10 Things We Learned From Davos
The World Economic Forum in Davos, Switzerland has long been one of the top economic conferences in the world. This year, however, the talk may be more political than economic. Here are 10 things we learned from this top political event.
The World Economic Forum 2017, commonly referred to as Davos, is held in January every year in Davos, Switzerland. Approximately 3,000 politicians, financiers, CEOs, and economists gather to talk about topics like climate change, inequality around the globe, and the global economy. Usually, this is the kind of meeting that entertains and discusses topics the way economics professors do – in hypotheticals and theories. It often feels like an economic Shangri-La for thinkers, far removed from the crisis, squabbles, and daily economic occurrences they gloss over. But this year is different. It’s become a top political event.
2016 shook the world with unexpected “plot” twists such as Brexit and Donald Trump’s presidential win. These types of events seem to have a butterfly effect rippling across the world and people are anxiously looking at the economists for their 2017 predictions. These events are simply too critical to the global economy to allow this meeting to continue its record of ivory tower forecasting.
Politics is taking top billing at this year’s meeting and here’s why.
Shifting Political Trends Towards Nationalism
The big events of 2016 certainly seem to point in the direction of nationalism trumping (forgive the terrible pun) globalism. The Davos elite, the world’s economic high priests and priestesses, failed to predict either of these big occurrences but like it or not, they’ll be poignant topics at this year’s meetings. Now instead of singing the praises of globalization, they will have to face why so many of the superpowers are pulling away from it and what that could mean for the world.
While a new U.S. president always seems to affect the stock market, this one has threatened to change the U.S.’s economic relations with much of the world. Economists cannot begin to make predictions for 2017 without considering Trump’s threatened semi-isolationism/populist policy. In this case, world economics and U.S. politics are inextricably linked.
Brexit has brought up a lot of questions about the future of the European Union. A day into the Davos meeting, British Prime Minister Theresa May announced Britain would be exiting the European Union’s “single market.” For the past decade, the gurus at Davos have been espousing the importance of global free trade and after the Brexit vote were still lobbying for a “soft” exit from the EU. May’s announcement made it clear the exit would be anything but soft.
Many of the speakers this year aren’t world-renowned economists but political personas. For instance, U.S. Vice President Joe Biden spoke on top economic earners not “pulling their weight.” While there are economic ramifications of such, that sounds more like a political campaign speech. Biden also addressed concerns over Russian President Vladimir Putin. While Germany’s defense minister spoke about the need for additional defense dollars.
The populist fervor of Brexit surprised most economic pundits, but 2017 may bring more surprises with EU issues at stake with elections in Germany, France, the Netherlands, and 20+ other countries. These elections pose a serious threat to the stability of the EU and since the Davos elite so firmly support globalization, they seem to be holding front row tickets to the most unpopular concert in recent history.
The Middle Class
Many at Davos are citing the rise in populist sentiment is due to the inequalities facing so many. IMF’s Christine Lagarde called for a fairer redistribution of wealth to help with it. While it has economic ramifications, it is largely a political issue.
Branding and Lobbying
Davos is a highly respected platform from which to launch a political agenda. Its meeting’s branding as well as the power of its attendees, attract some of the world’s wealthiest citizens, making it a political chessboard upon which only a few are suited and welcome to play. Evenings are often spent in private dinners trying to lobby people to causes. That’s part of the reason that Hollywood philanthropists like Angelina Jolie and Leonardo DiCaprio have made the trek to the Swiss Alps in the past.
The Ivory Tower
While there have been a number of elite speakers in the event’s 46-year history and the money is certainly present in this yearly gathering, the one thing that is not present is opposition. The crowd is largely one-sided, neo-liberal, pro-globalization. Samuel Harrington, a Harvard political scientist, coined the term “Davos man” to describe its largely transnationalist attendees. He wrote of them in 2004, “they have little need for national loyalty…see national governments as residues from the past whose only useful function is to facilitate the elite’s global operation.”
They’ve had almost an a-political stance when it comes to national politics because their focus was on globalization. Borders and national fervor were a hindrance to what they were espousing. This year, the Davos elite are being forced to see that support for their globalization views may not be as pervasive as they once believed. This may require some lobbying and politicking to gain support or, more likely, they may be forced to address larger issues in the political landscape.
This year’s theme is “Responsive and Responsible Leadership,” which sounds much more like a political undertaking than an economic one.
Controlled Invitation List
Davos invites and excludes as it sees fit. Many jockey for invitations, but the organization has been known to use invitations to its forum in the same way NATO may use sanctions. In 2015, North Korea was invited to attend for the first time since 1998. They accepted but after their January nuclear test, the invitation was revoked and hasn’t been reinstated.
This year more than ever, the World Economic Forum in Davos has to address the ripple effect of populist sentiment as several major powers appear to be moving away from the lure of globalization, an economic theory largely supported by the Davos elite. This year politicians will be watching Davos with a much keener eye than in years past. It will be interesting to see how the possible switch in tone in this year’s event will carry on into 2018 and beyond.
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