Chiara Lepora was used to working amid catastrophe. She was a supervisor at Doctors Without Borders, the Nobel Peace Prize–winning international relief organization that provides emergency medical care in war-torn, impoverished countries like South Sudan and Afghanistan. She had most recently been deployed to Yemen, where bombs rained from the sky, forcing her to patch the limbs of children emaciated by hunger.
But Lepora was not accustomed to thinking of her home country of Italy as a disaster zone. Her assignment in the spring of 2020 was both bewildering and unexpected. She found herself stationed at a public hospital in the north of Italy, overseeing a team of doctors that was providing support to a medical system overwhelmed by the pandemic.
Lepora had been en route to her base in Dubai, returning from a trip to the United States, when she stopped to visit her family in the Italian region of Piedmont. The pandemic all but shut down air travel, leaving her stranded. Two dozen Italian colleagues were similarly stuck. So they formed their unit at the hospital in the city of Lodi, the epicenter of the initial outbreak.
Doctors and nurses were working without enough protective gear, contracting and spreading the virus as they tended to an intensive care unit full of COVID-19 patients. The beds in the unit were full, even as more patients arrived by the day, forcing doctors to decide who lived and who died.
In the four months that Lepora remained in Lodi, she came to understand that the grim shortages around her went beyond the alarming presence of the novel coronavirus.
Profit-minded interests had turned the health care system in the region of Lombardy—Italy’s wealthiest—into something more like a business than a public enterprise organized to protect lives. Over decades, opportunists had privatized the system, yielding lucrative opportunities for themselves, while weakening its capacity to furnish basic medical care.
Across much of Europe, Davos Man’s success in prioritizing his own financial interests over public health helped explain how the pandemic proved so deadly. Davos Man would also help himself to the European rescue funds.
In Britain, a decade of austerity weakened the vaunted National Health Service, leaving it unable to cope with COVID-19 along with the everyday medical needs of the nation.
In Sweden, years of diminished care in nursing homes—the result of a safety net weakened by tax cuts for Davos Man—condemned the elderly to a wave of death. Resources were so scarce that doctors administered comfort care, merely softening the deaths of nursing home residents, as soon as they displayed COVID-19 symptoms.
Unlike in the United States, where the vulnerabilities of a world-class medical system could be pinned directly on monied interests, Europe’s tragedy was the result of a host of overlapping elements and policy decisions, with the blame less easily affixed to individuals.
Throughout Europe, national health care systems were the rule, ensuring that anyone could access medical care—a stark contrast to the United States. But the common backdrop was scarcity, the result of Davos Man’s success in limiting his tax burden, combined with the injection of the profit motive.
This was the reality that Lepora absorbed in Lodi.
Desperate to economize the hospital’s limited stocks of protective gear, she tried to institute a system to limit its use. The key was restricting the numbers of people entering the hospital. But that plan collided with the operations of private companies that had gained contracts to provide meals and cleaning services. They refused to limit their visits, concerned that they could be accused of breaching their contracts.
Lepora worked with the provincial health service to expand a telemedicine initiative aimed at reducing the influx of patients. Eight companies had a piece of the system, and no one was fully in charge. Some COVID-19 patients were receiving three calls a day; some were hearing from no one.
“The service rather than the patient had been put at the center of attention,” Lepora told me. “If you consider profit to be the endgame of health care instead of health, some people are going to be left out.”
The death rate in Europe told the story of which countries had continued to invest in public health, and which had allowed their medical systems to take a back seat to other considerations.
In Germany, the government had resisted the urging of international consultants to shrink its number of hospitals. Germany’s death rate, while considerable, was less than half that in Britain and the United States during the first year of the pandemic.
In the early months of 2020, Italy was Europe’s bleeding edge—the country the rest of the continent watched with a mixture of incredulity and horror, recognizing a preview of what was headed their way.
The northern Italian region of Lombardy was the hardest hit of all. Anchored by Milan, the nation’s fashion and financial capital, it boasted sophisticated manufacturing along with world-class medical care. Yet its hospitals and family medical clinics were overwhelmed—the result of decades of investment that had tilted heavily toward lucrative specialties and away from primary health care.
It was a story that began in the middle of the 1990s, when the presidency of the Lombardy region was claimed by a flamboyant local politician named Roberto Formigoni.
Known widely by the moniker “Il Celeste”—the heavenly—Formigoni was a majordomo in the Fraternity of Communion and Liberation, a Catholic movement that twinned pious social conservatism with prodigious moneymaking. The organization captured interests in major hospitals throughout Lombardy, wielding its influence to restrict the availability of abortions.
Formigoni’s organization was able to take control of hospitals by dint of a privatization law that he had pushed through the regional assembly. It enabled public money to be spent on private companies that provided medical care through the regional health care system. In the quarter century after the passage of the law, private hospitals seized control of 40 percent of the Lombardy market1.
