Every January, the elite gather in Davos, Switzerland to do business deals and listen to boring lectures by people who don’t have either money or power. It’s called the World Economic Forum.
Every year, the Left-wing foundation, Oxfam, simultaneously publishes its latest finding, which never changes much, that 1% of the world’s population owns half of the wealth.
These are public relations operations. The WEF’s message: “We’ve got it, and you don’t.” Oxfam’s message: “They’ve got it, and we don’t.” They are made for each other. They are joined at the hip.
The World Economic Forum is Duffy’s Tavern for the rich and powerful: “Where the elite meet to eat.”
Why do they go to the expense of gathering at Davos every year? Because no one wants to be left out. As they said on radio ads for rock and roll performances in my teenage years, “Be there, or be square.” Showing up means that you were invited. If you were not invited, you are not regarded as being in the elite . . . at least not this year.
In 2011, Ross Sorkin reported on what it cost to attend. First, there was the annual membership fee: 50,000 Swiss francs. In 2011, that was $52,000. But this was for commoners. If you wanted to get access to the private meetings, which the deal-doers presumably attend, you had to ante up $137,000 a year. Then there was the cost of a ticket into the Davos meeting: $19,000. Added up, the annual fee for insiders was $156,000.
Then there was the cost of a room. The budget rate was $500 a night.
You had to get there. First-class fare to Zurich was $11,000 in 2011.
You needed a chauffeur and expensive car. Add another $10,000.
Then there are the other meetings throughout the year. They get no publicity. But insiders feel the peer pressure to attend. “Be there, or be square.”
That is a lot of money to get bored listening to speeches by upper-middle-class college professors.
The economic reality is this: the value of lost time for deal-doers is far greater than the out-of-pocket, tax-deductible business expenses. These people really are the elite. Either an attendee must get a deal over the year, or else his membership and attendance are for show. “I’ve got it. You don’t.”
Oxfam’s marketers figured out years ago that the WEF’s Davos meeting is an ideal way to get free publicity for Oxfam in the world press. It also gives the fund-raisers an opportunity to feature these stories in their attempts to raise more money. “See? We’re getting worldwide attention.” This is true. They are. So, every year, Oxfam publishes a report intended to shock the economically uninformed. I have reported on Oxfam’s marketing strategy for several years.
The economically uninformed are unaware of Pareto’s 20/80 law. Pareto was a Swiss economist who, in 1897, published a book summarizing his discovery that wealth in European countries was distributed on a 20/80 basis. About 20% of the population owned about 80% of the wealth. Subsequent studies have reported a similar distribution. This is so widely known among economic historians that distributions that vary greatly from 20/80 are regarded as suspect.
The Pareto distribution is a power law. This produces the following:
20% of the population owns 80% of the wealth.
4% (20% of 20%) of the population owns 64% (80% of 80%) of the wealth.
0.8% (20% of 4%) of the population owns 51% (80% of 64%) of the wealth
Thus, 1% of the population will own more than 51% of the wealth.
This law seems to apply across national borders.