The annual World Economic Forum confab known as Davos has always had an optics problem. Picture a bunch of people descending in private jets to eat steak and appear on panels about alleviating poverty and fighting climate change (among other noble goals), while clinking cocktail glasses with other fellow rich people in an effort to make one another even richer.
But Davos 2026 has morphed into a kind of emergency session of the world’s elite to confront two simultaneous, ultimately related threats. There’s the elephant in the room — President Donald Trump, who is set to attend the summit Wednesday, and his trade-warmongering — and then there is another, far more complicated force threatening to destabilize the global order, known as the K-shaped economy.
The term, popularized by the economist Peter Atwater, refers to the growing split, starting in 2020, between haves and the have-nots. While the pandemic hit everyone all at once, the recovery from that jolt has taken place on two diverging tracks, with the well-off getting wealthier and the poor getting poorer.
Nearly six years later, the gap between the top and bottom of the K is still diverging. The stock market, while volatile, is trading near record highs. Luxury hotel bookings are holding strong even as fewer Americans take vacations. What looks like a housing affordability crisis from one end of the economy feels like a windfall at the other end as scarcity pushed home values higher.
If the Davos crowd seemed out of touch before the pandemic, the affordability crisis that helped re-elect Trump has only sharpened the contrast between the people at Davos and everyone else.
“Those at the bottom are all too aware of the abundance that exists above them,” Atwater, an adjunct economics professor at William & Mary, told me. “But I think that one of the consequences of Covid was that it created a blindness at the top… other than a delivery person showing up at the door, the interaction of those at the top and those at the bottom has really diminished, if not evaporated.”
To be sure, the Davos crowd understands, intellectually, that they have a “private-jet-to-discuss-climate-change” problem. Larry Fink, the CEO of BlackRock and the summit’s de facto “mayor,” diagnosed that core problem in his opening remarks on Monday.
“Many of the people most affected by what we talk about here will never come to this conference,” Fink said in his opening remarks on Monday. “That’s a central tension of this forum. Davos is an elite gathering trying to shape a world that belongs to everyone.”
In classic Davos form, Fink is stating the obvious as if it’s revelatory. As several critics have noted, the forum has a history of failing to read the room until it’s too late.
“Davos has been wrong, consistently, about where the world is heading,” wrote Semafor senior business editor Liz Hoffman on Tuesday. “The mid-2010s crowd whiffed on Brexit, MAGA, and the populist wave that followed. In 2020, delegates dipped into communal fondue fountains as COVID-19 circulated in plain view not far away. Davos was briefly all-in on the metaverse.”
Missing the MAGA mark, and the forces that shaped it, brings us back to the K-shaped economy problem, which is far from exclusive to America.
Severe inequality is inherently destabilizing. History has plenty of examples, though you need only glance at the headlines from Iran in recent weeks to see the risks play out it real time. Years of high inflation and financial mismanagement eroded middle-class wealth, while high-level corruption has empowered a handful of businessmen to enrich themselves. Anger over that disparity boiled over in late December as the nation’s currency fell to an all-time low, setting off mass protests and a violent crackdown by Tehran.
If Davos attendees want to learn from the Ghosts of Davos Past, they’d be wise to do more than pay lip service to the accelerating split in that capital K.
“You can’t sustain this level of overt wealth without there being consequences,” Atwater notes. “What I think those at the top miss is that any added weight of vulnerability could easily be the tipping point… We are a straw away from something being unleashed.”
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