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.

995 comments

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I do not see current economic crisis as rooted in the financial system. I see it as more a basic systemic flaw in social organization. Essentially our stucture called Capitalism has no reverse gear. When a profitable yet unsustainable process is begun over time the unsustainability becomes apparent. However the process will be maintained by the structure as long as possible to postpone the destructive and painful crash. AKA job losses and company failures.
Currently there is no sustainable way to admit mistakes and reverse a process. In politics to admit a mistake is often a costly loss of face and often results in permanent career damage. Admitting mistakes in other fields often leads to legal action. The whole system is designed to make recognizing and admitting and fixing mistakes as painful as possible.
Real growth in economies is a result of invention and innovation. We have always been in a knowledge economy.
It would be wise for all involved to remember Karl Poppers view on learning. I can’t remember who said it but ” The path to wisdom is to err and err and err, but less and less and less.”
So in my view if we want to permanently get out of the Kondratieff wave cycle we need to implement a political/economic/legal structure friendly to the most successful way of advancing knowledge. That is to try lots of things make lots of mistakes and not penalize for doing so.

Cheers,

Posted by James Demidoff | Report as abusive

How about a REAL TRUE distribution of wealth??? Like taking the largest % of wealth from the 2% of the world that have that wealth and redistribute it in a fair way amongst all the people of the world!!!

I know that is idealism, but so many people starve while so few are millionaires and some of these millionaires have brought us to this present situation.

Posted by Eileen | Report as abusive

The “World Financial Forum Of Religious Scholars” (GFFORS) which is being sponsored by Kabbalistic Solutions For Contemporary Problems is what is needed now. There must be an input from the World’s Religions as to the direction of the Financial community. Ethics without a Religious underpinning is fruitless. Obviously, a new structure is needed. For info: kabbalisticsolutions@gmail.com

Posted by Steven Turner | Report as abusive

Isolationism is the only way we can save ourselves from reliving the Great Depression. Pull everyone out of all the countries we have them in and stop sending funds over seas to help people and reconstruct other countries. Its money we dont have.

Posted by Jessica | Report as abusive

The easy answer tot the question posed about the usage of new technologies is to use scrape webservices for information (also known as crowdsourcing) to understand the issues being investigated, because instead of “asking” people what they think – which is likely to yield a high degree of false-positives and flaming (as the above post does) – you actually look at what they are saying about what you are looking for and end up integrating a huge dataset into your research.

This approach is being practised in a number of ways with the semantic web, most notably by the Simile project and its offshoots over at MIT as well as the Open Calais project. Some examples I can think of is how scraping flickr tags has helped the library of congress to reclassify texts or how the WHO monitors online communications on public platforms for disease trending, and the most potent example: http://labs.aljazeera.net/warongaza/

Of course one major issue with any policy approach that seeks to use contemporary internet-based technology is that the vast majority of people on the planet are not “online”. This actually ramps up the general education and wealth vectors of those “whose opinions matter” in the demographic sense.

:Daniel

The crisis has to run its course. The best resolution to this problem is to let the market eliminate the problems through bankruptcy. Attempts to prop up failed institutions and businesses is fruitless, these entities need to fail, otherwise we’ll never have a solid foundation to build upon. Also, there has to be transparency and revision to central bank policy, we can’t have central banks manipulating the markets the way they have in the past. Controlling market behavior through artificially low interest rates and currency inflation does not work…the present situation is a clear testament to the failings of current economic thought.

The failings of central economic planning we’re supposed be have been killed off, yet here we are again trying to run a supposed free market economy through central economic planning.

Unless we cease this incessant meddling we’ll continue to get more of the same. Let the liquidation of debt occur and allow better business managers to acquire the assets and move forward. The idea that we reward failure through bailout policy is absurd. And the idea that we reward private sector failure with public sector money is even more disturbing.

