High up in the mountains world economic leaders search for new ideas
THE AUSTRALIAN JANUARY 19, 2015 12:00AM
FOR the past couple of years, I have driven across Europe in January to a small and largely unheralded ski resort; six-lane autostrasses and autoroutes give way to smaller equally clean highways, all lit by the low-rise sun of a European winter.
The roads narrow until we take the twisting, two-lane road up to the Swiss alpine town of Davos-Klosters. I travel there for what will be this year’s instalment of the World Economic Forum’s annual meeting — also known as Davos. For a period of less than a week the forum invades the town and it is cordoned off and polished and transformed into a makeshift centre of the universe.
Attending from Wednesday will be more than 3000 of the world’s leaders in politics, philanthropy, science, fund- management, technology and academia (with an over-representation of those from the dismal science, economics).
There will be the heads of most of the world’s biggest companies, countless billionaires, more than 40 heads of state, 20 heads of national banks, tech wizards, Nobel prize-winners and just about every celebrity economist .
High-powered delegates are outnumbered by a highly armed security and military presence.
Australia’s contingent is expected to include Assistant Treasurer Josh Frydenberg, Telstra chief executive David Thodey as well as Telstra chairwoman Catherine Livingstone.
Other Australians preparing to head there this week include incoming Westpac chief executive Brian Hartzer and his chief financial officer, Peter King, as well as Brambles chief executive Tom Gorman and Future Fund boss David Neal.
The gathering attracts an enormous amount of media, a good percentage of which is a meta conversation about how packing so many suits in the snow, holding four nights of cocktail parties, reports of exorbitant accommodation prices, context-defying celebrities and two dozen Nobel laureates makes sense. Or more importantly, makes any progress.
For the media, those invited get priceless access to a year’s worth of interview subjects over four nights, and for them, and more so for those not invited, the World Economic Forum is a big soft target. One senior journalist called it “a week of introspection, learning, grandstanding, contact-making and hard-core partying”.
I don’t know where he gets his kicks, but I’ve never attended an evening of debauchery where the drinks are restricted to white wine and the sponsor is a global accounting firm.
I don’t fit easily into any of the traditional categories. I’m writing for The Australian and a US online journal, and I have my own take on what makes this gathering so special.
It certainly isn’t the snow — it’s mostly left untouched. There is so little accommodation in town now skiers can’t get in. I met an American Fortune 500 chief executive who told me he was “dorming” with six associates in a two-bedroom chalet.
It felt like college, he said, but with the hassle of everyone putting on suits and doing their hair at the one mirror.
It isn’t for the cocktail parties, as accountants, try as they might, have never thrown the best of those. In fact, I’d be a little suspicious of any accounting firm that showed real skills in throwing parties.
The biggest international firms, financiers and auditors, churn the water with well researched reports on the state of the world, then trawl with a dragnet for new business. But when the tone is set by a 300-page meticulously researched paper on the state of the world, a world in which nobody is feeling overly bubbly, it’s not exactly like shouting “get this party started”.
The first few days always involves too much fascination of the first few days.
After all, attending the world’s highest powered conference in Switzerland is one thing to tell your associates when you get home, but cocktail parties with Mick Jagger are a completely different thing.
Angela Merkel will be there, so will David Cameron, and for the first time Francois Hollande. Or will he? We all pray he will not have a new reason to provide a sombre excuse to send his apologies, as, after the events of the past weeks, nous sommes tous Charlie, Francois will, on social if not political terms, be the top Charlie in town.
The reason I do what I can to attend is for what goes down when you put this mixture of people in the thin air of the town 1500m above sea level, barricade them in, and schedule meetings they feel they should attend from two hours before sunrise to five hours after last light.
Davos takes place on the ultimate neutral territory. Putting aside the arguments as to exactly how neutral Switzerland is, this place is neutral in the sense that it isn’t like meeting an executive of a multinational on a roadshow or meeting politicians in their corridors of power.
This is a purpose-built conference centre designed to get people together to talk across their divides.
