At Davos, a World Economic Forum without economics
Gloomy and foreboding clouds loomed over the Swiss Alps at this year’s annual meeting of the World Economic Forum. Geopolitics dominated conversations in Davos more than ever before as war rages on in Ukraine, food shortages threaten and uncertainty mounts over the U.S.-China relationship.
Russia House on Davos’s promenade, formerly a hub for oligarchs and politicians conducting business, was transformed into an exhibition of alleged Russian war crimes, and the conference was rife with Ukrainian delegates, including the mayor of Kyiv, Vitali Klitschko, petitioning for further support and sanctions against their aggressor.
That conflict and other geopolitical developments, not least of which is the potential for famine in many parts of the world, have business leaders rightly concerned, but what was startling was the lack of emphasis on major economic issues that have them equally apprehensive.
In private conversation, virtually everyone agreed that the combination of inflation, stock-market declines, lockdowns in China and the growing possibility for a major global recession are contributing to a troubling economic outlook. And yet this year’s agenda was short on discussion of these issues. By comparison, in 2009, after the global financial crisis, the Forum was equally gloomy, but acutely focused on economic recovery plans and how the globalized system could respond to the shock.
Geopolitics and economics are inextricably linked and Davos usually serves as a place where the two realms can interact to discuss solutions. This year, something was different.
Unsurprisingly, Russian and Chinese delegates didn’t attend, but also absent were many Western politicians. The leading Canadian official there was François-Philippe Champagne, our Minister of Innovation, Science and Industry, but even he didn’t stay long enough to partake in an Invest in Canada event that was sparsely attended, largely thanks to the absence of any Canadian leaders.
Business leaders concerned with growing economic and geopolitical risks all wanted political leaders to be in Davos, to discuss Ukraine, sanctions, China and economic policy, but were left disappointed, and the lack of politicians only added to the uncertain mood. Notable exceptions included German Chancellor Olaf Scholz and Dutch Prime Minister Mark Rutte, who were present and engaged.
Geopolitical discussions, such as Volodymyr Zelensky’s virtual address, packed seats at the Forum. Conversely, discussions on economics were most notable for empty venues. It’s not as if business leaders aren’t seized with the multitude of threats facing the global economy, not least of which is rising inflation, but perhaps it was because on their own they are limited in how they can address them.
This was probably the year that political leaders needed to be at the Forum more than ever. However, it was also the year where it was most difficult for them to attend. During a cost-of-living crunch, a war in Europe, increased inequality, and people becoming more polarized and disenfranchised (not to mention the heightened conspiratorial theories around the Forum), many politicians wouldn’t dare be seen in Davos. That’s partly because of the fear of backlash from constituents and partly a failure to acknowledge that the private sector could contribute to the solution to many of the ills facing the world.
To be clear, it is equally a failure of the private sector to believe that issues such as climate change, which seem to have declined on the Davos agenda, cannot be solved without significant political and regulatory co-ordination and oversight.
In spite of many people’s skepticism about the Forum, those gathered there have a desire and an incentive to prevent the world being plunged into crisis. They come to work with politicians on energy transition, the impacts of supply chain disruptions, labour shortages, food supply and wealth inequality.
Whether the format of the Forum is effective is a separate question, especially as those most affected by these issues sadly are not part of the conversation. But we do need a venue to take on these issues, with both public and private sector involvement. And, in that regard, this year’s meeting failed.
Nevertheless, there were a few positive signs. It seems the shocks of the past two years and the lessons of the past two decades have galvanized a change in approach from capitalism’s leading proponents. Resilience, sustainability and long-termism have been incrementally advanced from the fringes of the Forum over its 50-year history and now have become central.
In addition, it was clear that technology is having positive benefits for the world and can be applied to complex public issues. For instance, a case study was presented about how big data and analytics (provided through a public-private partnership) helped Britain’s National Health Service lead the world on vaccine rollout and is now creating efficiency in dealing with that system’s COVID-19-caused backlog. It is model for other single-payer health systems, including our own.
It is examples such as these that demonstrate the positive impact of the World Economic Forum.
It makes sense that people are fed up with the status quo, but the reality is that with so many economic and geopolitical problems persisting and proliferating, government and business need to come together to chart a path forward. This was the year, above others, when politicians could have stood and defended their participation.
I am not a pessimist by nature, nor an alarmist, but there is a cacophony of economic issues that are very real and very urgent, starting with inflation. For summits such as this to be effective, we need the most powerful people in the world there to debate issues and, ideally, potential solutions. And, whether we like it or not, those people are still our politicians.