Connect with us

America

Quo Vadis World Economy – I: White Darkness at Davos

Published

on

A gloomy mood marked this year’s meeting at the rich club Davos. Women were told to take care owing to the explosion of “sex tourism” in Davos, and many millionaires who advocated for vegetarianism and gender equality flew private planes to Switzerland.

Nevertheless, the atmosphere there was dark. Annually released around the time of the Davos Summit, the World Economic Forum (WEF) Global Risk Report presented shocking findings. We are expected to witness social and environmental crises; the cost of living is ranked as the most severe crisis, and “biodiversity loss and ecosystem collapse” is viewed as one of the fastest deteriorating global risks.

Inflation could lead to stagflation, the socioeconomic consequences of which could be severe, given an unprecedented interaction with historically high public debt levels. Global economic fragmentation and geopolitical tensions could also contribute to widespread debt distress.

As if that wasn’t bad enough, the report went on to predict that technology would worsen inequality, food and fuel crises exacerbate societal vulnerabilities, and declining investments in human development erode future resilience.

Is there any cause for optimism in this dark scenario? For the WEF, there is.

‘Stakeholder capitalism’

“What kind of capitalism do we want?” was asked by Klaus Schwab, a WEF founder, in his 2019 Davos keynote.

Schwab thinks there are three models/answers to address the crisis.

The first is ‘shareholder capitalism,’ embraced by Western corporations. In this model, a corporation’s primary goal is to maximize its profits.

The second model is “state capitalism,” which entrusts the government with setting the economy’s direction and has risen to prominence in many emerging markets, not least China.

Third, of course, is the way Schwab also proposes, ‘stakeholder capitalism.’ In Schwab’s own words, it is a model he proposed half a century ago, positioning private companies as ‘trustees of society.’

The WEF founder argues that the single-minded focus on profits caused capitalism to become increasingly disconnected from the ‘real economy.’ This form of capitalism is no longer sustainable. Instead, large corporations must cultivate ‘stakeholder capitalism’ along with governments and multilateral organizations.

When discussing the transition from shareholder capitalism to stakeholder capitalism, Schwab emphasized the significance of the ‘Greta Thunberg effect.’ For him, the Swedish climate activist has reminded us that adherence to the current economic system represents a betrayal of future generations. Moreover, Generation Z no longer wants to work for, buy from, or invest in companies that lack values beyond ‘shareholder values.’

Now some facts

The WEF-painted bleak picture and its calls for ‘sustainable’ capitalism are close to the truth.

The 2022 Global Wealth Report by Credit Suisse estimates that global wealth will have increased to $463.6 trillion by the end of 2021. This is almost 4.5 times the total worldwide output.

Furthermore, international wealth climbed by 9.8 percent in 2021, much higher than the average growth rate of 6.8 percent witnessed since the turn of the century.

Behind this enormous jump are rising real estate prices and stock market growth fueled by credit expansion. That is to say, a significant portion of the rise in wealth can be explained by the enrichment of the richer in the world.

Indeed, the report estimates that by 2020, a mere one percent of the global population (56 million individuals) possessed 45.8% of all wealth, while the other 2.9 billion owned just 1.3%. This ratio changed as follows in 2021: What one percent of the population now owns rose to 47.8 percent of all the wealth. The richest 13% has 86 percent of the total wealth.

According to the inequality report by Oxfam, just four cents in every dollar of tax revenue collected globally came from taxes on wealth.

Income tax collection from the wealthiest in OECD countries has decreased from 58 percent (in 1980) to 42 percent now.

This rate drops to 31 percent when the number of countries in the sample is expanded to 100. In the same sampling set, tax on capital income, one of the significant sources of wealth for the top 1%, has an average rate of just 18 percent. Only three countries have a higher tax rate on capital income than on wages.

International institutions are also pessimistic

The warnings of IMF Director Kristalina Georgieva before Davos are worth remembering. According to Georgieva, a third of the world will face a recession in 2023.

The OECD revised down the IMF’s forecast for global GDP growth from 2.7% to 2.2%. Arguing that the growth ‘has lost its momentum,’ the OECD noted that risks are skewed to the downside.

The World Bank went even further, projecting the global growth rate to be at 1.7 percent and growth in per capita income in all regions of the world to be lower than in the pre-COVID decade.