Privatization was sold as the means of injecting greater efficiency into the health care system as it contended with declining levels of financial support. Battered by the global financial crisis, and forced by European rules to shrink its enormous debts, Italy cut spending on medical care, after accounting for inflation, even as its population aged.
By the time the pandemic arrived, Italy was spending far less on health care2 than many other European countries—8.7 percent of its annual economic output, as compared to 11.7 percent in Germany, 11.2 percent in France, and 10.3 percent in Britain.
The impact on intensive care units3 was especially stark, with beds in such facilities dropping from 12.5 per 100,000 inhabitants in 2012 to only 8.6 on the eve of the pandemic, as compared to 29.2 in Germany.
But not every part of health care was shrinking in Lombardy. The privatization scheme triggered a surge of investment into rewarding specialties like oncology and cardiac surgery, while forsaking traditional family medicine.
At Milan’s San Raffaele Hospital4—one of the finest facilities in Italy—booking an appointment as a regular user of the regional health system required calling in and sitting on hold for nearly forty minutes, while those who paid for VIP service secured slots in forty seconds.
Among the direct beneficiaries of the marketization of regional health care was the man who had set it in motion—Formigoni.
Gossip magazines stalked him on lavish holidays, discovering that he was enjoying jaunts on a yacht owned by his friend Pierangelo Daccò, a lobbyist and consultant for medical facilities in Lombardy. Over a decade, according to an eventual criminal prosecution, Daccò supplied Formigoni with gifts and vacations at exclusive Caribbean resorts5, where he was lodged in private villas with personal chefs, at prices reaching 80,000 euros a week. All told, the lobbyist demonstrated his appreciation for Formigoni’s governance with 6.5 million euros’ worth of treats. In exchange, the governor had steered public spending on health care toward Daccò’s clients.
Daccò was ultimately implicated in a complex con involving other politicians and administrators through which he raked off much of the money and stashed it overseas. Prosecutors found that he had bilked the regional health care system of 70 million euros6. They seized his yacht, a massive wine cellar, several houses, and more than three dozen bank accounts.7
When this tawdry dealing burst into public view in the fall of 2012, the ensuing outrage ended Formigoni’s reign as Lombardy’s governor—though not, remarkably, his political career. Even as he was being probed for corruption, Formigoni was elected to the Senate as a member of Silvio Berlusconi’s party.
Formigoni eventually spent more than five years in prison. Daccò, who pleaded guilty to a reduced charge, served two and a half years. The hospitals at the center of the scandal passed into new hands. In 2012, the San Donato Group, the largest hospital chain in Italy, purchased the San Raffaele Group.
In the years leading up to the pandemic, officials in Lombardy sought cost savings, giving hospital managers incentive to cut stocks on items like test tubes and chemical reagents—a decision that limited the capacity for mass testing for COVID-19 when the pandemic arrived.
The managers found their own ways to profit. According to an eventual complaint from prosecutors in Milan, executives at the San Donato Group connived with their counterparts at major pharmaceutical companies8, including Novartis, Eli Lilly, and Bayer, to swindle the Lombardy system through price gouging on drugs. The hospitals received the drugs at a discount, and the executives pocketed the difference—some 10 million euros—while taxpayers reimbursed the hospitals at inflated prices.
These shenanigans were not outliers, but indicators of the mindset that was driving privatization. Regional leaders were operating more like venture capitalists than public servants.
“Specializations such as hygiene and prevention, primary health care, outpatient clinics, infectious diseases and epidemiology have been considered not strategic assets, not sexy enough,” said Michele Usuelli, a neonatologist in Milan who held a seat on the regional assembly, representing the center-left Più Europa Party. “That is why we have a health system very well prepared to treat the most complicated diseases, but completely unprepared to fight something like a pandemic.”
Regional officials failed to use their authority to ensure that the public gained needed care. In exchange for agreeing to pay for expensive cancer treatments at newly constructed oncology centers, they could have demanded that the private owners also furnish less lucrative services like geriatric and pediatric care.
“They gave permission to the private sector to more or less open whatever they wanted,” said Usuelli. “It was a complete missed opportunity to hold private companies accountable to their social responsibility.”
As the first cases of COVID-19 were diagnosed in February 2020, Italy’s most influential business lobby9, Confindustria, urged the government to allow the factories of Lombardy to continue operating to avoid economic damage, preventing a swifter lockdown that might have limited the spread of the virus. This was especially reckless, given the links between the industrial zones of northern Italy and factories in China. Many people transited between the two countries, a vector for transmission.
