What’s the point of Davos?

The world's movers and shakers (literally – Shakira's gonna be there) gather in a Swiss mountain resort every year to talk about 'the big issues'. But does anyone really care?

The world’s movers and shakers are meeting in Davos this week for the World Economic Forum.

There’ll be gazillions of speeches, meetings, and headlines with pseudo-meaningful quotes about the challenges we face in the world today.

What even is ‘Davos’?

Liam Cunningham.
No, not you, Davos.

Davos is a mountain resort in the eastern Alps region of Switzerland. Every January since 1971, it’s played host to the World Economic Forum, a meeting of around 3,000 top business leaders, political leaders, economists, journalists and a few assorted celebrities.

What’s the point of going?

The point is to discuss the most pressing issues facing the world economy. Every year the meeting has a theme: 2015 was the ‘New Global Context’ (the vaguer, the better, it seems); 2016 was ‘Mastering the Fourth Industrial Revolution’, or how to deal with a digitalized world. This year, it’s 'New and Responsive Leadership' – how to manage discontent in places that aren’t experiencing economic and social progress on the scale they’d expect to, and how to achieve more 'inclusive ' – i.e. a way of increasing the amount of stuff we produce that benefits more people than just those at the very top.

'And Then We Told Them The Wealth Would Trickle Down...'
Basically, this didn't happen, so now they're trying to fix it.

...Isn’t it just one big ‘networking’ event?

Increasingly, the answer is yes. Corporate CEOs could have dozens of client meetings in their four days at the Forum, generating an amount of business that turns the cost of attending into petty cash. ‘Fringe’ events spring up outside of the main conference as companies take over storefronts and arrange private seminars and parties. It makes sense – the delegates at Davos are a concentrated, highly focused target market with – between them – some of the biggest purchasing power on the planet. It’s just about the most efficient place to get the most deals struck in the shortest time.

Do they get any closer to solving those pressing global economic issues?

Yes and no. The big set piece speeches from world leaders tend to be full of platitudes. “Growth must touch everyone to be sustainable,” and “We need to ensure a high employment rate,” are just a few of the strokes of genius to come out of the 2015 conference. No shit Sherlock. Was that really worth the $22,000 ticket…?

Then again, like the business deals, a lot of more hard hitting political chat probably happens behind closed doors too. Not to mention all the impassioned pleas from celebrities which can only really happen at Davos – last year, Leo diCaprio harangued the delegates on corporate greed, and this year Matt Damon’s championing the fight against water waste. Shakira’s there too, with the slightly more ambiguous call to ‘nurture our future leaders’.

But it’s worth noting that a lot of the time, Davos gets their predictions wrong (like last year, when they were totally sure Trump had no chance of getting elected.) So much so that they’ve devoted an entire session to ‘forecasting failure’ this year.

What does it cost to go to Davos?

It’s not cheap. Tickets cost around $25,000 and even travelling there is expensive. The only real way is to arrive is by helicopter, which will add another $10,000 to the bill. Oh, and even the most miserable room in a 3 star hotel is $600 a night, while hiring a chalet for a bit of Davos team building will be well into six figures. Even a hot dog is 40 bucks up there.

"These might actually be gold chips lining this sensational hot dog..."

So does this actually mean anything for our day to day lives?

Shallow as some of the post-Davos headlines do feel, major economic trends will be discussed – formally or informally. Last year it was the global economic slowdown, this year it’s mainly Brexit and what the world can expect from Trump. So far, there’s been a lot of cold shoulders for Theresa May over Brexit, and a lot of warnings to Trump on his plans to cut down on trade. These things will affect the stock market the way that global leaders’ statements always do – either giving investors confidence, or making them feel uncertain, about our economies, and influencing their decisions on where to put their money – but beyond that, the outcomes aren't super clear.

Now, if Shakira and Gordon Brown would stop looking so serious and would get on stage for a duo together instead...that we’d fork out $22,000 for.

