DC Special Bookazine Edition: Stakeholder Capitalism

D IPL O MAT ICO UR IE R .co m

A Global Affairs Media Network F EB R U ARY 2 0 2 0

STAKEHOLDER CAPITALISM FIVE TAKEWAYS FROM THE DAVOS ANNUAL MEETINGS

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STAKEHOLDER CAPITALISM HIGHLIGHTS FROM THE 2020 DAVOS ANNUAL MEETINGS A SPECIAL REPORT

MEDAURAS GLOBAL PUBLISHING WASHINGTON, DC

1 FUTURE OF HEALTH

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lobal healthcare spending has increased dramatically over the past decade. Issues previously relegated to the privacy of a doctor’s consultation room have now been destigmatized. Loneliness, workplace stress, grief, depression, anxiety—these are just some of the mental health issues that stakeholders are beginning to recognize as major problems, but physical ailments are also part of the problem. Medical science has made already huge leaps, and now technology promises the “precision medicine” dream once featured in science fiction books and films.

How do we identify and solve major healthcare challenges while ensuring fair access for all?

Modern technology is allowing humans to play with the very building blocks of life. Davos 2020 highlighted several ways we can change the world around us to create healthier futures.

The novel coronavirus pandemic has surprised governments and civilians with its rapid spread, but experts have been anticipating the threats of rapidly spreading infections for years. In a presentation given before the World Economic Forum in late February 2019, Imperial College virologist Wendy Barclay touted the potential of CRISPR gene editing technology to make farmed animals resistant to influenza viruses. Viruses such as influenza replicate inside the cells of their host, relying on host proteins. By identifying one specific protein which all influenza viruses are completely dependent upon, researchers believe they can cause farmed animals to produce a slightly altered version of that protein so influenza is unable to infect the host animal. As all influenza viruses originate in wild animals and typically pass to humans through farmed animals, this could completely eliminate the ability of new influenza strains from passing to humans. Scary as it may sound for us to essentially play god, this technology could potentially save thousands of lives by destroying the cross-species connections that have let viruses from the influenza family devastate humanity on countless occasions.

Health professionals traditionally face major logistical obstacles in bringing vaccines to rural and developing communities when diseases do spread, because vaccines typically require cold storage and have a limited shelf life. The cost of treating populations far away from urban centers is immense, limiting our potential to stop pandemics in their

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tracks. At Imperial College in London, researchers have devised a way to develop heat-stable vaccines that can not only survive long transport routes, but remain on the shelves for as long as necessary, allowing us to react quickly if the disease reemerges.

These technological innovations have serious implications for the future of global physical health, but they are only part of the story.

Society and health professionals are increasingly recognizing that our mental health is just as important as our physical health.

In much of the developing world, mental illness is stigmatized as a western import rather than something which naturally occurs in humans. These misconceptions suppress the voices of those who are suffering. This stigma has left millions across the developing world without the ability to receive treatment or even the means to speak openly about their struggle. One example is India, where an estimated 150 million Indians are dealing with mental illness in one form or another—a higher number than any other country on Earth. Women are diagnosed with depression at a rate twice that of men, and the average age of a diagnosis across the nation is only 30. Deepika Padukone, an Indian actress who garnered worldwide acclaim for speaking publicly about her struggles with depression, suggested that this disparity is rooted in a lack of engagement in the classroom.

Physical education and health courses are nearly ubiquitous across the world’s public schools, but mental health fails to receive the same attention although it has a disproportionate impact on younger generations.

Duke University professor of psychiatry Dr. P. Murali Doraiswarmy argued that specific cultural stigmas can be alleviated by presenting solutions tailored to a nation’s individual culture. Doraiswarmy buttressed this claim by noting that yoga, in many cases, has proved to be just as effective as a treatment as modern psychotherapy. A popular Japanese practice called forest bathing encourages each person to simply spend more time embracing nature, and has been credited with helping many in Japan who suffer from depression and high blood pressure. Embracing treatment options that are more culturally accepted could allow the world to bypass a number of entrenched roadblocks on the journey to addressing the global mental health crisis.

