WEF (World Economic Forum) Panel

The panel from the World Economic Forum on Saturday ended at 16:45 GMT+1. SRF Info was streaming it live in Switzerland in English and I caught the tail end of one of the panels. The discussion included Schäuble from Germany, Christine LaGarde (president of the IMF) and the presidents of the banks of Japan, England (who seems to be American?) and India as well as the president of Blackrock (an investment company) and was moderated by Martin Wolf of the Financial Times.

They discussed the global economy as if it were a thing in and of itself, not as if it were a beast that should serve all men equally. The market was thus imbued with a sentience that it does not have and its “needs” are considered as if they trump those of the billions of humans. As the article Why the irrelevance of Davos is good news by Felix Salmon (Reuters) put it, “[t]he irrelevance of Davos is, arguably, good news: it’s a sign that the economic crisis is over, at least if you’re a member of the 0.01%.”

Mr. Koroda of Japan had the closing remarks,

“Mr. Koroda (Japan): I think we can be cautiously optimistic about the global economic outlook. First, the US economy is likely to grow by 3% plus this year and next year. Europe is finally recovering, growing and Japan also is making significant progress and emerging economies like India as well as China, Indonesia and others, their economic growth rate is likely to be maintained at a high level or likely to accelerate. So I think we have to be of course cautious, we have to be always mindful of downside risk, but I think we can be cautiously optimistic about the global economic outlook.

“Martin Wolf I think that you have given the summary that I would otherwise have given (looks through notes) and that’s relevant to the sort of market gyrations we’re seeing. The strong view on the panel is that maybe this is a little overdone, we’re going to have a lot of volatility, but basically the world economy is recovering at last and not looking too bad, despite all the local difficulties. As I always remark in these conclusions—and for the last couple of years, we’ve had this sort of situation—that it’s as optimism grows that risk grows and I think that one has to always remember that. But my reading of this panel is they’re not optimistic enough to be really dangerous, so I’m going to go with the conclusion of the panel, which was I think an immensely thorough review of all the issues.”

At the remark about “dangerous”, Koroda laughed out loud. Of course he can. Even if they’re wrong about the danger that the policies they discussed and recommended, they won’t be personally affected. The billions who are affected by the grand scheming of such committees may have much less to laugh about but no one in Davos really listens to them, nor were they the topic of discussion. The people on stage will be just fine, no matter what happens. For them, the economic crisis is not only over, it arguably never even existed, considering how well that echelon came out of the financial crisis in the last five years.

In an interview after the panel on SRF, though, the interviewer claimed that “all of these arguments about income inequality are in the center of the debate”, to which Philip Jennings, the General Secretary of UNI Global Union replied (in part):

“You have Barack Obama just a few weeks ago who said that this is the challenge of our times. The lack of social mobility. We have the leader of the British business community, the CBI, saying that workers need a pay-rise. You have Angela Merkel and the new coalition talking about minimum wages. Because the problem is stark and real. People here talk about the economic recovery: is it sustainable? For the majority of the working population, for practically everybody, it’s meant nothing. Because in terms of their income, wages are stable, they’re not moving. In the USA, some research was done by Barkley University and they showed that the benefits of the economic recovery in America went to the 1% alone. Not fair. Not sustainable. And not good for business.”

When asked about the biggest global risks for the world economy being this wide income inequality, he responded,

“When you have unfair distribution of income, there are clear economic consequences of this. We talk about a lack of demand in our economies. The European economy growing 1% …. the US economy is growing faster, but there’s a lack of economic demand. We have not reached the level of output … of pre-crisis levels…it’s still 10% below. So, if you haven’t got income, when economies are based on 70% consumption and wages aren’t rising, what do you do? You borrow, you get another job, you take risks and, at the end of the day, the economy doesn’t move.”

He continued to explain that he’s couching his argument in economic terms only because he knows that waving a red flag and making the power salute will get him pigeonholed by the people who should instead listen. So he makes the argument that not only are people drowning in an economic system without a moral rudder but this a bad thing because it’s also bad for business.

They continued their discussion, but focused on Europe, discussing how the Euro kills countries (e.g. Greece) that cannot control their own devaluation in order to stimulate local growth. They next covered the topic of Bangladesh, focusing on how global multinationals are taking advantage of the poor and have the worst level of trust ever measured.

See the Uni Global Union home page for more details and news about this quite interesting organization and its president, who bring some much-needed balance, reason and consideration for the vast majority of the population to this very one-sided conference.

The next panel discussion was a love-in for Shimon Peres, former prime minister of Israel, who was allowed to spout off at length about how dangerous Arabs and Iranians are. I lost interest relatively quickly—because life is too short.