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  • Macrocompassion

    Look to who owns the land of Greece and why they are not using it properly!

    Discover how much the value of the land is being speculated in by holding it unused and the resulting lack of opportunity. Why can’t small scale farmers begin their own production of farm produce and the selling of it to local suppliers for domestic consumption?

    Adam Smith (“Wealth of Nations”,
    1776) says that land is one of the 3 factors of production (the other 2 being
    labor and durable capital goods). The usefulness of land is in the price that
    tenants pay as rent, for access rights to the particular site in question. Land
    is often considered as being a form of capital, since it is traded similarly to
    other durable capital goods items. However it is not actually man-made, so rightly
    it does not fall within this category. The land was originally a gift of nature
    (if not of God) for which all people should be free to share in its use. But its
    site-value greatly depends on location and is related to the community density
    in that region, as well as the natural resources such as rivers, minerals,
    animals or plants of specific use or beauty, when or after it is possible to reach them. Consequently,
    most of the land value is created by man within his society and therefore its
    advantage should logically and ethically be returned to the community for its
    general use, as explained by Martin Adams (in “LAND”, 2015).

    However, due to our existing laws, land is owned and formally registered and its
    value is traded, even though it can’t be moved to another place, like other
    kinds of capital goods. This right of ownership gives the landlord a big
    advantage over the rest of the community because he determines how it may be
    used, or if it is to be held out of use, until the city grows and the site
    becomes more valuable. Thus speculation in land values is encouraged by the law,
    in treating a site of land as personal or private property—as if it were an
    item of capital goods, although it is not (Mason Gaffney and Fred Harrison:
    “The Corruption of Economics”, 2005).

    Regarding taxation and local community spending, the municipal taxes we pay are
    partly used for improving the infrastructure. This means that the land becomes
    more useful and valuable without the landlord doing anything—he/she will always
    benefit from our present tax regime. This also applies when the status of unused
    land is upgraded and it becomes fit for community development. Then when this
    news is leaked, after landlords and banks corruptly pay for this information,
    speculation in land values is rife. There are many advantages if the land
    values were taxed instead of the many different kinds of production-based
    activities such as earnings, purchases, capital gains, home and foreign company
    investments, etc., (with all their regulations, complications and loop-holes).
    The only people due to lose from this are those who exploit the growing values
    of the land over the past years, when “mere” land ownership confers a financial
    benefit, without the owner doing a scrap of work. Consequently, for a truly
    socially just kind of taxation to apply there can only be one
    method–Land-Value Taxation.

    Consider how land becomes
    valuable. New settlers in a region begin to specialize and this improves their
    efficiency in producing specific goods. The central land is the most valuable
    due to easy availability and least transport needed. This distribution in land
    values is created by the community and (after an initial start), not by the
    natural resources. As the city expands, speculators in land values will
    deliberately hold potentially useful sites out of use, until planning and
    development have permitted their values to grow. Meanwhile there is fierce
    competition for access to the most suitable sites for housing, agriculture and
    manufacturing industries. The limited availability of useful land means that the
    high rents paid by tenants make their residence more costly and the provision
    of goods and services more expensive. It also creates unemployment, causing
    wages to be lowered by the monopolists, who control the big producing
    organizations, and whose land was already obtained when it was cheap. Consequently
    this basic structure of our current macroeconomics system, works to limit
    opportunity and to create poverty, see above reference.

    The most basic cause of our continuing poverty is the lack of properly paid
    work and the reason for this is the lack of opportunity of access to the land
    on which the work must be done. The useful land is monopolized by a landlord
    who either holds it out of use (for speculation in its rising value), or
    charges the tenant heavily for its right of access. In the case when the
    landlord is also the producer, he/she has a monopolistic control of the land
    and of the produce too, and can charge more for this access right than what an
    entrepreneur, who seeks greater opportunity, normally would be able to afford.

