from The Great Debate UK:
If Davos wants to run the world, it has to show some leadership
- Matthew Bishop is the U.S. business editor of The Economist and co-author, along with Michael Green, of "Road from Ruin – How to Revive Capitalism and put America Back on Top", published by Crown Business, Jan. 2010. The opinions expressed are their own. -
Who runs the world? Conspiracy theorists have long believed that the secretive annual gathering of the World Economic Forum (WEF) at the Swiss ski resort of Davos makes the real decisions in our globalized economy. If only it did.
A few years ago Davos was the focus of anti-globalization anger. Protestors tried to storm this secretive citadel of capitalist power, they even set up their own rival World Social Forum to be, as they saw it, a legitimate alternative to the WEF. That challenge failed in part because the World Social Forum has, frankly, been a bit of a joke. The WEF itself has also changed. Social activists of all kinds now participate in the meetings, journalists have plenty of access, and the proceedings are now broadcast to the world via Youtube.
As a result, as the WEF gathers to ponder its plans for a ‘global redesign’ it will do so transparently and with a broad range of stakeholders, not just heads of state and captains of industry. Discussions can break free from the painful protocols of official summits where the need for unanimity drags the debate down to the lowest common denominator. The WEF is uniquely placed to cut through the bluster and set an agenda for change. It needs to take that opportunity.
When we looked back at economic crises of past as part of the research for our new book The Road from Ruin, it was striking how often the great powers had gathered at summits to try to sort out the mess. Sadly, like at Paris in 1878 and London in 1933, there was a failure of imagination and the conferences ended in failure. This year more than ever, the WEF needs to use its freedom from tiresome diplomatic protocols to seize the opportunity in the crisis and to set an agenda for change. New thinking is needed.
At the top of the agenda at WEF should be reform of global finance. We cannot just reboot the system and go back to where we were before the crisis. Nor can we subject the financial system to large slabs of politically-motivated regulation, without doing enormous harm to all our prosperity. In the meeting rooms and corridors of Davos governments and financiers need to figure out a way to rewrite the rules in a way that makes our banks more responsible without tying them up in red tape.
Say it with philanthropy
- Matthew Bishop and Michael Green are the authors of “Philanthrocapitalism: How the Rich Can Save the World.” They blog regularly at Philanthrocapitalism. Their views are their own. -
Bankers keep telling us how sorry they are for getting the world into the current economic mess, but the public doesn’t seem to want to accept their apology. To show they mean it, the rich need to discover philanthrocapitalism and start to give back to society – for their sakes and ours.
Reckless financiers are public enemy number one and everyone seems to be enjoying the schadenfreude of watching them squirm in front of Congressional and Parliamentary inquisitions. Cathartic as these spectacles may be, it doesn’t seem that the bankers are going to be let off the hook that easily.
Bonuses are already under scrutiny. But more swingeing, and damaging, action is being called for. How long will it be before public bloodlust demands convictions and jail time? Will governments be able to resist draconian regulation of the financial sector that will choke off financial intermediation and risk taking, and thus hobble the economic recovery?
It’s not just the bankers who are in the frame. The financial meltdown is adding fuel to the pre-existing fire of deep resentment of CEOs of big corporations and the rich in general who amassed such a large share of the benefits of the boom time. This is an ugly time to be rich and a perilous period for capitalism as a system.
As our economies worsen, poverty and social unrest will rise. Charities and nonprofits, which will be on the front line in meeting those needs, are being hit by a triple whammy of declining revenue, as private donors cut back their giving, scarcer public funds, and rising demand for their services.
The rich need to move swiftly and decisively to fill the charity funding gap: to show contrition and demonstrate that they are good members of society rather than a bunch of speculators and hucksters. That’s why, at the World Economic Forum in Davos earlier in the year, we called on the CEOs of the Fortune 500 and FTSE 100 companies to give a year’s salary to good causes. Other wealthy individuals should join them.
Mr. Matthew Bishop, isn’t it a condescending view of the world?
Let’s see it this way: what would you think if you got robbed at gun point, shot at, but luckily escape death, then get taken to the hospital and then realize your doctor is the guy that robbed and shot you?
It’s like arms dealers setting up charities for victims of exploding mines.
Like the guy who lays you off to save his hide now serving you a hot steamy bowl at the soup kitchen, out of his kind heart and selflessness – not to mention a duty as a rich man to tend to the needy and the lesser well-off.
Comparatively speaking of course.
