In a nation famous for its sneering hostility to business, Emmanuel Macron—a former investment banker with starstruck eyes for billionaires—centered his presidency on the proposition that gratifying the wealthy would yield greater opportunities for France.
“For our society to get better1, we need people who succeed,” he said in 2017, in the first months of his tenure. “We shouldn’t be jealous of them. We should say ‘fantastic.’”
Macron’s allegiance to the Cosmic Lie both shaped his policies and imperiled his tenure. He slashed taxes on the wealthy, and then affixed a new levy on gasoline, enraging working people and provoking the furious protests known as the Yellow Vest movement.
As he reconfigured the national pension system, Macron treated one billionaire like an oracle—BlackRock chairman Larry Fink, the Davos Man who managed more money than anyone, and whose counsel influenced the French approach to retirement savings. When the public learned about Fink’s involvement, Macron absorbed withering accusations that he was selling out the interests of the French populace for the pleasure of billionaires.
In seeking to turn France into a refuge for Davos Man, Macron threatened the habitat for all.
Macron had spent most of his life marinated in the thinking and social conventions of the wealthy. He had worked in the investment banking division at Rothschild, a company uniquely intertwined with the history of globalization, having financed the construction of railway lines across Europe, and the British government’s military adventures.
Nakedly ambitious, Macron had prepared to lead France all his life. He had written an undergraduate thesis on Machiavelli and then secured a master’s degree from Sciences Po, a breeding house of the French elite, whose alumni included seven French presidents and thirteen prime ministers. Then he trained for a career in the civil service at another preparatory ground for the ruling class, the National School of Administration. It had been founded by his hero and role model, Charles de Gaulle, the leader of French forces against the Nazis, and the dominant national figure during the first decades of the postwar era.
Macron’s self-assurance, English fluency, chic suits, and admiration for billionaires put him in good stead at the World Economic Forum, where he projected a sense of representing an updated version of France long before he captured the presidency.
His election was celebrated among the moneyed as a signal that France was shaking off decades of antipathy toward business.
“We believe that this presidency2 is favorable for France and above all Europe,” Larry Fink said in June 2017. “France will energetically change its economy.”
At a gathering to promote Paris as a financial center, Jamie Dimon said Macron would prove a spur for “entrepreneurship, growth and jobs,” laying out the welcome mat for the affluent.
“It’s nice to be wanted,”3 Dimon added.
At a mere thirty-nine years of age, Macron was the youngest president in the history of the republic. He was well versed in the realities of the digital age, a seeming curative for the antiquated state of French life, which was too often romanticized as respect for tradition.
He had captured office by distinguishing himself as the least objectionable alternative to the doomed candidates presented by the French establishment. The Socialist Party had imploded. Its standard-bearer, the incumbent president Francois Hollande, was too unpopular to even muster a run for reelection. Macron had served as Hollande’s economy minister before bolting as the party careened toward irrelevance. The center-right was rife with internal discord.
Macron had run as a technocrat who would pragmatically fix what needed fixing. He built a new party from scratch, En Marche, deploying it as evidence that he was beholden to no camp. He raised a campaign war chest of nearly 16 million euros, an astonishing haul that was proffered as evidence of a popular groundswell.
But this missed the point. From inception, Macron cultivated power by extending himself as a Davos Man collaborator.
Nearly half of his campaign funds4 were harvested from a mere eight hundred donors. Far from a popular revolt storming the Bastille, he represented the palace court elevating one of its own. Macron’s fund-raising operation was run by a former executive of BNP Paribas, a major French bank. It included Emmanuel Miquel, a former senior leader at JPMorgan Chase. A Rothschild director, Philippe Guez, hosted a fund-raiser at his Paris apartment, offering a venue for other bank executives to meet with Macron. The bank’s managing partner, Olivier Pecoux, organized a fund-raiser on the Champs-Élysées.
During Macron’s turn as economics minister, he and his wife, Brigitte—his former literature teacher—regularly entertained France’s wealthiest people at their Paris apartment, which overlooked the Seine. Sometimes, they hosted two dinners in a single night.
Nearly every week, they dined with Bernard Arnault, the chairman and chief executive officer of Moët Hennessy Louis Vuitton, the world’s largest maker of luxury goods. His company’s empire of brands included Christian Dior, Bulgari, and Givenchy. Catering to people willing to spend $150,000 on a piece of luggage had supplied Arnault with a fortune estimated at more than $100 billion, making him one of the three wealthiest people5 on earth.
