The inequality gap is growing and governments must step up and spend more to help less fortunate.
You’ve heard that remedy for the world’s economic ills before—we all have, so much in fact that it’s become such a cliché that many liberals I know even doubt the efficacy of government’s ability to make the world a better (and more economically just) place.
But here is Davos, Switzerland, the meeting place where the biggest names in government and business gather once a year to think big thoughts at a junket known as the World Economic Forum, such verbosity is dogma even at a time when the overwhelming evidence shows just the opposite is happening. Countries are spending more to create massive sclerotic welfare states (ie those in Europe) and are stagnating while those embracing capitalism (ie in Asia) are growing.
And for all of President Obama’s grand intentions to model the venal U.S. economic system after Europe with its high taxes and socialized medicine, that nasty thing known as the wealth gap has grown during his presidency.
I should point out this is my first time covering this event; it is considered a plum assignment for most financial journalists given the who’s who nature of the attendees. To that point, the event has just started and already I ran into former Vice President Al Gore, Blackrock (NYSE:BLK) Chief Larry Fink at a reception, and Virgin Group Founder Sir Richard Branson.
Yes it’s nice to think big thoughts about how to make the world better. But after you take a deep breath of the crisp Alpine air here (and do a little research), you realize that these big thoughts are really small in scope.
For the most part, they’re no different from the thoughts these guys have been deeply imbibing in past years: Lots of government programs and spending to make things “fair” and nary a word about how the free markets have done more to bring economic equality to the masses than anything devised by the forum’s assortment of socialist economic planners. I get why so many fat cats come here; Larry Fink runs the world’s largest money management outfit so he gets face time with some of the world’s biggest investors and sovereign wealth funds. Davos is one-stop shopping for investment bankers.
In many ways, the panels and discussions are cover so the fat cats can do their unpolitically correct business in a politically-correct environment. While Fink & Co., are selling their investment products to the super rich, there is a discussion titled “A Richer World, but for Whom?,” a panel that raises the question whether religion is a “pretext for conflict”, and something on “Mindfulness Meditation,”
Whatever that means.
You get the picture: This event is such a wasted opportunity because much of the world is hurting—including right here in Europe—and most of the remedies espoused at the World Economic Forum are outdated at best, fatuous at worst.
Step away from the panels and do some research and you will find that at the heart of France’s problem with radical Islam is an economic crisis that has mired immigrant populations in such dire poverty that no amount of welfare seems to be able to mollify their resentments.
France’s economy isn’t the worst in Europe, but it only looks good compared to basket cases like Italy, Spain and Greece all of which have done their best to quash individual economic achievement to satisfy a large and decaying welfare state.
If you don’t believe me, answer this simple question: Who was the last great entrepreneur to come out of France, or Italy or Spain for the matter?
Conversely the rising wealth of Asian economies from India to China and elsewhere are testament to power of its growing entrepreneurial class. For all of China’s struggles with totalitarianism, in recent years it has embraced free markets enough to allow the emergence` one of the world greatest new entrepreneurs, Jack Ma, to create one of the world’s great new economy companies, Alibaba (NYSE:BABA).
I hear Ma will be speaking this week, though I don’t expect to hear much in the way of big thoughts about how he achieved his success and how entrepreneurialism might be able to save Europe from what appears to be an existential decline.
In fact, I bet there will be more weighty discussions here about President Obama’s State of the Union speech Tuesday night, and his plan to heap the rich with a batch of new taxes for programs to help the “middle class.”
Republicans who now control Congress after the American people rejected Obamnomics during the midterms (remember the dreaded wealth gap has exploded during his presidency), have already panned the speech and his policies as the same-old, same-old. The president’s plan will of course go nowhere in the states.
But herein Davos, his ideas about the economy will be embraced as brilliant and new—which is why for all the sound and fury coming out of the Swiss Alps this week, in the end it will signify next to nothing.