[OPINION] Downbeat Davos is still short on introspection
The Davos elite are downbeat. The executives, financiers and political leaders who traipsed to the Swiss mountain resort this week spent much of their time fretting about slowing economies, angry citizens, and technological clashes. The gloom contrasted with the misplaced optimism of the previous year. One important factor remained unchanged, though: the supreme confidence of World Economic Forum delegates in their ability to predict what’s next.
Twelve months ago, the gentry of globalisation were feeling good. Economic growth in most parts of the world was robust. Newly-elected President Emmanuel Macron declared: “France is back”. The idea of anti-establishment parties forming a government in Italy was dismissed. Saudi Crown Prince Mohammed bin Salman was regarded as a visionary reformer. Even U.S. President Donald Trump managed to sound, well, presidential.
The 2019 edition corrected some of those expectations. Even as the private jets were circling Zurich’s airport, the International Monetary Fund lowered its forecast for global growth in the coming year to 3.5 percent, and warned about the consequences of the ongoing trade clash between the United States and China. Trump and Macron bowed out to deal with protests and political stalemate at home.
Saudi delegates focused on repairing the diplomatic damage caused by the brutal killing of journalist Jamal Khashoggi by government agents. Meanwhile Italian Prime Minister Giuseppe Conte, representing the country’s populist coalition, told the Davos audience to put citizens first.
The prosperous crowd milling around the conference centre found plenty else to fret about. The slowdown in China, where GDP growth decelerated to 6.6 percent last year, dominated the macroeconomic discussion.
Though the tariff fight with the United States is partly to blame, many expect the world’s second-largest economy to slow further. That in turn is weighing on the economic prospects for exporting nations like Germany.
Self-inflicted wounds added to the dejection. The U.S. federal government shutdown had entered its fifth week by the time U.S. Secretary of State Mike Pompeo delivered a speech by video link. With official interest rates still low in the United States and negative in the euro zone, central banks have little scope to respond to a severe economic shock.
Technology dominated many of the private discussions in the ski resort’s hotels and fondue purveyors. Politicians queued up to criticise big tech companies for abusing data and paying too few taxes. A contrite Sheryl Sandberg, Facebook’s chief operating officer, admitted that the social network had lost the trust of its customers.
Huawei Chairman Liang Hua showed up to defend the Chinese telecom equipment firm from accusations of spying, which have been exacerbated by the arrest in Canada of finance chief Meng Wanzhou. Yet the company remains at the centre of a global battle to dominate new 5G standards for mobile communications.
The relative dearth of high-profile world leaders meant corporate chieftains were left to address the concerns raised by unhappy electorates. Behind closed doors, many chief executives cited BlackRock boss Larry Fink’s recent letter, which urges them to show leadership and look beyond short-term shareholder returns.
Amid the many misgivings, some senior executives saw glimmers of hope. After all, the Davos echo chamber has an unerring knack for getting it wrong. If the United States and China avoid imposing new tariffs before a deadline at the beginning of March, and Britain somehow steers clear of a chaotic departure from the European Union at the end of the same month, the mood could quickly shift.
What hasn’t changed, however, is the self-assurance that seems to accompany those who don a Davos badge. Some humility might be expected. In January 2016, delegates largely failed to foresee Brexit, or that Trump would win the Republican nomination, let alone the presidency. Twelve months later they insisted the self-proclaimed billionaire would be a pragmatic leader, only for him to warn of “American carnage” in his inauguration speech.
The distorted world view is not hard to explain: the overwhelming majority of those invited to Davos belong to the world’s political, corporate, financial and educational elites. The temptation to confirm each other’s views in between gulps of frosty mountain air is irresistible. Dissenting perspectives are few and muted.
The assembly of executives, investors, bankers and corporate advisers remains a testament to the power of networks: many are drawn to Davos by the expectation that those they want to see will also be there, rather than the earnest debates about artificial intelligence in the conference centre. Given the conflab’s dire predictive record, though, some introspection is overdue.