Arnault’s yacht6, Symphony, was longer than a football field and boasted six decks, including a dance floor, a golf practice range, a heliport, and an outdoor cinema. Its glass-bottom swimming pool was fed by a waterfall. He owned a villa in the seaside resort of St. Tropez, a private island in the Bahamas, a palatial home in Paris, and a world-famous winery in Bordeaux, Château d’Yquem, whose rich and honeyed dessert wines inspired poetry. His collection of modern art included works by Picasso, Andy Warhol, and Jeff Koons.
Among Arnault’s passions were playing the piano, wandering the flower gardens of his estates, and conjuring new ways to avoid paying taxes. He quickly surmised that Macron could prove useful in the latter pursuit.
As economy minister, Macron had opposed Hollande’s failed effort to impose a 75 percent levy on incomes above one million euros, warning that this would make France “like Cuba without the sun.” Arnault had been so alarmed by this proposal that he had applied for a Belgian passport to avoid the tax, provoking accusations of treason.
Arnault used a newspaper that he owned, Les Echos, to publish an op-ed endorsing his friend’s candidacy. “Emmanuel Macron’s program7 is built on the conviction that private enterprise is the only effective lever for sustainable, healthy and massive job creation in France,” Arnault wrote. “A company that is not hindered in its development, that is not distracted from its desire to grow by unreasonable taxation or bureaucratic procedure, has no other agenda than to invest, innovate and create sustainable jobs.”
Arnault did not appear hindered. He was a master at the art of avoiding taxation. His yacht was worth about 130 million euros, making it liable for wealth taxes of about 2 million euros a year. Arnault’s accountants had made8 that bill disappear by putting Symphony under the official control of a shell company that was registered in the tax haven of Malta. The shell company graciously leased the vessel back to its purchaser for the exclusive enjoyment of Bernard Arnault.
When journalists suggested that this arrangement made Arnault a less than wholesome source of counsel on economic policy, Macron defended his dining partner. “What you call tax fraud9 is not criminally punishable by law,” he told a television interviewer.
For Macron, Arnault’s savvy and wealth were the very point of his endorsement. It validated Macron’s relevance as a candidate, inspiring other rich people to contribute to his campaign. His fund-raising targeted bankers, entrepreneurs, lobbyists, and influencers, promising liberation from taxes.
Macron focused special attention on reversing the exodus of wealthy French people. He set the tone with a fund-raising dinner in October 2016 in a villa outside Brussels owned by Marc Grossman, founder of Celio, a popular French menswear brand. There, the future president promised attendees that he would ax wealth taxes. He took several trips to London10, which was home to three hundred thousand French citizens, securing donations from expatriates working in international finance.
In a runoff election, Macron extinguished the noisy insurrection of the National Front, the extremist-turned-mainstream party led by Marine Le Pen, whose growing popularity and shrill denunciations of Muslim immigrants were heightening alarm over Europe’s tilt toward right-wing populism.
Macron could be easily lampooned for grandiloquence. He had famously likened the French presidency to Jupiter, the king of all gods in Roman mythology. (Even Trump, who made no secret of his envy for the earthly powers of Vladimir Putin and Xi Jinping, had not reached to the heavens for authority.) But no one could accuse Macron of lacking vision. Far beyond France, he inspired hope as an antidote to the forces of nationalism and illiberalism.
At Davos in January 2018, he packed the main auditorium for his keynote address. Macron presented himself as the remaining guardian of liberal democracy, casting French revival as central to the preservation of the post–World War II order. He prescribed greater European solidarity as the requisite response to Brexit, Trump, and the debasing of democracy.
“If we want to avoid this fragmentation11 of the world, we need a stronger Europe, it’s absolutely key,” Macron told the Forum. “France is back at the core of Europe, because we will never have any French success without a European success.”
He was intent on delivering the one thing required to undercut the appeal of Le Pen and other hate-spewing opportunists: economic growth. He would root out the lethargy that had seeped into the national identity, with the unemployment rate stuck near 10 percent. He would boost education while enhancing research in areas like artificial intelligence to inculcate the skills needed to prosper in a modern economy. He would invest in technologies that could transform France into a world leader in attacking climate change. The best and the brightest French minds would return from London, New York, and Silicon Valley, turning France into a hotbed of innovation. Growth would inoculate the nation against the anger that was poisoning democracies around the globe.
“If I cannot explain to people12 that globalization is good for them, and that it will help them develop their own lives, then they will be the nationalists, the extremists who want to get out of the system,” he said in Davos. “And they will win in every country.”
Key to this refashioning was unshackling businesses from the strictures of archaic rules that discouraged risk-taking.