Milan was a city of more than 1.3 million people. When the first wave hit, it had only five doctors expert in public health and hygiene. They were responsible for setting up a testing and contact tracing regimen. As the second wave gathered force, Lombardy’s health department notified doctors that it could “no longer conduct prompt epidemiological investigations.”
“Family doctors are a cost,”10 said Filippo Anelli, president of the national federation of doctors and dentists. “If the mentality is that you need to make money from health care, the investment in community medicine looks clearly less remunerative.”
Erika Conforti began her career as a family doctor in early February 2020, just in time for the pandemic. In her midthirties, fresh from residency, she had taken over a practice from a retired doctor, working out of a private office in a Milan apartment building.
She had been drawn to general practice out of a desire to help people with everyday ailments. “I love to speak with patients,” she told me. “I love to spend time with them.”
But as the pandemic spread, Conforti was working twelve hours a day, and still failing to keep up with the barrage of calls and emails from patients suffering COVID-19 symptoms.
As the second wave mounted in late 2020, the region had added hospital beds, but lacked nurses and anesthesiologists. “If there’s not enough people who know how to work in the hospital setting, then increasing the number of beds is pointless,” Conforti said.
At her own practice, thirty patients had just tested positive for COVID-19 in a single day, while fifty more were quarantined, awaiting tests that took six days to yield results.
“I’d like to be able to contact positive COVID-19 patients at least once a day, but I just don’t have the time,” she said. “I’m worried that every minor distraction that I have has very serious consequences.”
In Britain, Boris Johnson’s administration was intent on avoiding Italy’s fate. As the virus spread in the spring of 2020, the government prevented hospitals from being overrun, but at a grim cost. To free up capacity, the National Health Service diverted thousands of elderly people from hospitals to nursing homes—many of them privately run, lightly regulated, and woefully unprepared for the unfolding disaster.
Within three months of the pandemic’s arrival, nursing homes in England and Wales alone had seen twenty thousand more deaths11 than usual.
Britain focused all resources on battling COVID-19, effectively shutting down the rest of the health care system. The resulting scarcity revealed how weak the system was before the pandemic.
In Liverpool, Simon Bowers—the doctor who had bemoaned austerity—complained that his patients with other ailments were waiting weeks and even months for treatments and tests that typically required days.
“I’ve written death certificates for two patients in the last week who wouldn’t have died of cancer if not for COVID,” Bowers told me in October. “Ten years of austerity has left the system just about coping for much of the year. The pandemic is a real perfect storm in terms of ruthlessly exposing the deficiencies of the system.”
It also exposed how cronyism had trumped considerations of public health. As the government awarded emergency contracts for protective gear, ventilators, and other vital wares, it allowed politically connected businesses to exploit a secret VIP lane12. Among some 1,200 contracts conferred by the central government and eventually made public—deals worth a collective $22 billion—roughly half had been secured by companies that tripped serious questions of propriety. The recipient companies were frequently run by people connected to the governing Conservative Party.
One company headed by an employee of the Board of Trade, a government body, secured a $340 million contract to furnish protective gear for medical staff. It eventually produced 50 million masks at a cost of $200 million. They proved defective and could not be used.
Meanwhile, qualified companies that lacked friends in high places were largely shut out.
As the virus mutated, turning Britain into the epicenter of a rapidly spreading variant in the first months of 2021, the country’s hospital system was again threatened by a crush of cases. Again, elderly patients were shipped off to nursing homes. Again, infection rates soared.
By August 2021, the pandemic was blamed for the deaths of more than 130,000 Britons—one of the worst tolls in Europe.
Even in Sweden, the pandemic revealed the extent to which the degradation of the country’s social safety net had undermined its ability to manage a public health emergency.
Like the rest of Europe, Sweden took note of the disaster in Italy as a portent, while opting for an unorthodox response: The government counseled people to engage in social distancing, but left shops, restaurants, nightclubs, and schools open. Swedes were largely free to carry on with their lives absent rules about wearing face masks.
The government presented its strategy as a more enlightened approach. Forcing people to avoid workplaces and hunker down at home would produce joblessness and despair. The impacts of mental health ailments like depression had to be considered alongside the consequences of the coronavirus.
Around the world, those decrying pandemic restrictions seized on Sweden as an alternative model. “Without locking down13, Sweden—and this is the key—has fared far better than other European countries that did lock down,” declared the Fox News commentator Tucker Carlson.
There was one problem with this assessment: Sweden’s strategy was a disaster.
By the summer of 2020, more than five thousand people were dead in a country of 10 million people, giving Sweden one of the worst per capita death rates on earth, and exponentially higher than in neighboring countries—twelve times worse than Norway, seven times worse than Finland, and six times the level in Denmark.
In exchange for this wave of death, Sweden had gained essentially nothing14 in the way of economic benefits. It was ensnared in a recession no more or less bleak than in neighboring countries, where lockdowns had been imposed.
