forum astonished the world with what it was capable of this year, deftly leveraging the talk around its chosen theme — “shared norms for the new reality” — into an effective and timely intervention in Egypt. The Forum’s slogan — “committed to improving the state of the world” — became reality, as the actions of a small and powerful few atop a distant Swiss alp managed to give shape and direction to what would otherwise have remained inchoate and dangerous demonstrations in the volatile North African hotspot.

Certainly the Forum had a lot to work with — it has long been looking long and hard at global risks including political instability in undemocratic countries as well as the demographics of North Africa and the Middle East; the adverse effects of high unemployment among both educated and uneducated youth; the game-changing aspects in autocratic regimes of the rapid spread of information over cellphones, the internet, and satellite TV; and countless other issues of direct relevance to Egypt.

On top of that, as the Egypt crisis evolved over the first few days of the Forum’s annual meeting in Davos, two things rapidly became clear. Firstly, this was an astonishing stroke of good timing: rarely is a major global crisis so fluid and susceptible to outside influence just as the world’s top politicians, businessmen, and thinkers are all in the same place at the same time. Secondly, the work being put in by delegates to define shared norms for the new reality was directly relevant to Egypt, which was clearly in desperate need of shared norms for everybody to agree on as it moves uncomfortably into recognition that it’s now in a new reality.

The result was undoubtedly impressive. All panels and events were reconfigured to concentrate on Egypt and what the delegates at Davos could do to help. The small Swiss village was full of leaders of every stripe — women’s leaders, youth leaders, media leaders, business leaders, and, of course, politicians with direct influence and importance, such as Amre Moussa, the secretary-general of the Arab League. Knowing that swift and focused action was the order of the day, they rapidly put together an action plan. It was both clear enough to persuade Hosni Mubarak that global opinion had turned decisively against him and that his position was no longer tenable, and flexible enough to adapt to rapidly-changing realities in Cairo.

With money from a large number of the Davos rich and communications expertise from broadcast, telecommunications, and social-media representatives, the manifesto put together in the space of just two days at the Congress Center became a clear rallying point not only for Egypt’s disaffected youth but also for their counterparts across the region. And with radical and democratic change now just a matter of timing, Arab countries saw that a peaceful transition to stable democracy was both possible and necessary. The rest is history.

Cynical bloggers had said that even events of Egypt’s magnitude would barely make a dent in the rigid and out-of-touch culture of Davos. The parties and ski trips would continue, they reckoned, the program would remain unchanged, and the handful of delegates interested in Egypt would simply cluster around flat-screen televisions screening Al Jazeera rather than actually doing anything productive. Those bloggers were forced to eat their words.

Did they think that the Forum’s commitment to improving the state of the world was simply a veneer designed to make an astonishingly expensive professional-networking event look vaguely respectable? Of course it wasn’t. We might be in a new reality now, but the leaders of Davos more than ever have the ability and determination to transcend their selfish agendas and unite to effect a major and positive change in the world. The triumph of Davos in 2011 has confirmed the World Economic Forum as an indispensable gathering-point for global leadership for decades to come.


Awesome, Felix. Great satire!

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Building a regulatory architecture for microfinance

Felix Salmon
Jan 28, 2011 19:36 UTC

The best panel I went to at Davos this year—and I got the impression that most of the other people there would say the same thing—was a lunch session today on going “beyond microfinance” when it comes to providing financial services to the unbanked around the world. The implosion of the microfinance sector in Andhra Pradesh has clearly had a sobering effect on much of the well-intentioned professionals here in Davos, and it’s clear that a lot of the hope that surrounded microfinance is now moving on to other things, especially mobile banking.

If there was one big running theme to the lunch, it was that of regulation—a very tough nut to crack. On the one hand, there are lots of organizations devoted to delivering financial services to the poor which are severely hobbled by the regulatory regimes under which they’re working. A big bank CEO at the lunch said that all of his company’s initiatives in the sector essentially had to be ring-fenced from the bank itself, or outsourced entirely to other organizations, for regulatory reasons. The cost of effective anti-money-laudering architecture, he said, is so high per bank account that no account for tiny depositors could ever make economic sense. And at the other end of the size spectrum, a tiny non-profit in Haiti was saying that the regulatory obstacles to providing basic banking services were so high as to be practically insurmountable.

On top of that, many of the success stories in banking the poor, from Grameen in Bangladesh to MPesa in Kenya, grew to be large and highly successful precisely because they had little or no regulatory oversight. And there was an impassioned plea from one speaker that the concerns of banks catering to the poor be an important part of the Basel rules, since so many of those rules are designed for big, rich banks with big, rich clients, and are almost impossible to apply to this very different world.

On the other hand, lack of regulation is the main reason why microcredit, in particular, grew so quickly and out of control, with pretty disastrous outcomes not only in Andhra Pradesh but in many other countries too, from Bosnia to Nicaragua. A profusion of microlenders can easily result in borrowers taking too many loans from too many people, eventually getting far out of their depth, and a lack of regulation can mean usurious interest rates. Far too much commentary on microlending seems to be based on the premise that more lending is ipso facto a good thing, but attempts to demonstrate that empirically have often failed or have generated very unclear results.

Meanwhile, the emphasis on small individual borrowers has meant a certain deficit of attention on small businesses in developing nations, where by some estimates the credit gap is well over $2 trillion. And the amount of money and talent being devoted to setting up lending operations does seem in many cases to have short-changed other, even more important financial services, such as payments, savings, and insurance.

My feeling is that what’s needed here is some kind of platform, or architecture, into which all financial service organizations can plug themselves without being stifled by regulation or needing to bypass or arbitrage it. Lending needs to be regulated more than it is, because although the main victims when a lender collapses are generally its rich shareholders rather than its poor borrowers, the collapse of major lending institutions can cause great damage when it comes to trust in financial-services companies more generally.

Some private-sector initiatives, like Fino, are quite exciting on this front, but they obviously can’t provide much help when it comes to regulation, which is crucial. It needs to exist, across the financial-services spectrum; it needs to be helpful and constructive rather than simply saying no to anything which doesn’t look like a big traditional bank; and it needs to be able to protect end users through deposit insurance and other mechanisms which require full state backing.

This is going to be extremely difficult. Central bankers and other regulators, for many reasons, have very little interest in regulating or licensing mobile-phone operators and other new entrants into the financial-services space. And the existing players in that space, banks foremost among them, have similarly little interest in seeing competitors spring up with lighter regulation. Already they’re at a serious competitive disadvantage: one attendee at the lunch said that a bank employee in India costs $10,000 a year, while a microlending employee costs only $1,000 per year. Given the politics of bank regulation, large existing regulated institutions are likely to be calling the shots when it comes to allowing smaller banks and insurers into the club.

For the time being, then, I fear that microfinance is going to continue to evolve most interestingly and vibrantly in the unregulated space, with all the dangers that naturally means. I hope that a well-thought-through system of microfinance and microinsurance regulation does begin to evolve, but I’m pessimistic, and I suspect that one of the greatest hopes for the educated youth of countries like Egypt and Tunisia—that they will be able to get loans to start companies and develop their economies—will remain out of reach for the foreseeable future.