Davos FOMO

By Felix Salmon
January 22, 2014

Andrew Ross Sorkin is a very old Davos hand — he’s been coming for years, he knows the ropes, he knows what happens and what doesn’t. Which is why his column this week is so very odd.

Whatever their reasons for staying away, the leaders of some of the largest and most transformative companies are demonstrating, with their absence, the difficulty of convening a global conversation with all the main stakeholders…

At a time when globalization has so transformed business and economics, and at an event that bills itself as drawing the top stakeholders, it easy to understand why it is so difficult to make progress on the big issues when so many key people are not in the room.

This fundamentally misses what Davos is about. Sure, if you ask Klaus Schwab, the autocratic chief of the World Economic Forum, he’ll tell you that Davos is all about “convening a global conversation” and trying “to make progress on the big issues”. But I don’t think that even he believes his own rhetoric — after all, he never tires of complaining that the Forum is being commandeered by the big companies whose dues have made him extremely rich. It’s entirely possible that Sorkin is the only man in Davos who seems to genuinely believe that the purpose of Davos is to put Schwab’s ideals into practice.

The fact is that there is no global conversation; there is no “room”. (Or if there is a room, it’s the room which holds the IGWEL meeting, which is open only to public officials: the entire private sector is explicitly excluded.) If you’ve ever tried to throw a dinner party for more than ten people, you’ll know that it very soon becomes impossible for all those people to participate in the same conversation — everything fractures very quickly. A highly formal setting with a tough moderator might be able to double that number, but when you’re talking about an event with thousands of delegates, simply being in the same Alpine town as everybody else hardly means that you’re part of some grand conversation which is going to improve the state of the world.

For instance: the Pope made a minor splash, today, by sending a message to the Forum, in which he calls, among other things, for “deeper reflection on the causes of the economic crisis affecting the world these past few years”, which should in turn result in the assembled CEOs adopting a “precise responsibility towards others, particularly those who are most frail, weak and vulnerable”, along with “integral promotion of the poor which goes beyond a simple welfare mentality”. To which I can only say: yeah, good luck with that. While it might be self-evident to the Pope that the global financial crisis was caused by a failure to care about the weakest members of society, that’s not exactly a viewpoint which is going to be forcefully articulated at tomorrow’s panel on the “Global Financial Outlook”, wherein various bank CEOs will talk about “consequences of continued monetary expansion” and the “impact of regulatory shifts and harmonization”.

Of course, the panels themselves are pretty much a sideshow. The secret to Davos’s success is no secret at all: you invite a very carefully hand-picked group of people to travel thousands of miles to a small and remote Swiss town, and then ask them to stay there, generally, for a good four or five days. You remove them from their normal gatekeepers and power structures, and force them to mingle in a space which is too small to fit them all comfortably. The result is a series of more or less serendipitous meetings, and an opportunity for the global elite to get to know each other in a largely agenda-free context. That’s why so many journalists come to Davos every year: it’s not because anybody is committing news, but just because it’s a rare opportunity to talk off the record with extremely important people, and to get a bit of a feel for what they’re like, as people.

The conclusion one draws from such meetings will not come as any surprise: CEOs are pretty normal people, who have a pretty shallow understanding of most things in the news, and who can often be stupid and/or obscene, especially when drunk. Yes, they have money and power, but that doesn’t make them particularly insightful or admirable. Often, the exact opposite is the case.

Why do these CEOs come to Davos? It’s not to reflect painfully on their failure to live up to the Pope’s calling. Instead, Occam’s razor absolutely applies, here: the simplest explanation is absolutely the correct one. They come because they are invited; because they can get their companies to pay for it; because it’s generally considered a hot ticket that lots of people want; and because they get to rub shoulders with heads of state and global celebrities.

Which is not something anybody will say in public, of course. The official reasons for coming are much more serious: Jamie Dimon “one top bank chief executive” told Sorkin that “it would take me an entire year, and I don’t know how many flights, to see the number of people I can in three days at Davos.” That might even be true, or true-ish, for Dimon. But Dimon is the schmoozer-in-chief in a high-touch client-service business: one of the main ways in which he’s managed to stay on top at JP Morgan Chase is precisely his political ability, and the way in which he can charm just about any client in a CEO-on-CEO meeting. Most CEOs don’t have that job, and their meetings in Davos are therefore much less integral to what they do.

