Good news and bad news for Davos
The good news from Davos is that 2010 has finally come to an end. Anxiety and soul-searching dominated last year’s gathering. The delegation from rapidly rebounding China seemed to enjoy itself, but almost everyone else was wondering why French President Nicolas Sarkozy was attacking the very foundation of free-market capitalism and whether the Obama administration had anything to say in response.
There’s more optimism this year as the world’s political and business elite gather for the 2011 World Economic Forum. Gone is the talk of double dips and dead cats, replaced with expectations of a long-overdue spring. There’s still plenty of worry about Europe’s endurance—and with good reason. But that’s a sub-plot here, particularly since some are convinced that threats to the eurozone are exaggerated in the English-language press. There’s a buoyancy expected at this year’s gathering that most will greet as a source of considerable relief.
Now for the bad news. Individual countries will grow with different tools and at different speeds, and the divergence in their interests will lead each government to safeguard its domestic political capital with policies that protect local jobs and industries at the expense of outsiders. Trade gaps are wide and getting wider. Major emerging states are back to go-go growth as the world’s richest countries struggle to regain their momentum. Talk of currency conflicts is becoming more common. There’s a distinct lack of international leadership at the moment, and the default response when global governance breaks down is every nation for itself. As demonstrated by all the turbulence in a politically integrated Europe, there's no such thing as collective economic security.
The Obama administration could at least help set the terms for discussion here with a clear statement of its view of the global economy’s way forward. But that probably won’t happen. Nor are we likely to see any kind of coherent joint statement from the major emerging markets that will have to drive global growth for the next several years. That’s in part because officials in Brazil and India don’t like China’s go-slow approach to rebalancing much more than Americans or Europeans do.
And what about the business decision-makers that flock to the Forum? Are they feeling sanguine enough to move all that money off the sidelines and put it back to work? If history is a guide, their speeches will tell us less than will their pronouncements over cocktails at the Google party...
Ian Bremmer is the president of Eurasia Group and author of "The End of the Free Market: Who Wins the War Between States and Corporations?""
| January 20, 2011; 8:25 PM ET
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