Beyond Davos

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Few annual events produce more paranoid commentary than the World Economic Forum’s recently completed Davos conference. The WEF, founded in 1971, has not only become the favored target of lunatic spinmeisters like Alex Jones and right-wing zealots like Glenn Beck but also of Fox News and many conservative activists. It is widely regarded as the place where a terrifying “Great Reset” has been plotted by the mighty—a plan hatched behind closed doors between sips of champagne and forays onto the slopes. The South African reporter Lara Logan even claimed (falsely) that the new Speaker of the House, Kevin McCarthy, was selected at Davos.

“WEF is a sitting target (of misinformation)—very expensive to attend, invitation only,” said Claire Wardle, co-director of the Information Futures Lab at Brown University. “It’s playing out the foundation of every conspiracy theory, which is that the world is being controlled by a secret elite and you’re not part of it.” But suspicions like these misunderstand the problem. A transformation of the world economy is occurring, but not because a bunch of elite business, political, and media folk preen on stage while enjoying Swiss comforts. Rather, the world is changing because the tectonic plates governing economics and politics have moved, and they are likely to continue moving.

The establishment avatar

The populist conspiracy theorists mistake showmanship for reality. Cambridge legal professor Antara Haldar notes that Davos is not really a place where important decisions are taken. It represents a symbolic “avatar” for the elites. If the Davos crowd has demonstrated anything, it is the futility of their posturing. They lack the ability to influence the leaders of countries like India and China, much less places like Iran, Russia, and Saudi Arabia. Some of the leaders of these countries may speak and consort with the Davos crowd, but they clearly do not listen to them. Nor do the West’s middle classes, who are proving reluctant to embrace an environmental agenda that threatens immiseration.

The WEF is unable to affect the global future outside the narrow confines of their own gilded circles. “On its face, Davos appears to be a meeting out of touch with the times, focused more on privilege than social change, economic displacement, or cross-cutting global challenges,” noted the Brookings Institution in 2020. Rather than an expression of real power, Davos reflects the continued rise of the publicity-mad business leader, first identified by Daniel Bell a half-century ago. Prior generations of business had embraced Western culture and national identity and placed some priority on addressing the needs of larger society. The new corporate elite, however, is unmoored from religion and family and this is transforming the foundations of middle-class culture.

More than anything, Davos demonstrates not power—it has no legislative or regulatory power—but the relentless search for prestige and recognition. It is no more real in its effects than a Kabuki play.

Aristocracy redux

The elites gathered at Davos may spout progressive ideas, but they actually represent something more like a return to the kind of hierarchy associated with feudalism. After nearly a half-century of expanded social mobility, Western economies have become increasingly stratified, with economic power concentrated in ever fewer hands. In the past decade, the proportion of US real estate wealth held by middle- and working-class owners fell substantially. “In 2010,” reports the Wall Street Journal, “high-income homeowners held 28% of all U.S. housing wealth. By 2020, that figure rose to 42.6%.” In the last decade, “about 71% of the increase in housing wealth was gained by high-income households, according to a report released Wednesday by the National Association of Realtors.”

This is a global phenomenon. Housing prices have risen “three times faster than household median income over the last two decades,” according to the OECD. And housing, it finds, “has been the main driver of rising middle-class expenditure.” In the next generation, those who purchase houses will be doing so through what one writer calls “the funnel of privilege.” Millennials who received bequests inherited more money than many workers make in a lifetime. “Inherited wealth will make a comeback,” predicts the economist Thomas Piketty in Capital in the Twenty-First Century. Inheritance as a share of GDP in France, he writes, grew from roughly four percent in 1950 to 15 percent in 2010. The growing importance of inherited assets is even more pronounced in Germany, Britain, and the United States.

These trends were evident long before anyone had ever heard of Klaus Schwab. What Davos does—for both the conspiracy nuts and the general public—is provide a garish stage for a bifurcated class structure. In the United States, in recent decades, wealth gains have been concentrated among the top 0.1 percent—roughly 150,000 people. Since the mid-1980s, the share of national wealth held by those below the top 10 percent has fallen by 12 percentage points, the same proportion that the top 0.1 percent gained. A British parliamentary study projects that, by 2030, the top one percent will expand their share to two-thirds of the world’s wealth, with the biggest gains overwhelmingly concentrated in the top 0.01 percent.