Davos is a town of insecurity: everybody worries that they’re missing out on something better than whatever it is they’re doing. But the ultimate missing out is not coming at all.

Are all these powerful CEOs so insecure that they worry about missing out on Davos if they don’t come? Yes, they really are. Once you get that coveted invite, it’s much harder to say no than it is to say yes. The true lesson of Davos is nothing about making the world a better place; it’s that even global plutocrats get stars in their eyes when presented with the opportunity to hang out with Bill Clinton, or when they get an invite to the Google party featuring Mary J Blige. Schwab shouldn’t bellyache so much about such parties: after all, panels on the global mining industry don’t make for much of a junket. The parties and the extra-curricular activities are the real reason that half the attendees even bother turning up in the first place.

11 comments

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… so I’ll state the obvious that I’ve never been to Davos… still though the event strikes me as a pretty darn good idea. You get a bunch of business leaders and political leaders in a smallish town and let them talk to each other for a few days. You could start with worse premise than that.

Lots of people say it’s window dressing but I think there is some sincere concern on the part of the world beaters for the plight of the world beaten. Maybe it’s not out of pure charity for the plight of their fellow man… maybe they just look at the 2 billion people at the bottom of the global heap and think “my goodness it seems like all these subsistence farming squatters would be better workers and more valuable customers if they weren’t so ignorant and malnourished… what can we do about that?”

Even if that extremely cynical P.O.V. was the default position of the masters of our universe; hey if the end result is it gets them talking and acting to increase food security and the availability of education than it’s a better use of resources than the Superbowl right. (Note that I am very in favor of the Superbowl)

Posted by y2kurtus | Report as abusive

I think you get most of it right, Felix. But do you have any evidence that the Forum has made Klaus “extremely rich” on a personal level? I’m sure he’s very, very comfortable, likely in the 0.1%, but rich by Wall Street standards? I’m not so sure.

Posted by lknobel | Report as abusive

” I’m sure he’s very, very comfortable, LIKELY IN THE 0.1%, BUT rich by Wall Street standards?” [emphasis mine] Priceless! That such a comment could be meaningfully crafted at all.

Posted by i_extant | Report as abusive

Thanks for an amusing column. You made me chuckle more than once Felix. ALthough that may not have been your intent. Isn’t it funny that the Republican Party here in the US is working hard today to delay the Foreign Account Tax Compliance Act? At the same time you’re wishing the Pope “good luck” with his ideas. The irony here is stunning…..forget about any progress on inequality. The wealthy don’t want anyone to know where their money is, let alone how much they have.

BTW, I am a registered Republican.

Posted by Missinginaction | Report as abusive

I agree with you Felix, also, I don´t think your are being cynical, just realistic. On the other hand, the real question and one that you left aside is not why the CEOs attend the event each year, but why almost nobody in the whole world seems to care or know anything related to Davos. Of course it´s ludacris to think that in 4 days something can be done just be getting together “important” people from different endevours, but the fact is that in one small town, a lot of people capable of making decisions that could have an impact in society, mingle for 4 days, and that should matter, again, not to change the world in a weekend, but to get more people interested in topics that go beyond the information provided by their local news station. What a waste of time and talent, at least for 99% of the planet, Davos is; when this meeting could be so much more than to make Klaus wealthy or to give an off the charts party with Mary J. Blige.

Posted by jonathanstahl | Report as abusive

Felix, ”

“But Dimon is the schmoozer-in-chief in a high-touch client-service business: one of the main ways in which he’s managed to stay on top at JP Morgan Chase is precisely his political ability, and the way in which he can charm just about any client in a CEO-on-CEO meeting” (snip)

I thought he ‘stayed on top at JP Morgan Chase’ the same way Dick Fuld did @ Lehman Bros: via his supine, submissive board of directors.

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