Macron’s first undertaking—a major refashioning of French labor law—put him directly at odds with the country’s trade unions. Though they represented less than 10 percent of the French workforce13, they had long proved their ability to mobilize the masses, unleashing strikes that could bring the country to a standstill. Macron was seeking to rewrite a famously obtuse collection of French labor rules that filled out 3,324 pages.
Firing workers in France was costly and time-consuming, involving lengthy severance and legal processes. This made hiring employees akin to marrying them. If the relationship proved unfulfilling, divorce entailed expensive agony, giving French employers commitment phobia. They increasingly tended to rely on contract and temporary workers, which kept joblessness high and wages low.
Over the previous two decades, legitimate full-time jobs—the kind that could enable a person to buy a home and plan a life—had remained flat, at about 1 million, while the number of contracts lasting less than a month14 exploded from 1.6 million to 4.5 million.
Macron’s reform rested on a logical premise: If firing workers became easier, employers would take the plunge and hire. People with better jobs would spend more, boosting economic growth.
Macron was aided in his mission by the fact that the largest French unions were themselves removed from the broader interests of the populace, functioning as a privileged club for their members. They were mobilized in defense of the continued employment of the predominantly white, middle-aged, native-born French who filled out their ranks.
One in five young people15 under twenty-four was unemployed. The banlieue—the grim, distant suburbs ringing major cities—were full of African immigrants who had never known formal employment. The full extent of the crisis was unknown, because measurements of racial disparity were all but forbidden in France—a vestige of the Nazi past, and a testament to the French fantasy of equality for all.
The unions were almost comically disinterested in discussing how to create jobs. When I posed the question to Manu Blanco, a board member of the CGT, one of France’s largest unions, he suggested that the workweek be shortened from its current thirty-five hours so that more people could share in the existing labor. Only in France could a union boss suggest that the solution to not enough work was to work less.
Street demonstrations predictably greeted Macron’s refashioning of the labor rules, but he divided the unions16, winning measured support with promises of additional severance. He packaged his alteration as sensitive to French social mores. This was not American-style capitalism, in which Jeff Bezos ran his warehouses like gulags, but a gentler variant, like Nordic-style free enterprise17. Within months, the strikes dissipated. The reforms became law.
But then Macron overreached, staking his political capital on bestowing a handsome gift to Davos Man. He delivered on his promise to eviscerate the wealth tax, effectively lowering it by 70 percent18—a measure that was expected to cost the state 10 billion euros over the first three years.
He maintained that this generosity toward billionaires would attract investment from overseas and spur businesses to expand.
The resulting anger was immediate, intense, and unrelenting.
France seemed an unlikely venue for a sustained outpouring of civil unrest. Economic inequality was nowhere near19 the levels in the United States or Britain. France delivered comprehensive national health care to every citizen. Only Denmark, Sweden, and Belgium20 spent a larger share of their economies on social welfare programs for working-age people.
But the gap between the affluent and everyone else had been widening for decades. Between 1983 and 2015,21 the wealthiest 1 percent of French households had seen their average incomes double, while the rest of France—the bottom 99 percent—saw their incomes climb by only one-fourth.
And the big picture masked extreme forms of inequality—between people in cities and those in towns and villages; between those with full-time jobs and the growing ranks of temporary workers; between the old and the young, who were largely excluded from government programs.
Equality had special currency in France. The ideals of the French revolution—liberté, egalité, fraternité—functioned as more than words engraved above the entranceways of government buildings. They were a covenant between the state and the people.
In previous eras, disaster had proved a leveler. The years between the start of World War I and the end of World War II saw a dramatic reduction in inequality22 by destroying the wealth of those who controlled most of it. For the next two decades inequality widened. Then came the explosive strikes23 and occupations at universities and factories in May 1968, a quaking revolution that was cultural as much as political—a backlash to the conservatism of de Gaulle, to traditional sexual mores, to the American war in Vietnam, to capitalism itself.
Laying down the template that Macron would deploy a half century later, de Gaulle boosted the minimum wage to appease the demonstrators. The result was greater spending power for the poor, closing the inequality gap.
But the 1980s began the reversal. Much as Thatcher slashed social programs in Britain, and as Ronald Reagan led the revolt against government in the United States, successive French administrations nullified wage increases for the poor while reducing unemployment benefits.
By 2014, barely 20 percent of national spending24 on social programs was being directed at households in the bottom fifth of French incomes—a smaller share than in the United States. Funds that had previously gone to the poor were going to people like Arnault.
