ANALYSIS || “An elite meeting trying to shape a world that belongs to everyone” is underway in Davos, where attention threatens to be divided between two issues
The World Economic Forum’s annual conference, known as Davos, has always had an optics problem. Imagine a group of people descending on private jets to eat steaks and participate in panels about alleviating poverty and fighting climate change (among other noble goals), while drinking glasses of cocktails with other rich colleagues, in an effort to become even richer.
But Davos 2026 has turned into a kind of emergency session of the world’s elite to face two simultaneous and, ultimately, related threats. There is the elephant in the room – US President Donald Trump, who is expected to attend the summit this Wednesday, and his trade policy – and then there is another, much more complicated force that threatens to destabilize the global order, known as the K-shaped economy.
The term, popularized by economist Peter Atwater, refers to the growing divide, as of 2020, between the haves and the have-nots. Although the pandemic hit everyone at once, the recovery from this shock has taken place in two divergent directions, with the rich getting richer and the poor getting poorer.
Nearly six years later, the difference between the top and bottom of the K continues to diverge. The stock market, although volatile, is trading near all-time highs. Luxury hotel bookings are remaining strong, even as fewer Americans take vacations. What appears to be a housing affordability crisis at one end of the economy appears to be a windfall at the other end, as shortages have driven up home values.
If, before the pandemic, Davos participants seemed oblivious to reality, the accessibility crisis that helped re-elect Trump only accentuated the contrast between Davos participants and everyone else.
“Those at the bottom are all too aware of the abundance above them,” Atwater, an associate professor of economics at William & Mary, told me. “But I think that one of the consequences of Covid-19 was the creation of blindness at the top… beyond a courier appearing at the door, the interaction between those at the top and those at the bottom has greatly diminished, if not evaporated”.
Certainly the Davos crowd understands, intellectually, that they have a “private jet to discuss climate change” problem. Larry Fink, executive director of BlackRock and “chamber president” of the summit, diagnosed this central problem in his opening speech this Monday.
“Many of the people most affected by what we talk about here will never come to this conference,” Fink said in his opening speech. “This is the central tension of this forum. Davos is a gathering of elites trying to shape a world that belongs to everyone.”
In classic Davos fashion, Fink is stating the obvious as if it were revealing. As several critics have already noted, the forum has a history of not being able to read the room until it is too late.
“Davos has been consistently wrong about where the world is headed,” wrote Liz Hoffman, senior business editor at Semafor, this Tuesday. “The mid-2010s crowd failed Brexit, MAGA, and the populist wave that followed. In 2020, delegates dove into communal fondue fountains while Covid-19 circulated in plain sight, not far away. Davos briefly went all-in on the metaverse.”
Failing the MAGA brand, and the forces that shaped it, takes us back to the problem of the K-shaped economy, which is far from unique to America.
Severe inequality is inherently destabilizing. History has many examples, but just look at the headlines from Iran in recent weeks to see the risks in real time. Years of high inflation and financial mismanagement eroded the wealth of the middle class, while high-level corruption allowed a handful of businessmen to become rich. In late December, this disparity caused the country’s currency to fall to its lowest level ever, triggering mass protests and a violent crackdown by Tehran.
If participants in Davos want to learn from the ghosts of the past, they would be wise to do more than talk about the accelerated division of this capital K.
“You cannot sustain this level of wealth without consequences,” notes Atwater. “What I think those at the top don’t realize is that any additional weight of vulnerability could easily be the tipping point… We’re a straw away from something being triggered.”
