What Davos says about globalisation
Another year, another World Economic Forum.
As usual, there are plenty of high-profile delegates attending Davos. German Chancellor Olaf Scholz, US climate envoy John Kerry, JP Morgan CEO Jamie Dimon, Al Gore, Tony Blair… the usuals.
But this time it’s different. Some outlets are reporting on a lack of A-list political attendees, with Biden, Sunak, Macron et al giving it a miss.
It’s an interesting phenomenon that I think is linked to Davos becoming increasingly prominent in the public consciousness over the past 5-10 years – in an increasingly negative light.
The tipping point
The tipping point seems to have been the public’s acceptance and acknowledgement of climate change (around 2018-2019), at which point the hypocrisy of hundreds of private jet flights for “elites” to get together and talk about climate change became too great.
Politicians, if nothing else, have a good nose for which way public opinion is blowing, and it’s not surprising to see them all giving the conference a miss this year.
Implications for globalisation
While it’s fair to criticise an event like Davos for being nothing but a giant party for “elites,” the truth is that this diminished attendance has some scary implications for globalisation going forward.
Writing for Sky News, Ed Conway goes as far as saying:
“The world Davos thrived in is disintegrating and the summit has fewer heavyweights attending than in years gone by as the era of globalisation itself appears to be ending.”
Business-people attended the conference because they wanted to do more business, and politicians attended the conference because they liked the trappings of power. By bringing both groups together, Davos reinforced the idea that global trade (in capital, goods/services, and ideas) was a good thing. It reinforced and accelerated globalisation in a way that few other forums would have.
Where are all the politicians?
Businesspeople can always be relied upon to be self-interested, (and thus, still broadly supportive of global trade/globalisation): they’ll follow the money. But it’s noteworthy that politicians no longer feel the conference is worth their time.
The political landscape has changed and for politicians, it’s better to be seen to be focused on domestic issues rather than hobnobbing with elites in a swiss ski resort.
This seems reasonable, but by keeping them away, the soft power of globalisation diminishes. And in its place, trade barriers start to get erected.
The world is (not) flat
In his seminal book The World Is Flat: A Brief History of the Twenty-first Century, Thomas L. Friedman analyzed globalization in the early 21st century. The title was a brilliant metaphor for viewing the world as a level playing field in terms of commerce, wherein all competitors, except for labor, have an equal opportunity.
Times are changing. The Economist has a great article about the increase in “industrial policy” around the rich world, and the negative implications for free trade. Think strategic subsidies, export controls and curbs on foreign investment.
America is leading the way with its “inflation reduction act” (IRA) and “CHIPS act,” both of which offer huge subsidies and tax breaks to the green energy and semiconductor industries respectively. Now the EU is clamoring to respond with its own similar policies.
Most of us have taken ever increasing globalisation for granted in our lifetimes, but that could be set to change dramatically. The world may not be as flat as we thought.