Posted by steve | Report as abusive

My thoughts are that the government should give massive tax cuts or money to the general population (maybe stimulus check part II). The population with that extra money will either save it (which should help deposit banks or financial firms presuming that’s where they stash their savings), spend it (which will help the retail industry and general trade between the different nations of the world) or pay down debt (which will reduce the amount of write downs banks are doing to cover their behinds when loans and credit go into default).

Also, something should be done to stabilize the housing market. Either use the money to buy up the toxic mortgages and re-write the terms so that the borrower can afford to make those payments but with unemployment being so high, it may be too little, too late.

Posted by Won | Report as abusive

It seems the problem with the current USA market is that people are not spending which is causing the shrinking of the economy, so instead of spending 800billion in bailing out companies that should have gone bankrupt, why not give that to the general population so they can start spending and revive the economy? My 2 cents.

Posted by Lestat | Report as abusive

I like the previous comment “capitalism has no reverse gear” – though to keep the analogy going – coasting in neutral is fine: the weathly countries will load up on infrastructure projects, wages will be lowered, building costs are lowered… and when the economy gets back it gear, the pubcos in those countries will reap larger rewards.

A cool coast in neutral will be good – if infrastructure benefits.

Take a long look at accounting, accounting practices and rules and laws behind them. Accounting is supposed to reflect the state of a business. Compared to the danger inherent in the overvaluation of intangible assets, I think it would be sensible to remove them entirely from the balance sheet.

Some of the losses that are surfacing now, as a result of write downs on “goodwill” and other intangible or subjective valued assets, have been carried by the companies for quite some time.

Current practices allow investment banks and other corporations to bury their losses, and it’s only during downturns in the economy these losses are written down – at least on the scale we are currently seeing. This serves to further emphasize the downwards trend in the economy. These losses should be required to be written of immediately. If the buyer overpays when he acquires a company this should be reflected in the accounts with the regard to the balance sheet of the acquired company, and not according to either the stock valuation or the price the company was acquired for. Some would say that this would lead to improper valuation of the buying company, but I think most investors could learn to live with more transparent accounting practices and the danger resulting from undervaluation are not as severe as the danger that may result from overvaluation.

Obviously this is not a solution to the current economic problems, but it may reduce the damage next time the market takes a downturn.

Posted by emanon | Report as abusive

The financial meltdown was caused by the following:

1. The Fed Chairman and lame-duck “Republican” President (What kind of Republican creates a socialist economic system in the United States?) going on TV for an entire week with doom and gloom–thus severely negatively influencing the markets.

2. Lack of responsibility of leadership in large corporations–including banks. How can a bank lose money when it gives its investors less than 1% in savings and then charges 5 to 10 times more? I’m confused.

3. Capitalism has not been tried–excessive government regulations and interference in key markets has a ripple effect. Since when do U.S. citizens count on the Federal Government (Remember New Orleans?) to solve its problems. Let the market work things out. Government intrusion and Keynesian economics has always been a failure.

4. The selfishness of the largest group of Americans (the baby-boomers) that has ever existed on this planet. They will bankrupt our country and the world as long as they can live high on the hog through their retirements.

5. Abortion and contraception–Destroy life at its root and you destroy the resources necessary for economic development and intelligent solutions to problems.

6. Over-reliance on national and international structures to drive economic prosperity instead of increasing competition through innnovation, encouragement of entrepreneurship and local issues. Globalism will do nothing but destroy local ingenuity and problem solving. Attach economic crises at its local roots. De-regulation and encouragement of more entrepreneurs. Let failed businesses like CitiBank fail as they deserve to.

Posted by Brian | Report as abusive

A stable economic system can only be built when people fully own and possess things, and have real cash to spend. People must own stocks, houses, businesses, or other property and therefore their businesses will be able to weather most financial storms. I have owned several business and have operated these businesses without a bank line of credit. It takes longer to get a business started, but growth is real and there is money in the bank to operate the business rather than credit. I also have seen many businesses fail that operated on credit and they were fine until a downturn, and then they stood alone while their banker demanded money they did’nt have. I realize that this cuts down the banking industry profits from lending to the average consumer, but credit is what brought down the current system.

