Davos 2014: The hills are alive with the sound of the rich and powerful

By J Brooks Spector 23 January 2014

It would make the most extraordinary action thriller. Dozens of world leaders, even more billionaires and captains of industry, international banking, thinkers, politicians, entertainers, armies of security guards are all gathered together in one small Swiss town. And then, at one of the big banquets, a crucial nucleus of the waiters are actually members of a private army dedicated to seizing control of, well, almost everything… that is, until Jack Ryan comes to the rescue and saves the world. But in reality, everything will move like clockwork, this is Switzerland, after all, and thousands of people will attend nearly a hundred sessions over the next several days in the little town of Davos – with its state of the art conference centre and 173 hotels, inns and pensions – to try to discern the future. J. BROOKS SPECTOR contemplates what it may mean.

From 22 January through to the 25th, 2,500 delegates (companies pay about $70,000 each for their bigwigs to attend), thousands of guards and a veritable horde of journalists will be swarming over the small Swiss town of Davos to listen to lectures, panel discussions and debates on this year’s official theme, “The Reshaping of the World: Consequences for Society, Politics and Business”. They will listen to heads of state and their accompanying entourages of ministers, all of whom are eager to showcase their countries’ economic prospects – like Japanese Prime Minister Shinzo Abe and South African President Jacob Zuma and Finance Minister Pravin Gordhan.

Prime Minister Abe and his team’s pitch is simple: Japan Inc is back in business, and it is a lean, mean, fighting machine again (and just by the way, it will be a more stable bet than that other country in East Asia – and it comes sans any sort of territorial ambitions like some other country we could mention).  Jacob Zuma and his troops, by way of contrast, will have been making the case that South Africa remains a stable, progressive country that, while it has problems, nevertheless remains very much open for business.

But some delegates will also attend actress Goldie Hawn’s lecture demonstration on the merits of meditation – “Mindfulness”. Hawn’s talk will be one of twenty-five lectures on personal wellbeing. And delegates will have watched while actor Matt Damon receives his award for philanthropic work with, and while Peruvian tenor Juan Diego Florez receives Davos’ Crystal Award for his work with youth orchestras and choirs in his native land. Pope Francis has sent a cardinal to “invoke divine blessings” on this thoroughly self-regarding gaggle so that they do not ignore globally pressing issues like inequality, the poor and the unemployed. Contemplating this event, London’s sharp-tongued mayor, Boris Johnson, made his judgement about this big party, calling it “a constellation of egos involved in massive mutual orgies of adulation” but he came anyway.

In one of the wilder “entertainments” at Davos, there will be a simulation session so delegates and others can feel what it is like to be a Syrian refugee. Like Pieter-Dirk Uys used to say about the debates in South Africa’s parliament as he read from the Hansard, “I am not making this up, you know.” As the BBC reported it, thrice a day, interested “delegates can be detained, chased by replica gun-toting militia and shouted at by aid workers in a bid to raise the profile of the Syrian refugee crisis. Queen Mathilde of Belgium has evidently already signed up and the Cross Roads Foundation, running the event, hopes to get Damon or Bono – yes he is there, again – to give it a go too.” Oh dear.

Inevitably, too, there will be a special Damien Hirst art exhibition on at Davos, there will be a special showing of the film, “Mandela: Long Walk to Freedom”, as well as meets with Olafur Eliasson, the artist responsible for the Tate Modern Gallery’s giant Weather Project sun, Martin Roth, director of the Victoria and Albert Museum and star orchestral conductor Valery Gergiev. And among other attendees, Paola Antonelli, a senior curator of New York City’s MOMA, the head of the Lucerne Festival, Michael Haefliger, and the Montreux Jazz Festival’s head, Mathieu Jaton will also rub shoulders with delegates. They presumably are going to be eager to search out ways to reduce global inequality via their participation in these events. Or, perhaps, they will also be there so they can find a sympathetic new sponsor or two for their respective new multi-million dollar projects.

Of course, not everybody who runs the world will be there. Neither US President Barack Obama nor Chinese President Xi Jinping plans to be there. And Warren Buffett, Apple boss Tim Cook, and GE’s Jeffrey Immelt aren’t coming either. The founders of Google, Larry Page and Sergey Brin, threw in the towel on attending several years ago, as did Facebook’s father, Mark Zuckerberg. But both companies will send lesser executives to keep an eye on things. Also giving Davos a pass is

Mohamed El-Erian, head of Pimco, one of the world’s largest bond investors. Given El-Erian’s background— an Egyptian-raised, Oxford-educated global investor – he would have seemed to be the perfect Davos man, but he’s staying home.

Jeffrey A. Sonnenfeld, senior associate dean of the Yale School of Management, a man who taught many Davos men and women but who does not show up himself, has argued that many CEOs attended every few years to “meet new heads of state.” But now, he says, many such executives “complain that significant decision-makers are too diluted in number by the tidal waves of aspiring consultants and other wannabes.”

Still, this year’s gathering is supposed to focus on some of the intertwined, really big issues of the world’s sluggish economic growth, continuing high unemployment in many nations, a frightening rise in income inequality, and the looming – but still unpredictable – impact of global climate change. Inequality has recently become a buzzword for politicians and economists alike and expectations are that it will be a key issue in many election campaigns around the world, going forward. In America, for example, both Republicans and Democrats are appropriating the concept to encapsulate their respective approaches to economic growth (although meaning some very different things), with both parties trying to figure out how to make reducing inequality a key element of 2016 political party platforms.

Meanwhile, continuing high unemployment in many nations is merging with a growing debate among economists as to whether the very nature of employment is poised to change in a major disjunctive and disruptive moment – together with this issue of economic inequality.

