Saturday 19 January 2019

The high life in Davos gives a wealth of experience

Economic optimism was reaching a peak last week up a mountain in Switzerland, writes Donal O'Donovan

Swiss police officers observe the surrounding area from atop the roof of the Davos Congress Hotel during the World Economic Forum (WEF) annual meeting in Davos, Switzerland. Photo: Reuters
Swiss police officers observe the surrounding area from atop the roof of the Davos Congress Hotel during the World Economic Forum (WEF) annual meeting in Davos, Switzerland. Photo: Reuters
Donal O'Donovan

Donal O'Donovan

It's a circus, albeit a very posh one. The membership fee of around €500,000 a year means there are few casual visitors to the World Economic Forum at Davos, and an unhealthy preponderance of people for whom the world is by definition doing just fine as it is.

"Let's celebrate what could go right for the moment because we are in a sweet spot," the International Monetary Fund (IMF) managing director Christine Lagarde said in her final contribution on Friday.

In overall terms, the world economy is motoring along in a way it hasn't for some time, but when you hear the IMF talking like that it's hard not to fret about complacency.

"It's the first Davos I've been at where we haven't mostly been talking about a recent or a next crisis," Bank of Canada governor Stephen Poloz told Bloomberg Television on Friday.

Again, a view that suggests a degree of confidence in Canada about the unpredictable administration on his southern doorstep that again outside the bubble seems hard to justify.

But the mood was pretty buoyant. The crowd at Davos even managed to shrug off a mini currency crisis set off by the sharp-elbowed US team here. Treasury Secretary Steven Mnuchin sent the dollar to a three-year low by indicating he was perfectly happy with a weak currency.

This year's attendance included tycoons like Bill Gates, Blackstone boss Stephen Schwarzman, the heads of Wall Street banks and Silicon Valley tech giants.

The heads of government in all but one (Japan) of the world's seven biggest economies came, along with prime ministers and presidents from dozens of smaller nations - including our own Leo Varadkar.

Donald Trump, president of a US whose economic heft is unrivalled, as he reminded the audience, got star billing. Whether that attendance list of those who are already doing more than OK fatally undermines the Davos promise - to bring "unity to a fractured world" by gathering the best and brightest people to work collectively on the issues of the day - probably depends on your own outlook.

The organisers, led by the WEF founder Klaus Schwab - a Swiss professor and the world's most unlikely impresario and ring-master - do think so.

In fairness, not everyone was so sanguine. Irish businessman Denis O'Brien worried about what he called the ebullience among the Wall Street crowd, as well as the bubble he sees in Dublin office prices.

David Rubenstein, whose famously well connected Carlyle Group owns stakes in Irish businesses like AA Ireland, Carroll's Cuisine and Sam McCauley Chemists, also called for caution: "The biggest concern I have is that most people think there's no problem of a likely recession this year or early next year.Generally, when people are happy and confident, something wrong happens."

But just in case the delegate mix is too rich, Prof Schwab leavens it with a genuinely fascinating cohort of handpicked thinkers, celebrities, activists and religious leaders. Priests, monks and scholars from every conceivable religious tradition mix with the economists and bankers. Irish disability rights campaigner Sinead Burke was part of a panel that included hip-hop star Will i am.

Holding the event high up on the Swiss Alps (Davos is the highest town in Europe and is about the size of Killarney) means that delegates are thrown together for the week.

Security is tight but low-key at the event itself, and completely hands off around the town itself, and local byelaws mean public protest is basically banned. A band of protesters who breached the perimeter of the main event centre last Tuesday were firmly, but by no means violently, removed.

So by and large the 3,000 delegates and the armies of hangers-on they bring to town with them, are free to mingle around the snowy streets. Business booms in the luxury resort hotels, but lots of local shops, and even schools shut down for the week. They're taken over and branded-up by big corporations - Microsoft, EY, Infosys and even countries - the Russia House was especially huge. So there's an informal trade fair and expo running outside but alongside the forum proper.

The dress code is a sort of post-apocalypse business-casual: ski coats and hiking boots worn under some or all of a business suit for the men, and much the same for the women with the option of very thick black tights.

Talk of legendary parties tends to be exaggerated, or at least reflect an ideal unfamiliar to most Irish readers. A legendary party at Davos is one where Goldman Sachs boss Lloyd Blankfein shoots the breeze with a Nobel winning physicist and Queen Rania of Jordan, not one where Angela Merkel ends up playing air guitar with Joseph Stiglitz to Sweet Child O'Mine at 5am.

Inside the forum, Donald Trump aside, most world and business leaders have small numbers of minders (if any), they sit in on panels on everything from financial engineering to climate and gender to the challenges posed by artificial intelligence and fake news. That's inevitably mixed with the serious business of meeting face to face and in rapid succession with the hit list each has for the event.

The public panels tend to be less about an exchange of views and more about helping speakers build a presence and hammer home their message.

"You have three audiences (when you participate in a public event at Davos)," one senior delegate told me.

They are, respectively, those in the room and on whatever panel the speaker is addressing, people back home, and then current and future investors. For most speakers, especially those who carry most weight here, it's the latter audience they're here to reach.

That was true of Donald Trump, whose keynote speech could be summed up as: "America is open for business." The business community here seemed to buy it, and they outnumbered the unhappy activist community here by some way.

Davos takes the people who control half the money in the world to the top of a remote mountain. It's no surprise that the people who do best there are the ones with something to sell.

Sunday Independent

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