The theme for this year’s edition of the World Economic Forum in Davos was “Rethink, Redesign and Rebuild.” While the actual rebuilding must await the delegates return to their home countries and the transition from talk to action, nonetheless the 2010 Forum lived up to its mission.
This was the 40th anniversary edition of Davos and the global financial meltdown and resulting Great Recession overshadowed every other topic. For those who have never been comfortable with the harsh freedoms of the market economy, the ravages of the deep recession provided a renewed opportunity to argue for their favorite blend of Marxism, socialism, controlled-economy or not-for-profit entrepreneurship. While I have always maintained that a prudent regulatory framework is not inconsistent with a free market economy (see, e.g., Towards a New Capitalism, Nov. 2008; London Chamber of Commerce, Feb. 2007, infra.), I found myself in an odd place on several panels defending the core principles of the free market. Despite its imperfections (e.g., a tendency to monopolies if left unchecked) and its resulting need for some government regulation, no other system allocates capital and labor as efficiently, thereby increasing the size of the pie for all.
On a similar note, while there was no shortage of poor banker conduct over the last several years to criticize, I found myself reminding serious global leaders that it might be difficult to deliver the jobs and entrepreneurship they professed to value without the credit intermediation function of banks. Bankers have few friends these days, and at times the entitlement culture of some of these Masters of the Universe does test one’s devotion to sensible policy outcomes; however, I don’t want to live in a country where the modern banking system is replaced by some government or shadow credit provision mechanism.
President Sarkozy delivered a mellifluous address in French, but after assuring the audience that he had not come to Davos to lecture us, he proceeded to do just that. After ranging through mark-to-market accounting, compensation abuses and the achievements of his government, Sarko announced the not unambitious goal of saving capitalism from itself.
This year’s Davos was, however, decidedly less anti-American than in the past. Whether this was thanks to the more multilateral approach of the Obama administration or the recognition in Europe that all is not well in the Old World with the PIGS (Portugal Italy, Greece and Spain) threatening the economic cohesion of the Union.
As always, there was plenty to be depressed about – the global economy, the militant theocracy in Iran, the stalled Mid-East peace process, the likelihood of peace ever being achieved in Afghanistan, the lack of progress on climate change, the overheated Congress Center, etc. However, come Sunday and the end of the conference, no amount of talk or hot air could overshadow the timeless beauty of sun shining on two feet of fresh powder on the long, tree-lined descent to Klosters. For the ACL not torn I have much to be thankful for.