Posted by Fred Belz | Report as abusive

It is simple my friend. Allow the USA to swallow its bitter medicine. The belief that an economy can have continuous growth is absurd. Non-stop growth is called Cancer. This economy must be allow to experience a painful shrinkage and readjustment into a more clean and mean system. This is a basic law of nature and it does apply to economic systems too.

Posted by Alan O | Report as abusive

attention to the wold the times as come to stop to be greedy the economy it is not hard to fix and i can show you the way to fix strait ways and stop talking you all got no brain the times as change for every one you have a littlet cake from so if you understant there are only one plan that will work and the economy will start to grow again ok and i have the best plan in the all world put them together you are all blind the money will not fix the problem only the new sistem will work it is new way how the world will change fast the plan will take affect

Posted by frank bruno | Report as abusive

I believe some of the global problems can be solved by better globalization. The current global financial system is rooted in capitalistic philosophies. At the same time, the Western economies are based on consumer spending which in the US, for example, constitutes about 70% of the US economy. Most of us have more cars, computers, phones, electronics, shoes, coats, clothes, watches etc. than we can practically use, yet we are expected to purchase more in order to keep the US economy going. At the same time, there is a vast majority of the world’s population barely getting by on scraps of food and horrible living conditions.

As an entrepreneur visiting an emerging economy some years ago, someone asked me what I would request of the country’s leadership if given a chance. I said that I will ask them to provide me electricity, clean water, a good phone/communication system, reliable broadband bandwidth, roads, and security. This is plenty to build any business upon without relying much more on the government.

I am not advocating simple socialism where we take the money from the Western nations and throw it around the world, but suggesting a synergistic collaboration. Given the West’s history of leadership in innovation, why not focus on solving the world’s basic problems of energy, clean water, and hunger by investing our time and money into new technologies in these areas. Then, produce the goods in these areas that may then be provided as aid or in a subsidized manner to those desperately in need. So, say 10% of the US economy is converted into a development economy reducing the US consumer portion to about 60% over the next 2-3 years. Not only will this recover the 6-7% drop in US consumer spending over the past year, imagine the education and development opportunities this can spur in the emerging markets when they have energy for all kinds of basic needs and clean water to keep them healthy etc. Many technologies are already available beyond the labs. However, in some cases these technologies need focused or subsidized development and production for mass use. This would be a great investment from the Western nations in the future of our planet.

Posted by Imran Qidwai | Report as abusive

The present day competitive growth rates and unmoderated greed have to be stemmed to bring in a modicum of stability in the market processes. Secondly,complexity of financial instruments and trade should be reduced to levels within comprehension even if we have super computers to penetrate the maze.

Posted by sash | Report as abusive

The key is Access. Core to President Obama’s successful campaign was enrollment at grass roots level. Why would that be helpful to you? Identify the top five issues as you see them; define clear objectives; stimulate and steer an on-going debate toward those objectives. Use this virtual forum as a focus group; formalise hypothesis and challenge academic institutions worldwide. Review at the next Davos meeting. It is imminent to feel the pulse of the people at large, if you wish to solve the issues at large.

Janine Chung-Thompson, ex PwC

Posted by Janine Thompson | Report as abusive

It’s all about the lack of a GOLD Standard. We have created this Financial Crisis because we hane no means of measurement . . . . without that nothing is going to happen. With a GOLD Standard the problem is very simple to Fix but also very Painful. Everybody wants the “FIX” but nobody especially the Policitians and Bankers want the PAIN. So until things get really Bad and they will . . . . . nothing is going to change. That’s what History shows. To Bad for US.