According to the World Bank, by the end of 2024, GDP levels in emerging and developing economies will be roughly 6% below the levels expected before the pandemic.

In the WEF’s Chief Economists Outlook survey, economists are even more pessimistic. 18% of polled chief economists in public and private sectors said that experiencing a global recession this year is ‘extremely likely.’

One-third of economists expect a global recession and anticipate that the United States and Europe will maintain their tight monetary policies.

All surveyed chief economists predict Europe to grow ‘weakly or very weakly’ in 2023. For the US, 91% forecasted ‘weak or very weak growth.’

In last year’s survey, these rates were 86 percent (for Europe) and 64 percent (for the United States).

Nine out of ten respondents agreed that corporations would feel the effects of low demand and high financing costs. At the same time, six out of ten underscored the rising input prices. For these reasons, many chief economists expect multinational corporations to reduce operational costs to cut expenses.

Huge dismissals at tech giants

What the economists polled by the WEF thought about multinational corporations has taken place for a while.

Having seen exorbitant stock rises and announced huge profits during the pandemic, technology giants began to ‘update’ their operational expenses due to the severe drops in their balance sheets last year.

Expanding their workforces in tandem with the growth of online activities during the pandemic period, American multinational monopolies, such as Alphabet (Google), Meta, Amazon, and Microsoft, started laying off employees as a primary measure against the shrinking industry.

The number of layoffs in the IT industry has reportedly reached 200,000 since the beginning of 2022, according to the website layoffs.fyi, which tracks releases in the technology sector.

In 2023, 67,268 people would have lost their jobs in this industry. About 51,000 people have been dismissed in the previous several weeks by Meta, Amazon, Microsoft, and Google alone. The only giant in the industry that has not announced a layoff so far is Apple.

The tech monopolies, on the other hand, are wallowing in money. Recently, Microsoft announced its profit for 2022 Q3 as $16 billion. If federal regulators had not stepped in to block the deal, Microsoft would have acquired the video game producer Activision Blizzard last year for $69 billion.

Meta reported a profit of $4.4 billion in the third quarter of 2022, although reporting a 52% decrease compared to last year.

Amazon also announced a decline in profits, but the company still made almost $3 billion in the latest quarter.

Layoffs spread across all industries

However, Silicon Valley giants are not an exception in dismissals.

Software giant SAP of Germany has announced it would lay off 3,500 staff, while chemical conglomerate Dow will fire 2,000 workers. Executives at Dow have said that they will cut costs by $1 billion this year.

3M, another American multinational giant, will reduce its staff by 2,500 on the pretext of falling customer demand.

The toys company Hasbro will lay off 1,000 workers, equal to 15% of its current workforce.

10% of employees will be dismissed at Salesforce, 6% at Spotify, 11% at Vimeo, 3% at BlackRock, and 7% at Goldman Sachs.

In the following articles, I will focus on the situation in the USA and Europe.

America

Tech giants pour billions into media licensing to fuel AI systems

Published

on

Investments by Silicon Valley-based technology giants in mainstream media organisations have taken on a new dimension in recent years, pivoting around direct cash flows, technology transfers, and legal strategies.

Aiming to shield their artificial intelligence models from copyright infringement lawsuits and feed them high-quality, real-time data cleansed of low-grade AI-generated material circulating online, tech companies are engaged in a billion-dollar licensing race.

OpenAI stands out with aggressive licensing drive

Building the industry’s most extensive content licensing portfolio, OpenAI is not only purchasing data but also integrating media outlets into its own ecosystem via AI integration.

The five-year agreement struck between the company and News Corp encompasses more than $250 million in cash and technology credits. The deal’s average annual cash flow stands at around $50 million.

Under this collaboration, the archives and live news feeds of The Wall Street Journal, Barron’s, MarketWatch, The New York Post, The Times, The Sunday Times, and The Sun have been opened to OpenAI systems. OpenAI uses this data both to train its GPT models and to summarize News Corp articles with source attribution links within ChatGPT search results.

The Media Copilot Citation Study and analyses by The Wall Street Journal on market dynamics reveal that publishers entering into licensing agreements gain a 48% priority advantage in ChatGPT citations.

OpenAI also signed an agreement valued at between $25 million and $30 million over three years with Axel Springer—whose portfolio includes publications such as Politico and Business Insider—securing the right to provide users with real-time summaries of European and US political news.

