“Severe income disparity” is the most likely risk facing business and political leaders according to the World Economic Forum’s Global Risk 2012 Report. This finding really caught me by surprise. So while the Occupy movement isn’t anywhere on the agenda, here at Davos, its impact has been very much felt.
There’s the published agenda for the World Economic Forum (WEF) this week in Davos — and then there are the elephants in the room.
“Severe income disparity” is the most likely risk facing business and political leaders according to the World Economic Forum’s Global Risk 2012 Report. This finding really caught me by surprise. So while the Occupy Wall Street movement isn’t anywhere on the agenda here at WEF in Davos, its impact has been very much felt.
“Capitalism, in its current form, no longer fits the world.” A statement from an occupy protester? No, it was uttered by WEF Founder Klaus Schwab. But it’s not a view that I have found widely shared by the 2,600 delegates here. The ultimate irony, of course, is that those at WEF aren’t even the one per cent — they’re the 0.0001 per cent of global corporate and political elites.
There’s a lot of talk about the European debt crisis, which centres on Greece. At the heart of it is the fact that wealthy Greeks don’t pay taxes; tax evasion is a national past time for the rich. In turn the Greek government’s austerity program will cut the benefits and pensions of average citizens. Here’s a warning: That’s the recipe for revolution. Average citizens won’t accept austerity programs if the wealthy aren’t pulling their weight. And the cascading impact that a Greek default will have on German and French banks will highlight just how interconnected the world that we live in is.
Erosion of Trust
The Edelman Trust Barometer shows that trust in financial institutions and banks is at an all-time low. That might not come as a surprise given the origins of the 2008 U.S.-led credit crisis.
A quick refresher: The subprime meltdown was caused by Wall Street investment banks selling securitizing mortgages (which was profitable). Then some of the very same investment banks made a killing by betting against these very same securities triggering the credit crisis. Then some of the very same financial institutions got hundreds of billions of dollars in bailouts, which some, like Goldman Sachs, in turn used to buy equities at drastically reduced prices, in turn making a killing and then paying huge bonuses.
The regulation of investment banks and markets (or the lack thereof) is the government’s responsibility. Ultimately these events have proven to be deeply corrosive to trust and in turn to faith in government. As the Sufi saying goes, “The eye cannot see itself.” How will Davos delegates, comprised of corporate and political elites, see that it is greed at the center of the problem?
What do all these have in common? At the heart of them all is the occupy critique: The privatization of public wealth and socialization of liabilities.
I feel like someone on the sinking Titanic while the band played on. Few participants that I have talked to understand the depth of threats that I perceive we are facing globally and tectonic shifts that the limits to growth will ultimately force upon all governments and corporations.
If everyone in the world consumed as much as we do in North America, we’d need another three planets to provide. So clearly our lifestyle is not sustainable. In Natural Capitalism authors Paul Hawken, Amory Lovins, and Hunter Lovins document our wasteful industrial process of harvesting raw materials, manufacturing, and then landfilling. When you look at the cycle after six months, only six per cent of the raw materials are in use. In other words, 94 per cent of the total cycle is waste! For me there’s no deep understanding of this at Davos. When people talk of resource productivity, they’re thinking about tinkering with the system as opposed to wholesale transformation.
Another issue that hasn’t had much attention here is the fact that globally governments are spending $1.5 trillion a year on militarism (the U.S. is responsible for about half this amount) and $700 to $800 billion subsidizing oil and gas. So when issues like poverty, access to safe drinking water, combating malaria and AIDS are discussed here — in my mind I keep coming back to the mantra that it’s not a lack of resources to address these chronic problems — the central problem is a gross misallocation of resources.
So dear reader, while you won’t hear reports of these issues from Davos, you got to read them here.
Not to be Completely Pessimistic
There are reasons for hope. From one survey: A staggering 92 per cent of millennials (those born after 1981) believe that a company’s purpose should be measured by social purpose not just profit. This contrasts starkly with CEOs who believe that profit maximization is the goal of business. So if corporations want to attract and retain the best and brightest employees as baby boomers begin retiring en masse, they will have to focus on the social good to ensure their social license to operate. A large number of the participants at WEF are highly idealistic. One such group is the WEF’s Young Global Leaders.
Another trend that gives me hope is the dramatic rise of the influence of the Internet. A staggering 6.5 million people signed petitions in a single day opposing SOPA and PIPA — convincing a number of U.S. politicians to withdraw their support from the bills.
I would deeply appreciate your feedback and comments on this.
And I will write more about Davos in my next blog… so click on the RSS feed to be automatically notified about the next one.
Originally posted at Huffington Post