Proponents of the government’s strategy insisted that it could be fairly assessed only over the long term. But by the middle of November, a brutal second wave was again sending Swedes to hospitals15 at one of the fastest rates in Europe.
Nearly half of those killed by COVID-19 had been residents of nursing homes. Champions of the official strategy were implicitly dismissing their deaths as collateral damage—a stance that provoked uncomfortable memories of Sweden’s experiments with extreme social engineering. As late as the 1970s, the government had imposed forced sterilizations on women deemed not socially acceptable, such as orphans and teenagers who had gotten into trouble.
Sweden’s state epidemiologist, Anders Tegnell, the architect of the national strategy, was privately expressing interest in pursuing so-called herd immunity16, exposing enough people to the virus to yield antibodies that would prevent further spread.
As criticism about Sweden’s strategy intensified, officials began excising the elderly from the conversation. Yes, there had been a problem in the nursing homes, but otherwise Sweden was doing great. If you looked past the places where lots of people had died, not that many people had died.
But the nursing home deaths were not incidental to the story of Sweden’s otherwise-masterful handling of the pandemic. They were the story itself—a direct outgrowth of Sweden’s liquidation of key parts of its social safety net to free up money to hand to Davos Man while entrusting much of elder care to for-profit, private companies.
Under a series of reforms launched in the 1990s, Sweden transferred responsibility for older people from regional governments to municipal governments, while home care took precedence over a traditional reliance on nursing homes. Municipalities gained permission to contract with private companies for services. By 2020, roughly half the residents of nursing homes in the Stockholm area were living in for-profit institutions.
Part of the driver was philosophical. Sweden’s leaders concluded that older people would better enjoy the last years of their lives in the comfort of their own homes, surrounded by loved ones. Private companies would design more accommodating architecture and experiences for elderly people who required an institution.
But the private companies also brought something else—an ability to squeeze costs out of the equation.
A decade of tax cuts that benefitted billionaires like the head of H&M had resulted in diminished government revenues despite the Cosmic Lie that they would pay for themselves.
Much as in the United States, for-profit nursing homes derived savings in part by downgrading staff.
“This is an undervalued part of the labor market,” said Marta Szebehely, an expert in elder care at Stockholm University. “Some care workers are badly paid, badly trained, and have really bad employment conditions. And they were supposed to stop a transmission that nobody knew anything about, and without much support.”
Sweden was still devoting vast sums of money to elderly care—some 3.2 percent of its annual economic output, as compared to 0.5 percent in the United States. Only the Netherlands and Norway17 spent more. But increasing sums were being absorbed by administrative costs and, most crucially, dividends for the shareholders of private companies.
Mia Grane knew none of this when she moved her parents into the Sabbatsbergsbyn nursing home in the center of Stockholm in the summer of 2018.
The institution was owned by Sweden’s largest for-profit operator of nursing homes, Attendo. It was home to 106 residents, most of them suffering dementia. They were divided into eleven wards spread across three low-slung buildings.
Grane’s mother was descending into Alzheimer’s. Her father required a wheelchair. The facilities included lovely gardens used for midsummer parties.
“It was a perfect place,” said Grane. “They felt at home.”
But anxiety quickly replaced peace of mind as the pandemic spread.
The first case emerged in Sweden in late January. When Grane pressed the nursing home staff for their plans to protect the residents, they treated her like a child scared of monsters.
“The people who worked there had no information,” she said. “They told me, ‘Everything is fine.’”
On March 3, Grane visited and took a picture of her parents in the dining room, feeling a sense that this might be her last chance to see them together.
“I thought, ‘If this virus gets into this place, a lot of people are going to die,’” she said.
A few days later, she read in a local newspaper that someone in the same ward had died. She called the home in a panic to ask if the cause had been COVID-19. The staff refused to say, but they told her that her father was suffering cold symptoms. Two other people in the ward were also sick.
Inside the facility, staff were initially given no instructions on how to limit transmission, a care aide told me. Management also did not immediately supply face masks, so she used a plastic file folder and string to fashion herself a visor before she entered her ward.
The nursing team formulated an emergency plan. Staff had to be dedicated to individual wards while rigorously avoiding entering others to prevent transmission. But this design collided with the meager resources on hand. There were not enough nurses.
A geriatric nurse who was working at the home through a staffing agency typically attended to the entire facility with only one or two others during day shifts, she told me. On weekends and at night, she was frequently the only nurse on duty.
The nurse urged her supervisors to add staff to allow them to prevent the spread of the virus, she said, but they brushed her off. By the time she quit in early May, the virus had penetrated seven of the eleven wards, she said, and at least twenty residents were dead.
