Turning the tables: Can you help Davos leaders?

By Reuters Staff
January 27, 2009

Klaus SchwabDavos is a well-rehearsed event and everyone knows the part they should play. Business and political leaders gather each year to tackle the major challenges of a global economy while the rest of the world, or those of its citizens who are interested, look on from afar. But this year, for obvious reasons, things are different. The notion of leadership has been coupled in the public mind with that of responsibility. The tone here is a little more humble and the attitude more open-minded. There’s a recognition that new thinking is required.  A suitable time, perhaps, to turn the tables on convention and have Davos delegates ask the questions they can’t answer and for global citizens to offer solutions.

Gamefully opening the discourse is Professor Klaus Schwab, Founder and President of the World Economic Forum.

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If you’ve got suggestions for Klaus then use the comments section below.

282 comments

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If the business “leaders” were to look forward past the end of this economic mess-(“we will get through it” warren buffett)- the parties involved expecially the bankers who got us into this mess with bad products-need to bite the bullet and mark to market assets in their portfolios. For those with the stomach to hold onto some then they can perhaps breakeven or proift a few years down the road. For those who cannot or whose mbs cdo or other bad paper is causing their credit quality to erode should shed these. the “global” buyers that buys up these mark to market assets(like junk bonds) using the bidding system that may drive the value up or even down will spread the risk over numerous other businesses that see light at the end. If investors buy stocks at 5 year lows looking forward then why doesn’t a tool and die maker with no exposure make a long term commitment much like an investor does. If a going concern has minimal risk then the right thing to do is to pitch in and help shoulder the burden not view the world as every business for itself as is now the case.

Posted by darrell c | Report as abusive

The global dynamic system has been expending because of relatively inexpensive inputs like energy, productivity gains, labor, easy access to commodities. Going forward we will encounter bottlenecks in energy and probably commodities(all the big and easy deposits have been found and exploited). So we face a choice, stop growing and declining or find alternative solutions. Things got complicated because the system has been leveraged to price in a perfect scenario of abundance. Energy was the first bottleneck and showed us the limits. The result was a shock that combined with a housing bubble and extreme leverage caused the cascading domino of last year. In a paper/debt based monetary system we are all standing on the shoulders of previous generations. Meaning new debt supports the debt and investments of earlier times. It makes absolutely no sense to let this system collapse by bankruptcy and forced liquidation. This would destroy the dreams and living standards of billions of human beings. What we have to do is to save the system by increasing the money supply, monetizing some of the debt and aggressively addressing the bottlenecks. Most importantly the current crisis should be used to increase (alternative)energy capacity to a very rapid pace. Ultimately we will have to live and adjust to a higher price level because conventional hydrocarbon supply is limited and causes global warming. Central banks need to accommodate this quest for new energy. Ultimately the market will solve energy and commodity imbalances but at a higher price. Policy has to be to anticipate these bottlenecks and direct capital in their direction before the worst shortages and price effects occur. We have no other choice than to accept a, at least temporary, higher price level and ultimately let the market play out. Leverage has to be regulated to no more than a factor of 10 and derivatives need to be supervised in a (global) clearing house. Stable inflation rates and economic growth will be impossible because of declining oil reserves, a deflationary collapse would be a catastrophe for humanity and needs to be avoided at all cost. This means that central banks need to ignore higher prices at least temporarily. We need to increase free/low cost inputs into the global, dynamic, economic system by way of new technologies so that it can continue to expend and to lead humanity into a better future.

Posted by stefalb | Report as abusive

Here is
1.The Alternative Stimulus Package Outline.

The goal of the Alternative Stimulus Package is to allocate extra capital of $1 Trillion in the USA
economy in a relatively short period of time. This economic stimulus might stop the
downward momentum the US economy is experiencing now. This package tries to allocate extra capital
efficiently, and potentially without adding to the US long term deficit. It also would strengthen
the US financial system.
Here is the outline.
The US Treasury borrows $1 Trillion at around 2.5% for five to ten years with the goal to invest
profitably this pool of money in the US economy. The conduit for this investment could be
the US banks.
The US Treasury would offer banks the opportunity to profit by investing money from the pool
without risk. The US Treasury would offer banks money at 4%. All the money a bank is able to
place successfully above 4% would constitute its profit. The bank would not earn any money, if
its total return from the money pool does not exceed 4%. The bank will not lose money
in case its total return is lower than 4% or even negative. However, the bank would lose future access to
access to the money pool in case of negative returns.
Therefore, all the profits from the money pool are shared between the US Treasury and banks,
all losses are the US Treasury’s.
The relationship between the US Treasury and a participating bank is similar to the relationship
between an invsetor and an agency. Agency is hired by investor for the purpose of investing.
The banks will be willing to participate in this arrangement, because there is no downside risk
for them.
This plan does not describe many details. What is the distribution mechanism of the money between
different banks, small banks, big banks, banks from different states ?
However, this is only an outline of a plan.

