Jan 26, 2019 - World

Deep Dive: A new — unknown — world

Illustration: Rebecca Zisser/Axios

DAVOS, Switzerland For two years, the global elite has fumbled for ways to defend the 7-decade-old structure of trade and diplomacy from punishing attacks. This week, they declared the system all but dead.

The main thing now, leading thinkers said, is to ensure that what replaces the system in the coming years prevents a great-power war — as the existing one has — and delivers more for millions left behind by the current economy.

  • The scale of what comes next seems likely to rival key modern social, political and economic transformations, such as the post-Gilded Age of the early 1900s, the global Great Depression of the 1930s, and the Reagan-Thatcher revolution of the 1980s.
  • "The paradigm is shifting. Powerful people are asking questions on the record in the halls that they've never asked before," said Ben Pring, director of the Center for the Future of Work at Cognizant.

Since Brexit and the election of President Trump, elite politicians, executives and scholars who meet here every year have wrung their hands over the wave of shocks to a global power system whose permanence most had taken for granted. Those shocks include needling and threats from Trump and throw-out-the-scoundrel elections across Europe and in Brazil.

But these elites told Axios that, while the current system is still functioning in place, a transition is already underway to a likely very different global political and economic order, one that is now at best faintly visible.

  • Klaus Schwab, founder of the World Economic Forum, told attendees that they must make dramatic changes to the global system, and not merely tinker.
  • And executives seemed to agree, voicing a new readiness to fundamentally change course in order to avert the worst, such as social unrest and violence, said Brian Gallagher, CEO of United Way Worldwide.
  • One thing all of them told us: The speed of advanced technologies, in particular artificial intelligence and automation, is already making the transition more disruptive than prior epochal shifts — and may prolong it. 

Wild card: The global system has already buckled under these pressures — and this has been amid strong economic growth. But now, a number of economists forecast global recession and, in the U.S., the possibility of zero growth — and populations may become even angrier under these more stressful conditions.

What to watch:

  • The new order could enable authoritarian-style governments that undermine counterweight institutions, said Adam Tooze, an economic historian at Columbia University. "You could have a liberal trading system with a majority of authoritarian regimes."
  • Many assume Beijing will sooner or later dominate the new order. That is not preordained, but even if power is dispersed regionally, China, India and Brazil all stand differently politically, which could cause tensions of their own.

Go deeper:

Go deeper

World Bank cuts growth forecast for fourth time in a row

Photo: Win McNamee/Getty Images

The World Bank cut its global growth forecast for the fourth straight time on Wednesday, reducing expectations by 0.2 percentage points each year for 2019, 2020 and 2021.

"Global economic growth is forecast to edge up to 2.5% in 2020 as investment and trade gradually recover from last year’s significant weakness but downward risks persist. ... U.S. growth is forecast to slow to 1.8% this year, reflecting the negative impact of earlier tariff increases and elevated uncertainty."
— World Bank statement on its Global Economic Prospects report
Go deeperArrowJan 9, 2020

Media coverage of Davos portrays more conference rhetoric than reality

Photo Illustration: Sarah Grillo/Axios. Photos via Getty Images: Fabrice Coffrini/AFP and Harold Clements/Express

Call it the hypocrisy gap. Davos has always struggled with the difference between the conference's rhetoric and its reality. This year, as climate change and talk of "stakeholder capitalism" increasingly dominate the public agenda, the gap between why delegates go and why they say they go is wider than ever.

Why it matters: Davos, once a quiet Alpine talking shop, has become a global media frenzy. Governments, corporations, and the World Economic Forum itself (slogan: "Committed to Improving the State of the World") increasingly see Davos as an opportunity to send the message that they care deeply about {insert cause here}. But that's not what keeps the plutocrats returning year after year.

Go deeperArrowJan 23, 2020

What's worrying the Davos crowd

Reproduced from PwC’s Annual Global CEO Survey; Chart: Axios Visuals

DAVOS — A parade of billionaires, CEOs, world leaders and hangers-on has now arrived in Davos, Switzerland, bearing skis, packed schedules and deep concerns about the global economy.

  • PwC's annual Global CEO survey — 1,581 CEOs across 83 territories — was conducted in the fall and released tonight as the World Economic Forum opened. It makes for some pretty alarming reading.
Go deeperArrowJan 20, 2020