The magic here is that it puts all comers on equal footing. Big business, the fund allocators, the administrators and the politicians go toe-to-toe with members of civil society, upstart young global leaders.
The normally basement- dwelling scientists, NGOers, religious leaders, and a spattering of niche artists with a sprinkling of celebrities — these are on the same level as the current corporate and political power list.
Everyone is equally inconvenienced by the shuffle between the main conference centre and the other buildings that hold dinners, lunches and those attention-grabbing cocktail parties.
Everyone is reduced to the same queue for their warmth providers, everyone rolls out of one building looking like a penguin and shuffles to another building to partially disrobe and carry on as if it wasn’t freezing outsides. I asked a guy if I could sit at his table as he had a spare seat — he also had a Nobel prize. The bathrooms, well, that’s another story.
The entire program is designed by this combination of politics, business and civil society (loosely those trying to do something to make the world a better place without the benefits of power or enormous remuneration).
Sure some people are here to just get their pipeline funded, but intellectual heft drags most towards the substantial. And in a world full of substantial, there is plenty that needs talking about.
But what does it achieve, the sceptical ask, demanding results that frankly will always be hard to quantify.
Sure there is lots to make fun of. It’s so easy to poke fun at the entire thing, badge envy, inappropriate attire for the alps, empty ski slopes, the stiffness of the Swiss, leaders with questionable human- rights records. And, of course, there is that guy trying to get his pipeline funded, who leaves you mid-sentence to try to corrupt an idealistic young leader or at least buy her a (free) glass of white wine. And yes, the leaders with the most questionable human-rights records will not be asked any really tough questions.
But in a world of relative stability economics trumps politics. Here they will provide you with simultaneous translation if you don’t speak English, but everyone has to have a passing understanding of the language of economics.
Of course, it’s not just where people come from, from which category they represent, but the individuals themselves who make the difference.
If you have ever been to a high school or college reunion, you know there is a success bias in those who attend. Here you know that those who don’t turn up, or cancel “for reasons beyond their control” at the last moment, include those politicians with poor approval ratings, chief executives with their stocks in free-fall, and scientists with a patent application that was rejected. Hedge-fund managers up 20 per cent attend in up years — they are less conspicuous in down years.
The crisis of 2008 that framed the past few years here has certainly subsided, but what is left over is more disconcerting. Yes there are funny accents, shirts worse than an APEC meeting, and out-of-context pairing taking the stage: Al Gore and pop artist Pharrell Williams. So what? An almost president of the free world and a platinum-plated pop producer are talking together on the same subject — how to communicate better on issues of global warming.
Criticism is that it’s all talking. Nobody has made the head of the WEF, Professor Klaus Schwabb, King Klaus yet. And sure, we are surrounded by a small well-armed militia, but it’s on loan from Switzerland.
Talking has it place. The annual meeting is an incubator, a testing of ideas, a forum for frank conversations and divergent ideas in the room at the same time. It’s a combination of business, politicians and civil society and puts them on equal footing. Addressing the challenges, and underneath all the snow, inside the barricades, within the protected confines of the purpose-built conference centre, real conversations take place. Every delegate is just as uneasy as the other. It’s a level playing field.
The need for new ideas is as live as ever. And ideas start their life with debate. Sure the economic crisis is officially over, but what’s left behind is much worse, much harder, more insidious. The economic crisis was an exciting sounding name given to a problem that still remains. We’ve woken hungover from a party that wasn’t even that much fun.
The issues of structural unemployment, growing inequality, regional instability, deflation and oh, that China issue, keep being kicked like the can further down the road.
So we are left with all the problems, but with a whole lot less of the excited energy to tackle the issues. Few politicians have any mandate to do anything radical to fix things.
Davos will always be an easy target, because, to paraphrase, everyone here is in the arena. It’s easy to criticise them and poke a little lighthearted fun at them, but to be anything more than a schoolyard bully with a keyboard, you have to put up an alternative.
So bring on the debate, bring on the critics, but until there is an alternative, this is where the action will be.
Even if, regrettably, the parties are not as good as the hype, and there is no time for a ski.