Does Davos still matter?
DAVOS, Switzerland – On the face of it, Davos doesn’t seem to make much sense. For business and political leaders who are increasingly mistrusted by the public, cloistering themselves in a luxurious mountain redoubt for a week seems like a good way to sharpen the perception that they are far removed from the interests and concerns of their constituents. And in a world of ever-proliferating global forums — TED and Google Zeitgeist for the techies, Clinton Global Initiative for the high-minded policy and business types, the list goes on — the World Economic Forum (WEF) has a bit of an identity problem. Aside from the invigorating alpine freshness, the good skiing, and the chance to meet Charlize Theron, is there any reason to come here? And does what happens here still matter at all?
First, for all the interconnectivity enabled by social media and information technology, personal meetings still matter, and Davos consistently gathers some of the most powerful and intelligent people in the world in one place. That includes the nearly 40 sitting prime ministers and presidents who are here, figures such as Shimon Peres of Israel, Mario Monti of Italy, David Cameron of Britain, and Angela Merkel of Germany.
But more importantly, that includes guys you’ve probably never heard of — guys like Carl Ganter, who I’ve befriended here. Carl runs Circle of Blue, an organization that provides data on the world’s water crises. He’s one of the smartest guys in the world on the question of dwindling water resources, and is particularly attuned to how water shortage exacerbates risks pertaining to food, energy, and health. I have no particular expertise on the topic — but it’s interesting, it’s important, and it helps me to think more clearly about an issue that directly affects the global political risk focus of my own work. I wouldn’t have bumped into him were it not for the WEF. Davos unearths the interdisciplinary aspects of your profession thanks to serendipitous encounters with other attendees.
Second, a lot gets done here. Not "by" Davos. Davos itself doesn’t do anything. But the key word in World Economic Forum is "forum" — the event provides a platform for powerful people to pursue their distinct interests. There’s no fat here. Sure, there are people who are just here for the parties and the scene — but you won’t slot them in for a 30-minute meeting.
It’s like 2,000 of the world’s top decision-makers having Hillary Clinton’s U.N. General Assembly schedule for a week. I’d say six weeks of work actually gets done here in just a few days. That’s certainly true for me. It’s not the way I’d want to live my life — I’m thoroughly exhausted by the end of the trip. There are a huge number of business deals getting done here. This year, I know of two technology agreements involving U.S. firms, one energy deal involving an African firm, and a medical devices agreement.
Once again, Davos isn’t a government — it’s a forum. It enables private and public players to get on the same page. For example, in a public session I hosted, there was a great back and forth between the governor of Brazil’s development bank and a major investor in the country; it led to a private discussion after, cards were exchanged, and I strongly expect interactions like this ultimately lead to an improved business climate down the road. Davos may not make policy, but it’s at least a nice little uptick for global productivity.
But even if Davos is a place where lots of powerful and intelligent people can meet each other and exchange ideas, does that matter for the rest of the world? Does Davos live up to the WEF’s claim to be "committed to improving the state of the world"?
Again, I think the answer is yes. But we need to rethink how we understand Davos.
First, it’s a good thing that Davos isn’t global. And let’s be frank, with 67 percent of attendees hailing from Europe or North America, this is not a Benetton ad of global interests. Emerging markets may drive two-thirds of global growth, but they drive about a tenth of the WEF agenda. But to be fair, Davos was never global (just like the World Bank was never global), we just pretended it was because it made us feel good — and, well, the rest of the world had to follow what the West wanted, anyway.
But the result of a more insular WEF, while imperfect, is at least substantial: It avoids the dysfunction of the G-20, where nothing gets done, besides the adoption of vague "coalitions of the willing" strategy documents. Folks at the WEF actually share a common worldview — a devision to transparency, free trade, global governance, liberal democracy, and the rule of law. This lets them align their interests and boost productivity, even if it isn’t global. This is becoming more important, precisely because there are growing alternative models out there.
Take the fact that China, which will soon be the world’s largest economy, subscribes to state capitalism rather than the free-market variety, and its authoritarian government clamps down on many of the values that are extolled at Davos. (While Russia does the same, the leadership at least recognizes the utility of engaging with these ideas as it seeks to attract more foreign investment.) Sure, some important Chinese executives were in attendance — but none of the political players of real importance showed.
The absence of China means, on the one hand, that Davos can’t presume to be global. On the other hand, it means a Western agenda can actually be set without the conflicting viewpoints that a country like China would bring to the table. That may stoke tension, but at least it makes the positions and agendas clear.
Lastly, while the theme of this year’s gathering — "Resilient Dynamism" — has been criticized for sounding like a scrap of corporate jargon, the idea that it represents is an important one that business and political leaders everywhere should learn from. I interpret the term as follows: In a world of uncertainty and volatility, the ability to navigate these shoals and troughs — and even grow because of them — is paramount. As Klaus Schwab, the founder of the World Economic Forum, explains: "Either attribute — resilience or dynamism — alone is insufficient, as leadership in 2013 will require both."
The other key theme at Davos this year is the vulnerability of political elites. Leaders marred by corruption, special interests, or a lack of transparency will be held accountable by their constituents. The same goes for elites that are witnessing a growing disparity of wealth, a weak economic outlook, or biting austerity. Want an example? Take a look at the record-low approval ratings of the U.S. Congress.
Many of today’s most pressing challenges, such as stubbornly high unemployment or the onset of climate change, are largely out of leaders’ hands. Incumbents are getting shunted out everywhere. Business leaders probably don’t feel as vulnerable in this Davos as they did after the financial crisis, but perhaps they should feel more so: The combination of improving information technology and growing inequality is going to lead to much more scrutiny and attention on them. That doesn’t mean class warfare, but when any of these leaders are seen to do something amiss, the reaction will be sharp and relentless.
Ensuring that leaders get this message is part of the value of Davos — though it’s an area where it still has a ways to go. As 2,600 of the world’s high and mighty meet on a mountain, the forum’s themes represent issues they need to stop sweeping under the rug. Part of the problem today is the investment world’s fetishizing of growth at the expense of focusing on the widening gap between rich and poor. These corporate attendees, through the lofty cost of attending Davos, are essentially footing the bill for thought leaders to bring vital global issues to their attention.
These economic, political, and media elites — who are very much in the public eye, and increasingly perceived as not upholding the public interest — are the very people who must pay closest attention to the increasing vulnerability of elites. Davos is their opportunity to acknowledge this trend, brace themselves, and then overcome it. After all, if they ignore the deeper issues in play, they may not have a ticket to Davos come next year.