2. Close GSEs,FNMA and Freddie Mac. Honour all the commitments made by GSE’s in the past, but liquidate
them. No implicit government guarantees which manipulated
housing market for tens of years. The GSE’s function should be handled by private companies, banks, mortgage
originators.
3. Securitization should be restructured. Before any type
of security is offered, it should be approved by regulatory body. Any type of security should be transparent to the potential end buyer. For instance,
mortgage backed securities could be conglomerated by
city or town, so that could be rated. The rating agencies should be paid by buyers of the securities, not
by issuers.
4. Bank CEO compensations, Wall Street bonuses is just a
small part of a big problem. The real problem is not just
with banks and Wall Street, but with all publicly owned companies. The compensation is determined by Board of Directors of publicly owned companies. The Board of Directors in reality is controlled by management, not by stockholders. There should be corporate governance reform.
5. Many current structures have builtin systemic errors.
They are similar to engineering systems. However, there
is no engineering group, that analyzed the existing systems from the point of stability. If it were, the current financial mess could have been predicted and avoided.

Posted by Alex Vasilyonok | Report as abusive

The MacGuyver engineered Solution (for today & now: get us started -> interim before more elegant solutions are found)

Re-hire generally qualifed people (ie. engineers, IT, welders, mechanics, administrators, financiers, UAW/CAW) whom have recently been laid-off en masse, to engage in a 2yr Fed/Municipal work assignment targeting \”green + clean\” energy production. Their salary comes from a portion of the Un-employment insurance they normally would receive + Fed infrastructure funding that has already been, and is being committed in Fed Gov budgets. Hire industry specialist contractors, to lead and guide and train this labour pool through the design, procurement, implementation and initial management phases. Employ them initially through Fed Gov funded start-ups targeting naturally abundant energy sources:

1) Solar Photo/Thermal energy
2) GeoThermal energy
3) Wind energy
4) Other (eg. conservation initiatives; Rain energy; Kinetic Energy via rollers in roads; Potential Energy storage via gravity or chemical storage solutions; -> any solution that does not require *incineration)

*Note: keep incineration derived energy for huge cities whom have land-fill problems and need to divert & convert garbage into energy. See Tokyo example.

Design \”green + clean\” energy solutions that take into account mass aggregration/economies of scale for town or city size populations < 250,000. With \”green + clean\” new energy creation by town/city, current transmission line distances (and losses) can be reduced, thereby also reducing the production load on current Energy Plants. (ie. encourage and enable down-turn of dirty energy production from coal-burning plants). Total Cost of Ownership for each \”electron\” produced should be equal to or less than oil/coal/natural gas based energy if you factor in \”subsized\” labour pool + benefit of meaningfully employed people during recession, reduced transmission losses, avoidance of CO2, increased manufacturing demand for \”green + clean\” materials.

In return for sustaining their current Fed Gov Income Tax incentives, and perhaps providing an additional 5-10% Tax incentive for those who go beyond, build a demand market by mandating that all Large Building Owners + Businesses (ie. this segment represents 35-50% of all energy use in a country) must purchase at least 30% or more of their energy from \”green + clean\” energy sources and must invest in technology solutions which help reduce by 20% their energy budget. Legislate that the Utilities who produce and distribute this energy today, must initially buy this \”green + clean\” energy from these Fed Gov funded startups. In 3-5 yrs time, when these ventures are properly established (and hopefully the recession fully over), the Fed Gov may privatize these assets selling them to the highest market bidder or giving them to the Municipalities or selling them to the Utility companies.

Probably very simplistic view, yet we have many technologies and idea\’s in place today … they just have to be \”holistically\” networked with some community passion and attitude.

Courageous Politicians are needed to sell the idea to the population and generate the passion/attitude needed from communities. Then Hire Engineers to run the \”green + clean\” startups. They will get it done.

Now that capitalism has prevailed, it is clear that we need an international bottom line of regulation to prevent a race to the bottom in individual countries and markets. The four freedoms, Freedom of Speech, Freedom of Religion, Freedom from Want and Freedom from Fear should be the essence of this bottom line and they are provided in the Universal Declaration of Human Rights.

Unfortunately, the UDHR is not legally enforceable. It is time to make it so, along with the twin Covenants on Economic and Social Rights and Civil and Political rights by drafting and adopting an International Convention on Human Rights. A draft International Convention can be found on our website http://www.2048.Berkeley.edu.

