The Death of Davos Man--The Death of Davos

Posted by: Bruce Nussbaum on January 21, 2010

The World Economic Forum is about to begin again in Davos, Switzerland but Davos Man, that quintessential pan-national, pro-market, global leader of finance and business is all but dead. First created by that great political analyst Samuel P. Huntington, Davos Man may be walking and talking in Davos next week, but he is stricken with a terminal irrelevance that infects both him and the conference that once celebrated his masterly success.

The Great Recession of the past two years is revealing that globalization, the economic ideology of Davos Man, was never more than a gloss over nascent nationalism. In the end, it is the nation-state and the local taxpayer that is saving the banks and businesses run by Davos Man from total destruction. The Great Recession is also showing that Chicago-School efficient market theory is as false an economic belief system for the global economy as it is for national policy. While globalization has clearly improved the lives of millions of Chinese, we can now see that it has also led to the immiseration of millions of middle class and poor Americans. The theory that efficient markets within a free trade system would benefit ALL participants is now proven wrong.

Let’s check the metrics. Peel back the huge debt and asset inflation (as the Great Recession has) that drove economic growth and prosperity for the past 20 years and you find this: real US family income has not grown in two decades and is down 4% for the past 10 years. Real earnings of full-time US workers with Ph.ds has fallen by 10% since 1990. The US trade surplus of high tech products has been falling for nearly 20 years and turned into an actual deficit—now running at $8 billion a month—that is getting worse. The US stock market, that measure of corporate growth and economic prosperity, has stagnated for well over a decade. Today, one out of 8 Americans is on government food stamps and nearly 20% of working age Americans are unemployed, underemployed or so discouraged they’ve left the work force.

Then there is inequality. The populist rage that is upending politics in the US is a reaction, in large part, to the widening inequality that globalization has brought to the West. Income inequality has widened sharply since the 1970s—as globalization began to pick up speed. A huge portion of the profits generated by global banks and corporations have been captured by none other than Davos Man, the top 1% of society.

Davos Man now stands naked in front of the world, devoid of the mantel of superior economic theory and absent the technical (certainly financial) skills required to guide the world economy. Alan Greenspan has admitted publicly that he is utterly shocked that the markets did not self-correct--that efficient market theory didn't work. We now need to take the next step and admit that globalization, based on efficient market theory, doesn't work either for millions of people.

It might have been different for Davos Man. If the US had invested more in educating its children to boost their skills and competitiveness; if the US had changed its immigration policies to attract the more educated and entrepreneurial; if the US had been able to stop Asian currency and trade mercantilism; if the US had taxed its people to pay for foreign wars, big tax cuts and higher government expenditures instead of borrowing abroad--a lot of "ifs"-- globalization and Davos Man might have been saved.

Alas, it's too late. I went to the World Economic Forum for 12 years. I enjoyed the networking, the learning and the partying. But I won't be going back to Davos next week. Davos Man has nothing left to say.

Reader Comments

sd

January 22, 2010 5:10 AM

The developed world preached free market and globalization on rest of the world when it suited its agenda. This brought untold miseries to the developing world i.e. wiping out entire sections of industries and wrecking lives in the process.

Now when the tables are turned we want to roll back those policies. It was (and will be) about national interest always.

Adrian Monck

January 22, 2010 9:39 AM

Bruce - In Davos this year, you'll see - via webcast - more participants from China, India, Brazil, and Africa.

As you know nearly half of participants represent NGOs, labor, faith communities, civil society and academia. Not exactly the monolithic "Davos Man".

And the principle of business accountability to stakeholders on which the Forum was founded 40 years ago? That sounds more relevant than ever...

Mike

January 22, 2010 6:31 PM

Sounds like sour grapes? Did they not invite you invite this year?

Alex Delarge

January 22, 2010 7:03 PM

Bruce -- thanks for stating the obvious. Looking at macroeconomic data, it is clear that the income gap has widened since the liberalization of the financial system in the 1970, and the on-set of "market fundamentalism". The fruits of economic growth go into fewer and fewer pockets, while real wags have flattened.

But there is also a moral argument to it, which you don't address:

While Davos Man is bolstering on Davos panels with noble, verbiouse statements about the "values" of big business, anyone can see that his true intentions are motivated by pure self-interest. Rare is the "leader" in Davos who sees beyond the narrow horizon of his portfolio. Davos Man is not interested in change, and neither is the World Economic Forum. Rather, its self-proclaimed mission, "committed to improving the state of the world", is a - admittedly - clever tool to disguise the intentions of Davos Man and the true function of the WEF. The result is a number of sessions that produce, to borrow the words of André Bretton, "statements of undue length whose persuasive power is attributable solely to their strangeness and which impress only by the abstract quality of their vocabulary". Meanwhile, billions of people still live under the 1$ extreme poverty line.

It is also not true what Monck says, that almost half of the participants are NGOs, Civils Society Leaders etc. How could they be? After all, its the Forbes 500 companies, the worlds big corporations, who feed the WEF's revenue stream - which are considerable given the fact that it is a non-for-profit organization. And Davos Man continues to sit in suit and tie on Davos panels and talk about improving the state of the world.

Take a look at Haiti: the media write that this issue has risen to the top of WEF's agenda during the next meeting in 2010, thus creating a public perception that the WEF stays involved and engaged, nd has an interest in social change. But its all shallow talk. Wait for a couple of weeks - until the meeting is over - and you'll see discussions go back to executive compensation, and other irrelevant issues. The plight of the Haiti victims will be forgotten, and Davos Man will be going back to business as usual. There is a very simple word to describe this moral perversion: hypocrisy.

