Elites at the World Economic Forum’s annual meeting in Davos, Switzerland, spent the week bickering about how best to address the rejection of globalization and the upending of the New World Order, a debate made doubly urgent for the terrified globalists by upcoming elections in Europe this year where anti-establishment parties stand to gain more ground.
International Monetary Fund chief Christine Lagarde – recently convicted on charges of misusing public funds – urged a list of policies from programs to retrain workers to more social spending, while other globalist elites admitted they are “terrified of democracy” and fretted that the people of the world will continue to reject their agenda.
Hedge fund billionaire Ray Dalio warned on a panel chaired by Bloomberg Television that “we may be at a point where globalization is ending, and provincialization and nationalization is taking hold.”
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That leaves the global elite in Davos trying to patch together expensive remedies to make the current system of global trade, bankster criminality and corporate rule that the Davos club represents acceptable to the public at a time when figures like President Trump threaten to dismantle it by scrapping trade deals and introducing tariffs.
However some Davos attendees don’t seem to have fully appreciated the mood of the people. Richard Baldwin, professor of international economics at the Graduate Institute of International and Development Studies in Geneva, said elites should impose higher taxes on workers to pay for the costs of globalization. “There may just be a need to man up. We have to pay for the social cohesion that we need to keep our societies advancing, and accept that this may be a higher tax burden on people.”
There's "a crisis of the middle class in advanced economies," Christine Lagarde says https://t.co/72GgBmZQxV #wef17 pic.twitter.com/bBiHRZ3bSz
— Bloomberg TV (@BloombergTV) January 18, 2017
Bloomberg reports: Davos over the decades has become synonymous with globalization and open markets, but in the background this year is the failure of business and political elites to predict any of the seismic political events that shaped 2016. That has raised questions over whether they are capable of understanding and addressing the anti-establishment forces that have roiled the U.S. and Europe over the past year.
After Trump and Brexit, there are more votes coming this year. Elections are due in the Netherlands, France and Germany, with a possible early poll in Italy following a constitutional referendum where voters rallied against the government.
Elites Admit They Fear Democracy
Even in Davos, there are those who are ready to scrap major pillars of the postwar European order. Two Nobel prize-winning economists, Joseph Stiglitz and Angus Deaton, suggested that in Europe in particular, things need to change.
Stiglitz said that if the euro can’t be made to work, it should be dropped. Deaton, who has written on inequality in the global economy, said in an interview that the cleft between voters and their elected officials has never been wider. In part, he blamed the European Union.
“Breaking up the European Union would certainly help, even though it would do a lot of other bad stuff,” he said. “There’s a sense of overreach. There’s the sense that people have very little control of what the EU does.”
The panel on middle-class anger saw former U.S. Treasury Secretary Lawrence Summers attacking Donald Trump while Dalio, founder of Bridgewater Associates, struck a more pessimistic tone than Lagarde.
“I want to be loud and clear: populism scares me,” Dalio said. “The No. 1 issue economically as a market participant is how populism manifests itself over the next year or two.”
Now at Harvard University, Summers said populism is “invariably counter-productive” for those it claims to help. “Our President has made four or five phone calls to four or five companies, largely suspending the rule of law, and extorting them into relocating dozens or perhaps even a few hundred jobs into plants in the United States,” Summers said.
The panel also discussed how to combat the backlash against governments and the elite by taking back control of the political narrative.
Summers’s recipe for dealing with populism twisted Trump’s campaign slogan. “Our broad objective should be to make America greater than ever before,” Summers said. “That’s very different from making it great again.”
He suggested three major steps. First, “public investment on an adequate scale starting from infrastructure” also embracing technology and education; second, “making global integration work for ordinary people” and third, “enabling the dreams of every young American” including education, finding work and home purchasing.
And if that seems distant in the U.S., in Europe there may be even less chance of a big policy effort in a region still weary from the sovereign debt crisis, with budgets stretched and debt levels high.
Italian Finance Minister Pier Carlo Padoan told the panel that Britain’s departure from the European Union and Trump posed a challenge to policy makers.
“They have a vision, we don’t have a vision in Europe, not a vision which is comparable in terms of powerful message,” he said. “Sorry to be pessimistic, but that is the case.”
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