I have a bumper issue of Edge for you this week: 10 different items, squeezed into 1,572 words, which should take 6 minutes to read.
Situational awareness: It’s been a bumper week for trade deals, with President Trump signing the phase one agreement with China and the Senate passing USMCA. The NAFTA replacement is likely to receive Trump’s signature any day now.
On the menu: Collective action problems under capitalism; MIT doesn't really come clean on Jeffrey Epstein; the weirdness that is the executive chairman; the bad global economy; internet banking; JPMorgan's astonishing profits; Yamaha's viral tweet; who's headlining Davos; and a spa in Lapland.
Illustration: Sarah Grillo/Axios
The planet faces a collective action problem of existential proportions. No one country or company can prevent catastrophic global warming; all of them need to work in conjunction with one another.
Why it matters: That kind of cooperation flies in the face of the standard capitalist mode, which is competition. If shareholders were to unite and force companies to cooperate on carbon reduction, that could prevent the death and displacement of millions of people.
Driving the news: BlackRock CEO Larry Fink released his annual letter this week, in which he said that climate change is "almost invariably the top issue that clients around the world raise with BlackRock," and that it will drive "a fundamental reshaping of finance."
The big picture: If, like most BlackRock clients, your investment time horizon is measured in years or decades, then you are almost certainly worried about the effect of the climate emergency on your asset portfolio. Aggressive attempts to mitigate the crisis make economic sense.
The glimmer of hope: BlackRock, which manages $7 trillion, last week joined Climate Action 100+, a group that manages some $41 trillion in total and aims to pressure major carbon emitters into becoming more climate-friendly. Fink, however, still put the onus of responsibility on governments rather than shareholders.
The bottom line: The growth of indexing means that at some point in the foreseeable future, it's possible that BlackRock and Vanguard between them will control a majority of most companies' shares. But it's very unlikely that asset managers will ever go further than governments in terms of mandating environmentally responsible corporate behavior.
Go deeper: Why climate change is so hard to tackle
Illustration: Sarah Grillo/Axios
In a classic Friday afternoon news dump, MIT released a 61-page report last week that sought to close the chapter on the university's fraught relationship with convicted sex criminal Jeffrey Epstein.
Someone is lying — or at the very least is being extremely careful in their exact choice of words. Lead investigator Roberto Braceras told me that "we were unable to connect with representatives of Mr. Black," but a spokesperson for Black told Axios' Dan Primack that “no one associated with the investigation contacted Mr. Black at Apollo or at his family office."
What we know: According to the report, MIT told former Media Lab head Joi Ito that the university would not accept Epstein money. The response: "Ito pushed back, suggesting several methods for Epstein to get money to MIT, including by having Epstein swap donations with someone else’s foundation, to conceal the origin of the donation."
What we don't know: Gates and Black still refuse to answer detailed questions about their donations.
The bottom line: MIT claims to want "a clear and comprehensive gift policy or a process to properly vet donors." In reality, its report would seem to be a guide for how to circumvent such a policy. Ito's donation-swapping tactic, it seems, would work exactly as intended.
Illustration: Eniola Odetunde/Axios
Steph Korey has unresigned. After replacing herself as CEO of Away in December, following a major investigation into a toxic corporate culture at the suitcase company, she has now changed her mind, telling the NYT's Andrew Ross Sorkin that she would instead stay on as co-CEO.
Why it matters: Korey's December announcement said that her new job would be "executive chairman" — the classic role of someone who wants power without accountability.
How it works: All executives report to the CEO, so on some level an executive chairman should report to the CEO. But because the executive chairman is also the chairman of the board of directors — which can fire the CEO — the job is also that of the CEO's boss.
The bottom line: Being a CEO carries with it an extremely uncomfortable degree of scrutiny and accountability; being an executive chairman, on the other hand, comes with very little of either.
My thought bubble: Korey intended to continue to run the company all along, with her resignation being just for show. That's cowardice, not leadership. The job of executive chairman has never made much sense, and this latest debacle helps to explain why the role probably shouldn't ever exist.
Depressing news abounds in the 16th edition of the UN's definitive annual report on the global economy, released today. Not only has global GDP growth hit its lowest level in a decade, so has growth in global trade.
The total amount of debt in the world hit a new record high in 2019, according to new numbers from the Institute of International Finance. It now stands at 322% of global GDP, up from 275% of GDP pre-crisis.
What they're saying:
"Amid prolonged loose monetary conditions in developed economies and rapid credit growth in some emerging economies, high levels of debt are pervasive. Elevated debt levels not only pose financial risks themselves but also reduce an economy’s resilience to shocks, creating a source of fragility in cases of further deterioration in economic activity."— UN World Economic Situation and Prospects 2020
Visa has bought Plaid for $5.3 billion. Plaid is a largely invisible tool that lets you use financial services apps to see your account balances at various financial institutions.
JPMorgan made $36.2 billion of profit in 2019 — the best year for any bank in the history of the USA.
My thought bubble: JPMorgan's earnings are now more than double their pre-crisis peak. This is not a good thing. When a high share of total income goes to financial intermediaries, that generally bespeaks deeper economic inefficiencies.
Illustration: Rebecca Zisser/Axios
Thousands of CEOs and world leaders will be in Davos, Switzerland, next week, Axios' Courtenay Brown writes. Climate change dominates the agenda.
Photo: Anders Blomqvist
Arctic Bath, a floating spa hotel in Swedish Lapland, officially opened on Wednesday.