Read the rest of this piece at Quillette.

Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Photo: Evangeline Shaw on Unsplash

California’s Budget Deficit Spells Trouble

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Just a year ago California Governor Gavin Newsom could, and did, brag about the state’s estimated $100 billion surplus. Flush with cash, the preening presidential hopeful was able to hand out thousands of dollars of goodies to households while financing an elaborate multi-billion dollar climate change agenda. Read more

Mysteries of the Labor Force

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One of the enduring mysteries of contemporary society centers on the seeming disassociation of so much of the labor force from the economy. This became particularly evident during the pandemic Read more

The Retreat from Globalism

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In the wake of liberal globalism’s failings, a nationalist tide is rising today, not only in China and Russia but also throughout the West. It is a dynamic eerily similar to 100 years ago, when war, pandemic and economic insecurity brought national tensions to the surface. Yet today’s undoubted turn against globalism need not herald a return to the dark days of aggressive nationalism. Instead, we are seeing the rise of a new community-based and self-governing model of localism.

This new localism counteracts some of the worst aspects of globalism – homogeneity, deindustrialisation and ever-growing class divides – while eschewing the authoritarian tendencies often associated with nationalistic fervour. It essentially seeks to replace, where possible, mass institutions and production with local entrepreneurship and competition.

This approach has demonstrated remarkable appeal. The promising evolution of technologies like remote work and 3D printing is already creating opportunities to enhance local economies. In the US, strong majorities trust local governments, compared to the more than half who lack trust in Washington, notes Gallup. Big companies, banks and media receive low marks from the public, but small businesses continue to enjoy widespread support across party lines.

This is not merely an American phenomenon. In France there have been consistent protests against globalisation for decades. Poland and the rest of eastern Europe, recovering from decades of central control and imperial edicts from Moscow, have also favoured localism. There is also pushback against federal encroachment in Canada, while the UK’s turn against globalism was best exemplified by its withdrawal from the EU.

The movement against globalism constitutes an alternative to increasingly intrusive government: such as in Europe, where the unelected EU bureaucracy seeks ever-expanding powers, and in North America and Australia, where national bureaucracies work to undermine traditionally vibrant local communities. It also has strong connections to populism, particularly in Europe. Its base, small business, tends to tilt to the right in most countries, including the US.

Yet the new localism is not fundamentally a question of left vs right. It is about sustaining local economies and self-governing institutions. According to Kevin Albertson, professor of economics at Manchester University, in politics today it often seems that the only choice on offer is between ‘big state or big business’. Faced with this unenviable dilemma, he argues, the ‘only viable alternative’ is localism – that is, ‘small state and small business’.

Essentially, localism looks to humanise the economy. Whereas global or national conglomerates respond largely to capital flows, local businesses rely heavily on networks of customers and suppliers. In the food industry, many start off as home-based businesses, and then become food trucks. Some evolve into modest restaurants, and occasionally open numerous locations, usually in the same region. These offer an alternative to the sameness of chain stores, at a time when many once ubiquitous traditional venues – pubs in London, bistros in Paris, as well as kosher delicatessens and Greek diners in places like New York – have declined.

Read the rest of this piece at Spiked.

Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Homepage photo: Famartin via Wikimedia under CC 4.0 License

California’s Budget Surplus Has Vanished; Its Economy Faces a Harsh Reality

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The much-celebrated California boom is facing a harsh reality.

Everything was looking good, based on enormous growth in capital gains in tech stocks and property, and some in Sacramento assumed the bounty would last — until it didn’t. The latest bad news is the evaporation of the state budget surplus that is now rapidly turning into a deficit that could run as high as $22 billion to $40 billion, particularly if there’s a recession. Read more

Can Capitalism Save Hollywood?