This website is part of the 2048 Project at the Berkeley law school and our mission is “to draft and international framework for enforceable human rights that can be in place by 2048, the 100th anniversary of the Universal Declaration of Human Rights.

We encourage leaders and participants at Davos to visit our website and make a comment about how this framework, “a new bottom line” based on the rule of law, should be designed.

Thank you for collecting ideas outside of your meeting, and we hope to participate with you.

Dr. Kirk Boyd
Executive Director
2048 Project
University of California, Berkeley
School of Law
kboyd@law.berkeley.edu

The world financial crisis was engineered by bankers and politicians. They should be identified and prosecuted. It is now expected that the people of the world will call for change, and Govt will respond by more bad Governing.

We need a complete overhaul of Govts. We need to strip the billionaires of their assets, and allow them to keep 10%. We need to abolish the UN and all inneffective world institutions and start over.

We also need strict population control. And elimination of OPEC and any other cartels.

We need to fix the price of oil at $30 bbl. For at least 10 years.

The worlds oil reserves belong to the people of the world not the Arabs.

We need a full court press in developing hydrogen extraction from sea water using RF energy and the development of magnetic motors.

All corrupt politicians should be jailed within 60 days. For a minimum of 25 years.

All terrorist acts should be named for what they are …..murder. God needs no army
he just needs a few with brains.

All weapons should be banned.

Posted by J Gutierrez | Report as abusive

Personal liberties and Freedom are the key to a successful and prosperous nation.

Posted by jason | Report as abusive

America do need to clean up Corporate America and go through CEOs and replace them with CEOs with hands on experience, and NOT paper (degree and no hands on experience in the industry) CEOs. Take greed and abuse out. Do NOT sell foreclosed homes, but lease back if possible… stabilize citizens’ life and the market. Restructure loans for all homeowners need to be restructured due to poor economy… at least for a while.

Have profitable Exxon to assist bailout auto industries by restructuring, consolidating and up efficiency in exchange of reasonable incentive, but not to repeat oil company trying to keep cars on road and not mass transit as in Los Angeles in 1960 or 70′s??? Invest in alternative energy, R&D, education – teach dicipline << especially to those accountable executives… teach common sense and get rid of frivolous lawsuits… and much more… Global confidence is key to the success…

Posted by Munki | Report as abusive

BEST COMMENT? You have got be kidding! This guy wants to explore the depths of a true deep and real economic depression. It was letting the market place ‘do its thing’ that got us into this mess in the first place. Now he wants to allow them to run amok even more to do even more harm! It is time to face up to the reality that maintaining a national policy of ‘Greed is Good’ has been a dismal failure! Wake up from the dream!

Posted by Hugh Powell | Report as abusive

MORE ACTION FOR THE LESS FORTUNATES, LESS TALKING, LESS GREED, LESS SELFISHNESS FROM ALL THE POLITICIANS AND MANAGERS ASSEMBLED IN DAVOS, AND THE WORLD WOULD BE A BETTER PLACE!

Posted by BRIGITTA MOSER-HARDER | Report as abusive

Can the World Economic Forum, with input from the major finance departments of the group of 7 leading countries(plus more as possible)develop a monitoring group who can provide a public (and non biased) advisory to governments and national regulatory bodies in order to manage financial risk. This would not interfere with free markets, but may alert us to major risks due to things such as subprime mortgages, collaterized debt obligations, and even inaccurate inflation data and other economic indicators which risks may not be known and yet can destroy our economies? In addition such a group may be able to monitor the ‘integrity’ of global currencies which for example you might expect the US Treasury to have done for the US dollar, but apparently they didn’t do so, and they ignored the risks caused by low interest subprime mortgages and easy money over the last few years. Looking forward, the current increases to the US money supply are being soaked up due to uncertainty in other currencies, but unfortunately when we start coming out of this recession and some money transfers back into the foreign currencies then the USD will fall, the FED’s will increase the interest rates which will kick start inflation that may exceed expectation due to the excess money in the system. Hmmmm, if the various regulators don’t keep track of this inevitable sequence of events, then maybe I can figure a way of making money out of this, but then I’d just be another greedy trader?

