---
title: "Your 10-Question Davos Application Test"
summary: |-
  It’s only five months until the World Economic Forum throws its next big thought-leader bash in Davos, Switzerland. What does it take to gain admittance to these elite circles? First, you’ve got to show that you buy into the global economic policy consensus.
date: "2016-08-08"
issues: ["Economic Theory"]
authors: ["Robert D. Atkinson"]
content_type: "Op-Eds & Contributed Articles"
canonical_url: "https://itif.org/publications/2016/08/08/your-10-question-davos-application-test/"
---

# Your 10-Question Davos Application Test

It’s only five months until the World Economic Forum throws its next big thought-leader bash in Davos, Switzerland—an elites-only event that brings together corporate CEOs, heads of state, and a lucky few others deemed interesting enough to diversify things (whom WEF labels “social entrepreneurs,” “global shapers,” “young global leaders,” “technology pioneers,” and “Matt Damon”). There are many other such exclusive salons where global elites gather to cogitate about the world’s problems—from the Atlantic Council’s Global Strategy Forum to the Aspen Ideas Festival to the Jackson Hole Economic Policy Summit—but Davos is the unquestioned pinnacle. If you can make it there, you can make it anywhere. You better start preparing now, though.

What does it take to gain admittance to these elite circles? First, you’ve got to show that you buy into the global economic policy consensus. I’ve been to enough of these things to know that real debates are frowned upon. These salons are gatherings that reinforce comfortably established views instead of questioning them.

To help you prepare, I’ve developed an easy 10-question test to see if you have the right stuff. Be sure to answer honestly; you don’t want to stumble in and realize you are not the right material. Ready? Here we go:

True or false?

1. The ideal tax code is simple—low rates and few or no deductions.

2. The best way to solve climate change is to put a price on carbon.

3. Governments should not pick winners and losers.

4. Trade is good; we just need to do a better job of compensating the losers.

5. Countries need to be more open to immigration, including low-skill immigration.

6. Global data flows should be protected at all times.

7. The solution to income inequality is more education.

8. Nations have lost manufacturing jobs because of productivity growth.

9. The Internet should be neutral.

10.Change is accelerating exponentially.

If you answered that 9 or 10 of those statements are true, then there is no reason you shouldn’t go ahead and make travel arrangements, because you are clearly cut out for Davos. (Just make sure you have paid the five-figure registration fee ahead of time. I hear they don’t take checks onsite.)

If you said 6 to 8 statements are true, then I am sorry, but you still need to do some work. To figure out where you went wrong, you might start by reading The Fourth Industrial Revolution, by Klaus Schwab, WEF’s founder and executive chairman.

If you said 1 to 5 statements are true, then you clearly don’t get it. What could you possibly have been thinking? Absent getting accepted to Harvard’s Kennedy School of Government for a master’s degree, I am not sure what options you have.

If you answered that all of the statements were false, then congratulations! Not only did you answer all of them correctly, but now you don’t have to pay the money to go to Davos and listen to what an idiot you are.

# Answer Key

1. **“The ideal tax code is simple—low rates and few deductions.”** This is a reassuring fiction that free-market ideologues and many companies like to repeat. Most economists call anything other than a completely neutral tax code “distortions,” “special-interest tax breaks,” “corporate welfare,” or, as the Simpson-Bowles Deficit Commission labeled them, “perverse economic incentives instead of a level playing field.” But they are wrong. Economic theory and evidence are clear that some business activities, like training workers, investing in new capital equipment and spending on research and development have large “externalities,” meaning that firms making these investments don’t capture all the benefits. Absent a tax code that explicitly rewards these kinds of investments, firms will underinvest in them and economic growth will suffer.

2. **“The best way to solve climate change is to put a price on carbon.”** This has become one of those “we all know this is true” kind of statements, and you definitely can’t go wrong prefacing one of your audience questions with it. But it’s also wrong. The historical evidence shows clearly that price signals have played little role in generating breakthrough innovations. While increases in prices might lead people to buy slightly more fuel efficient cars, for example, they don’t lead to radically better batteries or solar power generation. Only concerted R&D policies will get us those needed breakthroughs. Prices can help, but are inadequate on their own. The problem is that R&D policies get us dangerously close to picking winners (see next question).