“The way we had to work went against everything we learned in school regarding disease control,” the nurse told me. “We tried to tell them, ‘This is wrong. This is killing people.’ They didn’t listen.”
The previous year, Attendo, the company that owned the home, had tallied revenues in excess of $1.3 billion. But it had failed to stockpile adequate supplies of protective gear like masks and gowns. It had enough to comply with national guidelines, but not enough to contend with the pandemic. As the virus spread Attendo sought to buy supplies.
“It took five or six weeks to get the volumes outside of China,” the company’s chief executive, Martin Tivéus, told me.
The shortages inside nursing homes attested to the degree to which Sweden had been seized by the mentality of marketization. Stockpiling masks cost money. So did employing full-time nurses. Why not just rely on the web and temp agencies to deliver products and staff as needed? Limiting expenses and rewarding shareholders had taken precedence over social welfare.
“What this pandemic has done is demonstrate a number of system errors that have gone under the radar for years,” said Olle Lundberg, secretary general of Forte, a health research council that was part of the Swedish Ministry of Health and Social Affairs. “We totally rely on the global production chain and just-in-time delivery. The syringes we need today should be delivered in the morning. There is no safety margin. It may be very economically efficient in one way, but it’s very vulnerable.”
When the care aide came down with a fever, she stayed home. But other low-wage workers at the Attendo home continued to show up. The nurse overheard several in the changing room, discussing how they had to keep working because government-furnished sick pay did not begin immediately, and did not cover all lost wages.
While the care aide lay at home recuperating, she received a package from Attendo. Inside was a thick binder detailing instructions for managing the pandemic: how to properly put on safety gear, which she had initially lacked; how aides had to remain at least two meters removed from residents, which was impossible in caring for people with dementia.
At the nursing home, the phone rang relentlessly, with callers left on hold. Mia Grane was calling five and ten times a day. Her father had tested positive for COVID-19. She was terrified that he was being allowed to slide toward death without intervention. She urged the staff to transfer him to the hospital.
“They said, ‘No one is going to be sent to the hospital,’” Grane recalled. “Those were the rules.”
In Stockholm, guidelines encouraged physicians to prescribe palliative care—forgoing efforts to save lives in favor of keeping people comfortable in their final days—as soon as nursing home residents displayed COVID-19 symptoms.
The guidelines permitted doctors to proceed without so much as examining patients or conducting blood or urine tests to get information about their overall health. They prescribed morphine, cognizant that death would result within days. Experts likened it to active euthanasia, which was illegal in Sweden.
“As a physician, I feel ashamed that there are physicians who haven’t done an individual assessment before they decide whether or not the patient should die,” Yngve Gustafson, a professor of geriatrics at Umeå University, told me.
Doctors were adapting to scarcity. Over the previous two decades, the number of hospital beds in Sweden18 had dropped from 3.58 per 1,000 people to 2.1, placing the country below even Italy and the United Kingdom.
“We understood early on that we had to think very carefully about how we will benefit the most patients,” Michael Broomé, a physician at an intensive care unit in Stockholm, told me. “We had to think twice about whether to put elderly people with other conditions on ventilators.”
Swedish nursing homes became warehouses for people waiting to die.
At the Sabbatsbergsbyn home, the geriatric nurse was dependent upon reports logged by overworked colleagues to provide the proper care. Vital information fell through the cracks.
She was still tortured by the case of an elderly man who had been showing signs of reaching his final hours. No one had informed her of his status when she had come on duty. His family had not been told that the end was near.
“I would have gone to check on him, and maybe hold his hand to see if he was feeling anxiety or pain,” the nurse said. “Maybe I would have given him morphine.”
Her voice caught. “He died alone,” she said.
On April 2, Grane called the nursing home and was told that her father was barely alive. He died later that day with no one by his bedside.
She begged the staff to save her mother. But she wasn’t eating, and she was dehydrated. This time, Grane was at least permitted to sit in the room until the end.
Grane was wrecked by the experience. She sifted through what had happened—the confusion, the short staffing, the lack of awareness as the pandemic removed both parents from her life.
“For me, it’s clear that they wanted to save costs,” she told me. “In the end, it’s the money that talks.”
By the middle of 2021, Sweden had lost more than fourteen thousand people to COVID-19, giving it a per capita death rate far worse than its neighbors—more than triple Denmark’s, and almost eight times Finland’s. Attendo convened a call with stock analysts to discuss its latest earnings.
The pandemic had made Scandinavians reluctant to entrust their relatives to nursing homes. This had limited the number of “customers,” said Tivéus, the CEO, yielding a “lower average occupancy compared to a year ago.”
But there was better news for shareholders. The company reiterated its dividend target: 30 percent of its profits over the next three years.