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After a decade of rapid growth, the nation’s media and entertainment complex is facing retrenchment and, perhaps, a necessary reappraisal. Firms are consolidating. Workers are being laid off at Disney, Warner Brothers, Paramount, CBS, and other production houses. News media firms like CNN, Gannet, and Buzzfeed are planning similar actions. In 2022, stocks in media companies lost $500 billion in value, and stocks in tech firms, increasingly big players in entertainment and news, suffered a reversal of an astounding $4 trillion.

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North America Has An Opportunity to Lead the World

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For generations, pundits the world over have insisted that the future will be forged elsewhere — Europe for some, Japan for others and, more recently, China. Yet, in reality, the United States and Canada may well be best positioned for a changing world, if our leaders can leverage our natural advantages.

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The New Global Class War

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In The Communist Manifesto, Marx and Engels warned that the ‘spectre’ of class war loomed over a rapidly industrialising capitalist world. Today, the neoliberal world is increasingly haunted by a similar spectre, this time of a global class conflict.

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The Democrats’ False Victory

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For all their cautious optimism earlier this week, a mild Midterms victory may prove the last thing the Democrats need. If they had performed as predicted, the Democrats and their media adjuncts would now be busily dissecting their defeat. But what has to be considered a lost Republican opportunity — gaining little in a country where lifespans are now dropping — also means that the Democrats will be slower to address their weaknesses, and may be forced to accept the unpopular Joe Biden as their leader in 2024.

With no sign of a Republican resurgence, the Democrats will likely be lulled into thinking that Biden’s polarising agenda is a vote-winner, in the same way the conspiracy-minded MAGA wing of the GOP refuses to move on from 2020. Until it’s resoundingly disproved in the ballot box, stridency tends to whip up your base: Trump’s supporters have become, as the President suggested, “semi-fascist”, while his political mentor, South Carolina’s James Clyburn, goes further, decrying the GOP as the architects of a Nazi state.

When Democrats performed poorly in the past, they were forced to rethink their politics. After Walter Mondale suffered a landslide defeat to Reagan in 1984, the Democratic Leadership Council was set up to steer the ship towards the centre — and ultimately supported both a young Bill Clinton and, to an extent, Biden himself. In turn, the DLC was inspired by the moderate Coalition for a Democratic Majority, founded after Nixon’s trouncing of McGovern in 1972. Today, however, it’s hard to say that now is the time for a new political vision when virtually all the high-profile blue state Democrats won, sometimes by wider than expected margins.

So, rather than using the next two years to regroup and craft a political programme that could win the next election, the Democrats now appear stuck with a weak leader who appears unfit to deal with the global challenges that will define America in the coming decade. Internally, too, the Democrats look increasingly unstable. A stronger-than-expected Midterms performance doesn’t mask the fact that the progressives remain a dominant faction in the party — with an associated agenda that, outside of deep blue-college towns and core cities, commands remarkably low levels of support, as Barack Obama and others have warned.

Sticking to such a programme threatens the party’s already weakening hold on working-class voters, in particular those threatened by climate policies. Over time, the economic implications of Biden’s green agenda may be obvious, but for now they are hidden amid massive deficits and increased transfer payments. However, as Democratic strategist Ruy Teixeira has noted, in the longer run, the party’s emphasis on “de-growth” and austerity is unlikely to attract middle and particularly working-class voters. Already, the political implications of climate policy have ruined the Democrats’ best chance to take the GOP seat in Ohio. Their candidate Tim Ryan may have claimed to support fracking, but his backing of the Pelosi Congressional agenda proved disastrous in a state whose economy is fueled by natural gas production and hopes to attract new investment, including a possible $20 billion new Intel chip plant in the Columbus suburbs. In Florida, meanwhile, Ron DeSantis won heavily in Latino, historically Democratic regions.

Read the rest of this piece at UnHerd.

Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Photo credit: Gage Skidmore via Flickr under CC 2.0 License.

West Coast Blues

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Few regions have been more consistently Democratic than the West Coast. Even compared with the Northeast, where Republicans occasionally win governors’ offices, the appropriately named “left coast” has been adamantine in its progressivism. Republicans haven’t won statewide office in California in years; in Oregon, it’s decades. Washington has elected a Republican secretary of state, but she now serves in the Biden administration. And the region’s major cities are overwhelmingly blue.

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