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Davos groupthink dangerously out of touch

Patrick L Young is expert in global financial markets working in multiple disciplines, ranging from trading independently to running exchanges.

Published time: January 27, 2014 09:01
Michael Froman, U.S. Trade Representative (L) and European Union Trade Commissioner Karel De Gucht attend a session at the World Economic Forum (WEF) in Davos January 25, 2014.(Reuters / Denis Balibouse)

The Annual Plutocrats Ski Week ended at Davos last weekend. Once again opinions were dangerously uniform.

A private jet exodus has befallen Zurich Kloten and Samedan St Moritz, (an airport dedicated to ‘PJs’) as 2500 plutocrats presumably consider it another successful World Economic Forum.

When it comes to talking shop, few come more expensive than the $70,000 WEF delegate fee (equivalent to almost 1.5 times the average annual American household income). Conference topics often infer this exclusive grouping are in touch with ‘normal’ people. Rather the deportment and discussions of “Davos Man” (& woman) demonstrate an altogether more worrying tendency: dull linear groupthink. The polar opposite of the global leadership this conference smugly proclaims.

After all, in 2008 the world’s corporate titans proclaimed resilient economic growth. Within months various delegates were ‘running’ clearly bankrupt entities. Fortunately, those 70k tickets were worth something as governments rapidly supported their banker brethren with shockingly irresponsible bailouts to reward some shockingly irresponsible lending. (To be ‘fair’ to the bankers, government agencies like Fannie Mae and Freddie Mac, were shockingly complicit in lending profligacy).

Governments of left and right united to create a crony corporate socialism. Just like communism, an oligarchy were protected from their irrational exuberance, subsidized (without consent) by ordinary citizens’ taxes.

These insidious links between an unholy oligarchical trinity of multinational corporations, politicians and NGOs have helped Davos develop into a hotbed of dangerous global groupthink. An overlay of aging rockers and sundry celebrities espousing ‘good’ causes sprinkles some stardust amongst the ‘suits’. but adds little contrasting thought to the prevailing politically correct doctrine of big corporations / government / NGOs. Meanwhile, the irony of chartering private jets to protest about global warming by visiting an obscure Swiss mountain peak is somehow lost on self-important celebrity delegates.

Ultimately messages from Davos resemble the finale of a Mozart opera - a cast singing some moralistic homily in unison which is frequently far removed from any sense of reality.

Reuters / Arnd Wiegmann

This year’s delegate message has been one of cautious optimism - which can be translated as corporations thanking gullible governments for feeding the old economy with vast bailout subsidies, including the “funny money” of Quantitative Easing. Yes, even the Davos classes have ended up as welfare junkies. The net result is a travesty of cronyism, driven by consensual groupthink incapable of identifying lateral solutions. True, Schumpeterian “creative destruction” is often ugly but its force must occasionally be unleashed to renew the economy. Banks ought to have been the first to feel that force in 2008.

Creative destruction is the antithesis of the corporatized socialist mindset practiced at Davos where the caretakers of big business are eager to extrapolate what they already have and largely incapable, or unwilling, to evaluate the future creatively. This year one innovation subjected to concerted criticism was bitcoin. In an unedifying example of Davos’ reactionary protectionist tendency, JP Morgan boss Jamie Dimon readily concurred with US Treasury Secretary Jack Lew about the evils of cryptocurrency. With a characteristic Davos irony bypass, Mr Lew railed against bitcoin facilitating crime: A curious stance given more drug dealing takes place in dollars every fortnight than the entire value of bitcoin! The WEF was once again in the vanguard of reaction.

The oddest facet to the entire Davos concept is the dubious extrapolation that those who run businesses are adept at solving political problems. Asking a clutch of multinational CEOs to ameliorate income imbalance is a fallacy, akin to asking a convention of footballers to progress nanotechnology or a beauty pageant to improve skyscraper construction. CEOs should stick to what they know: running businesses, where they deliver growth, create jobs and hence raise everybody’s wealth. Giving executives political influence merely encourages their egos to emulate the celebrities. Resulting ‘solutions’ usually amount to endless platitudes mouthed by a ‘suit’ primed by legions of PR staff.

Ultimately Davos is a product of these stagnant times - a phoney capitalist-socialist mish mash. The world needs individual empowerment, not more top down policy that is outmoded before it is implemented. With globalization a fact of digital life, we need to educate workers with the flexible skills to prosper in an interconnected world. It is small business and start-ups which need to be unshackled from suffocating pro-corporatist regulations designed by sprawling crony committees. Incredible prosperity awaits through further technological innovation, but first we must prevent the reactionary protectionist Davos man mindset suffocating our individual abilities. Growth will only come from the bottom, not the snowy peaks of Davos groupthink.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.

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