In its partnership with Dotdash Meredith, a fixed annual guarantee fee of $16 million was established alongside variable commercial revenue-sharing arrangements.

According to IAC financial filings and Adweek data, millions of articles from brands including People, Better Homes & Gardens, Lifewire, and InStyle are transferred to OpenAI, while the technology company supports the AI optimization of Dotdash Meredith’s advertising targeting platform, D.M.A.P.

On another front, The Walt Disney Company partnership announced by Disney CEO Bob Iger and Sam Altman involved a combination of a $1 billion equity investment and stock warrants.

The agreement aimed to secure the legal use of more than 200 characters from the Disney, Pixar, Marvel, and Star Wars universes inside Sora, the text-to-video AI model.

However, according to details reflected in reports by The Guardian and OpenAI Index filings, Hollywood’s resistance to artificial intelligence, the rights of actors and voice artists, and shifting priorities within OpenAI regarding the Sora application have plunged the operational process of the billion-dollar integration project into crisis.

Alongside traditional media, OpenAI is also turning to alternative and emerging media platforms. The company acquired TBPN last April. TBPN is a podcast hosted by John Coogan and Jordi Hays, both of whom come from the venture capital world. Daily from a Los Angeles studio, the duo hosts a three-hour show reminiscent of mainstream media business or sports broadcasts.

The podcast and its team fall under the responsibility of Chris Lehane, an experienced lobbyist who rose to prominence managing scandals during the Clinton administration. Lehane serves as OpenAI’s head of public relations.

Silicon Valley’s “parallel media ecosystem” does not consist solely of ventures by tech investors. Andreessen Horowitz, for instance, is investing heavily to build its own media empire. The venture capital firm publishes podcasts to showcase its tech investment portfolio and promote pro-technology politics. In this context, bespoke publications such as Future were established to disseminate optimistic perspectives on technology and feature founders in their portfolio without subjecting them to external critical scrutiny.

Furthermore, tech-backed ventures such as the AI platform State Affairs—supported by Peter Thiel’s venture capital firm Founders Fund and Khosla Ventures—employ human reporters to feed state legislative data into large language models (LLMs) for corporate subscribers.

Meta pivots to AI data over social traffic

Having faced disputes with publishers after restricting external link traffic directed to traditional media via Facebook and Instagram, Meta has deployed its AI budgets as a solution.

According to reporting by The Wall Street Journal, the company is executing multi-year agreements reaching up to $50 million annually with News Corp and a global pool of publishers.

Meta is making this investment to ensure its open-source Llama models avoid copyright complications when delivering news in internet searches and inside the Meta AI assistant.

Rather than using the data directly to train model weights, the company employs it within a retrieval-augmented generation (RAG) infrastructure that enables the assistant to deliver instant, legally cleared news to the user.

Apple negotiates with legal liability clause

Entering the AI arena with its “Apple Intelligence” integration, Apple held talks with publisher groups including Condé Nast, NBC News, and IAC to conduct its data collection process on an entirely legal footing.

As reported by The New York Times and PCMag, Apple tabled multi-year offers with a baseline price of at least $50 million per group for decades-long archives of institutions such as Vogue, The New Yorker, GQ, Vanity Fair, and NBC News.

A primary factor prolonging negotiations was reportedly Apple’s demand that publishers also assume potential legal liabilities arising from the processing of data within the system.

Perplexity AI shares ad revenue

Confronted with accusations of plagiarism and content theft from media organisations, Perplexity AI established a revenue-sharing pool under the name “Perplexity Publishers Program” to pre-empt potential copyright lawsuits.

Under the partnership, which includes TIME, Fortune, Der Spiegel, and the Los Angeles Times, an initial cash pool of $42.5 million was created.

According to the model examined by The Wall Street Journal and Digiday, Perplexity AI, which has begun introducing advertisements into search results, transfers between 50% and 80% of generated ad revenues to the publisher when it draws on the relevant media outlet’s article while generating an answer.

The company also provides enterprise AI subscriptions to employees of these media organisations.

Continue Reading

America

US in talks to acquire equity stakes in Venezuelan oilfields

Published

on

The Trump administration is in talks with Venezuela’s interim government to acquire an equity stake in the country’s vast oil reserves.