Posted by Will Berends | Report as abusive

What I have a hard time believing is that (at least regarding the financial descisions of the United States government) our current plan is to spend even more money. Have all of the funds of th original $700B bailout been used? And now we’re a senate majority away from spending another $819B? What for? For infrastructure? To create jobs? To loosen bank lending? I think this whole crisis is ridiculous. I’m worried about a new administration rushing in to amend a situation 10 days after taking office – when this problem has been developing since December of 2007. And I don’t think the US can afford a $819B mistake. If they want to create jobs and stimulate the economy, don’t spend money….lose it…federally. Have Washington cut every income, capital gains, state, federal etc. tax for a whole fiscal cycle. I mean, Washington is losing money anyways right? And quite frankly, since this stimulus bill is coming out of my pocket for the second time, I’d much prefer they just cut my taxes as opposed to spending more of my hard-earned money. Oh, and please don’t go through with the ‘bad-bank’ idea. I don’t understand how removing debt from a bank and handing it to Washington is going to do anything but divert the issue. Toxic assets need to be liquidated or settled, moving them to a new location is a temporary solution. And then what happens if the banks, now free of their bad debt, incur more losses in the future and credit tightens up again? Are we going to create another bad-bank for that too? You can’t sweep trillions under the rug. The major outcome of all of this that I fear most however, is that once all is said and done, the feds will have a hand (financially) in EVERYTHING. And then, ‘re-distributing the wealth’ as the Obama adminstration puts it, will be much easier for a federally owned and regulated economy and a democratic-controlled house and senate. Say goodbye to Capitalism; hello Socialism. You think I’m wrong? He’s been in office 10 days and he’s already going after the excessive bonuses on Wall Street and strengthening the ‘working class’ to have more leverage on employers. And also, all those billions of our tax money that went into GM and Chrysler, AIG and Citigroup? I want dividends, and shares of stock. Since when does the American taxpayer aid a ‘too-big-to-fail’ corporation?

Posted by Ross | Report as abusive

Based on the results from the first round of TARP bailouts, continued bailouts probably will not help. Since taxpayers are funding the bailouts and 2/3′s of the U.S. economy is consumer-driven, perhaps taxpayers are the ones who should be bailed out, not the “smartest guys in the room” who created the problems in the first place.

Some general thoughts:

Governments should not allow corporations to become too big to fail. Such efforts will decrease the fallout when a firm fails, promote competition, and protect jobs. For instance, Pfizer should not be allowed to acquire Wyeth period. And particularly with $50 billion in loans from banks bailed out by TARP funds. If the acquisition is allowed to continue, the taxpayers are essentially paying for an acquisition that will cause at least 20,000 more layoffs (and all that entails) and will lessen competition in an industry that is already compromised. Further, the pharmaceutical industry should be a matter of national security, not some financial game played by masters of the universe who seek large bonuses and ego gratification with no regard for society.

Banking firms that have required bailouts should take back all bonuses paid in 2008 and create a fund to help taxpayers who are being foreclosed. That, or give grants to communities most affected by the recession to create jobs and provide emergency assistance to those in need.

The U.S. government should consider means-testing Social Security benefits. For instance, the top 5% do not need social security benefits, nor do the top 25%. Further, there should not be a phase-out for Social Security and Medicare taxes – meaning SS and MC should be taxed on 100% of earned income. Social Security and Medicare funds should no longer be poached and used for other sources.

The U.S. needs universal health care. It could be paid for in any number of ways. There should be no debate about this. Health care should be a right, not a privilege and it should not be tied to employment. The former health insurance execs and their lackeys could be put to work processing universal health care claims. Let them devise methods to improve claims processing efficiency, rather than devise draconian methods to deny applications and reject claims that result in poverty and early death for an increasing number of U.S. citizens.

Globalism has not worked. Each country needs to become self-sufficient, creating their own food, goods and services, selling and trading their excess, and helping each other during hard times. Further, within geographically large countries, regions should generally be self-sufficient. Globalism as we’ve seen it practiced has been used for exploitative and crass purposes, not for any noble purpose. The ideas expressed here are not “protectionist” or “nationalistic.” They are common sense.

The U.S. needs to end the wars in Iraq and Afghanistan. The war on terror has been an unbelievable power grab – a grab for oil, a grab for American’s civil liberties, a grab for taxpayers money.

We need to develop alternative fuels that are clean and renewable. This should be the top priority after stabilizing the economy, ending the wars, and providing universal health care.

My two cents.

Posted by Jane | Report as abusive

Since almost ever in humans lives moneys are a centerpiece of everyone’s lives. Thats why it was for a very long time considered as sacred; and to do fake money was an horrible crime as it could ruin the confidence of the people into the world they live in. To give the power of issuing money to the private hands of bankers, who run their own agenda of self enrichment, and use the money swindled through the interest rates for their own goals, was or the most stupid thing a government may have done, or a treason. To bailout banks is just the continuation of the former treason; it is just more visible and so, more scandalous.