As the pandemic tore at the economies of Europe, it seemed unlikely to bring out the best in a continent prone to bickering, recrimination, and tribal animosity.
Europe had never fully recovered from the economic damage left from the financial crisis less than a decade earlier. Now, an even bigger shock was playing out, threatening a wave of bankruptcies and joblessness.
The European Union was like a family in which trauma only heightened the existing dysfunction. During the crisis of the previous decade, conflict had centered on whether and how the bloc should marshal a collective relief effort, with some suggesting that it be financed by sales of so-called eurobonds backed by all member states. But Northern European countries had balked, consigning the hardest-hit nations like Greece, Spain, and Italy to unmitigated agony.
Northern European unwillingness to shoulder collective debts traditionally rested on crude stereotypes of their southern brethren. Germans were appalled by the prospect of putting their hard-earned savings on the line to allow orgiastic borrowing by Greece and Italy, where civil servants supposedly retired during their prime years, living on extravagant pensions as they reclined on the balconies of sea-facing villas.
“You cannot spend all the money on drinks and women19 and then ask for help,” the Dutch finance minister, Jeroen Dijsselbloem, had once remarked.
These sorts of depictions skipped over the fact that Greeks actually worked longer hours than many Northern European countries. They ignored how German banks had lent aggressively to finance Mediterranean investment debacles. In limiting European relief and demanding austerity, Germany ensured that ordinary households20 in southern Europe would suffer years of desperation so that its own lenders could collect on their debts.
Southern Europeans had forgotten none of this. The pandemic revived their grievances, especially as the so-called Frugal Four—Austria, the Netherlands, Denmark, and Sweden—demanded that aid be extended in the form of loans that would have to be paid back by national governments.
“One can at least ask21 what they will do to save themselves the next time,” Dutch prime minister Mark Rutte said in May 2020.
Spain’s morgues were overflowing22, prompting local authorities in Madrid to use an ice rink to store bodies. Italians were denied funerals23 amid the quarantine. Lectures about fiscal rectitude from the wealthy countries of the north had always grated. Now, they seemed a sign that European solidarity was a fraud.
But then an extraordinary consensus emerged. With uncharacteristic speed and decisiveness, European leaders ditched their budgetary strictures to yield action. The pandemic was so alarming, its potential dangers at once enormous and incalculable, that it eclipsed the usual rancor that frequently divided the nations of Europe, supplying one fundamental objective: limiting the damage. The austerity-minded governments of Northern Europe for the moment had something greater to fear than public debt, so they assented to a suspension of the rules, permitting the worst-hit countries to borrow as needed. The European Union transcended its legacy of national suspicion to forge a shared relief fund worth 750 billion euros. More significant than the sum was how the money was raised—by borrowing collectively24.
In striking an agreement to sell so-called corona bonds, Europe diminished doubts about the sanctity of its union in the post-Brexit era while applying a salve toward healing foundational bitterness. It was a victory engineered by Germany and France, the two charter members whose deadly animosities had been the impetus for the creation of the bloc. Macron had pursued as a primary target building out the next phase of the European Union. He won over a key source of opposition to collective debt, German chancellor Angela Merkel, for whom the endurance and vitality of the European Union was a legacy issue. Davos Man was happy to see an aggressive expenditure of public money, cognizant that it could be used to bail out his troubled investments in the name of protecting jobs.
Decades of widening inequality, immigration, and cuts to public services had torn at the fabric of the European Union, giving life to extremist parties that courted votes by attacking the institution. The pandemic appeared to have strengthened European solidarity while demonstrating the merits of European-style social democracy.
The United States had employed a Rube Goldberg contraption, with Mnuchin’s slush fund funneled through Jamie Dimon’s bank, and Larry Fink’s firm buying bonds on behalf of the Fed, allowing Steve Schwarzman’s private equity empire to borrow for free. All of this was supposed to trickle down through the rest of the populace.
European governments cut out the Davos Man intermediaries and stepped directly into the fray, essentially nationalizing payrolls. Instead of rescuing billionaires, they rescued workers. From Denmark to Ireland, governments agreed to pay the lion’s share of wages25 for companies whose businesses were threatened by the pandemic provided they held on to their employees.
While the unemployment rate in the United States soared, joblessness nudged up only a tad in most of Europe through the fall of 2020.
In Britain, the shock was profound enough to end the era of austerity. In place of stern homilies about the need to live within national means, Boris Johnson called for spending26 with appropriate abandon. Central to this was a dramatic increase in infrastructure spending, allowing Johnson to bolster the communities in the north of England whose deteriorating fortunes had produced the revolt that had propelled him to power.
Even in Germany, where a loathing of debt amounted to a national religion, the government borrowed to finance a substantial relief program—a package of spending measures worth 750 billion euros27.
