This year at Davos the chatter at the myriad events in the Congress Center and briefings and receptions was about three interlocking themes.
The first theme was about the enormous and increasing economic and political power of the giant tech firms, most of them American. This power and the accompanying “tech lash” response have been prominently featured in recent and influential articles, including the Financial Times and the Economist, much loved by the Davos elite. Politicians are clearly feeling empowered to take action. The tech firms themselves are struggling to come up with effective responses. Some are self-flagellating in public about their failures; some are arguing that self-regulation is working; some are changing their business models (e.g. Facebook’s announcement of giving greater weight to information from trusted sources, Google’s partnership with publishers, and many tech firms are changing their tax structures to pay more taxes where profits are generated). But the atmosphere in Davos suggests they may be playing a game of catch-up. The chatter in Davos includes speculation about a breakup, tougher antitrust enforcement with big fines and maybe even the creation of a new regulatory authority (“an FDA for tech”).
The second was about the challenge of trust in public institutions and the media. This relates not only to government but to business leadership and also mainstream media.
The third theme is whether, in a “fractured world”, President Trump (who will deliver the closing address) is proposing solutions that are likely to cure or worsen the malady. Most of the chatter is that, while Trump deserves credit for identifying the source of rage in our societies, the cure will aggravate the sickness because of the unprecedented assault on media for fake news (that is inconvenient), attacks on the judiciary and legislative branches. That leads to the troubling conclusion that governments, subjected to populist assault on both sides of the Atlantic, just don’t have the levers any more to affect change that people want. This may lead to increasing disillusionment and in turn greater populism.
The Trump administration is here in force, including Treasury Secretary Mnuchin and Commerce Secretary Ross. Davos was abuzz with speculation of what the president’s speech would say. Trump opened by saying he was here to represent the interests of the American people. He then went on to take credit for many of the trends, including the steady reduction of employment and economic growth that were set in train by his predecessor. At the same time his tax plan will add well over one trillion dollars to the deficit and will create a heavy debt for future generations. The vast majority of the tax benefit will flow not only to the 1% but to the 0.1%, thereby aggravating the inequalities that are powering populism. While many of the corporate titans will agree that the US remains a great place to do business, they must surely question whether Trump’s policies of unilateralism, especially in trade, and promoting division really are the right prescription for the sickness of a fractured world.