Global Elites Analysis: Fretting About Dystopia at Davos

Every year, leading members of the global elites meet in Davos, Switzerland, at a conference organised by the World Economic Forum. As part of their commitment to “improving the state of the world,” WEF publish their annual Global Risks Report, which is “based on a survey of 469 experts from industry, government, academia and civil society that examines 50 global risks across five categories".

The document is intended as an aid for policymakers to identify the problems their countries will encounter in the coming decade, and as a spur for those leaders to be "pro-active" in facing the worst of any upcoming challenges to the world's “future prosperity and security".

This year, WEF decided to emphasise three risks that threaten every nation, even if each country will be affected differently depending on their individual economic and social circumstances. The first, "Seeds of Dystopia", makes for especially depressing reading. It begins:

Dystopia, the opposite of a utopia, describes a place where life is full of hardship and devoid of hope. Analysis of linkages across various global risks reveals a constellation of fiscal, demographic and societal risks signalling a dystopian future for much of humanity. The interplay among these risks could result in a world where a large youth population contends with chronic, high levels of unemployment, while concurrently, the largest population of retirees in history becomes dependent upon already heavily indebted governments. Both young and old could face an income gap, as well as a skills gap so wide as to threaten social and political stability.

The Report suggests, if current social and political structures cannot find a way to deal with these looming trends, “this could precipitate a downward spiral of the global economy fuelled by protectionism, nationalism and populism"

Compounding this risk “of the emergence of a new class of critical fragile states --- formerly wealthy countries that descend into lawlessness and unrest as they become unable to meet their social and fiscal obligations" --- is the problem of rising income inequality. Or, as the Report recognises, a “growing sense that wealth and power are becoming more entrenched in the hands of political and financial elites.”

A final observation from the WEF Report highlights the consequences of ignoring “severe income inequality,” the global risk that the survey respondents selected as the most likely to happen in the next 10 years:

When social mobility is widely perceived as attainable, income disparity can spur people to reach for success. However, when ambitious and industrious young people start to feel that, no matter how hard they work, their prospects are constrained, then feelings of powerlessness, disconnectedness and disengagement can take root. The social unrest that occurred in 2011, from the United States to the Middle East, demonstrated how governments everywhere need to address the causes of discontent before it becomes a violent, destabilizing force.

There are no policy proposals in the document, just these stark warnings. And this, somewhat oddly, leads to the realisation that, for all the scorn heaped upon American politics, no nation in the world is engaging with these "dystopian" issues in such an open and democratic manner. In just the last week, the President's State of the Union Address and the two Repubican debates in Florida proposed different solutions to the pressing concerns identified by the WEF. Put aside personal politics, and the American democratic system of government, with the continual debate it encourages, offers some hope that the pessimistic future envisioned by the WEF is not a foregone conclusion.

Obama's address before Congress on Tuesday night was not the most impressive speech he has ever delivered, but he cannot be accused of ignoring the problem of unemployment or fostering the perception that political and financial elites are prospering unfairly at the expense of the majority of Americans. President Obama's solutions to the WEF "risk" of severe economic inequality may be ridiculed by Republicans. But his "Buffet Rule" is an attempt to address the concerns of many Americans that a few have manipulated the tax system to protect their wealth and avoid paying their fair share.

As Obama declared at the very beginning of his speech:

No challenge is more urgent. No debate is more important. We can either settle for a country where a shrinking number of people do really well while a growing number of Americans barely get by, or we can restore an economy where everyone gets a fair shot, and everyone does their fair share, and everyone plays by the same set of rules. (Applause.) What’s at stake aren’t Democratic values or Republican values, but American values. And we have to reclaim them.

Republicans wouldn't disagree with that. They just believe that a different set of policies will “reclaim” those American values that hinge on the premise that if you work hard you will succeed. Where Democrats see the Buffet Rule as ensuring all those who do succeed pay a fair share to the community that allowed them to prosper, Republicans argue that it is counter-productive and only deters further investment in wealth-creating opportunities.

The WEF are not the only people warning that democratic systems of government areincreasingly threatened by forces of "protectionism, nationalism and populism", as the global economy fails to meet the challenges the financial crisis has unleashed. And some experts are not only considering the possibility that newly erected democratic governments will fail, but that even some of the longest established democracies are in danger.

Paramount among the problems facing many countries is their lack of growth. Paul Mason is the Economics Editor for Newsnight, the BBC's flagship current affairs programme. On Wednesday, he analysed the latest dismal numbers for the British economy, which shrank 0.2% in the last quarter of 2011, and agreed with his interviewer that parts of Britain's manufacturing base have disappeared for good. Mason then observed that output in Britain has fallen 4% since 2008 and said that, allied with the depreciation of the pound in that period, meant that the British economy has contracted by 20% interationally. He continued that diggging Britain out of that hole would take “more radical measures than the political system at the moment can deliver".

Last November, commenting on the Government's budget presentation, Mason said:

Yesterday will be seen as a landmark in British economic history, and in British politics. It will relegate George Osborne's emergency budget of June 2010 to a footnote and elevate Robert Chote's happy-go-lucky assessment of our economic prospects in November 2010 to the status of a case study in predictive failure.

Because yesterday's Autumn Statement will set the political tone of the decade: it will tie the hands of future governments; and it has already brought a philosophical debate on the British right to an abrupt end.

Mason added, “And don't kid yourself that Britain is somehow immune, either, from the "government by technocrat" virus sweeping Europe.”

Perhaps this doom-and-gloom analysis of the possible future of many democratic governments is plain wrong, but the uncertainty surrounding the global economy –-- see the testimony of Dr. Ike Brannon and Dr.Joel Prakken at this week's Senate Budget Committee hearing for an admission of the cluelessness of economic forecasters –-- only feeds that pessimistic outlook.

So, while American politics may tend to descend into petty bickering and gridlock, can it really offer some hope that US democracy --- and the confrontational political culture in which it thrives --- may find what the World Economic Forum calls a “viable alternative” to a dystopian near-future?