Posted by Jean De Guise | Report as abusive

HIGHER STANDARDS!!!
Is the only way out of this crisis.
It is about time we change our habit of consuming substandard products and services. The quality of such products and services can not be in the mercy of the markets anymore, it has to be regulated by law. One can argue that it is already regulated, but the bar has to be set much higher. Better and safer products, longer lifetime products, higher ethical standards on corporations and financial institutions, will translate in more jobs, stable markets, better education, healthier population and will go a long way in preserving the environment and global natural resources.
Utopic?! No at all. Wherever this standards are set higher the crisis impact is not as bad as in other parts of the world and their way out will be even easier. Lets follow the best.

Posted by Misha | Report as abusive

Explore ways of creating a system that works for humans, rather than finding more clever ways of enslaving humans to the system.

Posted by Josef | Report as abusive

Well said Josef. I like your sintetic thinking.

Posted by Misha | Report as abusive

The world has become polarized: global, yet local.
Many local people complain about the excess of greed and lack of accountability of the global set. But the big guys only mirror us. Madoff would not exist without thousands or even millions of greedy smaller investors willing to surrender their savings and reason to the comfortable illusion of miraculous returns.
Any change, global and local, will have to start with the people’s mentality: we need to be better educated and accountable, lower our consumeristic expectations. The rule should be “do less with less” (resources). Each of us needs to get involved in government, starting at the communal level.
Globally, we need some government. Most large companies are global, yet governments are isolated and struggle to recruit and finance competences. Smaller counties, states, nations are fighting battles for which they cannot be equipped. Incompetence and power create the perfect bed for corruption. We need to fight graft everywhere.
Since market economies ended up begging state governments for bail-out funds, we need to shape up a new economic model with great respect for the natural cycles. That new model should be based on reason and control and yet still be entrepreneurial and flexible, locally and globally.

Posted by Thierry Flamant | Report as abusive

It seems to me the world economies are in a self perpetuating circle of disaster that has to be broken and throwing money at the banks, who are at the root cause, is not, in itself, the ultimate solution. Of course they need funding to maintain their liquidity levels but this has not made them able or willing to lend again. Banks have always operated a policy in “bad” times of calling in loans, bankrupting businesses, foreclosing on properties and then selling off the assets at whatever price they can get, showing the losses in their balance sheets but recovering the loss from customers by increasing bank charges and or interest rates on “good” loans. I don’t see them changing this philosophy. The problem now is that the extent of their potential losses, the so called Toxic Loans, is so great that if they follow their normal practice they would all be bankrupt and hence the need for government bail outs.

The proposals for a “Bad Bank”, or even a State Bank, I believe has its merits as long as it is handled and controlled in the right way. I wonder how many of the Toxic Loans would be recoverable if the borrowers could have their loans restructured to make them affordable, in the shorter term, particularly mortgages. This would enable people to remain in their homes, stop the foreclosure sales, which is helping to depress the property market, as well as taking out of the market all the properties currently for sale by owners trying to sell in order to reduce their burden of debt. This action would enable the property market to stabilise more quickly and the removal of these loans from the banks balance sheets would free up funding for mortgages to those wishing to buy and able to do so as well as financing good businesses.

Properly managed the Bad Bank may well recover many of the debts, albeit over a period of time, but at a much lower cost to the taxpayer than some of the policies currently being promoted. It seems to me that if no direct help is made available to both home owners and good businesses what we will see is more foreclosures, more businesses laying of staff or becoming bankrupt resulting in more unemployed people unable to keep up their mortgage payments followed by more Toxic Loans and the banks needing more funding to cover them.

Posted by Adrian Head | Report as abusive

I am one of the increasing numbers of persons who have consistently shown that the Banking System and Exchanges Regulatory system as it exists and the Regulatory system direction belong to Jurassic Park. They have outlasted their time, by being supported by Advanced Country Governments who also foist these on the rest of us. In Kenya, Mpesa the SIM based money transaction system has several times the number of customers as banks and has shown that the banking system is a dead weight. In Sri Lanka, we proved that our equity conversion of rehousing (of slums at that!!) is superior to all the jacked up methodologies of loans and collateral. Enterprises all over the world have proved that the Accountant and the Lawyer in commercial practice today are the wrong “storytellers”. As VISA founder and President of the world’s first trillion dollar organization Dee Hock put it, we have to discard the old “storytellers” and create the finance industry that matches our times. Otherwise the Western Taxpayer will just be bailing out the source of ruin so that they can crash resoundingly again. That time a trillion will be surpassed as the unit of bail out calculation.

Let’s put aside our anger and think carefully about what we really need. Because being angry with Banks or Banking regulators or Governments are wasteful exercises. We will have to spend more money to investigate and also spend money on maintaining Jails.

