I have been participating in the annual World Economic Forum in Davos, where the so-called global elite gather to discuss world problems, since 1995. And I've never left there in a darker mood than this year.
The world is full of problems that are extremely difficult to solve. Inequality is growing rapidly, especially in developed countries. The digital revolution, regardless of all its potential, is a serious threat to the privacy of personal life, security, workplaces and democracy; these problems are deepened by the growing monopolistic power of several Internet giants from the US and China, including Facebook and Google. Climate change has become an existential threat to the entire world economy in the form we are familiar with.
But even more than those problems are the attempts to solve them. Yes, of course, most of the managers who came to Davos from various countries started their contributions with an attitude about the importance of principles. Their work, as they claim, is aimed not only at maximum profit growth for shareholders, but also at creating a better future for employees, residents of the regions where their companies operate, and also for the world as a whole.
They can even hypocritically remember the risks caused by climate change and inequality.
But, at the end of those speeches, all the remaining illusions about the principles, which are the motivation for the work of the business leaders gathered in Davos - completely disappeared. It seems that all these CEOs and presidents are worried about the populist attack on the form of globalization that they themselves created (and which brought them enormous benefits).
Should we be surprised that all that economic elite perceives very badly the degree of disillusionment with the given system of a significant part of the population in European countries and in the USA. Due to this system, the real income of most households stagnates, and the share of labor in income has dropped significantly. Life expectancy in the US has been declining for two years in a row, and among those with only a high school education, the decline has been much longer.
Not one of the managers of American companies, whose performances I personally listened to (or they told me about them) did not mention the intolerance, misogyny or racism of the President of the USA D. Trump, who was present at that event. No one mentioned the endless series of uncultured statements, outright lies and capricious moves that undermine the position of the US president in the world, and that means the United States itself. No one mentioned rejecting the systems that help to establish the truth, and also the truth itself.
Besides, none of the corporate giants of America said that this administration cut funding for science; the science that is so important to solidifying US wealth and supporting the growth of America's quality of life. No one mentioned the Trump administration's negative attitude towards international institutions, its attacks on the media and the US judicial system, which is practically equal to an attack on the system of checks and balances that is the basis of American democracy.
No, in Davos the CEOs were licking their lips with happiness over the tax bill that Trump and the Republicans recently pushed through Congress. That law will bring hundreds of millions of dollars to large corporations, and also to the rich people who own and manage them, that is - people like Trump himself. They are not disturbed by the fact that this law, when it fully enters into force, will cause an increase in taxes for the majority of members of the middle class, that group of the population whose wealth has been decreasing for almost 30 years.
But - even in their purely material world, where growth is more important than anything else - they are looking forward to Trump's tax bill in vain. It is about the fact that he reduces taxes on speculative real estate trade, and such activity has not led to sustainable prosperity anywhere, but that is why it has led to the growth of inequality everywhere.
In addition, the law imposes a tax on universities, such as Harvard and Princeton, which are the source of many important ideas and innovations. It will also lead to a reduction in government spending at the local level in some regions of the country that have boomed precisely because they have invested in education and infrastructure. The Trump administration clearly intends to ignore a fact that is clear to everyone: for success in the XNUMXst century, it is necessary to increase investments in education.
Corporate leaders from Davos believe that cutting taxes for the rich and their companies, along with deregulation, is the solution to any country's problem. They argue that a top-down economy will ultimately benefit the entire population. And the good hearts of corporate presidents is all that is needed to ensure environmental protection, even without proper regulation.
However, the lessons that history teaches us are completely clear. The idea of pouring income from the top to the bottom - it doesn't work. And one of the main reasons why our nature is now in such a dangerous situation is precisely that corporations, acting independently, are not fulfilling their social obligations. Without effective regulation and realistic compensations for nature pollution, we will have no reason to hope that these corporations will behave differently than before.
The managers in Davos were euphoric about the renewed growth of the economy, profits and their own salaries. Economists noted that this growth is unsustainable and not inclusive. But such warnings have little effect on a world ruled by materialism.
And so, forget the banal phrases about values and principles from the first paragraphs of speeches given by company leaders. They may lack the sincerity of the character played by Michael Douglas in the 1986 film "Wall Street", but the essence of their performances has not changed: "Sleaze is good". And I get depressed because so many people think such an obviously wrong idea is right.
The author is a Nobel Prize laureate in economics; is a professor at Columbia University and chief economist at the Roosevelt Institute
Copyright: Project Syndicate, 2018.
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