3. **“Governments should not pick winners and losers.”** If you ever make it to Davos, be sure to include this in any cocktail conversation, as in, “Well, we all know that governments can’t pick winners when it comes to emerging technology.” It is guaranteed to be met with approving murmurs of “absolutely” and “good show.” Actually, many governments, including the U.S. government, have a long and incredibly successful track record of picking winners. There would be no Internet, GPS, fracking, genomic medicine, or a host of other critical technologies without governments targeting these technologies for support. To be sure, governments also sometimes have been spectacularly wrong when it comes to picking winners and losers, as have companies. But this doesn’t mean the entire enterprise of picking is bad, only that it has to be done wisely. (For example, don’t pick particular firms or narrow technologies. Support pre-competitive research. Try to get the private sector to have skin in the game, etc.)

4. **“Trade is good; we just need to do a better job of compensating the winners.”** When you go to any sessions on global trade, it is critical that you keep this little gem at the ready, because to question the first part of the statement is a sin that will get you sent packing on the next Swiss Air flight home. But the truth is that in discussing trade theory, economists use fairy tales rather than history. There is the fairy tale about comparative advantage: England was good at producing wool, and Portugal wine, so they trade and both are better off. There is the fairy tale about how because market transactions are always voluntary and always beneficial that trade, being simply a market transaction across borders, is always win-win. With the growing backlash against globalization in many nations, this framing has become the first commandment of the free-trade religion because it lets supporters of globalization off the hook for the fact that global trading governance has become broken as a growing number of nations embrace “innovation mercantilism,” all while the World Trade Organization and other referees sit on the sidelines holding forums in Geneva but doing little else to stop rampant protectionism in China, Russia, Indonesia, and Brazil, among many others. To be sure, trade can be very, very good, but only if it is based on market decisions companies make voluntarily, and not on heavy handed government protectionism.

5. **“Countries need to be more open to immigration, including low-skill immigration.”** Here’s a tip: If you want to ingratiate yourself to your newly met colleagues in Davos, say something like, “Well, of course, I am social liberal, but an economic conservative.” Trust me, it’s a sure winner. The last thing you want to be accused of being is a social conservative, especially someone who hates immigrants. But despite the elite consensus that rich nations should be open to low-skill immigration—the more the better—there is strong economic evidence that too much low-skill immigration is a serious drag on productivity growth, thereby forestalling improvements in people’s standards of living. By keeping wages low, low-skill immigration leads companies to invest less in machinery and equipment, which puts the brakes on economic growth.

6. **“Global data flows should be protected at all times.”** You will likely be hobnobbing with elites from all corners of the world, and you’ll likely want to connect with all of them on Facebook, LinkedIn, and Twitter (even though, if you are lucky, one out of 100 might actually accept your invitation or follow you back). So of course you need to say that global data flows are inviolate and everyone should be able to access the same content and commerce from anywhere in the world. You don’t want to be seen as an enabler of totalitarian regimes, do you? There are only two problems. First, geo-blocking—the practice by some companies of blocking access to their services or content in certain countries—actually can be pro-consumer, especially in low-income nations. For example, if consumers in rich nations were able to get their software from Zimbabwe at the discount prices companies charge there, then companies will simply require that everyone, including consumers in nations like Zimbabwe, to pay the prices we pay in Europe, Japan, and the United States. And that is good for poor Zimbabwians how? Second, while global Internet flows are increasingly a critical driver of global growth and we should be supporting cross-border data flows, this is only true for legal content. Surely, we shouldn’t be defending the rights of consumers to get access to websites like the PirateBay.com, which is a criminal hub dedicated to digital theft.

7. **“The solution to income inequality is more education.”** As a global elite, probably making 100 times more than the average American worker, and 1,000 times more than the average Chinese worker (or at least pretending you do), it’s critical that you bemoan the fact that you have so much money. Wait, no. I got that wrong. While you need to decry the rise of global inequality (tip: mention that you read all 600-some pages of Thomas Piketty’s Capital in the Twenty-First Century), the last thing you want to do is to say that it’s grown because you and your cocktail party mates have too much money. So blame it on people who don’t go to Davos. If they just got more education—perhaps a master’s in business administration at Harvard, INSEAD, or the London School of Economics—they’d be good to go and inequality would go down. The reality is that the evidence is clear: Income inequality has gone up because so many individuals now make winner-take-all incomes while others with exactly the same level of education make much, much less.

