The World Economic Forum’s annual meeting in Davos has lostsome of its pre-crisis panache. After all,before the meltdown in 2008, the captains of finance and industry could trumpet the virtues ofglobalization, technology, and financial liberalization, which supposedly heralded a new era of relentlessgrowth. The benefits would be shared by all, if only they would do “the rightthing.”
Those days are gone. But Davos remains a good place to geta sense of the global zeitgeist.
It goes without saying that developing and emerging-marketcountries no longer look at the advanced countries as they once did. But aremark by one mining company executive from adeveloping country caught the spirit of change.In response to one development expert’s heartfeltdespair that unfair trade treaties and unfulfilled promises of aid have cost the developedcountries their moral authority, he retorted:“The West never had any moral authority.” Colonialism, slavery, the splintering of Africa into small countries, and a longhistory of resource exploitation may be matters of the distant past to the perpetrators, but not so to those who suffered as aresult.

Ifthere is a single topic that concerned the assembled leaders the most, it iseconomic inequality. The shift in the debate from just a year ago seemsdramatic: no one even mentions the notion of trickle-down economics anymore,and few are willing to argue that there is a close congruencebetween social contributions and private rewards.

While the realization that America is not the land ofopportunity that it has long claimed to be is as disconcertingto others as it is to Americans, inequality ofopportunity at the global scale is even greater. One cannot really claim thatthe world is “flat” when a typical Africanreceives investment in his or her human capital of a few hundred dollars, whilerich Americans get a gift from their parents and society in excess of ahalf-million dollars.
A high point of the meeting was thespeech by ChristineLagarde, the International Monetary Fund’s managing director, who stressedthe marked change in her institution, at least at the top: deep concern aboutwomen’s rights; renewed emphasis on the link betweeninequality and instability; and recognition that collective bargaining and minimum wages could play an importantrole in reducing inequality. If only the IMF programs in Greece and elsewherefully reflected these sentiments!
The Associated Press organized a soberingsession on technology and unemployment: Can countries (particularly in thedeveloped world) create new jobs – especially good jobs – in the face of moderntechnology that has replaced workers with robots and other machines in any taskthat can be routinized?
Overall, the private sector in Europe and America has beenunable to create many good jobs since the beginning of the current century.Even in China and other parts of the world with growing manufacturing sectors,productivity improvements – often related to job-killing automated processes – account for most of the growth in output.Those suffering the most are the young, whose life prospects will be badly hurt by the extended periods of unemploymentthat they face today.
But most of those in Davos put aside these problems tocelebrate the euro’s survival. The dominant note was one of complacency – oreven optimism. The “Draghi put” – the notion that the European CentralBank, with its deep pockets, would and could dowhatever necessary to save the euro and each of the crisis countries – seemedto have worked, at least for a while. The temporary calm provided some supportfor those who claimed that what was required, above all, was a restoration of confidence. The hope was that Draghi’spromises would be a costlessway of providing that confidence, because they would never have to befulfilled.
Critics repeatedly pointed out that the fundamental contradictionshad not been resolved, and that if the euro was to survive in the long run,there would have to be a fiscal and banking union, which would require more politicalunification than most Europeans are willing toaccept. But much of what was said in and around the meetings reflected a deeplack of solidarity. One very senior government official of a northern Europeancountry did not even put down his fork wheninterrupted by an earnest dinner companion who pointed out that many Spaniardsnow eat out of garbage cans. They should have reformed earlier, he replied, as he continued to eathis steak.
IMF growth forecasts released during the Davos meetinghighlight the extent to which the world has become decoupled:GDP growth in the advanced industrial countries is expected to be 1.4% thisyear, while developing countries continue to grow at a robust 5.5% annual rate.
While Western leaders talked about a new emphasis on growthand employment, they offered no concrete policies backing these aspirations. InEurope, there was continued emphasis on austerity, with self-congratulations onthe progress made so far, and a reaffirmation ofresolve to continue along a course that has now plungedEurope as a whole into recession – and the United Kingdom into a triple-dip downturn.
Perhaps the most optimistic notecame from the emerging markets: while the risk of globalization was that itimplied a new interdependence, so that flawed economicpolicies in the US and Europe could torpedodeveloping countries’ economies, the more successful emerging markets havemanaged globalization well enough to sustain growth in the face of failures inthe West.
With the US politically paralyzedby the Republicans’ infantile political tantrums, and Europe focused on ensuring the survivalof the ill-conceived euro project, the lack ofglobal leadership was a major complaint at Davos. In the last 25 years, we havemoved from a world dominated by two superpowers to one dominated by one, andnow to a leaderless, multi-polar world. While we may talk about the G-7, orG-8, or G-20, the more apt description is G-0.We will have to learn how to live, and thrive, in this new world.