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Another challenge comes from the personal stigma currently attached to mental illness, causing many sufferers to see themselves as weak for needing help. Mental health is not an us vs. them issue—it is “an us issue” that can affect each and every person on the planet to a different extent. Amornthep Sachamuneewongse suggested that we must break down barriers within ourselves and reach out to willing friends, turning them into stakeholders in our own mental health. He hopes to achieve this through the Sati app, which serves as a 24/7 “army of listeners” for those undergoing a mental health crisis, inspired by his own experience in calling a suicide hotline only to receive no answer. University of Sydney Brain and Mind Centre codirector of health and policy Ian Hickie sees technology as an essential tool in creating healthy minds, noting that “a lot of the barriers in many countries still sit 20-50 years behind”—something that a global effort to address mental health can bypass.

Other researchers are taking a technological approach to tackling brain disorders such as Alzheimer’s, autism, and schizophrenia. By breaking down our brains to their most basic components, Sang Ah Lee believes that we can “engineer our minds” and replicate cognitive processes. In Alzheimer’s patients, an in-depth understanding of the Hippocampus unlocks the potential for prosthetic memory technology that will replace damaged brain functions much in the way that a prosthetic arm does so for the limb. Ki-Jun Yoon, assistant professor of stem cell biology, added that we now have the ability to grow artificial brains with stem cells. With these 3D models, we can imitate human development and begin to fully understand exactly how brain disorders like autism and schizophrenia arise. Possessing this knowledge under our command, new, effective methods of treatment and therapy are finally within our grasp.

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2 SAVING THE PLANET

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he Earth is getting hotter, polar ice is melting, the oceans are rising, and they’re filling up with plastic.

We’re losing species, building up greenhouse gases, and running out of time. It’s easy to feel downhearted, yet there are so many reasons for hope. The watchword is ‘sustainable’ and it’s being applied to every area of human activity—energy, food, clothing, travel, cities—you name it. But even if everything were 100 percent sustainable, there’d still be work to do to repair the damage we’ve done. Where should we start?

As the world moves into a 4th industrial revolution, a shadow looms over our future. Climate change is an existential threat greater than that posed by any geopolitical rival. It does not discriminate between nations, instead targeting our entire species.

Since the World Economic Forum started in 1971, the Earth has lost half of its arctic ice to rising temperatures. Arctic ice melt is a selffueling cycle thanks to the albedo effect, under which light bounces off white surfaces but is readily absorbed by darker ones. As the sea level rises and ice disappears, the Earth is beginning to absorb more heat, accelerating a warming cycle from which escape is uncertain.

Climate impact researcher Johan Rockström warned us that a 2° Celsius rise in global average temperatures would accelerate melting in the ice sheets, causing them to hit a permanent point of no return.

Without the Arctic, rising sea levels will make large swathes of the Earth uninhabitable. irreversibly altering the jet stream and completely upending our understanding of global weather patterns while destroying thousands of ecosystems. Rockström warned that one underappreciated contributor to climate change is modern food production. He suggests a new diet that greatly decreases the presence of red meat while still maintaining access to animal proteins. Marine geochemist Nathalie Goodkin warned that our access to one major source of animal proteins—fish—is at risk. Twenty percent of the world’s food comes from fish protein, and a quarter of those fish depend upon coral reefs which are dying at a rapid pace.

A new form of environmental activism is emerging under the leadership of the world’s youth. Greta Thunberg has received international attention for her journey across the world to raise

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awareness of climate change, but she is far from the only one. Isabel Wijsen was only 10 years old when her career in activism began. By the time she was 15, an NGO she co-founded to eliminate wasteful single-use plastic bags successfully persuaded her home of Bali to pass a total ban. Leaving the stage, Wijsen asks that we remember that youth like her are not just 25 percent of the population—they are 100 percent of the future. Spurred into action at a young age, activists like Wijsen are the voice of a revolution that refuses to stand idly by and accept the fate prescribed to the Earth by their predecessors.

