PARIS—The village of Davos in the Swiss Alps has seen a lot, but it has never seen anything quite like the impact of Donald Trump. As the men and women who used to be called (or call themselves) “masters of the universe” assemble there at the World Economic Forum this week, the man who will be sworn in as President of the United States in Washington on Friday remains for most of them a mystery wrapped in an enigma wrapped in a Twitter account.
Conference organizers tell The Daily Beast that Trump was invited in the past, like many another putative billionaire, but he never came. One suspects he didn’t want to be outclassed in wealth, power, and intelligence by so many people in such close quarters. And while many of the CEOs in attendance in Switzerland have brushed up against Trump in business or on the golf course, it’s fair to say that never in their wildest dreams did they imagine they’d one day see him being sworn in as the Leader of the Free World.
A year ago this time, conventional wisdom among the caviar and Champagne crowd slip-sliding around Davos streets was that Trump’s fledgling candidacy was a hiccup, or maybe a belch, in an otherwise healthy American democracy. The Clintons were familiar faces at Davos; Hillary’s victory seemed assured, and she could be counted on for a steady hand at the global helm. Now, the hand that will be there seems to spend long nights typing truculent 140-character capital-letter missives onto a cell phone.
The net result is that global leaders are looking elsewhere for a stable anchor in a stormy world, and the country that’s stepping forward at Davos to present its case for leadership is not the United States, not even Russia, and not any European country or collection of them, but China. Xi Jinping will give the opening address for the conference, the first time a Chinese premier has ever taken such a role.
“We’re at an inflection point,” says Adrian Monck, a member of the WEF managing board and longtime director of communications.
Yes, Secretary of State John Kerry, a Davos regular, will be making an appearance, but he’s the lamest of lame ducks. The United States is pulling back. And where President Barack Obama tried to lead from behind in order to build broad consensus in global affairs, Trump may decide simply to walk away if the world won’t play by his ad hoc and sometimes arbitrary rules.
So, says Monck, “What China has to say about its role in the global economy is hugely important. The potential lies there for trade wars, and some warn of shooting wars. But even if the Chinese meet Trumpian truculence with Mandarin delicacy, much of the planet may start looking to them to set the tone for international affairs.
“In the past, when a new president came into office, the world would adjust to the United States,” says Monck. “This time around America is going to have to adjust to the world.”
But here’s the crowning irony of Davos summiteering: the high and the mighty have very often predicted with reasonable accuracy, for better or worse, the turns that world events would take. They have warned the planet and each other. Yet they rarely managed to avert catastrophe. And that tradition goes way back.
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Ever since a luxury sanatorium opened high above the village of Davos in 1900, intellectuals have ridden the near-vertical railway up to enjoy the sun and the air, and opine on the future of the world. When the German novelist Thomas Mann took a cure there, he called it “The Magic Mountain,” and wrote about the coming of World War I in what he called “the catastrophe-smitten flat-land.” A few years later, the Nazi philosopher Martin Heidegger held forth, advocating a return to the kind of brutal nationalist primitivism favored by his much-admired führer, Adolph Hitler.
In the 1970s the World Economic Forum, organized by Geneva University professor Klaus Schwab, put Davos on the map as the site where each January the financial, business, and political elites of the world gathered to network, to see and be seen, and to share ideas about how they’d like to see the planet run.
As it grew and evolved, the event inevitably was caricatured as the place where CEOs arrived on private jets to talk about reining in greenhouse gasses, ate opulent meals and swilled copious quantities of expensive booze while rubbing elbows with do-gooder celebrities like Bono and Angelina Jolie—all the while bemoaning the fate of the starving masses.
Every year they came up with recommendations for policies the world should follow, which they would recommend again the next year when it didn’t. In the meantime, what Samuel Huntington dubbed “Davos Man” did help to push and implement policies that steadily opened the world to big companies, to vast capital flows, to migration flows, and what proved to be the cruel Darwinism of globalization.
