There seems to be mute agreement among participants at this year’s World Economic Forum to depoliticize the proceedings. Last year every discussion fell, sooner or later, into Flytrap. But at the “Outlook USA” table I host at lunch, the guests don’t even want to talk about what Germany’s new Social Democrat/Green politics might mean for the rest of Europe, much less what Clinton and the Congress might be up to next. Instead they keep wandering off to talk about the Middle East peace process, the U.S. stock market, or the troubles in Brazil. (The only promising prescription for Brazil that has emerged is to rename its currency the real.com, and then watch it soar.)
U.S. Treasury Secretary Robert Rubin is the morning’s plenary performer. He too tiptoes along the Third Way, expressing long-term confidence in free markets but also promoting stronger “safety nets” for those left behind. The global financial system must be made more transparent and “moral hazard” must be reduced (i.e., investors should stop acting like greedy idiots). But he is dubious about “novel schemes”–curbs on hedge funds and short-term capital flows, lenders of last resort, etc.–to achieve this. This disappoints the European and Japanese finance ministers who have been touting such measures.
Like Al Gore yesterday, Rubin reaffirms the U.S. commitment to free trade, but he also echoes Gore’s warning that, as the U.S. current account deficit balloons, “America cannot be the sole importer of last resort.” Still, he reassures his fellow investment bankers in the audience, the United States will not “use its currency as an instrument of trade policy.” In other words, he won’t devalue the dollar. (Of course, he might not be able to stop it.)
I have it on excellent authority that the Israelis have invented a mechanism that will block all cell phone reception within a limited space. I am also told that it was first developed for the Israeli army to keep worried mothers from calling their sons in the field (I’m not so sure of this). Installation of the blocker would greatly improve the atmosphere in the WEF conference center.
The view from Russia. We did what all you Western pols told us to do: Re-elect Yeltsin. And then you went and expanded NATO just to spite us. Of course, our reforms have been a joke thus far, but why were your investors crazy enough to lend us all that money on the promise of 200 percent interest, when they knew we couldn’t even pay our soldiers? And now what are we going to do? We still have a bunch of nukes. Does anybody care?
The view from Asia. It may take a few years but we’ll muddle through. Sure, Japan and its emulators need to make both financial and structural reforms, cut out crony capitalism, and move beyond manufacturing into “knowledge-based” sectors. But Western investors made the readjustment worse by mindless investment in “froth”–unneeded factories and office blocks (though it’s true that no one made us take the hot money). And please stop telling us to abandon “Asian values” and adopt the ways of the West. Strong families, thrift, and hard work have seen us through millenniums of turmoil. What’s so great about free love, free-spending, and fractured families?
The view from Europe. We’re euro-bound, watch our dust (and pay no mind to our stagnant labor markets, striking unions, or vast intra-country wage differential).
Swiss civilization is crumbling before our very eyes. In the late afternoon there is a street demonstration against “globalization” (about as effective as a demonstration against gravity, one journalist remarks). The multinational demonstrators–said to have organized their protest via the Internet–are few in number by global standards–and they are armed only with snowballs. Still, the Swiss are taking no chances. Riot control police have been flown in from all over. Their attire, a curious combination of high-tech armor and straw shields, occasions much comment. Robocop crossed with Genghis Kahn.
And as if that weren’t enough to unwind the finest watch, just as I am going to dinner (at the wrong time and, initially, to the wrong hotel) the lights go out all over Davos (literally). I tread cautiously along the narrow, icy street lighted only by car headlights. Still, this is Switzerland, so I don’t worry.
When the lights come back on, we dine with Malaysia’s Prime Minister, Mohamad bin Mahatir. “You know I shoot my mouth off quite often,” he says cheerfully. He actually doesn’t do a bad job of defending Malaysia’s freeze on exports of its currency (you can still convert it to dollars if you want to get your money out, other countries under attack have employed currency controls and anyway, if it’s a mistake we’ll pay the price so why should the West care?). But his answer to why he imprisoned his deputy prime minister (he’s an old friend and I didn’t want to do it, but the evidence of his unfitness that others brought to me was just too strong) is far less convincing. Still worse is his response to why he publicly blamed Malaysia’s currency crisis on “Jewish traders” (I was talking to a Muslim Malay audience and I can’t stop the perception of ordinary people and anyway I only meant George Soros).
Then on to after-dinner drinks with the Dow Jones, followed by the WEF gala soiree. (Black tie or national dress–I wish we had a national dress, other than blue jeans, so I wouldn’t always have to worry what to wear. Maybe something with feathers.)