Thunberg and Wijsen’s work have inspired thousands of young people across the globe, who have responded by pressuring their governments for reform and by starting grassroots movements dedicated to taking back their stolen futures.

Governments and private entities are also taking steps to address the environmental crisis. A major obstacle in the path of affecting change is the green growth equation—how can we transform our lives to protect the Earth without sacrificing our economies? Dow Chemical former CEO Andrew Liveris hates when the word sustainable is placed in front of growth, because “if growth isn’t sustainable, we shouldn’t be in business.” It is clear that we must accept the need to make sacrifices should we wish to save the planet. Renowned economist Mariana Mazzucato took a hardline stance on the environment, noting that we must be ready to face losses in profitability, business closures, and even the elimination of entire industries as we move toward more ecologically friendly economic models. She suggested that loans from public banks be made conditional based on the sustainable transformation of the sectors undertaking them. Bank of England Governor Mark Carney warned that we must be careful while enacting reforms that the most vulnerable members of a given society are not denied chances at success through, for example, improper recycling of a carbon tax.

Across the World Economic Forum’s Davos 2020 program, there is a sense that existing indicators of economic health like GDP are outdated and cannot be applied to ever-changing modern circumstances. Experts suggest that a better model would take into consideration such important variables as the health of ecosystems and provision of public goods as well as gross production. However, historian and professor Yuval Noah Harari pointed out, governments

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are afraid to take leadership on such climate-sensitive reforms out of a fear that the economic impact will leave them at a comparative disadvantage with their rivals. This sort of sentiment—a fear of other nations taking advantage of your good will—inspired the United States to withdraw from the Paris Climate Agreement. The outlook is not entirely hopeless, though. Some of the world’s largest investors are now uniting to ensure their portfolios are carbon neutral by 2050.

This “critical mass” of asset owners will not only drive future innovation, but eliminate the no-holds-barred growth present in much of the private sector today. Should we wish to save the planet, we must present a combined front across humanity and drive each other towards new climate solutions.

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3 FUTURE OF SOCIETY

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nyone with a mobile phone can access the course material for a Harvard degree, take part in the ‘gig economy’ or find funding for their new venture. That’s a profound and very recent change. Technologies underpinning the Fourth Industrial Revolution are disrupting our economic and social lives, but they are also helping us to adapt. Yet left to market forces alone, the Fourth Industrial Revolution will usher in a long and damaging period of dislocation. We can see it coming. We know we’re going to have to reskill. What are we going to do about it?

Globalization 4.0—a key theme of Davos 2019—is triggering a dramatic change in how individuals work within their societies to enact change. Speaking to this evolution, model and transgender activist Geena Rocero argued that a society of the future must provide ways for historically marginalized groups to spread their own stories.

Groups such as LGBTI people have faced centuries of discrimination that has forced them into silence, and policies guaranteeing basic rights won’t be enough to redress this historical imbalance. Rather, Rocero feels we must “create language for people to tell stories, for people to feel safe, for people to be their whole selves when they come to work.” Our commitment to equality must be sincere and based on empathy, not necessity. Rocero made another appeal for equality in the workplace - this one based in economics, not morality. When an individual is denied the right to simply be themselves, they can never truly be comfortable in their employment, and feel as if they’re constantly hiding an important portion of their identity from their colleagues and superiors. This, she argued, prevents people from working to their full potential. If we don’t empower marginalized groups, companies will be deprived of essential sources of talent who are currently likely to avoid entire sectors out of fear of discrimination.

Rocero presented a striking reality of the damage this will cause, arguing that “it will cost companies $100 billion a year to not support LGBTI rights.” Multinational businesses are increasingly expanding their presence in states where social policies are not yet in place guaranteeing protections or requiring anti-discriminatory practices.

