In today's Finshots we talk about the relevance of Davos in 2022

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“Davos is the epitome of one of the greatest challenges to society right now, which is self-congratulatory elites.”

Those aren’t our words but that of Jeffrey Sonnenfeld, a Yale management professor.

In case it wasn’t clear, he is talking about the World Economic Forum (WEF). You see, every year, the who’s who of the world descend upon Davos — a rather picturesque town in the Swiss Alps. It could be ministers trying to entice foreign investments. It could be tech and business magnates building relationships with peers. It could be film stars turned activists who’re leading a social cause.

And if you asked WEF to explain Davos, they’d tell you that the goal is to “engage the foremost political, business, cultural and other leaders of society to shape global, regional and industry agendas.”

But as Prof Sonnenfeld’s words seem to suggest, not everyone thinks so — the WEF has an image problem. And a rather big one at that.

Now before we get to the problems plaguing Davos, we need some background on how this elite gathering came about.

You see, back in 1971, a German engineer and economist Klaus Schwab called for a fourteen-day meeting and titled it the European Management Symposium. When it began, its purpose was pretty clear — invite American corporate honchos so that Europeans could pick their brains. And the chosen destination was the skiing hotspot of Davos.

A few years later, politicians found their way in too. And it soon evolved into a melting pot of intellectual decision-makers from across the globe. Mega business deals were cut here. Important things like climate change, diversity and inclusion were discussed at these hallowed grounds. And Davos began affecting change. It became a massive deal.

For instance, remember the New Development Bank? Well, it was set up by the BRICS nations — Brazil, Russia, India, China, and South Africa a few years ago to help fund infrastructural projects in their countries. And this bank saw the light of day during Davos.

Then there’s the all-important Gavi, a global Vaccine Alliance, launched at Davos in 2000. If you haven’t heard of this — it’s like the WHO but the focus is on making sure private and public players work together to help children in emerging countries get access to life-saving vaccines. And in 2020, Covax, the initiative to help distribute Covid-19 vaccines worldwide, emerged during Davos.

So, if Davos is that important, why are a lot of people still annoyed at this annual gathering?

Well, the fact is that the annoyance has been simmering for quite some time now. And one way to characterise the problem of the WEF is through the “Davos man”. What’s that, you ask? Well, it’s a term popularised by Samuel P. Huntington, a political scientist, in 2014 when he wanted to describe global elites or “gold-collar workers.” These Davos men only move in the upper echelons of society, care about their own wealth, and are quite “out of touch” with the real world and the pain of the common folk. The criticism is that while Davos is a place for big talk, very few tangible things actually come out of it. And quite often, the ones who claim to solve the problems are the ones perpetuating them.

Then there’s the matter of billionaire wealth. You see, the global charity Oxfam dropped a bombshell right before the Davos confluence.

1 new billionaire was minted every 30 hours during the pandemic. On the other hand, 1 million people fell into poverty every 30 hours during the same time! So yeah, while the rich gather to talk shop, the poor suffer. And no one talks about taxing these ultra-rich anyway.

What about diversity? While the Davos Man is white, male and very wealthy, women are severely underrepresented. For instance, in 2014, women only accounted for 14% of the guest list. And even though it’s slowly inching closer to 23%, it’s still a bit lopsided.

And finally, there's the carbon footprint! Globally, the wealthiest 10% are responsible for more than 50% of all carbon emissions. And for all the talk about battling climate change, Davos attendees still continue to arrive in gas-guzzling private jets and limos. Critics say that if there was ever a perfect example of virtue signalling, it is Davos.

So yeah, in an environment where the divide between the rich and poor is evident for everyone to see, Davos only further exposes the gap.

But perhaps the bigger worry for organisers is that the very mission statement is now unravelling — globalisation.

Because as Davos preaches globalisation, the world is increasingly advocating protectionism under the garb of being self-reliant. And this shift is something that’s been in the works for a while now. There was Trump with his manufacture in America initiative, there was Britain exiting the EU in a bid to protect its own citizens. Then the pandemic revealed fragility in the supply chain ecosystem. And now, Russia’s invasion of Ukraine has created fault lines across Europe.

Even WEF founder Klaus Schwab is lamenting this change: “We are living in a different world. We risk that the world splits up into a multi-power system. We have different philosophies, ideologies; even inside countries we have a polarization which you haven’t experienced 10, 15 years ago.”

So maybe, just maybe, if Davos needs to remain relevant, it needs a throwback to the 1980s?

Apparently, Turkey and Greece were once at the precipice of war. But then, the Turkish Prime Minister met his Greek counterpart at Davos, and they were able to forge a bond. A bond that helped to deescalate tensions.

In essence, Davos may have played a role in saving countless lives.

And maybe we need more of this and less virtue signalling.

Until then…

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