For those drawn to the Yellow Vests, Macron represented not some new outrage, but the final straw.
The wealth tax had been designed to soften the impact of the country’s broader refashioning. It had been instituted in 1982 by France’s first Socialist president, François Mitterand, as a means of bolstering social programs. Ever since, it has served as a prop in depictions of France as antagonistic to affluence, exhibit A in the stereotype that France was run by beret-wearing beatniks who saw anyone donning a gray suit as an enemy of the people.
Macron argued that scrapping the tax on everything except real estate would advertise that France was eager to welcome foreign capital. It was a message tailored in part to encourage people like Jamie Dimon to contemplate Paris as a sanctuary for the bankers that JPMorgan Chase would pull from Britain as Brexit unfolded.
In another play for London business, Macron pledged to slash the tax rate25 on private equity profits from 75 percent to 30 percent—a direct sweetener for executives like Steve Schwarzman.
Once in office, Macron moved slowly, lest he disrupt his primary objectives, especially the labor reforms. But Macron’s most loyal base—Davos Man—was impatient for the bonanza. The wealthiest people in France had been incensed by a speech from Prime Minister Edouard Philippe in the summer of 2017 in which he delivered the news that the wealth tax would remain in place for another two years. Three days later, at an annual economic forum held in the city of Aix-en-Provence, executives let it be known that they were nursing feelings of betrayal26. The organizers of the forum, a neoliberal think tank called Cercle des Economistes, demanded that Macron immediately eviscerate the wealth tax.
Members of a powerful collection of French companies, the French Association of Private Enterprises, secretly met the president27 at the Élysée Palace to express their displeasure over the delay. Among the members of the association was Arnault’s company. Shortly after the meeting, Macron’s Finance Ministry announced that the tax would be gone the following year, 2018.
Lifting the wealth tax28 did entice wealthy people to move to France. But it produced no discernible boost to investment. A report from the French Senate Finance Committee later concluded that the tax reduction saved the one hundred wealthiest people29 in France an average of 1.2 million euros a year. They did not use this money to expand factories, launch new businesses, or hire people. They bought cars, shares of stock, and added to Arnault’s fortune by snapping up Louis Vuitton luggage and cases of Dom Pérignon champagne.
“There is no trickle down effect,” the chairman of the committee told the panel. “This is a considerable gift made to the rich.”
The year before its abolition, the wealth tax had applied to 351,000 French households in a country of 67 million—the richest one-half of 1 percent.30 Among the beneficiaries of the cut were the president and his wife, who owned a home in Le Touquet, a seaside playground for wealthy Parisians.31
Macron had delivered to his base, but at the cost of reinforcing his hold on an unwanted moniker—President of the Rich.
It was a title he had earned one revelation at a time.
First came word that, during his first three months in office, Macron had racked up a 26,000-euro bill for makeup services32. For his fortieth birthday33, Macron threw himself a party at the Château de Chambord—a multispired estate with no less than 282 fireplaces, set in a game reserve in the Loire Valley—prompting accusations that he was cavorting about like a monarch. This notion was only enhanced by the disclosure that Macron had ordered a new set of 900 dinner plates34 and 300 side plates for the Élysée Palace, at a cost potentially reaching 500,000 euros, followed by news that Macron was seeking to install an opulent new swimming pool35 at his presidential hideaway on the Côte d’Azur.
Macron’s expensive tastes coincided with his penchant for whining about bloated state budgets and the stubborn refusal of the commoners to make themselves rich—as if their neglecting to upgrade their own swimming pools reflected a failure to prioritize.
The government “spends a truckload of cash on social programs,”36 Macron said in one especially disastrous turn on television, “but the people are still poor.” He had lectured workers aggrieved about a factory closure in a rural area, telling them to “stop messing around”37 and simply move somewhere that had jobs.
These episodes could not be dismissed as gaffes. They revealed Macron’s core identity as someone marinated in the worldview of Davos Man, with a sense of entitlement to some of the spoils.
This was the backdrop in the fall of 2017, as Macron made the decision that would define his presidency. Having slashed the tax bill for friends like Arnault, he increased taxes on gasoline, arguing that this was needed to encourage the transition to green energy.
Across France, protestors donned yellow safety vests—the uniform of the working class—and brought the country to a halt.
Paris, where Macron resided, had an efficient network of public transportation—a comfortable subway system, and ubiquitous public buses to go along with a network of bicycle paths. Nearly everywhere else in France, people relied heavily on cars to get to jobs, schools, and stores.
