The failure of Davos

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The slogan of the World Economic Forum is “Committed to Improving the State of the World,” which makes for some pretty awkward conversations when the State of the World is clearly not improving, and is in fact getting markedly worse. Davos is an annual event, and if last year was characterized by fear, this year has the feeling of the other shoe dropping: the things that people were worried about in 2015 have become reality in 2016.


There are the markets, for one thing, plunging around the world. U.K. and Japanese stocks, for instance, have officially moved into bear-market territory, down more than 20% from their highs, and they look positively rosy compared to what’s been happening in countries like Brazil and China. There’s the European refugee crisis, which is in part a symptom of a broader crisis of radical hate coming from the likes of Daesh and Boko Haram. And politics are increasingly polarized and radicalized—a story which is no longer confined to crisis-hit countries with soaring unemployment like Greece and Spain. It’s seen in the rise of the National Front in France, it’s seen in the significant probability that Britain will vote to leave the E.U. this year, and it’s seen, of course, by the single most common topic in Davos this year: Donald Trump.

Trump is as un-Davos as it’s possible for a Western politician to be. He has no interest in platitudes; indeed, he has no interest in Improving the State of the World. All he wants is to Make America Great Again, and his plan for achieving that is about as zero-sum as can be imagined: “If I'm president, you'll say, ‘Please, Mr. President, we're winning too much. I can't stand it. Can't we have a loss?’ And I’ll say, ‘No, we're going to keep winning.’” In Trump’s world, all deals are negotiations where the aim is to inflict maximum cost on the people sitting across from you: that’s how you win. Making America Great Again is something that can only be done by Making Everybody Else Lose.

And yet, Trump, were he to fly his private jet to Davos tomorrow, would be a bigger draw at the World Economic Forum than Bill Clinton and Kevin Spacey and Bono combined. He would be swarmed wherever he went by delegates trying to snap a photo of him on their cellphones; he would effortlessly force the Forum to invite him to answer softball questions from founder Klaus Schwab; and his mere presence in the town would serve to draw all of the oxygen out of every room he wasn’t in. The thought experiment is silly, on one level—there’s no way that Trump would do it—but it’s useful all the same, because it serves to demonstrate just how anemic and irrelevant the alpine gabfest really is.

Davos remains unsurpassable in its ability to bring together the most powerful people in the world, for a series of confidential (yet generally quite substance-free) meetings that are effectively camouflaged by the official programme. Conversations here, at least in private, are often fascinating and insightful, and profitable, too: many studies show that the most well-connected people also tend to be the most successful.

But most of the public chatter about Davos concentrates on the high-minded stuff: the ritual incantations about having to improve working and living conditions for all the world’s 7.4 billion people in all manner of spheres, such as education, security, health, climate change, and the global economy as a whole. And that public chatter is important, since it gives the great and the good all the excuse they need to come up the mountain to rub shoulders in the Piano Bar and boondoggle away year after year.

And when it comes to the high-minded stuff, this is the year when it started becoming increasingly obvious that the emperor has very, very few clothes. The bankers and policymakers aren’t even faking it any more, and are increasingly willing to admit that they have no idea what’s happening and no idea what to do about it. Oil prices are at levels no one could have predicted just a few months ago, and no one knows how long it will stay so cheap. That alone injects enormous amounts of uncertainty into the global outlook. After all, the oil price has a direct effect on pretty much everything: wars in the Middle East, politics in Venezuela, terrorism in Nigeria, the likelihood of a global credit crunch, you name it. (The oil and gas industry is responsible for most of the losses that fixed-income investors have taken of late.) And that’s just one of the many unknowable variables out there.


The undeniable level of uncertainty also works to make it that much more obvious how much mindless derp fills Davos every year. If someone talks in starry-eyed terms about the rosy future of sustainable energy and the wonders of charging cars from renewable resources like the wind and the sun, then it’s usually pretty easy to fall into a mindless reverie and simply nod along. There’s a limit to how much critical thinking you can actually do over the course of an over-filled day. But when oil is trading at $27 per barrel and everybody knows that there’s no way to create wind or solar energy at scale for anything like that cheap, even the most self-congratulatory audience members start to wonder whether anybody is even thinking about what they’re saying on these panels.

Or take bitcoin: the blockchain has for a while now been a central part of the Second Machine Age, or Third Industrial Revolution, or Fourth Industrial Revolution, or whatever else you want to call the rise of the robots. As such, it makes an obligatory appearance on all manner of technology panels, especially anything associated with finance or (weirdly) the Internet of Things. And again, the elephant in the room goes largely unmentioned: bitcoin is deeply fractured at best; it might even be dead already.


This year, then, is proving itself to be the Davos of denial, the year that the disconnect between rhetoric and reality became more obvious than ever. The founder of the World Economic Forum, Klaus Schwab, is on some level a plutocratic power-broker just like many other rich and powerful men, but his dream of bringing the world together in the service of peace and prosperity is, or was, a genuine one. It has even been bought into by leftist critics who complain that Davos is “increasingly where global decisions are being taken and moreover is becoming the default form of global governance.”

The truth, however, is that with the exception of a few public-health initiatives, the Davos model of “multi-stakeholder initiatives” and “global redesign” has utterly failed in its stated aims. The grandiloquence is as lofty as ever, but the world has not come together; instead, it is fracturing, and the World Economic Forum’s manifold Leaders are reduced to the status of impotent spectators. Some men just want to watch the world burn; Davos Man wants nothing less. But, right now, that’s all he can realistically do.