This week, thousands of the global elite — billionaires, CEOs, celebrities, and government officials — are meeting in Davos, Switzerland for the World Economic Forum (WEF). The purpose of the event, founded by German economist Klaus Schwab, is purportedly to "consider the major global issues of the day and to brainstorm on solutions to address these challenges." The WEF says it is guided by "the stakeholder theory, which asserts that an organization is accountable to all parts of society."
In 2019, the WEF produced the "Davos Manifesto," which sets forth "the universal purpose of a company in the fourth industrial revolution." According to the manifesto:
…A company treats its people with dignity and respect. It honors diversity and strives for continuous improvements in working conditions and employee well-being…A company serves society at large through its activities, supports the communities in which it works, and pays its fair share of taxes… It acts as a steward of the environmental and material universe for future generations…A company is more than an economic unit generating wealth. It fulfills human and societal aspirations as part of the broader social system...
To its critics, however, the WEF is a networking opportunity used by the powerful not to create a better world, but to maintain and expand their wealth and influence. (A WEF membership costs between $130,000 to $921,000 annually.) Documents like the "Davos Manifesto" are meant to mask the true nature of the event.
The New York Times' Peter Goodman, author of "Davos Man" — a blistering criticism of the WEF and its neoliberal ideology — recently offered this brief description:
The World Economic Forum is not a secret government or organized conspiracy. It is a giant business meeting, a chance for the heads of multinational oil giants to sit opposite Persian Gulf potentates — fronted by the performance art of earnest panel discussions aimed at solving the problems of the day.
More than anything, Davos is a prophylactic against change, an elaborate reinforcement of the status quo served up as the pursuit of human progress.
Tuesday's WEF program included a panel with Senators Kyrsten Sinema (I-AZ) and Joe Manchin (D-WV). The pair shared an on-stage high-five in celebration of the filibuster, which has been used to block increases in the minimum wage, protections for voting rights, and efforts to maintain access to reproductive health care.
The economic data also support Goodman's perspective. As CEOs and billionaires at WEF preached the gospel of "stakeholder capitalism," the ultra-wealthy have captured the vast majority of new wealth. This has been achieved by holding down worker wages, slashing corporate taxes, and obstructing environmental regulations.
The last two years have been an economic windfall for the obscenely wealthy
A new report on global wealth inequality by Oxfam, an international non-profit, reveals how lucrative the last two years have been for people who didn't need any more money. The report, Survival of the Richest, finds that over the last two years, "the richest 1% have captured almost two-thirds of all new wealth – nearly twice as much money as the bottom 99% of the world’s population." Since 2020, billionaire wealth has increased by $2.7 billion every day. This massive increase comes after decades of rapidly accumulating wealth for billionaires.
Today, just 81 billionaires "hold more wealth than 50% of the world combined." And while the elite enjoyed an unprecedented windfall, those with the fewest resources saw their material conditions stall or worsen. Oxfam estimates that "at least 1.7 billion workers worldwide will have seen inflation outpace their wages in 2022."
In 2022, the World Bank announced that "we will fail to meet the goal of ending extreme poverty by 2030" and "global progress in reducing extreme poverty has come to a halt." The last two years constitute "the largest setback in addressing global poverty since World War II." In 2021, "between 702 and 828 million people were affected by hunger," nearly 10% of the world's population.
Extreme wealth inequality is a policy choice
The concentration of wealth is not an accident. It is the result of policy choices pushed for by corporations and the wealthy and enacted by government officials. Many of the folks responsible for these choices are in Davos this week.
Since 1980, taxes for the highest incomes, capital gains, and inheritance have all plummeted in wealthy countries. This has corresponded to a large increase in the share of wealth held by the top 1%.
The very wealthy often pay much less than the statutory tax rate in their home country. Billionaires routinely embrace a "buy, borrow, die" strategy to avoid taxation. Instead of paying themselves a salary, they borrow money against unrealized capital gains, which are almost never taxed. So Jeff Bezos gets richer as Amazon's stock price increases, and he can access that wealth by using his Amazon stock as collateral for a loan. But the new wealth is untaxed because Bezos did not sell any of his stock.
In 2021, Senator Ron Wyden (D-OR) proposed cracking down on the "buy, borrow, die" strategy by imposing a 23.8% tax on the unrealized capital gains of billionaires. Wyden's proposal would have impacted just 700 people but would have raised $507 billion over 10 years. This could have financed a multi-year extension of the expanded child tax credit — a credit that lifted millions of children out of poverty.
But Wyden's wealth tax was abandoned because two Davos attendees — Manchin and Sinema — decided to oppose it. "I don’t like the connotation that we’re targeting different people," Manchin said. It was also opposed by every Republican Senator.
Manchin and Sinema did not act in a vacuum. They were responding to a massive lobbying effort by corporate America — including many of the companies represented in Davos this week — opposing a wealth tax. That lobbying effort was successful. As a result, the expanded child tax credit expired, and 3.7 million children fell back into poverty.
Global corporate taxes have "fallen from an average of 47.5% in 1980 to 24.9% today." Many corporations pay much less — either through creative tax planning or relocating their some or all of their operations to corporate tax havens. In the United States, Biden proposed modestly increasing the corporate tax rate from 21% to 25%. The increase would have helped fund significant investments to combat climate change and important benefits for working families, like paid family leave.
But Sinema opposed any increase in the corporate tax rate. So the climate investments were pared back, and American workers still do not have access to paid leave.
I don’t know what else to say, other than this is fucking infuriating.
Instead of bringing together the best minds, this event bringing together the fabulously wealthy to inform them of the very events and trends that will decimate their wealth. It is very much worth it for them to listen so they know what and who will try to put a leash on them. Maybe one or two will be interested to doing something uplifting for the underdogs and ordinary, but the rest will know the playbook of their opponents.
At the rate we are going, the only thing that will stop this is a worldwide depression. Everybody suffers, but a lot of the rich will also be swept away because the money they have is only backed up by our heated up economy.