In many communities, people viewed the gas tax as proof that their struggles were irrelevant in Macron’s calculation. His justification was especially galling. His pursuit of a greener France would play well in places like Davos, while they were forced to pay for it. As one popular Yellow Vest slogan put it, “Macron is concerned with the end of the world. We are concerned with the end of the month.”
The gas tax turned Virginie Bonnin, a forty-year-old single mother of three, into a foot soldier in the rebellion that shook the country. She lived in Bourges, a city of sixty thousand people in the heart of the country. Bourges was centered around a Gothic cathedral, its warren of narrow streets giving way to drab suburbia, with big-box retail shops and auto lots extending into the surrounding fields.
Once a hub of munitions factories and textile plants, Bourges had seen many of its jobs disappear. The plants that remained were increasingly inclined to hire temporary workers.
“We are disposable,” said Bonnin, who had spent most of her working life in local auto parts plants.
She was earning 1,900 euros a month. She had to wait until Thursday night to learn her hours for the coming week, making it difficult to manage her parenting responsibilities. This sort of lament was familiar for Americans, who associated it with Walmart workers, but it was increasingly the reality in France, too.
When Bonnin’s jobs ended, unemployment benefits typically sustained her. “I have enough to get to the end of the month, but it’s tricky,” she said. “In those times, I will not eat meat so that the kids can eat meat.”
The gas tax landed atop months of increasing fuel prices. “You put fuel in the tank to go to work,” she said, “and then you work to be able to buy fuel.”
Her Facebook feed filled with angry posts and calls for action. People planned to gather at a highway on-ramp south of the city. They would put on their yellow vests and block trucks and cars.
On the first day the movement convened, a chilly gray morning in November 2018, Bonnin was among the several hundred people who showed up. As they stood on the pavement, physically preventing France from carrying on with its business, most of the drivers stuck in the ensuing traffic jam tooted their horns in solidarity.
“Everyone is fed up,” Bonnin said. “It had to explode.”
The Yellow Vest movement soon disrupted nearly every city in France. Protestors flooded Paris, smashing the windows of banks and shops, setting fire to cars, and even vandalizing the Arc de Triomphe. They tangled with the police, who unleashed rubber bullets and tear gas38 to quell the fury.
Macron, who usually appeared unflappable, looked besieged. After several weeks, he reversed course39 and suspended the gas tax. It was an extraordinary concession in the face of violent opposition. It was also too late.
The protests were no longer about a single policy, or even about what Macron had come to represent. The Yellow Vests had captured favor as an expression of outrage over the violation of the central idea of France; the understanding that social harmony would flow from equality. Macron could scrap the gas tax, but he could not take back the injury he had inflicted on the national psyche, the sense that he had trashed France’s moral code.
The protests went on, destroying Macron’s aura of technocratic calm, and pushing his approval rating as low as 23 percent. Five months in, he held a series of town halls around the country to listen to the complaints, then submitted to the first press conference of his presidency.
“One can always do better,”40 he said. “We haven’t always put the human at the heart of our project. I’ve given off the feeling of always giving orders. Of being unfair.” He committed to “a profound reorientation of the philosophy I believe in—more human, more humanist.”
Macron promised 5 billion euros’ worth of tax cuts for the middle class. He vowed to stop closing hospitals, cease shuttering rural schools, and even banish to history the National School for Administration, the elite institution where he had trained for the civil service.
But money was of limited use in a conflict now propelled by a sense of unfairness. Bonnin’s family lived in an affordable apartment paid for in part by a government housing subsidy. What had drawn her to the Yellow Vests was less a feeling of desperation than a deepening sense of grievance.
“Having to make sacrifices while rich people aren’t paying taxes anymore,” she said. “There’s a sense of despair, as well as a sense of social injustice.”
The Yellow Vests congregated inside a crude tent they had fashioned on the southern edges of Bourges, in the field of a sympathetic farmer, near the traffic roundabout that had been their first point of mobilization.
Inside, a dozen people occupied wooden benches, drinking instant coffee and passing around cigarettes. Some stood outside in a drizzle, huddling around a makeshift firepit—a pile of burning construction pallets.
An older man lamented that his pension did not cover his bills. A twenty-year-old woman named Coralie Annovazzi complained that she was still living with her parents as she bounced from one temporary waitressing job to the next. People her age were excluded from government benefits like cash grants for those with low incomes.
Her hatred for Macron was visceral, yet nothing provoked harsher words than a group of people much closer at hand—refugees from Afghanistan, Sudan, Sierra Leone, and other war-torn countries, who were living in a former motel alongside the highway. To Annovazzi, their presence constituted proof that she and her people had been displaced.