    A wise and sensible government would recognize that this problem derives from
    lack of opportunity to work and earn. It can be solved by the use of a tax
    system which encourages the proper use of land and which stops penalizing
    everything and everybody else. Such a tax system was proposed 136 years ago by
    Henry George, a (North) American economist, but somehow most macro-economists
    seem never to have heard of him, in common with a whole lot of other experts.
    (I would guess that they don’t want to know, which is worse!) In “Progress and
    Poverty” 1879, Henry George proposed a single tax on land values without other
    kinds of tax on produce, services, capital gains etc. This regime of land value
    tax (LVT) has 17 features which benefit almost everyone in the economy, except
    for landlords and banks, who/which do nothing productive and find that land
    dominance has its own reward.

    17 Aspects of LVT Affecting Government, Land Owners, Communities and

    Four Aspects for Government:

    1. LVT, adds to the national
    income as do other taxation systems, but it replaces them.

    2. The cost of collecting the LVT is less than for all of the production-related
    taxes–tax avoidance becomes impossible because the sites are visible to all.

    3. Consumers pay less for their
    purchases due to lower production costs (see below). This creates greater
    satisfaction with the management of national affairs.

    4. The national economy
    stabilizes—it no longer experiences the 18 year business boom/bust cycle, due
    to periodic speculation in land values (see below).

    Six Aspects Affecting Land Owners:

    5. LVT is progressive–owners of
    the most potentially productive sites pay the most tax.

    6. The land owner pays his LVT regardless of how his site is used. A large
    proportion of the ground-rent from tenants becomes the LVT, with the result
    that land has less sales-value but a significant “rental”-value (even
    when it is not used).

    7. LVT stops speculation in land prices and
    the withholding of land from proper use is not worthwhile.

    8. The introduction of LVT initially reduces the sales price of sites, even
    though their rental value can still grow over a longer term. As more sites
    become available, the competition for them is less fierce.

    9. With LVT, land owners are unable to pass the tax on to their tenants as rent
    hikes, due to the reduced competition for access to the additional sites that
    come into use.

    10. With LVT, land prices will
    initially drop. Speculators in land values will want to foreclose on their
    mortgages and withdraw their money for reinvestment. Therefore LVT should be
    introduced gradually, to allow these speculators sufficient time to transfer
    their money to company-shares etc., and simultaneously to meet the increased
    demand for produce (see below).

    Three Aspects Regarding Communities:

    11. With LVT, there is an
    incentive to use land for production or residence, rather than it being unused.

    12. With LVT, greater working opportunities exist due to cheaper land and a
    greater number of available sites. Consumer goods become cheaper too, because
    entrepreneurs have less difficulty in starting-up their businesses and because
    they pay less ground-rent–demand grows, unemployment decreases.

    13. Investment money is withdrawn from land and placed in durable capital
    goods. This means more advances in technology and cheaper goods too.

    Four Aspects About Ethics:

    14. The collection of taxes from
    productive effort and commerce is socially unjust. LVT replaces this extortion
    by gathering the surplus rental income, which comes without any exertion from
    the land owner or by the banks–LVT is a natural system of national income-gathering.

    15. Bribery and corruption on information
    about land cease. Before, this was due
    to the leaking of news of municipal plans for housing and industrial
    development, causing shock-waves in local land prices (and municipal workers’ and
    lawyers’ bank balances).

    16. The improved use of the more
    central land reduces the environmental damage due to a) unused sites
    being dumping-grounds, and b) the smaller amount of fossil-fuel use, when
    traveling between home and workplace.

    17. Because the LVT eliminates
    the advantage that landlords currently hold over our society, LVT provides a
    greater equality of opportunity to earn a living. Entrepreneurs can operate in
    a natural way– to provide more jobs. Then earnings will correspond to the
    value that the labor puts into the product or service. Consequently, after LVT
    has been properly introduced it will eliminate poverty and improve business