Davos 2013

The World Economic Forum

Committed to Improving the State of the World

Below is a brief summary of the main themes / concerns of Davos 2013. 

The conference also considered emerging technologies, equality issues and threats to global socio-economic security. 

The theme of Davos 2013 was Resilient Dynamism:

§  Leading Through Adversity;

§  Restoring Economic Dynamism;

§  and Strengthening Societal Resilience

Which means what ?

§  Economies affected by the financial crisis remain fragile and need to gain resilience, actions by governments and central banks avoided collapse, but there is real danger of relapse

§  The world has moved from ‘crisis response’ to structural reform; dynamism is about moving on from austerity to the investment required to create employment

“We are awash in cash, but we continue to invest as if cash were scarce,

We are not investing in innovations that create growth.”

Clayton Christensen, Professor of Business Administration,

Harvard Graduate School of Business Administration, USA.

Unemployment

“Davos has been too optimistic, the underlying issue is jobs.

There are 200 million people unemployed worldwide.”

FredericoCurado,

President and Chief Executive Officer, EMBRAER, Brazil

§  11 million in Europe and the US made unemployed in consequence of the Global Financial Crisis

§  Europe 25 million unemployed and 3 million vacancies that cannot be filled

§  The unemployment rate among young people; 44% in Greece, 30% in Portugal, 29% in Italy, 26% in Poland and 22% in France

The information age has replaced much human labour with ‘automation’ but has also had an impact on human labour, of which greater efficiency is expected.  But what the world needs is a system that is more resilient and that means getting people not to be ever more efficient, but to encourage them, and equip them, to be more creative.

There is a consensus that the “grow at all cost” model is no longer viable in the post-crisis world. Not only is it destructive of the environment but it also tends to concentrate the wealth in a few hands.

Reflecting on the Financial Crisis

The Global Financial Crisis was a governance crisis originating in the financial sector.  That sector hid too much of its activity in “dark and murky corners” (Christine Lagarde) and “put its own short term gain ahead of supporting the real economy”.

Accountability is crucial. “The goal of the private sector cannot be only profit; it must also add value, create jobs [and] develop the new ideas that drive an economy forward,” she said. “We need a financial sector that is accountable to the real economy, one that adds value, not destroys it.”

According to Professor Stiglitz (Columbia University, Nobel Prize in Economics Science 2001) the global financial system still needs to be fixed, there is still a murky trade in derivative products of unclear value that poses a threat to economic stability.

Moving on from 2012

2012 was about whether the Euro would collapse, the US fiscal cliff and concerns that the Chinese economy could hit serious problems.  The view from Davos was that 2013 should be about jobs and growth.

Too many nations retreating from addressing long term issues of sustainability, infrastructure, agriculture, energy production, education and health, to focus on domestic and economic challenges.

Responsible Capitalism; businesses and share holders cannot continue to think short term, they must think of long term sustainability, of what their business can contribute socially and economically as well as ‘the bottom line’.  If ‘Responsible Capitalism’ emerges from the wreckage of the Global Financial Crisis it will take some years for it to fully evolve.