Billionaires heading to Davos, Switzerland, this week for the annual retreat at a luxurious ski resort in the Alps have every reason to be jubilant. Stock markets are at record highs, corporate taxes in the United States and Britain are falling, and every major economy is growing.
There has arguably never been a better time to be a member of the 1 percent, yet there is growing unease among the world's millionaires and billionaires that this gilded age could soon be cut short by the rise of populism and the deepening inequality fueling it.
"We are seeing a paradox of high returns and high anxiety," BlackRock chief executiveLarry Fink wrote this month in his annual letter to the heads of the world's biggest companies. "Since the financial crisis, those with capital have reaped enormous benefits. At the same time, many individuals across the world are facing a combination of low rates, low wage growth, and inadequate retirement systems."
Billionaire Ray Dalio, a hedge fund manager, has been warning that a "big squeeze"on the middle class is coming as more blue-collar jobs disappear, the population ages and the social safety net cannot keep up. He predicts the already fragile "bottom 60 percent" will be devastated, probably igniting even more backlash against those in power.
The Conference Board, which surveys more than 1,000 top executives in 50 countries about their biggest concerns, found in its latest report, released Thursday, that inequality ranks seventh on the worry list, up from 18th last year.
"I find that more and more world leaders are concerned about excessive inequality," said Christine Lagarde, head of the International Monetary Fund and a co-chair of the 2018 World Economic Forum in Davos.
One of the most popular events so far is a talk on "rentier capitalism," a term used to describe how the rich make most of their money not from working but from owning property, patents and investments they pass down to their heirs, further exacerbating inequality.
"People around the world have become aware they are part of the bottom class, and they're angry," said British economist Guy Standing, author of "The Corruption of Capitalism" and a session headliner. "Trump could be just the beginning."
Many in the top 1 percent say they see income inequality as an economic issue in addition to a moral one.
President Trump, British Prime Minister Theresa May and a slew of other leaders from Austria to Turkey promised their voters a rollback of globalization, one that has largely yet to materialize. Among business leaders, alarm is growing that voters may elect even more populist leaders in the coming months or years if they become dissatisfied with the current batch.
Populism is a risk to their wealth, and one that is hard to control or predict. It could lead to war or, more likely, barriers to the flow of people, ideas and goods across borders that has helped so many large multinational corporations achieve record profitability lately.
"The rosy view we have of the stock market could be at risk if there is dramatic political change," said Torsten Slok, Deutsche Bank's chief international economist and author of an 80-page report on global inequality. While inequality is the worst in the United States among the major economies, Slok found it has increased everywhere since 1985, including in Scandinavian countries.
Still, chief executives and political leaders tend to be an optimistic crowd. They approach these issues as a problem that can be solved through government and corporate policies.
"Leaders from around the world are meeting in Davos at a time of global economic recovery, a time when governments must do all they can to sustain this momentum and lay the foundations for long-term growth," Lagarde said.
By some metrics, the world is a better place today than it was a generation ago. More than a billion people have been lifted out of extreme poverty — defined as living on $1.90 a day or less — since 1990, according to the World Bank, a dramatic improvement largely caused by the rise of China and India.
But Branko Milanovic, a leading scholar on inequalityat City University of New York, found something curious when he looked at what happened to people's incomes around the world in the past 20 years. The top 1 percent saw major gains, and so did the world's lower-middle class — the cohort in China and India that went from making a few hundred dollars a year to several thousand. But the middle class in the United States and Europe has stagnated for two decades.
"If rich people really wanted to solve inequality, they should use the lobbying power and money they have been using for the past quarter-century to get better deals for themselves to do something for the working class," said Milanovic, who refuses to attend Davos.
Trump is, in many ways, the ultimate symbol of this age of "high returns and high anxiety." He's a billionaire who likes to decorate with gold, yet he campaigned for president as a populist who would deliver for the working class.
Business leaders still don't know how to handle Trump. They don't like a lot of his tweets and rhetoric, especially when it's racially divisive, but they acknowledge that his first year has been far better for them than many expected. Trump has pursued a classic pro-business agenda of rolling back regulations and massively reducing the corporate tax rate, moves that are expected to exacerbate inequality in the United States and, possibly, the world as more countries race to lower their tax rates, too.
"The Trump administration took us in the wrong direction on inequality," said Rob Johnson, president of the Institute for New Economic Thinking. "He responded to globalization and technical change by cutting taxes for rich people and corporations, who were already the winners."
No one is sure what to expect when Trump arrives at the conference to give a keynote speech Friday.
"Does Trump go to Davos and tell the billionaires 'I'm on your team,' or does he give these people a spanking?" said Johnson, who has attended Davos since 1989.
Beyond Trump, the elites also see a robot and biotech revolution underway that could cause even more disruption and inequality. A new report comes out almost weekly forecasting robots will take over human jobs. Politicians and pundits are already questioning whether Silicon Valley has too much power.
Chief executives, while recognizing the risks of this changing world, are divided on how to fix it. In short, the debate is over whether to directly redistribute wealth from the top to the bottom or whether to focus on fixing education and removing barriers that hold people back.
"When I talk to executives about the future of work, their primary focus still seems to be on efficiency: How quickly can I replace costly humans with less expensive machines?" said John Hagel III, co-chair of Deloitte's Center for the Edge.
Hagel argues the problem isn't robots taking over boring, routine jobs; he says it's executiveslaying workers off instead of realizing they now havea big talent pool they can move into a more creative part of the business. He thinks there's massive untapped potential.
Another popular idea is universal basic income, where everyone would get an annual payment of, for example, $15,000. It's a way to ensure people don't starve if there are mass job losses. But that also appears to be an admission that society won't find anything else for people to do after machines replace humans in many fields.
Retraining remains crucial, many say, but so does finding a way to move workers around the country and the world, physically or virtually.
"Where you lose your job matters as much as what job you lost," said MIT economist David Autor, who is speaking on numerous Davos panels because of his extensive research into job losses from trade and automation. "I worry a lot about urban and nonurban divide. The United States has never been this geographically unequal."
Fink, the BlackRock CEO, says government can't be the only solution to inequality. Businesses have to play a bigger role, he says, especially since many governments are short on funds. He's calling on business leaders to find their "social conscience" in 2018 instead of just maximizing profits for their shareholders. The Swiss event is a prime place to pitch that idea.
"Davos is the ultimate corporate speed-dating event," said Mark Malloch Brown, former deputy secretary general of the United Nations. "After getting drunk on Swiss wine, CEOs often feel the need to get engaged in something they can boast about at Davos next year."