If you truly believe in Capitalism & Free Market, then you have to let it go through its natural flow. We are all afraid and it is affecting our judgment.

Blaming conspirators and Secret world powers is again useless because, if they are indeed very powerful then you cannot do anything against them.

But I remember a western leader/philosopher who said, Democracy is bound to fail because once people understand that they can vote themselves unlimited money, the system will fail.

What that guy was saying is that people should not be allowed to vote themselves money. But this is exactly what is happening in US and Europe where Banks are using their votes (purchased) in Parliaments to vote themselves easy money.

I am completely sure that we should allow everyone to get the same opportunity. Not just farmers or auto companies or Banks but all other producers.

Meaning if someone is making any product, he should be issued subsidies for producing it. That subsidy will ensure he continue to manufacture that product and provide economic growth. His earning will contribute to purchase more products from others.

When some products are not sold out, Government should accept the products and can issue around the world as donations just as it does today with agricultural products.

The Government will become more powerful than what any war machine can achieve.

All Governments can do the same. Japanese can donate cameras. Chinese can donate cheap toys. Indonesia can donate handicrafts. Important is start giving money for production rather then GOLD.

The method of printing money based on GOLD is the single most anti-Capitalist element which is causing all the economic disasters. The reason is simple.

When money is printed for Gold, Everyone will sooner or later search for gold. It allows them to print money and issue it to others for interest.

So why waste time working. Start finding ways to get gold. right? Stop that and Capitalism will be a smooth system of never-ending growth. Because only production will provide money. Governments will be there to regulate any products that are found useless or unwanted.

For those who are wondering why Islam is growing, please learn that Islam forbids usury. Against all media advertisements against Islam and branding of Islam as bad extremist religion, people are adopting Islam. Even in modern country which provided western style economic growth such as Malaysia and Turkey, Islam is growing. This is because of the Corruption of Capitalism with extreme usury. Productive activities are not valued correctly but is being suppressed. This is forcing people to find alternative Governments which today is only Islam.

In Eastern Europe and Russia people are yearning for the return of Soviet style Socialist Government which provided money for work and not credit.

I am not a Muslim and I urge all thinking Capitalist to start understanding the true danger ahead and start amendments.

Posted by VelShan | Report as abusive

Dear Prof. Schwab and other Davosians:

It is a natural, innate human tendency to seek to accumulate enough means to overcome perceived future threats to one’s own well-being, and that of one’s family, friends, and even clan. Globalized commerce, finance, and population growth to 6.6 billion have amplified the natural tendency of people to accumulate their means to an extent that is now threatening the viability–the genomic relevance–of our species within our living biosphere’s ongoing “mandate” to sustain Life. This is why the Davos gathering has such import: a new framework for a “sustainable capitalism” is badly needed. And bad behaviors have to be curbed without damping the creative spirit of entrepreneurship that yields so many astounding solutions to societal problems. We don’t need immense new regulatory superstructures. Taxpayers don’t have the means to support regulatory police states. But all people do have the means to insist on healthy bodies, communities, and ecosystems as their birthright.

Governments that have the capacity to regulate commerce within capitalist frameworks also have the power to harness this natural human tendency, and bend it towards a broader sense of “means”: namely, the means of our living planet to sustain ourselves, our communities, and our nations. Specifically, governments that have the power to tax corporate income could apply sustainability performance metrics to their taxation models. Corporations that achieve “top quintile” sustainability performance metrics in a two-year cohorts of similar SIC-code businesses, could be given tax-free status. Imagine it. All others in the cohort would receive their normal income taxes. Every two years, for-profit corporations would have the opportunity to be re-scored in comparison to their peers. Successful companies would attain “E-Corp” status (short for “ecological corporation”). But this status could be lost due to competition from below every two years. The pond would turn over.

Such an iterative system would harness the modern profit incentives that drive individuals and corporations, towards broad-based sustainability outcomes, in a manner that would reward and recognize that their “green” efforts are actually lowering the carrying costs of their governments–and deservedly so! Focusing the profit-seeking behavior of individuals and corporations on the “triple bottom line” of true biospheric sustainability is the challenge of our day, our century. A simple tool like the incentive of zero income tax for “top quintile” sustainability performance would represent a major “stimulus” on behalf of a smart and sustainable capitalism.

I welcome further input opportunities, if you think this idea has merit.

Posted by Greg Cumberford | Report as abusive

Klaus, that’s a great question, and I’m not sure you will like the answer. This medium is one of communication, and that requires a significant personal commitment. In my opinion, the most honest dialogs occur on bulletin board-type forums that cater to specific subjects (like say finance) and allow people to post anonymously. Although some people abuse the privilege, anonymity invites honesty and all ideas have to be judged on their own merits, not the name attached to them.