“These migrants, they have gotten the latest sneakers, the latest smartphones, and all of that is paid for by the state,” she said.
Another woman, Claudine Malardie, leapt up to offer support. The refugees were “constantly sexually assaulting local women,” she said. “If you’re French, you don’t get any assistance, and if you’re foreign, you do,” she continued. “Give me a pot of black paint and I’ll paint my face in black, and then I will get benefits.”
When I pressed her to justify this racist depiction, Malardie let slip that she did in fact receive benefits—an 860-euros-a-month disability payment. She lived in public housing, paying only 300 euros a month in rent for a state-subsidized apartment.
She did not know anyone who had actually had contact with the refugees. As for the claim that the men were assaulting local women, Malardie acknowledged that she was just repeating something she had heard. “I read it on Facebook,” she said.
The notion that the refugees explained the troubles of the French working class did not endure even minimal scrutiny. The ninety-nine mostly young men stuck in the former motel were sitting quietly in their rooms when I went over to have a look. They were not allowed to work while they waited for their asylum claims to be processed, so they were using a collection of weathered schoolbooks to study French, or texting with friends and relatives back home. There were no shops within walking distance, so they rode the bus downtown to buy groceries, trying to stretch out the 200 euros a month they received in public support.
If these were the people who had stolen French prosperity, they were keeping it well hidden.
But the migrants provided an opening for the opportunistic far right. As she campaigned for European parliamentary elections in early 2019, Marine Le Pen laid claim to representing the Yellow Vests.
“The battle is now between nationalists and globalists,”41 she declared. Her party emerged with the highest vote total.
Despite the rebuke from the Yellow Vests, Macron was not finished with his project to refashion France. In the fall of 2019, he embarked on his restructuring of the French pension system.
France was spending 14 percent of its economic output on pensions, compared to an average of 8 percent in the world’s most developed nations. The typical French worker was retiring at sixty42. The system comprised forty-two separate pension schemes, each with its own convoluted rules and boondoggles secured by one union or another.
Macron had been so bludgeoned by the Yellow Vests that he began the mission by promising not to raise the retirement age or diminish what the government spent on pensions. He merely aimed to impose order. He would take the tangle of separate pension programs and reconfigure them into one unified system.
The unions smelled a ruse. As they saw it, spending lots of money on pensions should be considered a point of national pride—the hallmark of a civilized society—not a problem demanding reform.
Under the existing pension system, people were generally entitled to retire at a standard matching the average of their twenty-five best years of earnings. Macron was proposing to replace this with a setup in which people earned points during their careers, with their final total determining their pension payments. The certainty of a state-furnished retirement would be ditched for something that looked like lotto. Some people were going to lose.
One figure had positioned himself to land among the ultimate winners—a Davos Man who had, over decades, quietly amassed unrivaled influence over the movement of money around the planet: Larry Fink had gained Macron’s attention and was deftly using it to help refashion the French retirement system, transforming it from a walled-off refuge mostly beyond reach of the global financial services industry into an enticing frontier.
Fink was among the most consequential figures in finance, yet curiously unknown outside his realm. His company, BlackRock, had successfully wandered the globe, persuading pension systems, university endowments, health care networks, and other institutions to entrust it with managing their portfolios, taking control of more than $7 trillion. Along the way, Fink had become a billionaire, and a Zelig-like figure in global capitalism, a behind-the-scenes adviser to presidents, central bankers, and fellow Davos Men.
He had proven especially adept at winning the trust of the most deep-pocketed client of all, the United States government.
“He’s like the Wizard of Oz,”43 the former investment banker turned financial journalist William D. Cohan once remarked. “The man behind the curtain.”
Raised in the sprawl of the San Fernando Valley, north of Los Angeles, Fink headed east after business school, launching a career on Wall Street.
He landed at First Boston bank, in what was then a sleepy preserve of American finance—bond trading. Fink helped turn it into a raging profit center, developing a new kind of bond called mortgage-backed securities. By buying individual mortgages, pooling them together, and then selling the resulting bonds to investors, home loans were transformed into the raw materials for a wildly lucrative investment vehicle.
Fink’s innovation was initially progressive, diminishing the risks of mortgage lending and promoting home ownership. But Wall Street’s excessive gambling on mortgage-backed securities would emerge as a leading cause for the global reckoning of 2008.