According to a report by Axios, this historic agreement would more than double US oil reserves by securing resources from the country that holds the world’s largest proven oil reserves.

“To call this deal ‘big’ would be an understatement. This is a massive deal,” one official said.

Another factor driving the push to sign the agreement is the wars in Iran and Ukraine, which have disrupted global oil supplies and pushed up prices.

The US Strategic Petroleum Reserve currently stands at a 40-year low.

The details are still being worked out, but the talks cover more than a dozen producing oilfields, rather than the entirety of Venezuela’s 300 billion barrels in proven reserves.

The fields in question hold 90 billion barrels in proven reserves and were previously controlled by former Venezuelan officials, including some who face criminal charges.

Interests once controlled by China were also linked to these fields.

In exchange for granting the US an ownership stake, the Venezuelan government would benefit from private firms, including American companies, developing these fields and generating increased oil revenues for the country.

According to Axios, the Venezuelan oil deal would represent a legacy-defining moment for President Trump, who has made US energy security and dominance in the Western Hemisphere cornerstones of his “Donroe Doctrine”.

“President Trump is very close to securing America’s energy future for generations to come, not only in the US, but across the entire hemisphere,” another official said.

Trump had reportedly begun discussing ways to acquire a stake in Venezuelan oilfields in secret even before Nicolas Maduro was abducted by the US on 3 January.

The negotiations are being led by US Secretary of State Marco Rubio and Venezuela’s interim president, Delcy Rodriguez.

Last month, senior officials from the Departments of State and Defence met with their counterparts in Caracas to discuss the details in greater depth.

White House Deputy Chief of Staff Stephen Miller is also playing a significant role in the process.

An official noted that the White House is sensitive to accusations that Rodriguez will hand over Venezuela’s natural resources to the US, stating: “We are doing everything we can to show this will benefit the Venezuelan people, because it genuinely will.”

It remains uncertain exactly when the agreement will be finalised. US Secretary of Energy Chris Wright is discussing plans to travel to Venezuela next week, as his department examines ways for US companies to boost oil production.

Continue Reading

America

US urges Mexico to curb undocumented crossings at southern border

Published

on

The administration of US President Donald Trump is demanding that Mexican President Claudia Sheinbaum implement additional measures against illegal crossings along the US border.

According to a Bloomberg report citing sources familiar with the matter, US Secretary of State and National Security Advisor Marco Rubio conveyed this demand to Mexican Foreign Minister Roberto Velasco during a closed-door meeting in Washington on 26 August.

The Washington administration is demanding that Mexican authorities prevent their own citizens from attempting to cross the US border illegally.

Bloomberg noted that fulfilling this request could encounter constitutional and legal obstacles, as Mexico’s constitution guarantees its citizens freedom of movement across national territory.

US State Department Spokesperson Tommy Pigott stated that Rubio urged Mexico during the meeting to take decisive steps in combating migration, drug trafficking, and cartel operations.

The Mexican Secretariat of Foreign Affairs has not yet issued a statement regarding the matter.

According to data cited by Bloomberg, US border patrol units detained more than 9,200 migrants in July. This figure represents the highest monthly tally recorded since Trump returned to the White House in January 2025.

The July figure was reported to have doubled compared to the same period of the previous year, yet it remained at approximately one-sixth of the level recorded in the final July of Joe Biden’s presidency.

Under Trump, who declared a state of emergency on the southern US border upon taking office in January 2025, illegal border crossings were recorded at 28,635 in February and 29,065 in March.

In the corresponding months of the preceding year, those figures stood at 256,071 and 246,505, respectively.

Following negotiations between Trump and Sheinbaum in February 2025, Mexico pledged to deploy 10,000 National Guard personnel to its northern border to counter drug shipments heading into the US.

Washington, in turn, suspended for one month the tariffs planned on goods of Mexican origin and pledged to work towards preventing illegal firearms shipments into Mexico.

Following Trump’s threats of launching ground operations against drug cartels in Mexico, Sheinbaum called in January 2026 for enhanced security coordination with Washington.

The Mexican leader had assigned then foreign minister Juan Ramon de la Fuente to hold talks with US Secretary of State Rubio.

Sheinbaum expressed that she considered a US invasion of her country unlikely and that Trump’s statements to that effect should not be taken seriously.

Continue Reading

MOST READ

Turkey