Rocero suggested that if multinational businesses enact inclusive hiring policies it could create a universal incentive within that state, serving as important models for the formation of new public policies.

The World Economic Forum hopes to emphasize such dynamic

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public-private relationships in its upcoming development programs.

In January of this year, the WEF launched the Reskilling Revolution, a “multi-stakeholder effort to provide enhanced education, skills, and better jobs to one billion people by 2025.” With support from public institutions and over 400 private businesses, the Reskilling Revolution hopes to harness the potential of the 4th industrial revolution to ensure equal opportunities for those still struggling under the current international order. An internationally powered effort to provide working people across the world with the skills necessary to succeed in these new futures is essential. As Salesforce CEO Marc Benioff explained, “capitalism as we know it is dead.”

This belief that we must entirely remodel the systems we have trusted for decades is not limited to the economy. There is a growing sense that we need to redesign democracy to better build consensus across increasingly pluralistic and divided societies. E. Glen Weyl founded RadicalxChange in hopes of spearheading an international movement to redistribute the building blocks of democracy in such a way that empowers individuals to more efficiently advocate for societal change.

Weyl touted a concept he calls “quadratic voting”—a practice under which each vote maker has a set number of votes which can be allocated to various referendums to express both direction and degree of support. These votes do not replenish until a set time, so individuals must carefully weigh what they consider most important and distribute them strategically. RadicalxChange’s model for using quadratic voting aims to allow those traditionally on the outside of political processes to focus on the problems most relevant to their own lives and encourage greater popular participation in legislation.

Weyl claimed technologies like quadratic voting—which has already been successfully deployed by governments in Taiwan and Colorady as well as by wiki surveys—will help to unite pluralistic societies.

Digital innovations are helping create new ways to improve our future society, but conceptualizing new ways to tell our stories will also be fundamental to shaping the future of society. As Rocero noted earlier, our stories of struggle and growth not only define us, but also empower us to affect real change in the world. Jane Goodall, renowned for her work with animal rights, offered an alternative model for making our voices heard. Goodall sees little value in what she calls “aggressive activism,” and argued that by putting those in power on

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the defensive with confrontational language, we prime them to oppose our aims. By sharing our stories in ways that invite the listener to connect, we can plant a seed in their hearts that may just cause a turn of face. In his short address to the WEF, Mohammed Hossan Mohamud aimed to do just that. Telling the story of his experiences in refugee camps along with his mother for over two decades with no progress toward finding a new home, Mohamud expressed bewilderment that “money and capital move around the world in seconds, but it takes a refugee decades.” Mohamud took the audience to task, asking that they look beyond his words and consider the lives that are at stake. Across the world, people are searching desperately to find the beginnings of a new order in which we finally uplift those who have been forgotten and finally commit to the values of justice and equality that we have championed for so long.

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4 FAIRER ECONOMIES

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ince World War II, the average life expectancy across the globe has risen by 30 years, as access to healthcare and education has helped lift billions out of poverty. Over the same period many states are suffering increasing wealth inequality, reversals of social mobility, and an undermining of social cohesion.

Now there are fears new technology will make things worse. How can we reshape economies so the benefits of growth benefit the many rather than the few and thereby ensure that the extraordinary engine of human development we built is made sustainable?

While global economic growth over the past century has been unprecedented, that growth’s uneven distribution results in rising income inequality, a degrading environment, and political unrest.

