Market Watch – by PAUL B. FARRELL
SAN LUIS OBISPO, Calif. (MarketWatch) — The world looks different from rarified altitude of a billionaire. Especially if you’re one of the 85 richest who control more wealth than the 3.5 billion poorest.
You guys already own half the planet. Keep up the good work, getting richer, by the end of this century your family could be one of the world’s 11 trillionaires predicted in the new Credit Suisse Global Wealth Report. Capitalism is the ticket to owning everything.
Cruising at 51,000 feet, Mach 0.85 in your $40 million Gulfstream jet, you know the world belongs to you. A few days at the World Economic Forum in historic Davos, Europe’s highest city, high in the Swiss Alps, and your world seemed even bigger. Roots in the Higher Middle Ages. Fabulous ski resort.
Davos is mostly about business contacts, meeting other powerful capitalists, great PR and i-photo ops walking among world leaders, in seminars, at meals, over drinks, just mingling with the 2,500 participants — all the captains of industry, central bankers, heads of state, thought leaders and celebrity economists, maybe even listening to actor Matt Damon talking about his Water.org or attending a mindful meditation session with Goldie Hawn.
But bottom line: for 1,500 business and financial types at Davos, many whose firms are permanent members, just one new contact can justify the quarter million often spent belonging to the exclusive Davos Forum. Yes, up at their altitude, the world really does looks different.
Billionaires aren’t ‘Curious Capitalists,’ they just want to make more money
The truth is, for 43 years Davos has been a private club for capitalists that has had more to do with increasing economic inequality than any other global organization. Here’s how a real “Curious Capitalist,” as Time’s editor, Rana Foroohar, sees it from ground level mingling with world leaders, gathering quotes, interviewing and blogging, to get answers to “The 5 Most Important Questions for the Davos Elite”:
- Is U.S. economic recovery for real?
- Will China’s economy blow up?
- Is technology a friend or an enemy?
- Who wins, millennials vs. baby boomers?
- What will the political impact of inequality be?
Actually, only one of these five questions has the potential of triggering catastrophic long-term consequences: Economic inequality. The other four, while significant, are all what mathematicians call dependent functions of the inequality equation that’s impacting technology, generational conflicts and the economies of China and America.
In fact, a cultural revolution is creating a new global collective conscience between capitalism and inequality, the Haves and the Have-nots. A powerful virus is spreading, rising from the grass roots of billions in the repressed poor and the middle class, forcing moral leaders to step forward and openly challenge the destructive forces of capitalism. You can now even see them jumping on this new bandwagon.
New inequality bandwagon is a backlash against capitalism
We know Pope Francis has already made global inequality and the end of free-market, trickle-down capitalism the rock upon which his papacy stands as the leader of the 1.2 billion Catholics worldwide. He has stated unequivocally that “inequality is the root of social ills” and will only be resolved by “rejecting the absolute autonomy of markets and financial speculation.”
He warned that “no solution will be found for the world’s problems or, for that matter, to any problems” until capitalism is rejected.
Worse, violence, war and revolution follow as capitalism has increased inequality repressing many, says Al Jazeera News. Quoting from an Oxram global report: “Disparities in wealth and income result from ‘political capture,’ in which the wealthy use their economic power to make sure the rules bend to favor the rich, often to the detriment of everyone else. The consequences include the erosion of democratic governance, the pulling apart of social cohesion, and the vanishing of equal opportunities for all.”
Inequality is also emerging as a political force in America, echoing the growing power of a new collective conscience against capitalism. In his “State of the Union” address next week, President Obama has already committed to “make inequality the defining issue of 2014.”
Warning: Repressive capitalism is fueling rage, triggering violence
Yes, with leaders, the public and media jumping on a new inequality bandwagon, Time magazine’s “Curious Capitalist” analyzed the World Economic Forum’s report, “Global Risks 2014: “The annual WEF global-risk report, which surveys academics and other experts in 70 countries, lists the growing wealth divide as the biggest geopolitical risk today. Elections are coming up this year in many countries with growing inequality, like India. Will populist leaders emerge, and can they carry out the structural reforms necessary to bolster growth and shrink the gap?” warned the “Curious Capitalist.”
Then, the big question: “When does the discontent of the global millennial cohort, nearly half of whom are underemployed or unemployed, finally bubble up into rage with serious social ramifications? Closer to home, how will inequality affect the debate over things like raising the minimum wage and finishing the reregulation of the financial sector?”
