image credit: World Economic Forum / photo by Moritz Hager
Nothing.
Davos has done nothing for you lately. Unless, of course, you’re one of the global elite who managed to snag an invite.
This assertion should be met with fierce resistance from the political right, especially given their penchant for the liberal economic model (in classic sense) formed most recently by Ronald Reagan. After all, it’s this approach that suggests wealth will trickle down from those Davos-going plutocrats (from Francis Fukuyama’s excellent essay in The American Interest):
Basic to the legitimacy of market capitalism is the efficient market hypothesis—that is, the notion that in a truly competitive market everyone earns something close to his or her “social” rate of return. This means, in other words, that if your investment banker earns 100,000 times as much as your plumber, it’s because he or she is contributing roughly 100,000 times as much to society’s total pool of wealth.
One could argue, as Chrystia Freeland does in her contribution to the Jan/Feb 2011 issue of The Atlantic, “And, ultimately, that is the dilemma: America really does need many of its plutocrats. We benefit from the goods they produce and the jobs they create.”
Maybe.
But we’ve seen that the trickle isn’t really getting to the middle (heaven forbid the bottom). As Freeland herself points out, 65% of US income growth between 2002 and 2007 went to the top 1% of the population.
Also troubling is that in the US, the middle class hasn’t seen their real wages grow since the 1970s. So while the plutocrats are getting richer, the rest of us—even in times of economic prosperity—have stagnated. And while Davos-ites might be adding more greatly to society’s total pool of wealth, they’re keeping most that pool roped off from the bottom 99%.
Clearly, the efficient market hypothesis didn’t really work out like the economists said it would.
If this saga had a soundtrack, you can bet Everything Counts would be the theme song.
So in the face of growing inequality, and as Davos man himself Bruce Nussbaum points out, immiseration, what’s Davos done for you?
The Daily Mail puts this cheery spin on Davos’ ability to address inequality:
Alongside unsustainable deficits and the crisis in the eurozone, the issues to address included a ‘threespeed’ recovery (with Europe in the slow lane); ‘inequality’ as the super-rich (many in attendance) get richer and the world’s poor (not invited) get poorer; youth unemployment; mass unemployment; a food crisis; inflation; social unrest.
These were all challenges set for the global elite to discuss. Talk they did. But there was little sign of a solution, of a plan.
Perhaps it’s because our friends the plutocrats don’t really care that much.
It’s not them who are feeling the pain of our wage reductions. They’re getting richer. Especially those damn Yanks. As Stephen King (managing director of economics at HSBC, not the author) wrote in The Independent, the US economy will grow 3-4% in 2011, only because “unlike most European countries, it still believes it can carry on borrowing with no real regard for the interests of its foreign creditors.”
In light of his analysis, King frames a serious question: who pays?
Certainly not the Davos elite.
History has shown us it’s the average taxpayer, the low-wage worker, the bottom 99% that will bear the burden.
Thanks Davos.
If Davos isn’t going to do anything, who is?
Not governments. At least not directly or immediately.
In the US, we’ve wanted governments out of the market for decades, and we’ve done a good job of keeping them there. Even our most socially liberal president’s reform efforts were less than stellar to say the least.
To be fair, even when we’ve had tough regulations, we haven’t succeeded in promoting economic growth (cf. the 1980s). Robert Samuelson explains the problem in the most recent edition of The Wilson Quarterly: because regulators often aren’t any smarter than those they regulate, they lack the ability to anticipate new problems. Without that foresight, there’s no way to tell if investor actions are dangerously risky or not.
So Davos won’t do anything, and our governments can’t, then it’s gotta be us.
If you believe our current global economic system is messed, you need to get off your butt.
We’ve stagnated for too long to let the pattern continue. As Umair Haque puts it,
Our untrammeled path back to prosperity — should we choose to blaze it — is millions of personal revolutions made up of billions of tiny choices that reclaim our humanity from the heartless merchants of indifference, fear, anger, and vanity.
It would do us well to remember that humanity is defined by meaning, not dollars.
We have to ask ourselves hard questions: how does my product or service provide long-term value for my customers? Does providing value mean more to us than at-all-costs profits? What is the sustainability outlook, not just for our business models, but for our means of production and service delivery? Are we willing to view our employees as people, leading by transforming our businesses into truly organic organizations instead of hierarchal institutions?
It’s up to us friends, in board rooms and cubicles, to choose value over quick profit.
Are you with me?
Image credit: World Economic Forum / photo by Moritz Hager, worldeconomicforum on Flickr. See original for copyright information.
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