Increasing inequality appears to be a consequence of our focus on binary growth standards. This year, speakers at the World Economic Forum proposed new models of capitalism that no longer see immediate profits as the best indicator of economic health. Scholars increasingly see traditional measures of economic strength—such as Gross Domestic Product (GDP)—as a hurdle to more sustainable and inclusive growth. Private investments, international credit ratings, and developmental programs have historically relied heavily on GDP to make economic decisions. While it may have provided meaningful measurements for the 20th century’s emphasis on traditional industry and manufacturing, GDP cannot provide a holistic picture of modern economies. Douglas Peterson, President and CEO of S&P Global, claimed out that a state’s GDP figure can exclude up to 35% of actual economic activity thanks to rapid growth in informal economic activities. The informal economy is growing exponentially due largely to innovations in the digital marketplace, displacing significant portions of economic activity away from the physical realm. These transactions often cross borders, and it is increasingly unclear who should reap the benefits. If a company based in India sells an online product to a consumer in the United States, who is entitled to the tax revenue? Is it even possible to fully tax online transactions?

The digital marketplace is about more than buying and selling goods and services as we would traditionally recognize them. Data is now becoming a more valuable commodity than the products that tech companies create, leading to a new digital industry focused on harvesting personal information. Jennifer Lyn Morone, CEO of

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RadicalXChange Foundation, proposed a unique solution to this challenge: collective bargaining in the realm of data collection.

Morone envisions a world in which nonprofits collect data and allow each individual entity to sell the data they deem appropriate, returning their agency and granting them the opportunity to profit off of their online presence.

An additional issue with traditional economic measures is that they provide an aggregate view of a nation’s economic success without painting a picture of the prosperity of an average person. Even GDP per capita can be skewed by a disproportionate concentration of wealth. Jacinda Ardern, New Zealand’s current Prime Minister, suggested alternatives, citing her government’s requirement d to report child poverty numbers each time they deliver a budget. This approach paints a clearer picture of a state’s economic well-being. It also improves public trust in policy institutions by policymakers to focus on social well-being and holds them accountable for their proposals, improving public trust in policy institutions. The benefits of practices like these are not hypothetical, but completely tangible; Satya Nadella, Microsoft’s CEO, proposed that we reconsider conceptions of capitalism that maximize immediate profits before all else. Nadella has tried to emphasize to shareholders that “there is value in undercutting profits” in order to focus on improving the general well-being of the company’s workers—and of society as a whole. According to Nadella, improving employee conditions won’t just improve their lives, it will also result in better business outcomes as consumption and public trust in the company rises.

Beyond empowering the individual, we must reevaluate how economic growth intersects with the environment according to Enric Sala, an Explorer-in-Residence with the National Geographic Society. Sala argued that half of the Earth must be maintained in a natural state in order to preserve its health. The value of such a choice is not purely environmental—in fact, Sala argued that “protection generates more value than destruction,” pointing out that every dollar spent on national parks results in up to ten being reinvested in the local economy through tourism and consumption. For Sala, the rate at which we are exploiting the planet’s limited resources is actually a conscious tradeoff, privileging short-term growth at the expense of Earth’s survival. This tradeoff highlights still another issue with GDP;

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if a nation chooses to cut down a forest or destroy a biome to harvest resources, the numbers will show a boost in economic production without considering the depletion of existing value and degraded future value of that land. This concept is one that will grow increasingly important as nations in developing world continue to industrialize further and reach levels of economic output that rival the developed, causing their environmental impacts to increase exponentially.

Responsible models of growth must therefore be developed and widely adopted before time runs out.

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5 BEYOND GEOPOLITICS

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here are 193 UN-recognized states, a proliferation of regional power centers, and one increasingly obvious fact binding us all together—all the inhabitants of Earth are facing shared, existential challenges. The good news: when we put our minds to it, we can really get our international act together. Think of when we reversed the depletion of the ozone layer, or when we struck the Paris Accord to limit climate change. The not so good news: the scale of the challenges we face demands many more success stories in a short period of time. As a global community we need to move from geopolitics and international competition to a default of close global collaboration. Stats are going to have to change.