As the current issue of The Economist has pointed out, “some now fear that a new era of automation enabled by ever more powerful and capable computers could work out differently. They start from the observation that, across the rich world, all is far from well in the world of work. The essence of what they see as a work crisis is that in rich countries the wages of the typical worker, adjusted for cost of living, are stagnant. In America the real wage has hardly budged over the past four decades. Even in places like Britain and Germany, where employment is touching new highs, wages have been flat for a decade. Recent research suggests that this is because substituting capital for labour through automation is increasingly attractive; as a result owners of capital have captured ever more of the world’s income since the 1980s, while the share going to labour has fallen.”

The Economist goes on to say, “The case for a highly disruptive period of economic growth is made by Erik Brynjolfsson and Andrew McAfee, professors at MIT, in ‘The Second Machine Age’, a book to be published later this month. Like the first great era of industrialisation, they argue, it should deliver enormous benefits—but not without a period of disorienting and uncomfortable change. Their argument rests on an underappreciated aspect of the exponential growth in chip processing speed, memory capacity and other computer metrics: that the amount of progress computers will make in the next few years is always equal to the progress they have made since the very beginning…. Tyler Cowen, an economist at George Mason University and a much-read blogger, writes in his most recent book, ‘Average is Over’, that rich economies seem to be bifurcating into a small group of workers with skills highly complementary with machine intelligence, for whom he has high hopes, and the rest, for whom not so much.” If these folks are right, it’s going to be a difficult period ahead.

This would point to an increasingly tough time for young, under-skilled entrants into the labour force around the world – with all of the attendant social and political ructions that that implies. However, whether this Davos meeting can actually provide real, thought-through, worked-out ideas of how the world can deal with sluggish growth, continuing unemployment, and rising inequality is open to real question. The very structure of the meetings is not designed to produce global commitments to do anything. As the brainchild of its founder, industrialist-philanthropist Klaus Schwab it is not a decision-making, let alone decision-implementing international body.

Meanwhile, however, over in another Swiss town, in Montreux near Lake Geneva, a UN-sponsored conference to confront the appalling circumstances of Syria, and designed to puzzle out a way out of that civil war, is spluttering into life as well. The various warring parties, international bodies and interested nations – but now apparently without Iran after it had first been invited into the tent – are now coming together, albeit fitfully.

As the New York Times reported on the Montreux meeting, “Logistics were still being ironed out as delegates arrived, ranging from Mexican diplomats to representatives of the Russian Orthodox Church. Journalists became edgy waiting to pass through a single airport-like security check to reach the press center, then repaired to its lakeside terrace for restorative espressos. An Agence France-Presse reporter was thrown out of the conference hall — journalists are restricted to the press area — but not before triumphantly spotting the defunct place card for the banished Iranians.”

The paper went on to explain, “Syrian anti-government activists and citizen journalists who normally spend their time in refugee camps and border towns in Turkey popped in and out of the press center, where on Wednesday dozens of representatives of Syrian state-owned news media are expected to join them, undoubtedly coming face to face during smoke breaks on the narrow terrace. Despite the cold and gray, and the ferment among opposition factions who say the meeting is a waste of time, the activists projected a certain air of buoyancy. For all the complaints from some opponents of President Bashar al-Assad of Syria that the conference restores his aura of legitimacy, it also confers it upon the opposition. What began with waves of protests that would have been unimaginable in Syria before 2011, then turned into an armed insurgency, has become, for a few days, the focus of global diplomacy.”

The Syria civil war crisis conference is supposed to find solutions – or at least the road towards solutions. By contrast, despite all the expansive talk, the banquets, and the schmoozing at the highest level, the Davos meeting isn’t likely to issue any blueprint for the way forward. By the time things end, maybe there will be some sort of report pointing to possible solutions for the world’s problems – but that isn’t what this talk shop normally does. And it probably won’t do it this time either. But it will give many of the people who run everything a chance to rub shoulders with their counterparts.

Just before Davos began, Oxfam chose to release a report arguing that only 85 people are as rich as the bottom half of the world’s population. Whether that figure is precisely true or not (did they include people who are rich as Croesus from ill-gotten gains?), it still seems a pretty good bet that a major chunk of that small group fingered by Oxfam will be in Davos this week – even if Warren Buffett didn’t attend. And they will be eager to find out what the political power brokers of the world have in mind for their wealth. DM

Read more:

  • Oxfam: 85 richest people as wealthy as poorest half of the world in the Guardian;
  • Gates Annual Letter Aims to Debunk Myths About Global Poverty at Philanthropy News Digest;
  • The onrushing wave at the Economist;
  • Leaders gather for Davos meeting at the BBC;
  • Global outlook rises, risks abound as leaders meet in Davos at Business Day;
  • Peaceful Swiss Resort Takes On Troubles of Syrian War at the New York Times;
  • World Economic Forum Full Official Program at the World Economic Forum;
  • Davos Billionaires See Wealth Gains on 2014 Stocks Rally at Bloomberg;
  • Whom to Watch at the World Economic Forum in Davos at Business Time;
  • Notable in Their Absence From Davos at the New York Times;
  • Zuma urges business to market SA in Davos at African;
  • World’s rich threaten democracy says Oxfam in pre-Davos report at the Economic Times of the India Times;
  • Davos 2014: from PMs and CEOs to Goldie Hawn, Matt Damon and Bono at the Guardian;
  • Davos 2014: Reshaping the world? At the BBC;
  • Leaders gather for Davos meeting at the BBC;
  • South African ministers head to World Economic Forum in Davos at Business Day.

Photo: Participants break for lunch between sessions during the annual meeting of the World Economic Forum (WEF) in Davos January 22, 2014. REUTERS/Ruben Sprich


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