Every January a group of right-minded business leaders, intellectuals, and politicians with time on their hands huddle up in a five-star resort in the Alps, in something called the World Economic Forum. I generally enjoy reading about it every year, but not for the right reasons. I get a detached sense of amusement learning about this self-righteous and self-flattering congregation of millionaires and billionaires, hobnobbing in Switzerland to confer about what they think is important.
Having been to more than a few conferences and seminars, I can imagine that attention spans are pretty narrow in a room full of egos, so not much ever comes from Davos that is too impactful. In 2007, for example the WEF concluding statement predicted no major economic developments during 2008.
But, I also get a sense of loathing when I read about the WEF, because there is a mildly fascist quality to the whole affair: a bunch of supermen and -women, infinitely smarter than you and me, gathering to prove how “connected” and influential they are — the evidence of which is, of course, that they’re at Davos, and we’re not — and declaring what are or ought to be the correct views on economics, the environment, trade, taxation, war and peace, and basically anything they decide to preach about.
But, for all their brilliance these people are pretty slow to figure out what’s going on in the world. According to a report in the International Herald Tribune, the WEF is starting to see “protectionism” as a serious problem. Gee, we’re lucky to have this perspective.
Anyone paying attention to the manufacturing industries in North America and Europe could have filled them in about this, even as early as 2001 – the last time the world waited to find out if we were in a recession. That would have been seven WEFs ago.
As I’ve written elsewhere, I’m not yet convinced we’re in a recession or heading toward one, But, there is an obvious liquidity problem (i.e., a cash shortage) in the global economy, and the main reason for this is the overzealous control of money supplies by various central banks. This includes explicit actions — like Chinese policy of restraining currency values in order to keep employment high and exports churning; as well as passive efforts like the Federal Reserve Bank’s ongoing pursuit of strong consumer spending, even to the extent of deflated U.S. stock valuations.
The spread of protectionism isn’t surprising in the face of this, but the rise has been primed over the past decade by all the smiley-face declarations about globalization making the world better. It isn’t that the global free trade has not, or cannot, or will not make the world better — it’s just that no government, or central bank, or panel of experts has had the will to explain to the world’s “emerging” economies what is expected of them in terms of monetary, or labor, or, environmental policies. The alternative, the one we may be heading for, is a world with no effective monetary, or labor, or environmental policies. It's hard to imagine a meeting of global egos in that context.
So, what do you suppose is the WEF’s assessment of the current economic confusion: According to one recent WEF press release, a “lack of coordinated response and leadership was voted the single greatest threat to worldwide economic growth by participants at a brainstorming session at the Annual Meeting.”
Who’d have guessed it?