Davos looks to a post-Bush future
At the annual festival of good intentions, the usual anti-Americanism was tempered with an understanding that the global economy requires the U.S. to be healthy.
|Day 3 in Davos and world leaders are leery about the American economic stimulus plan.|
DAVOS, SWITZERLAND (Fortune) -- By the final day of this year's World Economic Forum, people were joking that the world had gone through a full economic cycle in the four days the conference had been underway. After a Monday on which global markets seemed in freefall, by Friday the Dow average amazingly showed a tiny gain for the week. Klaus Schwab, the paternalistic overseer of each year's Forum, was proudly talking of a "Davos effect" on world markets.
That was probably wishful thinking, but it was easy to fantasize that this group could engineer such a transformation. (And it was true that the general Davos mood on the global economy was not as grim as the press would have had you believe.) Here gathered the - mostly Western and developed - world's bankers, pundits, government officials, corporate executives, and perhaps most importantly, investors.
At one lunch I happened to find myself sitting next to a guy who runs a $30 billion New York hedge fund. At a dinner I spoke to the CFO of Mubadala, the government-controlled Abu Dhabi investment group that owns 7.5% of the Carlyle Group, 8% of AMD, 5% of Ferrari, etc. etc. etc. George Soros roamed the halls, J.P. Morgan Chase's (JPM, Fortune 500) Jamie Dimon sipped water in the lounge, and the Google (GOOG, Fortune 500) guys stood on the stairs with their wives.
You could take a choice of which issue you wanted to worry about - global warming, global poverty, and the financial crisis all vied for pre-eminence in the program and hallway hubbub. The WEF tagline is "To Improve the State of the World," and evidence of admirable intentions for markets, living standards, and general public welfare could be found here in great abundance. It was hard to find a session on any topic, be it tech, design, management, or finance, where issues of business responsibility and social welfare didn't come up at least once.
The verbiage may still often be merely obligatory, but it is now on everyone's lips. Bill Gates gave a speech proclaiming a new era of "creative capitalism" in which companies increasingly blend a striving for profit with a consideration for the needs of society. Microsoft (MSFT, Fortune 500) accordingly joined with Dell (DELL, Fortune 500) and Bono's Red initiative to announce they would start selling special laptops. With each sale the companies would make a donation to the Global Fund for AIDS. The Japanese prime minister said his country would create a new $10 billion fund to combat global warming. British Prime Minister Gordon Brown announced a conference on how business could help the United Nations achieve its Millenium Development Goals.
After skiing, U.S.-bashing is Davos' most popular sport for non-Americans. That's been true for years, but now the real estate lending crisis, U.S. regulatory laxity, and greed-driven losses by Wall Street have made the bashers bolder and more numerous. At one lunch, a top U.S. economist said "Many in Davos for years have been looking for the chastening of the United States. Now they have gotten what they wanted." However, he went on, "they are not going to like what they get."
His point was that for all its relative decline in prestige, and a self-destructive foreign policy, the U.S. - and particularly the now-skittish U.S. consumer - remains the world's economic engine. This eminence grise noted that the portion of U.S. gross domestic product driven by consumer spending had risen in the last decade from 67% to 72%, Meanwhile, in China, consumer spending represents only 39% of GDP. "That," he remarked, "is unsustainable."
The alternative view, heard often in Davos, is that roaring demand in all the world's developing countries, particularly for things like cellphones along with infrastructure for communications, transport, and energy, could keep global growth going. We'll just have to see.
There wasn't much discussion about the upcoming U.S. presidential election, in stark contrast to four years ago when Howard Dean's Iowa howl was the talk of the Congress Centre (where most meetings are held). The New York Times' endorsement of Clinton and McCain caused a ripple of chatter among Americans, but for everybody else it just seemed sufficient that the presidency will soon pass to somebody - anybody - other than the reviled George Bush.
He had virtually no defenders here from any country. A speech about American values by Secretary of State Condoleezza Rice seemed to go in one ear and out the other. The growing ethnic violence in Kenya, about which the U.S. seems to be doing nothing, was widely noted. Just about every techie and plenty of others found time to spend 5-10 minutes repeatedly spitting into a test tube in order to get a free genetic analysis from start-up 23andme. The company's executives, which include Anne Wojcicki, wife of Google co-founder Sergey Brin, set up a booth outside the Friday night party hosted by Google, which has become one of the Forum's hottest tickets. All comers were invited to register and spit.