But how long would the new spirit of European harmony last?
The budget rules that restricted spending by E.U. member states remained on the books. They would not be suspended indefinitely. Eventually, the bills for the rescues would be tallied, and the money would have to be paid back.
In theory, governments could raise taxes to amass what was needed. Indeed, as Britain’s treasury overseer, Rishi Sunak, announced a new budget in March 2021—extending relief programs for workers through the fall—he said the bill would eventually have to be collected by lifting corporate taxes.
But Davos Man was skilled in wielding influence to deflect the burden elsewhere, raising the possibility that the debt would ultimately be paid in a fashion that had become ritual—through cuts to government services and greater burdens on rank-and-file workers. Sunak had already announced pay freezes for many government workers, while promising to “keep debt under control.”28 Even as Prime Minister Johnson outlined proposed tax increases to finance a bolstering of the national health care system in the fall of 2021, it was clear that an outsize share would be paid by ordinary workers.
Austerity was no random faith. It was the complement to the Cosmic Lie, a value system promoted by the affluent people who benefited from it. Less public spending spelled less need for taxes—which meant more for Davos Man. And what public spending was required to pacify a restive populace could be paid for by the sacrifices of others—ordinary wage-earners, especially younger people.
Austerity might go dormant for a while, but it was never fully dead.
The relief effort in the United States was no fount of transparency. But in Britain, the treasury refused to disclose the names of the companies securing government-guaranteed loans, even as their outstanding value swelled beyond £52 billion.
Officials at the British Business Bank29—a government entity that was handling the transactions—declared that allowing the public to see where its money was going would make borrowers uncomfortable, perhaps discouraging them from taking loans.
Still, the odd disclosure about such programs demonstrated that Davos Man was applying his usual prowess toward tapping the public’s generosity.
Britain’s treasury relied on a network of more than one hundred qualified lenders to distribute the loans. One lender, Greensill Capital, furnished £350 million’s worth of government-backed loans30 to a collection of companies controlled by Sanjeev Gupta, an Indian-born, Cambridge-educated steel magnate with a private jet and a mansion in Wales. Those loans at least temporarily staved off disaster for both firms. Greensill had lent some £3.5 billion to Gupta’s business empire over the years. That money had enabled Gupta31 to acquire steel and aluminum operations in the United States, Europe, and Australia, employing about thirty-five thousand people while racking up annual revenues of $20 billion.
The global economic shutdown was threatening Gupta’s ability to keep making his debt payments. A default by his commercial group would be colossal—a failure large enough to take down its lender.
As subsequent disclosures made clear, Greensill was aware32 that the Gupta group was already behind on its payments and in serious jeopardy of sliding into bankruptcy when it used taxpayer-backed loans to help plug the gap. That should have made the company off-limits for a publicly financed rescue.
But two details transcended such mundane considerations. The Gupta group’s holdings included steel mills that employed more than four thousand people in Britain, making the company’s collapse a potential calamity. And its lender, Greensill, employed the former British prime minister David Cameron, paying him more than £1.2 million33 in annual salary and bonuses, plus stock grants that he cashed in for more than £3 million in 2019.
The following year, in March 2021, British authorities revoked Greensill’s participation34 in the government loan program while probing the firm for allegedly breaching its rules by failing to demand adequate collateral from Gupta’s companies. As Greensill’s investors pulled their capital, the firm teetered toward bankruptcy. Gupta was holed up in Dubai, scrambling to raise fresh finance.
The Bank of England published a list of companies whose debt it was buying—a tab that reached £19 billion by the fall of 2020. EasyJet, a discount airline35, tapped the central bank for £600 million in support, even as it outlined plans to lay off 4,500 people. Still, the company found £174 million to cover dividends for shareholders36.
British Airways, the nation’s largest carrier, received a £300 million infusion37 from the central bank, even as it outlined designs to terminate twelve thousand jobs.
Companies that had managed to avoid paying taxes to the British treasury when times were bountiful now used the crisis as an opportunity for corporate panhandling. The Agnelli family—the clan that controlled Fiat—owned a conglomerate called CNH Industrial. It had managed to secure British tax refunds exceeding £15 million between 2017 and 2019—a period in which it had relied on the hired advice of one George Osborne, the former British treasury secretary. In the midst of the pandemic, the Agnelli-owned conglomerate helped itself to £600 million in credit from the Bank of England.38
But the most remarkable recipient of British public assistance was a company that regular people had likely never heard of, even as they were familiar with its holdings—Merlin Entertainment. Its portfolio included Legoland, a chain of astronomically priced amusement parks, and Madame Tussauds, famous for kitschy wax likenesses of celebrities. It operated 130 entertainment sites and 20 hotels in 25 countries, while calling itself Europe’s largest visitor attraction operator. That was not a good thing to be in a pandemic.
