The new Medicis and a new medieval world

January 21, 2011

HUNGARY/I spoke with Parag Khanna, author of “How to Run the World” and a young global leader of the World Economic Forum, about global imbalances and creating better corporate citizens. The following are some excerpts of our conversation:

KH: Parag, what’s the key issue for you this year at Davos?
PK: The key question is this: whether the WEF can succeed in repositioning itself as an organization about risk issues.

KH: What would the WEF need to do in order to reposition itself?
PK: They can start by looking at their prescriptions for what to do about the risks – do they have awareness networks and early warning systems for serious global issues like food security and access to water.

KH: Why should the WEF be responsible for this as opposed to other global organizations like the United Nations?
PK: No one else is doing it on this scale – trying to put together a systemic risk network the way the forum is. That’s why everyone shows up at something like this and the pre-cursor at Dubai. At these meetings, the WEF is creating and providing a knowledge-sharing platform.

KH: So you’re relying on a “If you build it, they will come” approach to solving these problems?
PK: Davos has a convening capacity that no one else has. The forum rarely gets credit for some of the things that come out of there – some of the early strategy for the Gates Foundation was formed in Davos. Business activities between Israelis and Palestinians even take place. It’s just that these things are kept very quiet at the forum and the WEF never gets credit for them.

KH: Parag, you’re hosting one of the panels at Davos – what is it going to be on?
PK: New patterns of global trade. I’m co-hosting it with Pasqual Lamy, general director of the World Trade Organization.

KH: And what are these new patterns?
PK: In a nutshell, emerging markets are looking for new export nations. There is a growing pluralism right now. The 20 to 25 countries that take the lion’s share of world trade is starting to expand. It’s a globalization of globalization.

KH: In your latest book you talk about a new medievalism and its effect on the diplomatic industrial complex. Do you really think we will become a borderless global society?
PK: There were three times global retrenchment didn’t happen when everyone thought it would – 9/11, the collapse of the Doha round and the 2008 financial crisis. So history seems to be proving my theory.

KH: Then do you think the euro zone – and the euro – will break up?
PK: In an impolite way, Roubini’s wrong that there won’t be a euro. In a more polite way, he’s just not thinking it through.

KH: Go on ..
PK: What I want to know from all the eurozone doubters is to tell me, how to you do it? How do you pull out of the euro zone? I don’t think there’s room for currencies to do that. I don’t think Greece is going to last all that long outside of the euro zone.

KH: Tell me about a country that IS doing well.
PK: Most of the world is in a post-colonial entropy. The only truly successful post-colonial state is Singapore. Malaysia is also going to do well. They’ve invested a lot in infrastructure and beaten the resource curse. They’ve done a good job of managing natural resources and are a major exporter of manufacture electronics.

KH: What’s a country that you think would benefit from not having a border?
PK: Iraq. I don’t believe Iraq should stay together. There’s no reason for the country to stay together. It’s only to satisfy people on a map. There’s a remarkable degree of cooperation between Kurdistan and Turkey.

FOOD

KH: What about India? There are so many regions and even more languages in that country. Do you think India should split up?
PK: India has vast inequalities, many civil wars, enormous corruption and is not transparent. It has enormous potential, but that doesn’t mean it’s made it.

KH: You are describing some sort of new reality, which is the theme this year at Davos. Is your envisioned reality different from the WEF’s?
PK: What they mean of new reality is a post-crisis world; an acceptance of slow-growth; not getting hyper anymore; the notion of permanent risk. In a pessimistic kind of way; it’s about sharing skepticism of Europe as a call to action to prevent currency wars and trade imbalances. But, overall, I think the WEF has positive messages for all of that.

KH: What you’re describing really seems to be a new mentality – people need to see the world in a new way, or as you would say, an old way, a more Middle Ages kind of way where there is long-term chronic instability.
PK: We are moving from diplomacy to wikidiplomacy – a much more collaborative approach to running the world. We are living in a globalized medieval world and we have to figure out how to stabilize it and get to the Renaissance Age.

KH: Do you have the same mentality as those running Davos?
PK: They think one of the top five risks is de-globalization, which I violently disagree with.

KH: Why is the war in Afghanistan, a critical global issue, not being discussed at Davos?
PK: They don’t have the interest from the business community. What are you going to say that’s going to change a damn thing when you’re thousands of miles away in posh Davos?

KH: Many attendees at Davos think of themselves as thought leaders. Who are the real leaders in your eyes?
PK: Davos is full of the new Medicis – CEO statesmen – such as Richard Branson, Steve Jobs, Bill Gates, Mark Moody Stewart and Shai Agassi.

KH: What countries do you think show the best leadership right now?
PK: Germany (I went to high school there). They have a long segmented educational system – some people would call it eugenic, but it’s not. The state creates a process and a testing system to analyze faculties and then depending upon the result of the test send their youth to the right vocational school. That’s why they have five of the best car companies in Germany.

KH: Since you mentioned cars, who are the leaders in clean technology?
PK: China, India and Japan. America is way behind.

Photos, Top: A woman passes in front of a work “A Portrait of Youth” by Raffaello Santi during an exhibition of Medici paintings in the Museum of Fine Arts in Budapest January 24, 2008. REUTERS/Karoly Arvai
Bottom: People shop at an open air vegetable and fruit market in the western Indian city of Ahmedabad January 6, 2011. Record high food prices are moving to the top of the agenda for many Asian policymakers as the prospect of higher inflation in 2011 poses a major threat to the region’s strong revival from the global financial crisis. REUTERS/Amit Dave

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The Medici were running for their lives within three generations. Giovanni was the only one worth anything, and he would have been shamed to death by the behavior of many of the ‘new global elite’.

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