SINGAPORE (Jan 28): Ten years ago, the Davos conference asked the question: “What must industry do to prevent a broad social backlash?” The answer probably was not “Double, triple, or sextuple the wealth of the most prominent conference attendees while letting median household incomes stagnate back home”. Yet, that is what happened. Make no mistake: The backlash is coming.
There has always been a whiff of hypocrisy at Davos, where elites expand their carbon footprint, eat US$43 hot dogs and throw lavish parties in the name of making the world a better place. “Fat cats in the snow”, the regular attendee Bono once called it (and he should know). But given the rapid advances of populist politics, it is remarkable that in 2019, those felines are looking better-fed than ever. The past decade and a half has seen US corporate profits outgrow employee compensation at an unprecedented pace, according to the St Louis Fed. A Bloomberg News analysis of the fortunes of a dozen Davos attendees found that they soared by a combined US$175 billion ($237.9 billion) since 2009. Those feel-good panel debates on topics such as “Better Capitalism” are pretty laughable. The response from the Davos crowd has always been to talk, talk and talk a bit more. But there is an increasing impatience with capitalism’s inability to regulate itself. That might explain why quite a few handsomely paid “Davos Men” have experienced a rather brutal comeuppance of late.
It is surely telling that Carlos Ghosn — the ultimate personification of Davos, according to Bloomberg Businessweek — will not be anywhere near the event this year, after his shocking arrest in Japan for allegedly under-reporting his pay. The holder of three passports, who amassed a US$120 million fortune after many years of leading the Renault-Nissan carmaking alliance, cut a gaunt figure in court this month when denying the charges. Whatever the merits of the case, the pile-up of revelations about his lavish lifestyle, including a report that he benefited from a Dutch tax residency, has done serious damage to his image.