As for the question everyone is answering that you didn’t really ask, how to fix this thing… I think, at least in the USA, it’s a couple of things. First is an over-reliance on credit. We’ve got to turn away from that and encourage not only individuals to save more, but also companies. Problem is, this is counter to the belief that spending is what drives the economy. And I do expect it will hurt a bit at first, and may require the banking business to downsize, but it is necessary.

The other thing, which is somewhat related to saving: we need to encourage, and perhaps require, companies to pay dividends instead of keeping all their cash. This will do a few things. First, it will remove much of the speculation. Much of the “money” lost in this crisis was never actually money at all, but simply speculation in the future value of corporations. With dividends, price/earnings ratios are easily calculated to set the value, and the more CEOs steal the earnings, the more it depresses the stock. This will restore some honesty to the system, but it might require a hard pill to swallow for our current Democratic administration: cutting or eliminating capital gains taxes on dividends. I’m neither pro- nor anti- tax here, because I know in the end all tax is passed on to the consumer. But the psychology of it affects people and has to be dealt with.

Posted by Proton Soup | Report as abusive

The justification given for the bank (and insurance/financial services/brokerage/auto) bailout was that they were “too big to fail.” No one should be too big to fail under capitalism. They should be free to fail just as they were free to succeed. Rather than an ill-conceived, knee-jerk, panic bailout with borrowed money by a basically bankrupt country, they should have been busted up into their parts and the viable parts sold off to help offset the bankrupt parts.

It would be ridiculous to think that someone who is virtually bankrupt would go out and borrow (if they could) a large sum of money and take it to Las Vegas and place the borrowed sum on a roulette wheel thinking that they would be lucky enough to bail themselves out of that debt, but that is exactly what our government has chosen to do – and it has not worked, and had about the same chance of working as the roulette wheel.

Now, it appears that we all get to experience first hand what the word “hyperinflation” means, probably sooner rather than later with the new “stimulus” plan, which will probably just stimulate the money supply more than anything else…

Posted by Cathy | Report as abusive

When toxicity is inflicted with potentially lethal agents at dosages which kill 50% of the conscripted receipients (LD50) the experiments are halted by pathologists as it is known and guaranteed that LD70 or greater will wipe out the entire ‘population’. Also, serious epidemics, unchecked, coalesce rapidly into torrid pandemics with serious global consequences. It is not just foot and mouth, it’s, BSE too. The wretched toxic Bankers having released economic ebolas and marburgs simultaneously, surely, must be cast off on a far away desert island to spare the rest of commerce and industry from getting wiped out?

Posted by Monawar | Report as abusive

this comment is as true as that tons of sickly swirling air polution effects our climate … there are many living in 55 states of denial in the US , a false cosmetic lie … obsessive compulsive illusions of being bulletproof as if life is a computer game .

while bail outs help stop the market panic short term they are a total waste of needed capital .

time to prepare them for the incovenient truth … buried as they fall for their inhumane ways of doing business … strength is in righteousness … the strong survive , and the vacuum can also be filled by government sponsored co-operatives where needed , those who play fair for the common good… an equilibrium of government and private business activity … it is like a natural order of balance .

but a sad fact is a lot of good people are financially trapped in these failed entities… it’s also like helping the morgage defaulters , some are from over indulgent selfish greed , some from inoccent circumstances …. which ones do we help first with our charity ? work it out quickly or the wasted $$$ supporting moral cowards will be a global disaster .

Posted by Harry | Report as abusive

You in the billionaire class, you elitists:

Fatally missing from your proceedings is the addressing of the inextricably entwined collapses of the world economy and of ecological services forcing mass extinction and, sooner than later – human extinction.

You folks have failed to factor in the life-support sustainability of the earth in your ruthless increase in wealth at the hands of the world’s peoples.

To avert looming extinction, the World Economic Forum must face the direct link between unregulated financial profiteering and the equally steep curve of the uncontrolled rate of its component rapacious consumptive-driven, greed-caused resulting climate change head-long descent into planetary environmental complete holocaust.

Real wealth has nothing to do with the non-productive gains realized from the financial bubble, now vanished.

Real wealth is measured by a steady-state, sustainable economy based on zero carbon emissions, reset to a CO2 neutral flux, an economic activity to 5% of the current levels and a redefinition of the global economy into a constellation of relocalized communities based on bio-regional determinism, watersheds, and local access to necessities of life, education, culture, health care for all.