In early April 2020, the company released a statement aimed at reassuring its bondholders that it was taking steps to cut costs while seeking public assistance. “We expect to benefit39 from various government measures.” Later that month, Merlin released its annual report, sounding the alarm that lockdowns and social distancing measures posed “an unprecedented disruption to our business.” The pandemic had resulted in “the current temporary closure of substantially all of our Attractions.”40
Merlin was furloughing 80 percent of its workforce worldwide. It had “implemented voluntary salary reductions,” leaving one to wonder about the other options for its selfless workers. These steps had reduced its expenses by 45 percent, but it needed £12 million per month41 just to stay current on its debt payments.
That debt was the result of a merger completed the previous year by a deep-pocketed triumvirate—the Canadian pension fund, the billionaire family that launched Lego, and none other than Steve Schwarzman’s company. They had paid a collective £6 billion to take control of Merlin. Then, they had followed the classic private equity play, using their new assets as collateral for unrestrained borrowing to finance expansion.
That strategy was in tatters. The investors were seeking £10 million a month in wage subsidies, plus £2 million a month in government support for troubled businesses.
Blackstone told me that Merlin tapped the furlough program and gained from tax relief on its shuttered properties.
“We do not believe that Merlin’s employees should be arbitrarily excluded from paycheck support programs that are widely available to virtually all workers solely due to the company’s private ownership,” the company said.
But at the same time that Merlin was drawing on the taxpayer’s generosity, Schwarzman was publicly boasting about his firm’s abundant finances.
“We entered this crisis42 in a position of great strength,” he told stock analysts.
Blackstone was sitting on $150 billion43 in cash and was “looking aggressively” to snap up businesses that had been knocked down to bargain bin prices. Schwarzman’s company paid out more than $700 million in dividends and stock buybacks during the first quarter of 2020.
By the following year, Blackstone would use some of its hoard to purchase a majority stake in another British company—Bourne Leisure, a collection of family resorts.
The government’s rescue of Merlin collided with a legal prohibition against aiding ventures that appeared to be failing—a vestige of European Union law that still applied during a transition period leading up to Brexit. By dint of its heavy debt burden, Merlin fell into the category of those at risk of collapsing.
But Merlin, the treasury, and the Confederation of Business Industry—a leading trade association—all lobbied Parliament to lift the ban on state aid, clearing the way for the government to deliver rescue funds.
Brexit had been sold to the public as a means of taking back control. Freed of the supposed European straitjacket, Britain was flexing its sovereignty, asserting the right to hand taxpayer money to Davos Man.
Months after Chiara Lepora returned to Dubai to resume her duties with Doctors Without Borders, she still struggled to make sense of how her own country—a European nation with world-class medical facilities—had so profoundly failed to protect its people from a public health emergency.
The pandemic was precisely the sort of event that had motivated humans to fashion government—a threat that wildly exceeded individual capabilities to contain. It demanded a pooling of resources, a collective battle plan, and effective execution overseen by specialists. Instead, Lepora had watched aghast as Italy suffered the sort of agony that she and her colleagues were used to seeing in the world’s poorest, conflict-torn countries.
“That was definitely one of the shocking aspects for us,” Lepora told me, “the idea of finding in our country, in hospitals that were very similar to the hospitals where we all started practicing medicine, the same sorts of difficulties that we are used to seeing all over the world.”
But there was one crucial difference. In places like Yemen and South Sudan, the medical resources were scant, leaving populations largely dependent on outside aid organizations. In Italy—as in Europe in general—the medical know-how and facilities were both sophisticated and abundant. But they were no longer organized predominantly for the benefit of public health. That consideration operated alongside an increasingly decisive objective that frequently posed a conflict—enriching shareholders.
In incentivizing doctors to focus on lucrative specialties, Lombardy had given short shrift to basic preventative care. That limited what constituted the most basic surveillance system in a pandemic—family doctors who interacted with patients. In privatizing a host of services at its hospitals, the region produced a setup in which no one was fully in charge; in which no one was empowered to think systematically about how to respond to an emergency, rationing what protective gear was available. That was an invitation for the coronavirus to spread.
Across Europe, part of the explanation for the lethality of COVID-19 was indeed that health care services had been diminished to finance tax benefits for Davos Man. But structure was also a powerful element. When the interests of Davos Man seized primacy in the policy conversation, that relegated other concerns to secondary status. You could have the best-trained doctors, the most formidably equipped medical facilities, and access to the most advanced medicines and still fail to mount an effective response to a public health crisis.
“What we saw was really this sort of lack of centralized and integrated direction that I’m afraid is really a sign of what goes on in general in the region,” Lepora told me. “The pandemic exposes all of those weaknesses.”