By Paul B. Farrell, MarketWatch
SAN LUIS OBISPO, Calif. (MarketWatch) — Davos. Swiss Alps. Annual meeting of the notorious World Economic Forum. Invitation-only club for the Super Rich and friends since 1971. Feel-good mantra: “Committed to improving the state of the world.”
But they’re failing. In 40 years the Haves got richer. Have-nots got shafted. Something’s terribly wrong. When it comes to global economics, Davos is a disaster.
Reuters
A general view shows the Swiss mountain resort of Davos. The annual meeting of the World Economic Forum takes place under heavy security measures beginning Wednesday in the Alpine resort, and will be attended by top politicians, monetary policymakers and senior business executives.
Why? Inside Davos is a secret society, a Conspiracy of the Super Rich, more than half the 2,500 attending the event. They’ve got trillions. And it’s not enough. Right now, many are cruising to Davos at 50,000 feet, enjoying caviar, foie gras, filet mignon and Dom Perignon in the comfort of their tax-exempt Gulfstream 5 jets.
For them a Davos invitation is not just a status symbol, not just proof of their power. An invitation confirms the illusion that their Conspiracy of the Super Rich is the main engine driving global economic progress the past 40 years … so they think they deserve all the wealth they’ve accumulated, including their $60 million jets.
Now step into a parallel reality: You’re flying coach to Davos. Can’t sleep. Watch an iPad movie. Old favorite: “On Her Majesty’s Secret Service.” James Bond is also flying to the Blofeld Institute high in the Alps. Blofeld, publicly known for cutting-edge research. But behind-the-scenes, a diabolical plot is hatching.
At night, after a formal dinner, Bond discovers Blofeld is secretly brainwashing 10 beautiful ladies, Angels of Death, to deliver a deadly toxin across the world on his command, a biological WMD. His strategy: Hold the world hostage, demanding more fame, fortune and absolute power.
Yes folks, at some deep level the Davos Conspiracy of the Super Rich parallels Blofeld’s attempt to take over the world. Both symbols of a dying capitalism.
But unfortunately, in today’s real-world scenario we have no James Bond heroics. This time, the inbound fleet of Gulfstreams may well be flown by armed Secret Service pilots with a detail of CIA guards, all funded by Congress to protect their donors in the Conspiracy.
Reagan insider warns: Inequality gap as bad as before 1929 Crash
Seat-belt sign turns off. You relax. We shift from Gulfstream metaphors to the real-world facts. Ask yourself: Why is the Davos Conspiracy of the Super Rich (with its high-toned mission to “collaborate in a proactive, integrated and systematic manner to address global challenges”) actually creating a global economy that’s deteriorating at high speed, where war, disease, population and poverty are accelerating at alarming rates, where the planet’s commodity-resources are rapidly disappearing?
Why? Because Davos really is a disaster. Their economics is a disaster, capitalism a disaster. The Davos’ world view is a disaster. But unfortunately, the Super Rich cannot see this reality cruising at 50,000 feet. They can’t even see the risks once at Davos.
Yes, Davos does have a thick-slick report about 28 global risks (warning: it only takes three happening simultaneously to trigger a global shutdown). But the real motives of the Super Rich are personal wealth, political power, glory. They care little for the masses. They are myopic narcissists, like Blofeld’s Angels of Death, trained solely to laser in on profit opportunities, marginalizing risks. Sadly, they will never see the next big catastrophe in time, will not act till it’s too late.
The facts on economic progress since Davos launched in 1971 are undisputed: In the new American Interest Journal, Francis Fukuyama, author of “The End of History” and one of the leading minds behind President Reagan’s foreign policy wrote: “It is well established that income inequality has increased substantially in the United States over the past three decades, and that gains from the prolonged period of economic growth that ended in 2007–08 have gone disproportionately to the upper end of the richest layer of society.”
Yes, Super Rich billionaires grabbed the bulk of economic prosperity since Davos was launched. Fukuyama says “a study by Thomas Piketty and Emmanuel Saez shows that between 1978 and 2007, the share of U.S. income accruing to the top one percent of American families jumped from 9% to 23.5 % of the total. These data point clearly to the stagnation of working-class incomes in the United States: Real incomes for male workers peaked sometime back in the 1970s and have not recovered since.”
The last time the inequality gap was this huge was just before the 1929 Crash and the Great Depression.
