I spent the week with the global elite at Davos. Here's why I'm worried.
DAVOS, Switzerland — For the City University of New York journalism professor Jeff Jarvis, who has attended the World Economic Forum at Davos for 11 years, this year’s gathering of the global economic elite was tinged with déjà vu.
“The talk at Davos this year reminded me of the World Economic Forum meeting in 2009, right after the economic crash,” Jarvis said. “We're hearing similar defensiveness from many institutions now ... government, and certainly media."
Then, as now, populist anger over the disappearance of middle-class jobs was roiling politics on either side of the Atlantic. Yet the architects — and primary beneficiaries — of the new global economic order seemed reluctant to acknowledge its downsides: For all the innovation that globalization and technological advancement have spurred in the last few decades, they have deepened income inequality in developed countries like the United States. To a large swath of the population in the U.S., the titans at Davos are the problem.
I attended the World Economic Forum this year as both a journalist and a participant, moderating two panels on solving inequality and bridging the urban-rural divide. Despite the ostentatious displays of wealth that make everyone outside of Davos roll their eyes — the private jets, exclusive dinners and champagne toasts — the forum provides an important platform for world leaders in government and business to exchange ideas and collaborate. In recent years, organizers have strived to make the gathering younger, more diverse and more digitally savvy through new programs aimed at young people, social entrepreneurs and artists.
But this year’s meeting on “responsive and responsible leadership” was disappointing in just how unresponsive attendees seemed to the economic upheavals wreaking havoc on ordinary workers. This helps explain why this year’s Edelman Trust Barometer, an annual public opinion survey which was released in Davos, found that public trust in leaders across every sector — from politics and business to media and even nongovernmental organizations — have plummeted. Everyday people no longer feel like institutions are working for them. As Richard Edelman told a room full of CEOs over breakfast, if leaders at Davos don’t step up, “We have a tsunami on our hands.”
Those at Davos paid lip service to the yawning gap between rich and poor. The world's richest eight people now hold as much wealth as the bottom half of the population. Median per capita income fell by 2.4% in the world’s richest nations over the past five years, according to the Inclusive Growth and Development Report released by the forum. But while attendees recognized the problem, they offered few tangible solutions to help struggling families cope.
"There's talk about things like automation and joblessness, but people throw up their hands and say we've been through this before and it will work itself out," said Kenneth Roth, executive director of Human Rights Watch.
During a BBC World Service debate on the rise of populism, Trump supporter and former House Majority Leader Eric Cantor acknowledged "there is no confidence in those in Davos who are considered the elite.” Yet when I pressed him on what Republicans will do to help working-class people whose jobs have been lost to automation, he offered only platitudes such as "fixing immigration." Over the next 20 years, automation threatens to destroy 47% of jobs in the U.S. According to a McKinsey & Co study, 59% of manufacturing jobs in the U.S., 73% of food service and accommodations work, and 53% of retail jobs could go away due to automation.
It was far more common to hear participants ranting in the hallways about the “angry working class” and plotting how to better sell the benefits of globalization to the masses, rather than take responsibility for the ways in which capitalism and technology are failing everyday people.
Perhaps it should be no surprise that the beneficiaries of the current world economic order aren’t clamoring to rock the boat. Trump has appointed people to his senior team — Goldman Sachs president and chief operating officer Gary Cohn and SkyBridge Capital founder Anthony Scaramucci, for example — who are well-loved in Davos. However wary attendees were of the president-elect's volatility, they expressed excitement about Trump’s promises to reduce corporate taxes and cut government regulation. Ray Dalio, founder of Bridgewater Associates, said during a panel that the way to help the middle class is to “create a favorable environment for making money.”
“While people here say, ‘We have to do something about it,’ they don't want to discuss specific measures because any of them are probably antithetical to the agendas they are interested in pursuing,” Nobel Prize-winning economist Joseph Stiglitz said in an interview Wednesday.
There were promising moments at Davos. In a session titled "Squeezed and Angry: How to Fix the Middle Class Crisis," International Monetary Fund chief Christine Lagarde said at a closing panel on the Global Economic Outlook that “growth will not be sustainable if it is not inclusive” and warned that “if policymakers don’t get it now, I don’t know when they will.” Chobani CEO Hamdi Ulukaya told me in an interview Wedneday that he was driven to give away 10% of his company to his employees because he believes business leaders have a key role to play in helping tackle inequality.
But as one CEO told me Tuesday during a United Nations Global Goals dinner on the theme of tackling hunger, "The problems are all in this room, and the solutions are here, too."
Leaders in Davos need to do so much more.
That must start with being honest about where globalization, free trade and technological advancement have failed workers. Innovation in business can be wonderful, but there are always people on the other end who pay a price. The advent of self-driving cars, for example, threatens to put tens of millions of drivers out of work.
“The economic revolution that [the World Economic Forum] likes to celebrate has left a lot of people behind,” Yale president Peter Salovey said.
Populism caught those in Davos by surprise because leaders too rarely pierce their own echo chambers. We’re facing “a failure of listening, by news media, by companies, by politicians and government,” CUNY's Jarvis said. Whether it is Standing Rock activists, Black Lives Matter protesters, Women's March supporters, or members of the Tea Party, everyday people are demanding extraordinary change.
Those who couldn’t care less about what's happening in Davos are the ones who need to be heard.