Outside/Inside
The "world's most interesting cocktail party" turns serious, as the backlash against globalization starts to shift the views of the powerful
BY J.F.O. McALLISTER Davos
It's the first time it hasn't been sunny in seven years," sighed a disappointed guest at the farewell lunch, surveying the huge outdoor buffet of Swiss delicacies slowly disappearing under a dusting of snowflakes. The gray skies pretty much summed up the mood at this year's World Economic Forum (WEF) annual meeting in Davos. Last year, the U.S. economy was booming, the dotcoms were pushing into the stock market stratosphere, and a triumphal chorus of praise to American-led capitalism drowned out alternative messages. How the world has changed. The dotcoms have wilted like so many Dutch tulips. The U.S. growth machine has stalled. A greenhorn President (who didn't send anyone to Davos to state his case) is taking over in Washington. It's not surprising that the annual conclave of 3,000 top business executives, political leaders and intellectuals from around the world was more introspective than usual.
"Committed to improving the state of the world" is the WEF's motto. But with the Alpine ski resort surrounded by barbed wire and overflowing with armed police ready to beat back the kinds of antiglobalization protesters who paralyzed Seattle, Prague and Melbourne in the last 15 months, participants couldn't ignore that many of those outside the barbed wire consider them not improvers but despoilers. One handbill distributed near the conference center summed it up: "WEF — World-Eating Fatcats." Indeed, the subdued tone of last week's meeting stemmed partly from how loudly the outsiders' charges were bouncing around inside this sanctum sanctorum of global capitalism — because the conference's organizers designed it that way. Instead of multiple sessions on "Peak Performance: Managing the Health of the CEO" as in previous years, or star turns by Bill Clinton and Tony Blair, participants were given a diet rich in self-criticism: attacks on the world trading system by developing country leaders, discussions of poverty and the dangers of genetically modified organisms, a plea from African leaders for long-term investment and involvement. After DaimlerChrysler chairman Jürgen Schrempp delivered an impassioned speech committing his company to social responsibility, one Davos regular observed: "They don't need protesters outside, they're right here."
Well, not exactly. However heart-warming his words, Schrempp's company announced the layoff of 26,000 U.S. workers the very next day. And representatives of various antiglobalization groups invited to the meeting often felt ignored, shunned or unwelcome. "CEOs listen to me but don't understand me," said Thilo Bode, executive director of Greenpeace International. "They are more interested in the cooling of the U.S. economy than the warming of the planet." But at least the business titans and their detractors were starting to talk, which could lead to something constructive.
Spare half a tear for the modern CEO, coddled though he (seldom she) may be by mind-numbing lucre, corporate jets and ubiquitous retainers. Based on research for his new book The Mind of the CEO, Yale School of Management Dean Jeffrey Garten reports that many business chieftains, like the ones he met at Davos last week, feel under siege. The backlash against globalization has been gathering strength. Customers are demanding to know whether the companies behind big brand names are treating workers well in developing countries and practicing good environmental citizenship. Fears are mounting about technological advances like genetically modified food and cloning. "Protesters have been raising these issues for a while, but now ordinary citizens are wondering whether the pace of change is too great and whether anybody is in control," said Garten. Simultaneously, "the markets are putting intense pressure on CEOs to manage for the short term. The deal they signed up for" — basically keeping a high stock price — "is already so excruciating that the combination of these pressures almost burns out their circuits."
At Davos, the CEOs needed a fire extinguisher. James Wolfensohn, President of the World Bank, emphasized bleak demography: 80% of the world's 6 billion people receive only 20% of its income. Half live on less than $2 a day; 97% of the 2 billion extra people expected to join us in the next 20 years will be born in developing countries. "This is not just a moral and social issue, but really a problem of peace," he said. Kofi Annan, the U.N. Secretary-General, noted that half the people alive have never made a phone call. What's worse, the gap between rich and poor, despite a boom in world trade and foreign investment, is intensifying. A few countries have hoisted themselves onto the economic escalator; tiny Singapore, for example, has secured more foreign investment than all of Africa.
But many poor countries face interlocking maladies that render remote any prospect of rapid development: poor infrastructure like roads and ports, struggling schools, corruption, mountains of debt and a brain drain of the educated few. A problem that received particular attention at Davos was disease as a cause, rather than a result, of poverty. Malaria, for example, has cost developing countries $100 billion in the last 30 years, yet eradication has received paltry sums for research. Microsoft's Bill Gates, the world's richest man, said it was "outrageous" that his foundation's recent gift of $50 million was big enough to increase the worldwide malaria research budget by half.
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