Several governments made it clear at Davos that they will be taking the initiative in uniting those around them. Imran Khan, Prime Minister of Pakistan, pledged to never again create partnerships not based entirely on peace. Khan feels that Pakistan’s alliance with the United States in the war on terror - which left 70,000 Pakistani people dead as they disarmed militant groups spilling over the border - was a critical mistake that came out of a misplaced hope that Pakistan could bolster its international reputation through military cooperation. Khan intends future alliance to be focused on peacebuilding and environmental justice. To this end, he has involved Pakistan in negotiations to end conflict in Afghanistan and attempted to deescalate hostilities between Iran and Saudi Arabia. Khan vowed to avoid conflict when at all possible, even when such decisions injure Pakistan’s geopolitical interests. Involvement in conflicts, Khan suggested, only deepens cleavages further degrade regional security.

This ambition suggests a selfless internationalism which is an essential quality for developing powers to adopt if we ever hope to see a new age of global cooperation.

Others argued more pointedly that U.S. foreign policy is creating divisions. Elias Bou Saab, Lebanon’s Minister of National Defense, argued that Hezbollah is “part of the Lebanese community,” and that US moves to designate the group a terrorist organization interference in Lebanon’s domestic politics. Saab noted that Hezbollah has “mayors, they have elected members in the parliament, they are in the government.” Hezbollah continues to face serious scrutiny due to its historical role in terrorist attacks and ongoing funding from Iran, but Bou Saab argued U.S. actions toward Hezbollah only serves to

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destabilize Lebanon’s politics during a time of intense crisis in the Middle East. Saab contended the U.S. could find more positive results by focusing its efforts on supporting regional diplomacy.

Representatives from Oman and Jordan offered similar sentiments; decades of conflict have left them uninterested in hardline foreign policy and open to opportunities for dialogue.

Meanwhile in Europe, governments have been largely uninterested in taking on direct roles in mediation. Dutch Minister for Foreign Trade and Development Cooperation Sigrid Kaag called for a sort of Marshall Plan for the Middle East, but argued that this must stem from the initiative of regional leaders rather than from a framework imposed by Europe or America. Kaag emphasized difficulties faced by the EU in presenting a united front in addressing the region due to widely differing views held by member states. German Chancellor Angela Merkel suggested that the world needs new value chains, meaning that the world—especially developed societies—must make sacrifices and abandon some of the comforts and conveniences of modern life in order to achieve critical objectives as a species. Europe wants to achieve complete carbon neutrality by 2050, but to do so the people across the continent must accept a widespread scaling back of consumer culture and higher social costs from taxation.

These calls by European leaders signify a promising trend wherein governments and individuals are increasingly taking responsibility for their impact upon the Earth and taking an active role in addressing new global challenges. This especially holds true for the environment.

Ursula von der Leyen, President of the European Commission, highlighted the importance of the environment to Europe’s economic well-being in her address, suggesting “the top 5 risks for our economy are all climate related.” Von der Leyen said that while the old international order appears to be receding, we cannot afford to wait and deliberate over what should rise to replace it. Instead, we must mobilize scientists across the world and establish public-private partnerships to fight for the planet’s future.

Africa, meanwhile, is increasingly seen as the world’s greatest source of developmental potential. Seven of the world’s 10 fastest growing economies are located on the continent, and Africa will soon boast the world’s the largest workforce, with 60% of the population being

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under the age of 25. Queen Máxima of the Netherlands suggested that this development must be empowered with technological innovation, citing estimates that widespread access to mobile payments and banking can create 3 million jobs by 2025 across the continent. Making this into a reality will require widespread 4G coverage, allowing citizens of each African nation—especially women—to gain access to online banking. The queen suggested that African nations should facilitate the creation of a stronger social contract between the government and the people and provide ready access to these public goods which are becoming increasingly essential. However, Botswana President Mokgweetsi Eric Keabetswe Masisi cautioned that Africa’s potential prosperity should be harnessed by Africa alone. He argued that this is the only way to must ensure the continent’s bountiful natural resources are exploited responsibly with the intention of benefiting those who need these opportunities the most instead of opportunistic foreign venture capitalists.

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