Marcelo Goulart

January 22, 2010 7:20 PM

There is no such thing as the Davos Man. Rather, there are many types of Davos Men, uncomfortably sitting side by side with very little to agree with except for how great it felt to be one of the select group.

Davos was and seems like it will continue to be self-help gathering of disparate talkers who pretend to care about the "global message", but who actually care more and acted exclusively for their self-interest.

The Davos Men have "nothing left to say" because they are now too ashamed of themselves to even show up to the ballo di maschera and look so incredibly hypocritical. Even they can't stand their mask anymore, not least can they stand looking themselves in the mirror.

There's always a chance at redemption, though. The US$16 billion Goldman Sachs bonus pool could go a long way towards redeeming the worthiness of some Davos Men. There's no shortage of need for help around the world.

But...it's now easier to avoid Davos altogether, or to just bash it from outside its big glass windows.

MG

January 22, 2010 7:28 PM

Instead of just bashing from the outside now after being one of the hypocrites for so long, why not have the courage to go and speak out your supposed redemption right to the face of who it matters most, the Davos Men? Isn't it too easy to just throw stones at the big glass window of your old beloved joint of collective pseudo-intellectual-onanism gathering?

Peter G.

January 23, 2010 6:54 AM

Bruce,

It's a long way from innovation and design to economics.

Too far, obviously.

This post is fundamentally false. Globalization isn't an ideology; it's an inescapable fact of life. As people become wealthier and it becomes easier for them to communicate and travel, their horizons widen.

But this doesn't mean nationalism will go away. In diverse nations, people continue to promote personal and local agendas over national agendas. Nationalism didn't eliminate those behaviors.

Most importantly, globalism isn't even LIKE nationalism; in important ways, the two don't compete for mindshare.

Well, enough, no reason beating you over the head with this. Stick with what you know until you know something about something else.

Stephen Baker

January 24, 2010 1:40 PM

Bruce,
Sounds to me like you're down on capitalism, which is the driving force behind all this. Looking at it from an American point of view, I think if the government guaranteed decent universal health and good education, globalization would seem less scary and we'd be better equipped, in mind and body, to face its challenges.

Sean

January 25, 2010 3:22 AM

This description from Mr. Nussbaum, "While globalization has clearly improved the lives of millions of Chinese, we can now see that it has also led to the immiseration of millions of middle class and poor Americans" is the effect of the nature of Capitalism that jobs are shipped to lower cost providers as the result of the entire food chain's pursue of higher profit. Anyone wonders if Karl Marx's vision had some sense?

Bill

January 25, 2010 7:42 AM

I'm currently working in China. I do not quite agree with the statement:'globalization has clearly improved the lives of millions of Chinesehe'. It isn't totally wrong but there's an important story behind the scenario - which Bruce simply (or intentionally?)overlooked. In China it looks that there appears the wealthy middle class - but, like many peop[le in the world, they do not, for instance, afford to buy any house in the cities. They've indeed earned more, compared with the past, but in a sense they're not quite different from the past. What happens is material progress in China, but it doesn't mean the common social good. Bruce made a false dualism - as if globaiization benefits developing countries like China but wrecks US. Face the music. Globalization only benefits Davos Men - Who are them? MNCs.

andreas schwander

January 27, 2010 4:51 PM

The word Davos in Raetormanish (the language spoken here before german speaking settlers arrived 600 years ago) the word Davos means "behind". So Davos man actually means a backward, lagging person. Or the one behind it.

Zeno Cossini

February 1, 2010 2:11 PM

Peter G: this post is NOT fundamentally false. There are many good points in it; to wit, the backward immigration policies, the horrible US lag in industry and technology, education and so much more.

The "globalisation" we have today could benefit no one but the rich, regardless of geography. How the US could ever have believed such a sham is typical of both the "keep the dream alive" mentality, no matter how transparently delusional, and the stranglehold the very powerful have long maintained in Washington and across the country.

Equally – and astoundingly – absurd is the fact that Americans continue to want more for less, looking for (debt-driven) tax breaks when everything's broken and there's no money – nor real will – for repairs.

However, the (your) point about nationalism and globalism is a good one, as they simply can't be talked about interchangeably or compared in a way that positions them as competing for the same ground.
True, however, is the fact that the US's (and most any other nation, corporation etc.'s) motives behind promoting a very selective handful of pro-globalisation policies is entirely self-interest (and in this way, marginally nationalistic)-driven.

The US auto industry has sucked billions in "energy research" and other fraudulent funding schemes and produces the poorest, lowest-tech cars in the world.
NAFTA continues to compete for bad joke of the late-century (along with blind deregulation, zero supervision, creationist theory in schools (and the Whitehouse), providing not a single promise the agreement – except to make some fabulously wealthy and powerful all the more so.

Davos Man is not only irrelevant – he's a self-serving criminal who ought to be prosecuted at what ought now to be the (far more innovative, just and relevant) Davos Tribunal.

kikus

June 16, 2010 10:58 PM

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January 11, 2011 12:58 AM

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Want to stop talking about innovation and learn how to make it work for you? Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking. Read him to discover what social networking works—and what doesn’t. Discover where service innovation is going and how experience design is shaping up. Learn which schools are graduating the most creative talent and which consulting firms are the hottest. And get his take on what the smartest companies are doing in the U.S., Asia and Europe, far ahead of the pack.

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