Fink built his reputation as a master of the intricacies of complex corporate restructurings. At the age of only thirty-one, he had reached the status of managing director, the youngest in First Boston’s history. But in 1986, he committed a grievous error that cost the firm $100 million, a bad bet on a rise in interest rates. That mistake—which Fink blamed on the analytical systems he had relied on—destroyed his career at the bank. It also marked the beginning of his obsessive interest in harnessing the computing power used to process data.
Two years after that episode, Fink left the bank and joined Steve Schwarzman’s firm, Blackstone, running a bond-trading venture under a boutique arrangement they called BlackRock.
It was extraordinarily profitable, but Fink and Schwarzman possessed too much ego and bravado to peacefully coexist. They clashed over how to distribute the winnings, prompting Schwarzman to sell the unit to a bank in Pittsburgh for a mere $240 million, a rare atrocious transaction for one of Wall Street’s master dealmakers.
Fink’s company swallowed up competitors in a slew of mergers, and sold its shares to the public in 1999. It expanded from bonds into every sphere of finance—stocks, real estate, hedge funds.
BlackRock’s scale supplied a unique perspective on the global marketplace. This itself became the source of its most substantial line of business. Chastened by his costly error at First Boston, Fink had overseen the development of a computer-driven risk management system that scoured portfolios for unseen perils, simulating the effects of abrupt changes in market sentiments, shifts in interest rates, and other consequential developments. The advanced system, known as Aladdin, gave BlackRock the capacity to identify risks lurking in the markets. In the mid-1990s, Fink figured out that he could sell Aladdin to other financial institutions as a service. Jamie Dimon’s bank was using it. So were more than one hundred other financial institutions.
Aladdin is what positioned the company to win the business of the ultimate investor, Uncle Sam.
As Washington unleashed bailouts amid the financial crisis in the fall of 2008, the government took control of vast portfolios of bonds and other securities. Someone would have to manage all these investments. Larry Fink got the job.
He was in prime position, because he was an insider’s insider. In the months before the crisis, BlackRock had worked44 for nearly every major player in the unraveling—the insurance giant AIG, Lehman Brothers, and the two government-backed mortgage companies, Fannie Mae and Freddie Mac. His team of data experts had probed their portfolios, supplying him intimate knowledge of the risks.
As U.S. Treasury Secretaries Hank Paulson and Timothy Geithner formulated the federal rescue response, they relied on Fink’s counsel. When legal questions nearly derailed JPMorgan Chase’s emergency takeover of Bear Stearns—specifically, whether the Treasury had the authority to cover losses incurred by the Fed in serving as guarantor—Fink settled the issue. He told Paulson and Geithner45 that BlackRock could supply the Fed a letter attesting to the minimal risk of further losses.
Fink had been wrong about some not-insignificant details. Even after Bear’s collapse, he had counseled his clients to make larger bets on riskier investments in pursuit of greater rewards. And he publicly vouched for the solidity of Lehman Brothers46 before the giant investment collapsed, sending waves of terror across the financial landscape.
But Fink possessed something invaluable—the confidence of the people running the system.
Under its arrangement with the United States government, BlackRock assumed control of taxpayer-owned portfolios stuffed with the detritus of disastrous trading positions forged by its clients—Fannie and Freddie, AIG, and Bear Stearns, by then under Dimon’s control.
This presented a gaping conflict of interest.47 BlackRock was at once influencing the prices of distressed debt and trading in it.
Fink scoffed at such talk. “Our clients trust us,”48 he said.
There was truth to that assertion. With his unremarkable clothes, balding pate, nervous energy, and old-school wire-rim spectacles, Fink’s brand was that of a details-fretting nerd. His leisure time was spent not on gargantuan yachts but at his home in Colorado, where he was partial to fly-fishing. Arnault could wax poetically about the magnificence of Sauternes. Fink was a devotee of In-N-Out Burger.
Of course, he was also a regular at San Pietros49, the Italian restaurant in midtown Manhattan that functioned like a private club for connected money people, drawing bank chiefs, the head of the New York Stock Exchange, and even Bill Clinton. He was a reliable attendee of the World Economic Forum, later taking a seat on its board of trustees. This gave Fink a perch from which to ingratiate himself with the Davos Man collaborator running France.
In June 2017, less than a month after assuming office, Macron hosted Fink50 at the presidential palace. Later that month, Macron’s economics minister, Bruno Le Maire, traveled to New York to court Wall Street investment. His schedule included a dinner with Fink51. Four months after that, Macron’s government convened a panel of thirty experts to formulate plans for the pension reform, including the head of BlackRock France.