Posted by John L Strauss | Report as abusive

The troubles all track from the fundamental tendancies of capitalist entities to concentrate ownership amongst ever smaller groups of principles until ultimately a kind of corporate socialism (fascism or classic Italian syndicatalism is achieved. The Depression modified the tendancies of this by first allowing wholesale bankruptcies to clean out failed monopolies that had failed due to their own penultimate and arrogant greed…the governments at the time had no power to really prevent those failures anyway any more than the unemployment insurances and welfare policies of Hoover’s time could have coped with the swamping they eventually got. Then the New Deal re-regulated the economy to stop the trading in worthless stock that had been overmarketed..(blue sky stock with no visible means of support, just like the ‘dot bombs’ of the early part of this decade. This time, as last, it is the banks that are the deep dyed villains of the whole mess. The re-enactment of the Glass-Steagel Act, outlawing interstate and international banking, outlawing large banks over a billion or two capitalization, demanding large reserves in bank funds before they can loan (prevents banks loaning the same money many times in a form of ‘blue sky capitalization’ that would have made a roaring twenties gangster capitalist proud and envious). Steep regulations on the appraisal industry to prevent an unholy alliance of banks, insurers, appraisers, lawyers, realtors and other leeches on the economy from ever defrauding the nation and holding its young people in permanent loan slavery ever again. A national forgiveness of every citizen of the nation, erasing in a stroke of a pen all debts of every citizen while allowing them to keep all their possessions. An immediate write down of all home values to their prices in 1966. Therefor a house in Compton, California or Whittier, California that sold in 1966 for fifteen thousand dollars and now brings over a million dollars for a one or two bedroom shotgun shack on a sixty foot lot…would go back to selling for fifteen thousand dollars. Make felony illegal for any foreign national to own real property in this country. Make illegal and a felony for any foreign corporation to own real property in this nation. Make illegal and a felony for any foreign entity to own a controlling interest in any American business, partnership, limited liability corporation, corporation or any entity that is American. Make it illegal for any goods to be imported into this country if it cannot be proved beyond a shadow of a doubt that it cannot be created by whatever means by American workers in America. Make it a law that the products of slavery and child labor cannot be sold in this country. Create a value added tax structure on an exponentially graduated scale, incorporating a requirement that manufactures selling anything in the American market must file reports to the American government detailing the bare cost of the item and all costs that went into the calculation of this bare cost. Then the VAT would be assessed on the gross profit calculated from the bare cost of the original manufacturer and the final selling price to the end consumer. Such scale would allow honest profits to go relatively untaxed, but profits from slave operations in China where a pair of sneakerss made in a sweatshop for less than fifty cents in labor, materials, SIOH, etc, and ultimately sold to an American kid ‘mall rat’ for over a hundred dollars would pay over ninety nine dollars in VAT, with a further proviso in the law that would prohibit passing on the cost of this VAT to the final consumer. The offending business would have to pay this or face felony punishment. Also the corporate veil would have to have a legal hole in it such that the stockholders and bondholders and debtholders of corporate predators would be exposed to the same charges and felonies that the corporate officers would face, up to and including the death penalty. The average young person making minimum wage in this country now cannot even pay to see HGTV on cable to see how impossible his/her dream of home ownership really is. This has got to change or this country will become increasingly unstable until and unless these changes to the present sytem of robber baron banker capitalism is destroyed. And if that result is a civil war, failed state ala Somalia region, then so be it.

Posted by chester drawers | Report as abusive

A crisis in the Health Care will follow unemployment in the U.S. My suggestion is de-regulating low impact laboratory testing for the general population. As it stands all test results must be reviewed by a Pathologist or desingated laboratory manager.This includes screening test, Cholesterol, Glucose, HCG and ect. The FDA has many CLIA waived test, which can only be run by Physician or an acredidited Laboratory.The State licensures deter any small enteriprises due to liabilty of results. It is just another form of keeping power in the hands of the physicians or large corporations in America. In several states, they have sought to let pharmacies run these test.
The general public should be allowed access to avoid costly visits to the Physicians office. These test are excellent for screening and monitoring patients.It is time to bring back small business in America. Small business do not have stock holders which adds presure to business to be greedier and greedier at whatever it cost.