8. **“Nations have lost manufacturing jobs because of productivity growth.”** One of the keys to success in elite salons like Aspen, Jackson Hole, and Davos is to hold to Voltaire’s Panglossian belief that things are as good as they can be. Any purported problem must at all costs be defined away, lest one lose faith in the system. A case in point is the decimation of manufacturing jobs in many OECD nations (such as the United States and Commonwealth nations). If asked why America lost more than one-third of its manufacturing jobs in the 2000s, a wipeout greater than in the Great Depression, under no circumstances say that it was because the country lost its competitive position, especially to mercantilist nations such as China that manipulated their currencies and forced U.S. companies to set up shop overseas and transfer valuable technology as a condition of market access. Rather, simply say, “All that job loss was a sign of success; superior productivity gains in manufacturing. While it might be hard on the dislocated blue collar workers, we should be celebrating, not bemoaning.” Never mind reality, which is that when measured properly U.S. manufacturing output declined by more than 10 percent in the 2000s while GDP growth went up by more than 11 percent, and more than half of those jobs were lost to trade.

9. **“The Internet should be neutral.”** You are on pretty safe ground with this one, as the global elites have bought into it big time, even though very few of them have the faintest idea of how broadband Internet network protocols actually work. The notion is that broadband pipes should be “stupid” and treat all traffic alike. Otherwise, God forbid, we’d violate the principle of net neutrality. (I wonder if Tim Wu, the person who coined the term net neutrality has been to Davos. If not, Tim, you should go in 2017.) The reality is the Internet is not like the 20th century phone system which largely handled one application (circuit-switched voice calls). Rather, it is series of protocols and a system that handles a wide variety of types of traffic that have very different network management needs. You don’t care if your email arrives 25 milliseconds late, no matter how compulsively you check your email. But you do care if your FaceTime bits arrive 25 milliseconds late because some bandwidth hog is watching Lord of the Rings in HD in the same cell zone as you and now you can’t talk to your daughter back in Greenwich. So prioritizing latency-sensitive traffic like video telephony bits in pro-competitive ways is pro-innovation and pro-consumer.

10. **Finally, we get to the most important thing to believe, or at least to parrot if you don’t believe it: “Change is accelerating exponentially.”** After all, if it wasn’t, then why not hold Davos every five years or so, rather than every year. As master of ceremonies Schwab writes in The Fourth Industrial Revolution (again, don’t forget to download a copy before your flight to Switzerland), “major technological innovations are on the brink of fueling momentous change.” If this is true, then why are job losses from U.S. firm closures and contractions lower today than any time since the early 1990s? Why are global productivity growth rates at their lowest levels in decades? Hardly evidence of a “revolution” as momentous as the British industrial revolution. (What a downer. Who let him in?)

I suppose we shouldn’t be too hard on global elites, particularly with the disturbing rise of the forces of disarray, know-nothing populism, and strong-man politics across the globe in the last few years. A nuanced position on low-skill immigration could easily be turned by the Donald Trumps of the world into a nativist push against all immigrants, justifying building a wall “the Mexicans” will pay for. A nuanced view of global trade could lead to a backlash against trade itself and global integration, leading the Brits to Brexit and the U.S. Congress to reject TPP. Questioning carbon pricing is a short step to questioning the science behind climate change. Not being full-throated defenders of a global Internet gives carte blanche to the Chinese government to make the Great Firewall even stronger. And the list goes on.

But it’s actually possible, if not likely, that the reason these anti-elite arguments are getting such play is precisely because global elites persist in holding on so tight to their own undemanding narratives. One either buys into their consensus or is labeled a, fill in the blank: protectionist, nativist, racist, climate denier, Luddite, Marxist, etc. But one-sided, self-congratulatory narratives generated in a group-think environment neither reflect reality nor do much to sustain real debate that encompasses all legitimate views. It does, however, generate revulsion and rejection of elites and elite views. That’s too bad, because when tested and refined through rigorous scrutiny, elite views can be a major driver of civilization and progress. But not, at least now, in our Davos-like world.

*This commentary was originally published* [*on Medium*](https://itif.medium.com/your-10-question-davos-application-test-d8300b080b49)*.*

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*Source: Information Technology & Innovation Foundation (ITIF)*
*URL: https://itif.org/publications/2016/08/08/your-10-question-davos-application-test/*