As inequality continues to grow, it will trigger more and more rage, war and violence until, as Pope Francis says, capitalism is rejected, because until then “no solution will be found for the world’s problems or, for that matter, to any problems.”
Davos billionaires in the clouds, narcissists not ‘Curious Capitalists’
Yes, inequality is the world’s No. 1 unresolved issue. When we last covered it in 2011, our headline read: “Super Rich at Davos: 40 years disaster: Income gap peaking.” The impact of inequality was obvious to us back then. But not to WEF. In their Global Crises 2011, “Storms and Cyclones” was the No. 1 risk, then Floods, Corruption, Loss of Biodiversity and lastly Climate Change. Since 2012, “Income Disparity,” the inequality gap, has been the No. 1 problem. And getting worse.
The Davos Forums were founded in 1971. An earlier feel-good mantra: “Committed to improving the state of the world.” This year’s mantra: “Reshaping of the World: Consequences for Society, Politics and Business.” The WEF is a neutral zone, observing “profound political, economic, social and, above all, technological forces are transforming our lives, communities and institutions.” Yes, typical Swiss neutrality in the midst of war, and profiting from it.
Paradoxically, global inequality has gotten worse in the years since WEF was founded. Why? Because it exists as a club for capitalists. A few years ago we warned that WEF is “failing. In 40 years the Haves got richer. Have-nots got shafted. Something’s terribly wrong. When it comes to global economics, Davos really is a disaster. Their economics a disaster. Capitalism a disaster. The Davos’ world view is a disaster.”
That was 2011: And unfortunately, “the Super Rich cannot see this reality as they metaphorically cruise along at 50,000 feet or hobnob with world leaders and celebs searching for another deal. They can’t even see the risks at Davos.
Yes, Davos does have a thick-slick report about global risks, even warns readers that it only takes three happening simultaneously to trigger a global shutdown.” Interesting. But contacts are all that count.
Capitalism’s collective brain won’t change without a revolution
Today’s billionaires, tomorrow’s trillionaires, all live in a culture that breeds blindness, a culture with a collective brain brilliantly explained by a 30-year-old former Wall Street hedge fund trader in his recent New York Times piece. His last bonus was only $3.6 million and he “was angry because it wasn’t big enough.” He was in it to become a billionaire.
His description of Wall Street’s addictive brain is classic. Tells you why capitalism can’t stop, will eventually self-destruct and take the world with it: “Not only was I not helping to fix any problems in the world, but I was profiting from them. During the market crash in 2008, I’d made a ton of money by shorting the derivatives of risky companies. As the world crumbled, I profited. I’d seen the crash coming, but instead of trying to help the people it would hurt the most, people who didn’t have a million dollars in the bank, I’d made money off it.”
“In the end, it was actually my absurdly wealthy bosses who helped me see the limitations of unlimited wealth. I was in a meeting with one of them, and a few other traders, and they were talking about the new hedge-fund regulations. Most everyone on Wall Street thought they were a bad idea. ‘But isn’t it better for the system as a whole?’ I asked. The room went quiet, and my boss shot me a withering look. I remember his saying, ‘I don’t have the brain capacity to think about the system as a whole. All I’m concerned with is how this affects our company.’ Myopic, greedy narcissists.
As long as this addictive mind-set controls the collective brain of global capitalism, the war between capitalism and inequality will get more and more intense, exploding into violence and revolutions against the Super Rich. They are not, and may never be “Curious Capitalists.”
They stay isolated in Davos bars, or cruise at 50,000 feet in their Gulfstream G650, a perk of their cultural ideologies earned from their ventures taking advantage of the world’s 3.5 billion poorer citizens, addicted to the perks and power of capitalism, remaining oblivious of the political impact of economic inequality, until it’s too late.
Paul B. Farrell is a MarketWatch columnist based in San Luis Obispo, Calif. Follow him on Twitter @MKTWFarrell.
One thought on “Davos Billionaires: Oblivious to the Coming Revolution”
Hedge fund managers and the Wall Street traders who get rich shorting and betting against companies and derivatives that were meant to fail have one big problem. When everything breaks down and there’s war and then the slate is wiped clean these people are useless. They’ve never built anything, they never changed a spark plug on their car….heck they wouldn’t know how to start a lawn mower to cut their own grass.