The 44th
annual World Economic Forum (WEF) began Wednesday, bringing over 2,000
corporate executives, major investors, government leaders, central
bankers and celebrities to the Swiss Alpine resort of Davos.
The annual celebration of wealth and
avarice follows a bumper year for the world’s super-rich. Stock prices
and corporate profits surged to new record highs, swelling the bank
accounts and portfolios of the financial elite, even as austerity
measures, wage cutting and layoffs slashed living standards and threw
tens of millions more people into poverty.
On the eve of the forum, the British
charity Oxfam released a study documenting the staggering growth of
social inequality. Oxfam reported that the richest 85 individuals
possess more wealth than the poorest 50 percent of the world’s
population—3.5 billion people!
The Davos conference embodies the
emergence of a new global financial aristocracy. In attendance at this
year’s meeting are 80 billionaires and hundreds of millionaires.
The general tone on the opening day was
one of “fragile optimism,” according to a survey of attendees. There is a
general expectation of more good fortune in 2014. But looming over the
festivities there is also fear of the social and political consequences
of the naked plundering of society by the elites represented in Davos.
The conference, which goes from January
22 through 25, has officially adopted the title “The Reshaping of the
World: Consequences for Society, Politics and Business.” It will draw
1,500 business executives, 48 prime ministers and presidents, and the
heads of twenty central banks. US attendees include Secretary of State
John Kerry, Commerce Secretary Penny Pritzker, Treasury Secretary Jacob
Lew and Environmental Protection Agency head Gina McCarthy.
Panel discussions on topics such as
“Regulating Innovation,” “Closing Europe’s Competitiveness Gap,” “Higher
Education—Investment or Waste?” and “Immigration—Welcome or Not?” are
sandwiched between galas and parties for the rich and powerful. As the
Washington Post quipped, “After absorbing so much info during the day,
evenings are your usual party scene, devoted to celebrity-spotting,
night skiing and such, and apparently a fair amount of alcohol
consumption.”
Davos’ prestigious Belvedere Hotel alone
has ordered 1,594 bottles of champagne and Prosecco, as well as 3,088
bottles of red and white wine, according to the BBC, in order to
accommodate “320 parties in five days, its 126 rooms crammed with chief
executives, prime ministers and presidents.”
The attendees have reason to celebrate.
The wealthiest 300 people on the planet saw their net worth grow by $524
billion over the last year, according to Bloomberg News. The Bloomberg
article, entitled “Davos Billionaires See Wealth Gains on 2014 Stocks
Rally,” noted that Bill Gates was last year’s biggest gainer, having
increased his fortune by $15.8 billion to $78.5 billion, recapturing the
position of world’s richest person.
The conference was founded in 1971 by
German business professor Klaus Schwab, who invited hundreds of
corporate executives throughout Europe to what he called the “European
Management Forum.” But the event, whose name was changed to World
Economic Forum in 1987, came into its own in the first period of
political reaction under Reagan and Thatcher, growing in tandem with the
redistribution of wealth from the bottom to the top.
Among the hundreds of corporate
executives at Davos are substantial delegations from banks whose
speculative and fraudulent activities triggered the 2008 financial
crisis. Goldman Sachs sent eight delegates (including CEO Lloyd
Blankfein), Citigroup and HSBC sent seven apiece, and JPMorgan Chase
sent six, including CEO Jamie Dimon.
Panelists at a Wednesday forum entitled
“Is the International Financial System Safer Now than it was Five Years
Ago?” included HSBC Chairman Douglas Flint and Barclays CEO Anthony
Jenkins. Barclays paid regulators $450 million in 2012 to settle charges
that it illegally manipulated the world’s main interest rate, the
London Interbank Lending Rate, or Libor. HSBC paid $500 million to
regulators to settle similar allegations and hundreds of millions more
to settle charges of drug money laundering.
In its annual “Global Risks” report, the
forum listed income disparity as the number one threat, warning that it
was the risk “most likely to cause serious damage globally in the coming
decade.” WEF chief economist Jennifer Blanke, pointing to the 2011
upheavals in Egypt and Tunisia, commented, “Disgruntlement can lead to
the dissolution of the fabric of society, especially if young people
feel they don’t have a future.”
International Monetary Fund Managing
Director Christine Lagarde struck a similar note in an interview with
the Financial Times, warning that rising economic inequality “is not a
recipe for stability and sustainability.” Pope Francis issued a similar
warning.
No one at the conference, however, is
proposing any social reforms to ameliorate the plight of the working
class or redistribute wealth downwards from the top. On the contrary,
the watchword is “structural reform,” a euphemism for stripping workers
of all protections, dismantling what remains of the welfare state, and
removing all environmental and health and safety rules that restrict
corporate profit.
A survey of 1,344 business executives at
the forum by PricewaterhouseCoopers concluded that the top concerns were
corporate “over-regulation” and government deficits (i.e., social
spending). Seventy two percent of the executives said overregulation was
an impediment to economic growth, while 71 percent complained of
“excessive” social spending and government debt.
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