Speeding Through Davos
The World Economic Forum (collectively known as Davos) has its annual meeting in two conjoined towns that together are the highest town in Europe. Davos came to prominence as a sanitarium (not for mental patients) for its dry sunny weather, and is the setting for Thomas Mann’s Magic Mountain. Sometimes it feels a bit more like London and New York combined, when we all arrive. The conference is always a bit pessimistic, fitting the mood of many of the European elites, but in a short time you can get a sense of what is on the mind of the leadership, or at least the elites mostly of Europe:
Syria is getting worse, and China/Japan not far behind:
The humanitarian crisis of Syria is the worlds worst today, with estimates of 9 million people displaced (1/4 of Lebanon population, huge inflows to Turkey) and a civil war with no end in sight. Syria appears on its way to being like Afghanistan, with her neighbors engaged in proxy wars. The difference between Afghanistan, a largely isolated country, and Syria, is the potential for genuine destabilization of her neighbors and a true regional conflict.
In the first dinner of the trip, the first speaker ended his summary of the China/Japan conflict predicting some type of conflict. (I find it hard to believe that such mature countries would go to war over uninhabited islands.) Many speakers pointed out this is the 100 year anniversary of the events of 1914, where a set of seemingly minor incidents escalated to our first, horrific world war. The current lack of leadership and clear standards on country structure, behavior and futures was seen as similar to the scene before 1914.
Europe is in much better shape than the last few years:
Davos was consumed with the future of the Euro and the questions of breakup since the financial crisis. The broad consensus of Europeans is that the Eurozone is stable and that the union is getting stronger, with the rotating leadership of Europe now with Greece and treland’s successful exit from debtor status. Britain will decide her role in the European scene in the next few years with a planned referendum on remaining in the Union. All agreed the the internal north-south imbalances continue to be real problems for the economics of Europe.
NSA spying was a common topic:
The NSA revelations did not play well in Europe, especially in Germany, and continue to be a frustration for many of the leadership. It was not clear to me what those leaders can or will do about it, and the view of the importance of citizen privacy is not uniform throughout the region.
While technology continues to amaze, and innovation is accelerating, there are policy implications that we are just beginning to grapple with:
The combination of globalization and technological innovation is lifting billions out of poverty and providing tremendous consumer benefits we all see every day. From communications, to the ubiquitous phones, to new businesses and real empowerment of citizens, we see the improvements every day. The combination of globalization, demographics and automation is also leading to the worsening of economic inequality in most developed countries, and a pernicious joblessness and skills mismatch is getting worse. There are many policy ideas just now being discussed including the long proposed idea of a “basic wage” and other ideas in European circles.
The developed world is awash is cash:
Financial markets, bankers and the the money industry are all smiling here. Central Bankers have generally been using their primary tool of lending to help initiate economic growth, and a number of presenters worried aloud about the “asset bubbles” returning. China’s growth has depended on a generous central bank, and as they tighten lending the future growth of China will be tougher to maintain.
One presenter lamented the loss of the American role in world affairs.. that in the old days America, or the Soviet-US debate, set the rules clearly. With a better economic growth picture now, we also face the greater uncertainty of more global actors and more, disparate agendas.
I remain very optimistic that all these challenges will be overcome. After all, Davos is always slightly pessimistic, and the next year is always much better than Davos thinks. Looks to me like the world is going to have a very good 2014!