BlackRock helped organize a summit52 convened at the presidential palace with nearly two dozen investment firms featuring discussion of emerging opportunities in France, including pension reform. Fink signed a note that was sent to participants and marked “Confidential—Not for Distribution.” It described the summit as a chance for “unique and dynamic conversations” with the top leaders of the nation. “We will spend all day discussing the transformative vision of President Macron with representatives of his cabinet.”
Fink attended the summit. He brought with him another Davos Man collaborator—George Osborne, the former British chancellor of the exchequer, and architect of austerity. A year after the debacle of the Brexit referendum, which had cost Osborne his job, he had reinvented himself as an instrument of the financial services industry.
Osborne’s calamitous oversight of the treasury had helped produce Brexit, while turning him into a villainous figure in his own country. But the experience had also supplied him with an inside understanding of the interaction between finance and government—a valuable commodity for which Davos Man was willing to pay.
Osborne was pleased to sell. In the months after the Brexit referendum, he collected more than £600,00053 for a series of speeches to financial services firms including Citibank and BlackRock.
Osborne was also working for HSBC, a notorious bank that was frequently being probed in one European country or another for its willingness to help clients with their tax evasion needs.
In 2015, when he was still running the treasury, Osborne had cut a special bank tax in an effort to persuade HSBC to keep its headquarters in London. Brexit prompted HSBC to reconsider those plans. In Davos in January 2017—six months after the Brexit referendum—HSBC’s chief executive said the bank was considering moving perhaps one thousand jobs54 to Paris. That same year in Davos, HSBC threw a private event for twenty clients, featuring a talk from Osborne.
A few days later, Fink announced that he had hired Osborne in an advisory role. “At the center of our mission55 is helping people around the world save and invest for retirement,” Fink said in a statement. “George’s insights will help our clients achieve their goals.”
Osborne would work only four days a month for BlackRock, for which he pulled down £650,000 a year. Now, in late October 2017, he was devoting one of those days to counseling Fink on how to extract profits from retirees in France.
At the summit in Paris, Osborne made a presentation titled “Geopolitics and the Market.” It was followed by a series of talks from Macron’s cabinet officers—on the pension and labor reform plans, investments in French transportation, and opportunities for international finance.
As the French press would later note, none of the ministers entered these meetings into their official diaries, hiding them from public view. The summit ended with a reception with Macron.
Two years later, as Macron began the push to reconfigure the pension system, BlackRock had insinuated its aims into the government’s own proposals.
According to a BlackRock analysis published in October 2019, France beckoned like a gold mine for international asset managers. The French were sitting on mountains of savings entrusted to cash and conservative government bonds. Only about 5 percent of French savings56 were in stocks as compared to 34 percent in the United States.
BlackRock urged the government to promote the adoption of private retirement accounts in which ordinary people could invest in a basket of stocks.
These details garnered little attention among the French public until January 2020, when Macron conferred the ultimate distinction on the president of BlackRock France, Jean-Francois Cirelli, elevating him into the ranks of the country’s Legion of Honor. The head of the local branch of the world’s largest asset management company was now officially a national hero.
The pension reform plan had already stirred up a vociferous protest movement. On the barricades, the public acclaim for the BlackRock chief appeared to validate every suspicion about Macron: he was a tool for international finance; the President of the Rich selling out the public interest by funneling national savings to Davos Men.
Nearly one hundred protestors stormed BlackRock’s office57 in Paris, accusing the company of a conspiracy to seize public wealth. They spray-painted anticapitalist slogans on the walls and carpets before the police arrived to make arrests.
BlackRock protested that it was an innocent bystander. “We deplore the fact58 that our company continues to be caught up in an unfounded controversy driven by political objectives,” the company said in a statement. “We reiterate that BlackRock has never been involved in the current pension reform project and does not intend to be.”
But whether and how BlackRock had lobbied for pension changes notwithstanding, Fink’s company was certain to benefit from any shift of French savings into the stock market by dint of being the largest money manager on the planet. Buying almost anything in the global marketplace—stocks, bonds, mutual funds—presented the likelihood that BlackRock would capture a piece of the action.
Davos Man had won the day. Macron’s party had the power to institute his pension alteration, histrionics aside.
Despite his perpetual humiliations, the taunting names, and the accusatory slogans, Macron had produced no less than a revolution: France was now governed by the same principle that had spurred upward mobility for billionaires from the United States to Britain—the idea that the key to national salvation was making life more rewarding for people like Larry Fink.
The Cosmic Lie had so comprehensively captured the globe that it was even shaping economic policy in the ultimate bastion of social democracy—Sweden.