Almost fifty years ago a professor at the University of Geneva formed a group that would become the World Economic Forum (WEF). You probably know it as “Davos,” named after the Swiss city that hosts its invitation-only annual meeting that draws 2,500 of the famous that want to be leaders like Leonardo DiCaprio, and the leaders that want to be famous like Xi Jinping, the president of China.
A year ago, at the January 2016 meeting of the global titans that imagine themselves setting the world’s agenda, they listed “Involuntary Migration” as the number one risk for the upcoming year. While it is true that 2016 saw significant migration—particularly from the Middle East to Western Europe—much of it was hardly “involuntary.” It was mostly opportunistic. But at the start of 2016, the WEF never saw Brexit or the Trump election coming. They failed to even acknowledge that a large portion of the middle class worldwide had been left behind and wanted change—or that a populist revolution with economic roots was growing worldwide.
No, the WEF fostered the paternal idea that 2,500 people meeting in Switzerland once a year should lay out the framework for how the world runs. The progressive Davos attendees shun, or perhaps even hate, populism. Their preferred explanation for Donald Trump and Brexit is that the voters were misled, or ill-informed. And while “income disparity” did make their top five list from 2012 to 2014, it’s now completely vanished – as if it doesn’t exist anymore. That’s just bizarre given that inequality, if anything, has only increased in the ensuing years.
But what could the Davos elite possibly think is a more important economic risk for 2017 than the populist political upheaval being felt around the world? Their report actually identifies the Brexit and Trump movements as “ferbile”— that is, having a fever or being feverish. No, the World Economic Forum identifies the number one risk for this year as “extreme weather.” True, there is a lot of science pointing towards global warming, but is it really the number one risk to the global economy in 2017? “Large scale natural disasters” comes in at third place right behind “large scale involuntary migration” still making the list, but demoted to the number two position.
So what does all of this have to do with economics? The organization is after all, the World Economic Forum. Basically, very little. Over the past decade, the WEF has been hijacked by progressives more interested in advancing their governing agenda than in pursuing economic stability and equality. Does anyone really—really—believe the number one threat facing the global economy in 2017 is climate change?
Let’s take at face value all of the claims of the environmental movement. The idea that global warming will melt icebergs and flood major port cities around the world, or that horrific storms will dramatically affect agricultural output may be in fact true. But not in 2017. A call to action for the future should certainly be sounded, but San Francisco is not going to be swallowed by the bay this year.
The elephant in the room—which the WEF seems to trivialize —is the rise of global populism. Not only did the 2016 Davos attendees fail to even consider Brexit occurring, or Trump’s rise to the presidency, they continue to obviate its economic implications in 2017 by focusing their anxiety on the weather. The WEF elite ignore that a large portion of the world’s workforce feels left behind by globalization.
A newcomer to Davos this year, Xi Jinping was—surprisingly—perhaps the only voice of reason in the crowd. While quoting Charles Dickens and Abraham Lincoln in his WEF address, he hit the nail right on the head. Xi unequivocally stated that globalization must be “balanced,” and must provide “equal access to opportunity and sharing of benefits.” He went further and stated that the priority of globalization should be given to addressing poverty, unemployment, and the widening income gap.
Times certainly have changed. At Davos we have the leaders of the major western free markets shuddering in the corner worried about melting ice caps while the leader of the largest Communist country in the world champions free markets, heralds equal access to opportunity, and fears a widening income gap. This single event is all you need to realize that the WEF has completely lost it way.
And while Xi’s observations may be prescient, they fell on deaf ears. At the conclusion of this year’s Davos soiree, the attendees mostly chartered private helicopters at a cost of around $10,000 per 30 minute trip to get back to Zurich rather than taking Uber at cost of around $200. And once in Zurich they boarded their private jets and flew back home to worry about climate change while ignoring their own carbon footprint.
Kevin Cochrane teaches business and economics at Colorado Mesa University, and is also a Permanent Visiting Professor of Economics at The University of International Relations in Beijing.
