Thu, Feb 08, 2018 - Page 9 News List

Davos shows the one value driving business leaders

By Joseph Stiglitz

I have been attending the World Economic Forum’s annual conference in Davos, Switzerland — where the so-called global elite convenes to discuss the world’s problems — since 1995. Never have I come away more dispirited than I have this year.

The world is plagued by almost intractable problems. Inequality is surging, especially in the advanced economies. The digital revolution, despite its potential, also carries serious risks for privacy, security, jobs and democracy — challenges that are compounded by the rising monopoly power of a few US and Chinese data giants, including Facebook and Google. Climate change amounts to an existential threat to the entire global economy as we know it.

Perhaps more disheartening than such problems, however, are the responses. Chief executive officers from around the world begin most of their speeches at Davos by affirming the importance of values. They said their activities were aimed not just at maximizing profits for shareholders, but also at creating a better future for their workers, the communities in which they work and the world in general. They might even pay lip service to the risks posed by climate change and inequality.

However, by the end of their speeches, any remaining illusion about the values motivating Davos CEOs was shattered. The risk that these CEOs seemed most concerned about is the populist backlash against the kind of globalization that they have shaped — and from which they have benefited immensely.

Not surprisingly, these economic elites barely grasp the extent to which this system has failed large swaths of the population in Europe and the US, leaving most households’ real incomes stagnant and causing labor’s share of income to decline substantially.

In the US, life expectancy has declined for a second year in a row; among those with only a high school education, the decline has been under way for much longer.

Not one of the US CEOs whose speech I heard (or heard about) mentioned the bigotry, misogyny or racism of US President Donald Trump, who was present at the event. Not one mentioned the relentless stream of ignorant statements, outright lies and impetuous actions that have eroded the standing of the US president — and thus of the US — in the world. None mentioned the abandonment of systems for ascertaining truth, and of truth itself.

Indeed, none of the US corporate titans mentioned the administration’s reductions in funding for science, so important for strengthening the US economy’s comparative advantage and supporting gains in Americans’ standard of living.

None mentioned the Trump administration’s rejection of international institutions, either, or the attacks on the domestic media and judiciary — which amounts to an assault on the system of checks and balances that underpins US democracy.

No, the CEOs at Davos were licking their lips at the tax legislation that Trump and congressional Republicans recently pushed through, which will deliver hundreds of billions of US dollars to large corporations and the wealthy people who own and run them — people like Trump himself.

They are unperturbed by the fact that the same legislation will, when it is fully implemented, lead to an increase in taxes for the majority of the middle class — a group whose fortunes have been in decline for the past 30 years or so.

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