Mood of sobriety and self-recrimination at Davos

Well, that’s how the Financial Times describes the scene as bereft millionaires and billionaires, down to their last few helicopters, swan into Davos to keep the world on the straight and narrow. Along with Angela Merkel, Vladimir Putin, Gordon Brown and the prime minister of China, Wen Jiabao, and 2500 other VIPs. Not too many from Lehman Bros, but you can’t have everything. Plainly the right people for the job, considering the spiffing job they’ve done to date.

Don’t they have any sense of responsibility for the disaster they have visited upon the world? It’s not as though the mistakes they have made were hard to spot – basically it was just Financial Management 101. But perhaps they could not see beyond the vast and constantly growing piles of money that were blocking their view, and so stopped them being able to detect the misery this would cause to absolutely everybody else. That’s what happens if you give the making of traffic laws over to the drivers with fastest cars – everyone else ends up run over.

So what are they talking about in Davos? It’s still the economy, stupid. Some, it seems, are likely to be a bit less bullish about globalisation, free-market economics and insane levels of risk. A little ‘sobriety and self-recrimination’ will become them. Yet it turns out that not all are contrite. Apparently Duncan Niederauer has pronounced that “We’ve had a globalised economy and markets over the past few years and that’s been brought into question given the financial crisis. But there is no turning back”.

I’m sure Mr Niederauer’s perspective is not clouded by the fact that he is the CEO of NYSE Euronext, which owns two of the world’s biggest stock exchanges and is liable to serious damage if the world starts to think that endless speculation (which until recently made up about 95% of all trades, with only 5% going into real investments) is a pretty poor way to run the economy.

But of course it’s a completely spurious argument anyway. No one is asking them to ‘go back’. This isn’t a choice between trading and not trading. It’s not very likely that anyone in Davos is thinking that even globalisation is under threat. The question is, if we trade, to what purpose do we do it, and so by what rules should it be done. As things currently stand, we trade so that big companies can profit, as though that is the necessary and sufficient premise for global well-being. That is why we have the WTO – to implement a very abstract and theoretical model of economics.

But the way WTO rules actually work favours governments and businesses that are already rich and powerful and all but encourages corporations to despoil cheap resources and then move on. So is this what we want to perpetuate? I doubt it, because we have just seen what deregulating businesses does to the world, and everything we know about the environment screams out what will happen if we continue to globalise manufacturing, transport, energy generation, public services and a host of other pillars of the world economy in accordance with what can only be called the standard Davos model. The impact on climate change, ecosystems damage and resource depletion (starring Peak Oil) will be vast, unmanageable and catastrophic. Certainly there won’t be any more snow in Davos.

So what should they be doing? Hard to say. It’s not that it’s hard to invent plausible recommendations for moving the world economy to a safer path. It’s just that these are just about the last people on Earth I would ask for advice from. How about, walk home, train more rational successors, and resign en masse?

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