Trickle-up capitalism: Rich get richer, the masses get shafted
What about the Have-nots? The 99% in our working economy? Capitalism is shafting them: 40 years of economic gains trickling up. The top 1% got richer. Real incomes for the Have-nots, the bottom 99%, have declined.
Since Davos was launched four decades ago, the Super Rich only come to share with other Super Rich. They share little with the rest of the world. Their motives are selfish. They come to Davos to share clever legal, political, tax and financial tricks that will protect and increase their personal wealth and power, with token caring for the masses.
The results are clear: For the Super Rich, Davos a money-maker. For the world economy, Davos is a disaster.
Worse, Fukuyama warns of a toxic connection between the political and economic goals of the Super Rich: “The growing disparity in outcomes has coincided with a period of conservative hegemony in American politics. Conservative ideas clearly had to do with the rise in inequality. The economic model favored by Ronald Reagan was intended to open the doors to greater competition and entrepreneurship.”
But Reaganomics failed. While “pro-market advocates have repeatedly told us that growth nearly always trickles down over time to all or nearly all class cohorts … as the years went by, those outsized gains at the top of the income distribution pyramid failed to trickle down in any substantial way.”
In short, the Reaganomics brand of capitalism failed miserably. And ironically it’s making a rapid comeback. Why? Because the Davos Conspiracy of the Super Rich is obsessed with wealth, power and globalism.
Pimco’s CEO Mohamed El-Erian warns of revolutions dead ahead
The Bond movie ends. You lean back, relax, open the new Atlantic magazine you bought at the airport before boarding. The lead-in of Chrystia Freeland’s brilliant essay, “The Rise of the New Global Elite” grabs you, evokes more images of a vast conspiracy taking over the world: “F. Scott Fitzgerald was right when he declared the rich different from you and me. But today’s super-rich are also different from yesterday’s: more hard-working and meritocratic, but less connected to the nations that granted them opportunity — and the countrymen they are leaving ever further behind.”
Reading on, you become convinced there really is a Conspiracy of the Super Rich headed for Davos in U.S. Gulfstreams. But it’s not what you thought. There’s no secret organization commanded by a diabolical Blofeld clone plotting to disperse Angels of Death armed with biological WMDs to destroy the world.
Sure, the Super Rich are plotting. But they’re doing it right out in the open. To control everything. To concentrate more money, more power for the top 1%. They have all the money and lobbyists necessary to buy enough politicians to make all their corrupt, unethical behavior appear legal and constitutional.
The clincher comes near the end of Freeland’s essay when she focuses on Pimco CEO Mohamed El-Erian, author of a powerful best seller, “When Markets Collide,” a guy who manages over a trillion of investments worldwide.
Freeland summarizes: “The real threat facing the super-elite, at home and abroad, isn’t modestly higher taxes, but rather the possibility that inchoate public rage could cohere into a more concrete populist agenda — that, for instance, middle-class Americans could conclude that the world economy isn’t working for them and decide that protectionism or truly punitive taxation is preferable.”
Or a revolution.
Revolutions work because diplomacy, peaceful negotiations don’t
El-Erian is a “model member of the super-elite. But he is also a man whose father grew up in rural Egypt, and he has studied nations where the gaps between the rich and the poor have had violent resolutions.” Sudden, violent revolutions.
El-Erian is clear: “For successful people to say the challenges faced by the lower end of the income distribution aren’t relevant to them is shortsighted … this will lead to increasingly inward-looking social and political conditions … we risk ending up with very insular policies that will not do well in a global world.” We become even more vulnerable to external enemies.
Freeland’s summary: “The lesson of history is that, in the long run, super-elites have two ways to survive: by suppressing dissent or by sharing their wealth.”
Unfortunately, there is a third, more violent solution, as El-Erian hints. But few in the Davos Conspiracy of the Super Rich get the hint. They have a blind spot, minimizing risk — which, ironically, triggers catastrophes when we least expect them, as in 2008.
Capitalism is in a death spiral, obvious from the recent resurgence of self-destructive Reaganomics in America. It will not survive. History tells us suppressing dissent will eventually fail. And sharing the wealth rarely comes through diplomacy and peaceful negotiations, only after violent costly revolutions that overthrow existing “systems,” like the Davos Conspiracy of the Super Rich.
PAUL B. FARRELL
Jan. 25, 2011, 12:01 a.m. EST
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