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| Employees install a sign for the World Economic Forum on the Congress Center in Davos, Switzerland, on Monday. Some 1,600 economic and political leaders, including 40 heads of states and governments, will converge at the chic ski town for the 42nd edition of the five-day forum that opens today. (AFP Photo) |
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Davos Man
is approaching his annual Alpine get-together with humility after spending the
past year getting fired, arrested, belittled and occupied.
When the
World Economic Forum’s conference gets under way in the Swiss ski resort today,
several past stars will be missing from the swirl of policy debates and
cocktail parties.
News Corp.
chairman Rupert Murdoch is embroiled in a phone hacking scandal. Oswald Gruebel
quit as chief executive officer of UBS after a $2.3 billion loss from
unauthorized trading. Philipp Hildebrand left the Swiss National Bank in a
furor over his wife’s currency transactions. Dominique Strauss-Kahn resigned as
International Monetary Fund managing director after sexual-assault charges,
later dropped, were filed against him.
As
“OccupyWEF” protesters build igloos under the eye of Swiss security forces, the
leaders of this year’s Davos may try to profit from the mistakes of their
predecessors by embracing transparency and ethics.
Citigroup
CEO Vikram Pandit, a co-chairman of the meeting, is calling for the financial
industry to be more open amid panel discussions with such titles as “Is
20th-century capitalism failing 21st-century society?”
“Davos Man
has taken on the lessons of recent years and is asking how to do things
differently,” said Richard Edelman, president and chief executive of public
relations agency Edelman, who is attending the conference. Businesses and
policy makers are having to “process accurately the vox populi.”
The need
for them to do so is demonstrated by Edelman’s annual poll on trust, released
on Monday in conjunction with the Davos meeting. Trust in government fell a
record 9 percentage points to 43 percent, while faith in business slid to 53
percent from 56 percent.
The
credibility of CEOs slid 12 points to 38 percent, the largest drop in nine
years, and banks and financial services remained the two least trusted
industries. The online survey questioned a total of 30,600 people in at least
25 countries from Oct. 10 to Nov. 30 last year.
“Davos Man
is not this caricature of the rich and powerful person,” Klaus Schwab, founder
of the forum, said on Monday.
“Davos Man
is a person who, as I define it, should be concerned with the present state of
the world and who should be ready to engage and contribute so that the state of
the world is improved.”
The term
“Davos Man” was created by the late Samuel Huntington, a professor at Harvard
University in Cambridge, Massachusetts, to describe those with international
visions who view governments’ only use as easing “the elite’s global
operations.”
The 42nd
annual meeting of the World Economic Forum embodies the “1 percent,” to use the
phrase popularized by the young protesters who spent more than eight weeks
occupying New York’s Zuccotti Park last year.
Among
scheduled attendees are bank CEOs such as Pandit and Jamie Dimon of JPMorgan
Chase and corporate chiefs Peter Voser of Royal Dutch Shell and Cisco Systems’
John Chambers. At least 70 billionaires are to be present, including investor
George Soros and Microsoft founder Bill Gates. They will join about 2,600 other
delegates discussing the world outlook.
The image
of financial, corporate and governmental powers have taken a hit as the
“occupy” protests, the Arab Spring uprisings and recent marches in Moscow
highlighted rising unemployment and income inequality, said Tina Fordham,
senior global political analyst at Citigroup and a member of the forum’s Global
Agenda Council. It helps shape the forum’s work.
There is “a
reduced willingness to tolerate the perceived excess of elites and the old
social order, and heightened potential for protests to cause disruption,
violence and pressure to alter the legislative agenda,” she said.
Not
everyone has gotten the message. Three years after he used the Davos stage to
pledge Russia wouldn’t turn toward “isolationism and unbridled economic egoism”
and as he seeks to return to the presidency, Prime Minister Vladimir Putin is
facing the biggest protests against his rule in 12 years. They were sparked by
alleged fraud in the Dec. 4 parliamentary election, in which his United Russia
party retained power.
In the
financial world, Davos Man took a pay cut. Morgan Stanley CEO James Gorman, who
is scheduled to attend the forum, had his 2011 pay reduced by 25 percent from a
year earlier. Goldman Sachs cut average compensation and benefits expenses 21
percent in the same period.
Ian
Bremmer, president of Eurasia, a New York-based investment consultancy, detects
a generational transition. While Murdoch, 80, began posting on Twitter last
month, it’s executives less than half his age who will be more alert to the demands
of consumers and to accepting less privacy given the rise of social media, he
said.
As younger
leaders “start taking a role and grow in influence and importance, then you’ll
see a different sensibility in terms of how they interact with the global
public,” Bremmer said.
There will
be plenty of room for them.
Murdoch is
absent again. A year ago, he canceled his participation in a panel discussion
at the forum as British police stepped up an investigation into phone-hacking
allegations by News Corp. newspapers.
News Corp.
spokesman Jack Horner said Murdoch was busy this year.
Gruebel,
who two years ago was privately huddling in Davos with counterparts to discuss
how to reassert their influence with regulators and governments, quit in
September after UBS fell victim to a rogue trader.
High-profile
locals are also missing from Davos this year. Hildebrand, who as a student
worked in the resort as a bell boy and limousine driver, is a no-show after he
resigned as SNB president this month. His credibility was questioned following
the disclosure his wife bought $504,000 in the days before the SNB imposed a
currency cap on the franc.
Two former
Davos stars have been incarcerated in the past year. Strauss-Kahn, who as IMF
chief used a Davos debate four years ago to push governments to ease fiscal
policy, is back in Paris after being arrested in New York and charged with
attempted rape and sexual assault.
Saif
al-Islam Qaddafi, the son of the former Libyan dictator, was named a Young
Global Leader at the forum in 2006. He was captured by rebels in November while
trying to flee to Niger a month after his father was killed in Libya’s
overthrow.
Some of the
falls from grace reflect the aftershocks of the recent credit crisis and the
resulting pushes for greater income and democratic equality, said Nariman
Behravesh, chief economist at Englewood, Colorado-based IHS and a Davos
delegate.
“Severe
income disparity” was cited as one of the greatest threats to global prosperity
over the next decade in the forum’s annual review of risks published on Jan.
11.
Organizers
have made some nods to the emerging theme. The opening panel on capitalism in
modern times will involve Bank of America CEO Brian Moynihan and Sharan Burrow,
general secretary of the International Trade Union Confederation. Later in the
week, the role of business in society will be discussed, as will whether banks
are a cure or curse for the world economy.
“The focus
on ethics and responsibility and social justice will be much greater this time
around,” said Behravesh.
Bloomberg
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