Did they know this was dangerous? Yes indeed. I witnessed first-hand the pessimism of world economic leaders at Davos in January 2008 as they talked at a luncheon behind closed doors about the perilous nature of the over-leveraged global economy. Yet in public they were optimistic—and eight months later in September that same year their darkest predictions came true with the global crash.
In 2014, two and a half years after the “Occupy Wall Street” protests had helped launch a ferocious debate about the One Percent who controlled an obscene share of the world’s wealth, the Davos elites (a tiny fraction of that same one percent) were supposed to talk about “inequality.” But that was quickly forgotten.
As I wrote at the time, “Once the conference was in full swing, few people talked, and even fewer seemed to care, about inequality.” The most popular video on laptops and iPads was a Jon Stewart “Daily Show” segment about the hypocrisy of the event. Citing the stunning statistic that 85 people on this planet control as much wealth as 3.5 billion, Stewart said “Jesus Christ [pause] would not be very happy about that.”
For most of the big executives there, Davos was, and is, a place to make more deals face to face with more people much faster than they could anywhere else—then spend a few hours on the slopes or taking in the esoteric offerings on the conference agenda, like a talk Goldie Hawn gave in 2014 about meditation. “I like to improve my mind,” one influential American CEO told me back then.
But, in truth, that wasn’t doing much to improve the world.
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Ironically, Klaus Schwab himself was the ultimate Cassandra, warning of doom only to discover nobody would act on his prophecies, when he predicted way back in 1996 in a piece he co-authored for the erstwhile International Herald Tribune that ran under the headline “Start Taking the Backlash Against Globalization Seriously.”
Twenty-one years later, it reads as if it were written yesterday.
Schwab warned that in many industrial democracies the mood was “one of helplessness and anxiety, which helps explain the rise of a new brand of populist politicians.”
(Kind of gives you a chill when you read that, no?)
The “lightning speed” at which capital moved across borders, the acceleration of technological changes, the rapid evolution of global marketing and management requirements—all strained the existing system “to a breaking point,” said Schwab. “This is multiplying the human and social costs of the globalization process to a level that tests the social fabric of the democracies in an unprecedented way.”
(And this was before the rise of terrorism and the endless wars of this new century had begun to strain that fabric as well.)
“Until now,” Schwab wrote in 1996, “it was conventional wisdom that technological change and increases in productivity would translate into more jobs, higher wages. But in the last few years technological changes have eliminated more jobs than they have created.”
(This was just as NAFTA was getting into gear; just as Europe was about to launch its single currency.)
“It becomes apparent that the head-on mega-competition that is part and parcel of globalization leads to winner-take-all situations,” wrote Schwab. “Those who come out on top win big, and the losers lose even bigger. The gap between those able to ride the wave of globalization … and those left behind is getting wider at the national, corporate, and individual levels….
“The way transnational corporations have to operate to compete in the global economy means that it is now routine to have corporations announce new profit increases along with a new wave of layoffs,” as Schwab noted.
“Some estimates put at 3 million the number of layoffs since the end of the 1980s in the United States, and more are expected,” said Schwab before penning a line to be remembered: “It is no consolation for a laid-off employee to hear analysts explain how the re-engineering of which he is a victim will help his former employer prosper.”
“Public opinion in the industrial democracies will no longer be satisfied with articles of faith about the virtues and future benefits of the global economy,” he wrote. “It is pressing for action.”
Schwab’s recommendation was to set national priorities: training and education, overhauling communications and infrastructure, developing policies that gave more incentives to entrepreneurs, and adapting social policies to protect those who lose out. Corporations, too, would have to make sure the “free market on a rampage” did not become “a brakeless train wreaking havoc,” he wrote.
Some of that happened. But not much. Not nearly enough. The doom of Davos Man that Klaus Schwab warned of finally arrived 20 years later, and with names attached to it: like Brexit and, of course, Donald Trump.