In Davos, global financiers are bewildered by populism
DAVOS, Switzerland — For the investors and market movers at the annual World Economic Forum here, a threat lurks.
At cocktail parties, financiers have expressed bewilderment over the rise of populist groups that are feeding a backlash against globalization.
“This is the first time there is absolutely no consensus,” said William Browder, co-founder of Hermitage Capital Management, who has been coming to Davos for 21 years. “Everyone is looking into the abyss.”
The religion of the global elite — free trade and open markets — is under attack, and there has been a lot of hand-wringing over what Christine Lagarde of the International Monetary Fund has declared a “middle-class crisis.”
But while everyone has a view on the state of the world, there is little agreement on how to deal with it.
The biggest concern? Finding a way to make the people who are driving populist movements feel like they are part of the global economic pie that Davos participants have created and largely own.
Ian Bremmer, president of Eurasia Group, a political-research firm, offered his advice: “Elites won’t be able to manage populism until they stop seeing it as a threat and start seeing it as a symptom.”
If that is the case, Davos has made little progress.
“I want to be loud and clear: Populism scares me,” Ray Dalio, the billionaire hedge fund manager, said during a panel on how to fix the middle-class crisis. “The No. 1 issue economically as a market participant is how populism manifests itself over the next year or two.” But Dalio offered little by way of a solution, beyond opining on the positive aspects of loosening regulation and lowering taxes.
Jack Ma, the founder of Alibaba in China, offered his view of the problem in the United States: Americans “do not distribute the money properly.”
Such a theme is generally not discussed. Nor is bolstering the power of workers to bargain for better wages.
“That agenda is anathema to a lot of Davos men and women,” said Joseph Stiglitz, a Nobel laureate economist and author of numerous books on globalization and economic inequality. “The stark reality is that globalization has reduced the bargaining power of workers, and corporations have taken advantage of it.”