What the New York Times Gets Wrong About the Davos Man

Dean Baker January 20, 2017

Davos Man has no particular interest in a free market or unregulated economic system. (Robert Scoble/ Flickr)

This arti­cle was orig­i­nal­ly post­ed by Portside. 

The New York Times had an arti­cle on the annu­al meet­ing of the world’s super-rich at Davos, Switzer­land. It refers to Davos Man as an eco­nom­ic elite who built unheard-of for­tunes on the seem­ing­ly high-mind­ed notions of free trade, low tax­es and low reg­u­la­tion that they cham­pi­oned.” While Davos Man may like to be described this way, it is not an accu­rate description.

Davos Man is actu­al­ly total­ly sup­port­ive of pro­tec­tion­ism that redis­trib­utes income upward. In par­tic­u­lar, Davos Man sup­ports stronger and longer patent and copy­right pro­tec­tion. These forms of pro­tec­tion raise the price of pro­tect­ed items by fac­tors of tens or hun­dreds, mak­ing them equiv­a­lent to tar­iffs of sev­er­al thou­sand per­cent or even tens of thou­sands of per­cent. In the case of pre­scrip­tion drugs, these pro­tec­tions force us to spend more than $430 bil­lion a year (2.3 per­cent of GDP) on drugs that would like­ly cost one tenth of this amount if they were sold in a free mar­ket. (Yes, we need alter­na­tive mech­a­nisms to finance the devel­op­ment of new drugs. These are dis­cussed in my free book Rigged: How Glob­al­iza­tion and the Rules of the Mod­ern Econ­o­my Were Struc­tured to Make the Rich Rich­er.)

Davos Man is also just fine with pro­tec­tion­ist bar­ri­ers that raise the cost of physi­cians ser­vices as well as pay of oth­er high­ly edu­cat­ed pro­fes­sion­als. For exam­ple, Davos Man has nev­er been known to object to the ban on for­eign doc­tors prac­tic­ing in the Unit­ed States unless they com­plete a U.S. res­i­den­cy pro­gram or the ban on for­eign den­tists who did not com­plete a U.S. den­tal school (or recent­ly a Cana­di­an school). Davos Man is only both­ered by pro­tec­tion­ist bar­ri­ers that raise the incomes of autowork­ers, tex­tile work­ers, or oth­er non-col­lege edu­cat­ed workers.

Davos Man is also fine with gov­ern­ment reg­u­la­tions that reduce the bar­gain­ing pow­er of ordi­nary work­ers. For exam­ple, Davos Man has not object­ed to cen­tral bank rules that tar­get low infla­tion even at the cost of rais­ing unem­ploy­ment. Nor has Davos Man object­ed to mean­ing­less caps on bud­get deficits, like those in the Euro­pean Union, that have kept mil­lions of work­ers from get­ting jobs.

Davos Man also strong­ly sup­port­ed the bank bailouts in which gov­ern­ments pro­vid­ed tril­lions of dol­lars in loans and guar­an­tees to the world’s largest banks in order to pro­tect them from the mar­ket. This kept too big to fail banks in busi­ness and pro­tect­ed the huge salaries received by their top executives.

In short, Davos Man has no par­tic­u­lar inter­est in a free mar­ket or unreg­u­lat­ed eco­nom­ic sys­tem. They only object to inter­ven­tions that reduce their income. Of course, Davos Man is hap­py to have the New York Times and oth­er news out­lets describe him as a devo­tee of the free mar­ket, as opposed to sim­ply get­ting incred­i­bly rich.

Dean Bak­er is co-direc­tor of the Cen­ter for Eco­nom­ic and Pol­i­cy Research and co-author of Social Secu­ri­ty: The Pho­ny Cri­sis (Uni­ver­si­ty of Chica­go Press, 2000).
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