Well the comments here answer part of your question: if there is a mechanism for getting focused answers to the question you actually want to ask, this is clearly not it!

Something like a semantically-enabled wiki, with some level of permissioning and editorship (AKA gardening) would be a better route.

The technology to do this is not quite there, but it would help to have something where the ideas people put up are expected to reference established art wherever they can. Then if the referencing was somehow viewable or navigable, those wanting to make sense of the screed of comments and ideas could navigate things in the order in which they link into the wider global and academic conversations. Even original thinking, if it has value, is an original bringing together of existing thinking and existing facts.

At present the underpinnings of such a thing are in place in the form of the semantic web techniques and some of the existing research in semantic media wikis (I could provide references) but the imaginative stuff needs to be done.

Posted by Mike Bennett | Report as abusive

MY SEVEN STEPS TO SAVING AMERICA

Taking toxic waste (In this case loans that are never going to be paid) and moving that waste to another county (in this case the US Treasury), then shipping it back 5 years later to the county it came from miraculously making potable soil is irresponsible dreaming!

STEP 1 (STOP FEEDING THE LIES)
The first thing that the President can do is stop the phoney-baloney that the Treasury Secretary, Federal Reserve Chairman, and people of the ilk of Robert Rubin, and the Media Like the New York Times are serving up to the public. ALL OF IT to date is complete and utter hogwash. The public can smell a rotten egg and if Obama doesn\’t come to terms with that fact quickly, then he will not spend more than one short term in office.

STEP 2 (BECOME REALISTIC)
All of this nonsense about the Government taking the failed debts of the banks \”temporarily\” to be repaid later is an effort to hide the fact that the Plutocracy of America is more important than the rest of the American People and as they all run for cover the rest of us will be left holding nothing.

STEP 3 (STOP PRINTING MONEY)
As the Goverment continues to print new currency at an alarming rate (that I might add is no longer reported due to M3 no longer being published), we risk Weimarian inflation. We will be carrying 100 Billion US Dollar Notes in the next 5 years at the current rate of inflationary dollar creation.

STEP 4(REVITALIZE MODERN FED.RES.GOLD CERT. RATIO)
There is no solution to the current financial problem that we face, other than creating \”The Revitalized and Modernized Federal Reserve Gold Certificate Ratio\” as per Sinclair.

STEP 5 (HIRE RON PAUL AS SPECIAL ADVISER)
Obama should also make Ron Paul his Special Advisor to work with Volker.

STEP 6 TELL THE ENTIRE COUNTRY THE ABOVE AND EXPLAIN TO THEM WHY IT IS NECESSARY.

Let the Bankers and the Motor companies and any other company that has failed, to fail. Then you will have the trust of the people and other Nations.

STEP 7 (USE THE BIBLE AS YOUR GUIDE)

That’s my solution and it will work if Obama tries it.

Posted by McGregor | Report as abusive

Post Offices are everywhere and the safest money houses; they should arrange all transactions including mortgages and insurances. The taxman, who knows all about everyone and only takes presently can also give timely advice, arrange extra time to pay and arrange above all, good financial partnerships or ‘marriages’ between the rich and ‘poor’ to benefit all citizens equally.

Who needs greedy Bankers who have disgraced and violated the Founder of The Bank of America.

Posted by Monawar | Report as abusive

Putin and Wen pointed towards the politics in the US and the UK and partly they are right.

Wrong macro economics and lack of regulation allowed the bubble to grow until it was not controllable anymore.
So what have we learned out of that? Change the politicians in the US(already happened) and the UK(will happen).

I would like to add another culprit to Putin and Wen`s point of view: US/ UK MBA mangement culture,share holder value culture and greedy irresponsible CEOs sometimes called “leaders”.

This overpaid, short sightened, personally not responsible parasites on top of huge companies should be made personally responsible for losses occured.
They must loose their houses and not receive bonuses instead.
Obama was rightly angry – there should be a mini revolution and we should throw this CEO bankers, Madoffs in prison and confiscate their money to build schools and help the poor. Instead their institutions get our money and we get their debt – hey what a good deal – how will Obama explain this to his citizens!

Run companies with personally responsible “entrepeneur style” people and see what will happen. I can give of course one example: Porsche. Their CEO is personally responsible and would have lost his house if he would have got it wrong – but he hasn`t.

Finally leave the entrepeneurs alone to run succesfully their companies and look for a social market economy as the new third way as obviously capitalism and socialism have failed in this world.

Posted by Karlheinz | Report as abusive

No bailouts, no fiat currency, no federal reserve, no government debt, no financial ‘industry’. Only goods and services should be traded in the real economy. Credit default swaps should be declared void due to force majeur.