NAFTA is said to have been conceived here.
.. Davos is, fundamentally, an exercise in corporate speed-dating. “Everyone comes because everyone else comes,” Larry Summers told me. A hedge-fund manager or a C.E.O. can pack into a few days the dozens of meetings—with other executives, with heads of state or their deputies, with non-governmental organizations whose phone calls might otherwise have been ignored—that it would normally take months to arrange and tens of thousands of Gulfstream miles to attend.
.. A basic W.E.F. membership is fifty-five thousand dollars, and for a member to come to Davos costs an extra twenty-seven thousand.
.. They also subsidize the scores of academics, scientists, artists, journalists, and N.G.O. chiefs who attend for free. Everyone, whether he pays or not, has to be invited. “You cannot buy your way in,” Schwab said.
.. “You don’t understand your own interests until you encounter others with other interests. This is the foundation of enlightened self-interest.
.. The coveted pass is the white one, granting delegates free rein. There are variations: A Strategic Partner gets a blue dot and access to an exclusive lounge. A special hologram used to signal membership in an élite faction called the Informal Gathering of World Economic Leaders, or IGWEL, but now “serves boring logistical purposes,” according to Monck. I was given a white badge, which meant I’d been knighted a Media Leader. Media Leaders may trump Reporting Press (ha!), but they bow before the Media Governors (curses!), who get invited to the off-the-record sit-downs with Geithner and Merkel.
.. Most of the sessions and private events are governed by the so-called Chatham House rule. The bargain is generally acceptable to the insidious extent that the thrill of access outweighs the urge to reveal. Anyway, as the journalists all say, nothing newsworthy ever happens at Davos, even if the journalists must occasionally pretend that it does, in order to justify their presence there. For most of them, it’s an occasion for cultivating sources, ideas, and the short-lived delusion that they belong among the white badges of the world.
Memo To Larry Summers; Middle Class Stagnation Is The Outcome Of The Most Successful Economic Policy Ever
Larry Summers has one of those prelude to Davos OpEds out today. The basic claim is that middle class stagnation is the largest economic problem we face and one about which something must be done. It’s possible, as I do, to argue with the premise, the analysis and the conclusion. As far as I am concerned the major economic problem we face today is that billions of people on the planet are dirt poor, still stuck in peasant destitution. Further, that the rich world middle class stagnation that is being complained about isn’t in fact a problem at all. It’s the result of the most successful economic policy anyone has ever implemented anywhere. And far from us having to do something about it we should carry on exactly as we are, following exactly that most successful economic policy ever, that of neoliberal globalisation.
.. Well, my argument would be and is that that middle class stagnation is actually because of the success we’re having in meeting that moral imperative to help the world’s poor.
.. Third, if it is to benefit the middle class, prosperity must be inclusive and in the current environment this is far from assured. If the US had the same income distribution it had in 1979, the bottom 80 per cent of the population would have $1tn — or $11,000 per family — more. The top 1 per cent $1tn — or $750,000 — less. There is little prospect for maintaining international integration and co-operation if it continues to be seen as leading to local disintegration while benefiting a mobile global elite.
If I’m honest about it I have to say that I just don’t care. Those global poor are much more important.
.. It is there — between the 50th and 60th percentile of global income distribution, which in 2008 included people with annual after-tax per capita incomes between 1,200 and 1,800 international dollars — that we find some 200 million Chinese and 90 million Indians, as well as about 30 million each in Indonesia, Brazil, Egypt and Mexico. These 400 million people are among the biggest gainers in the global income distribution.
.. We set out to make the global poor richer and it was always obvious that this would be somewhat at the expense of the rich world working classes. We have made those global poor richer and it has been somewhat at the expense of those rich world working class people. Well?
Me, I’d say an unfortunate casualty of the most successful economic policy ever. And we certainly don’t want to reverse this because, as Summers says, aiding those global poor really is an imperative.
The myth of wage stagnation
Over the last few decades, employees have been receiving an increasingly larger portion of their overall compensation in the form of benefits such as health care, paid vacation time, hour flexibility, improved work environments and even daycare. Ignoring the growth of these benefits and looking at only wages provides a grossly incomplete picture of well-being, and the increase in compensation for work. While it is difficult to adjust for all of these benefits that workers are now receiving, one measure of wage and salary supplements show they have nearly tripled since 1964. Total compensation, which adds these benefits to wages and salaries, shows that earnings have actually increased more than 45 percent since 1964.
.. Furthermore, “purchasing power,” the amount of stuff people can buy with each dollar, has changed dramatically over the last half decade and, surely, must be considered when evaluating the state of the average worker based on his or her take-home pay. CPI is notorious for overstating inflation, and thus understating the growth of real wages received by workers. Adjusting the data with the more appropriate Personal Consumption Expenditure index brings the growth in average hourly wages from 5.58 percent to more than 35 percent and the growth in total compensation of employees from more than 45 percent to more than 87 percent.
.. According to the economist Mark Perry of the American Enterprise Institute (AEI), 100.5 hours of work was required to purchase a washing machine in 1959 compared to just 23.3 hours of work (for the average worker) in 2013. Purchasing a TV demanded an astounding 127.8 hours of work in 1959, whereas a worker in 2013 could purchase one with only 20.7 hours of work.
.. Daniel J. Smith is an assistant professor of economics at the Johnson Center at Troy University, a research and educational center dedicated to understanding the moral imperatives of free markets and individual liberty.
Where Is All the World’s Money Going?
The wealth of the richest 62 people grew by more than half a trillion dollars in that last half-decade, while the wealth of the poorest 50 percent of people globally decreased by more than $1 trillion during the same period. “Far from trickling down, income and wealth are instead being sucked upwards at an alarming rate,” the study finds.