Swiss flag in Davos town with church and mountains in the background. Davos is a ski resort and location of the annual World Economic Forum. Photo: iStock
Davos' local economy was affected by the cancellation of this year's WEF gabfest, but the rest of us hardly noticed. Photo: iStock

With the US government shutdown still an unresolved affair, President Donald Trump canceled his appearance at the World Economic Forum’s annual meeting. So did French President Emmanuel Macron, because of the continuing political issue with the Gilets Jaunes. Ahead of an interesting 2019, Chinese President Xi Jinping is also staying at home, in contrast to the big speeches he made in 2017 and 2018.

However, this year’s Davos summit is more important than at any time in the past three decades because of its theme (Fourth Industrial Revolution) and the increased turbulence in the world and mounting risks (the WEF just published its risks report, and the title of the press release states the obvious: “Weakened International Cooperation Damaging Collective Will to Tackle Global Risks”).

Much remains to be done in harmonizing the positions on the broad lines of a new social contract that would address the discontent of those segments of the population (especially in the West) whose attention has been captured by populist and increasingly authoritarian/anti-democratic messages. Without the pressure of regular political summits to deliver big results, the hope is nonetheless, because of Davos’ prestige, that the conversations will veer on to the need for a new economic model and its proper communication and implementation.

The world is not in its best of times, at least in terms of perceptions. In the West, it has become a commonplace to see every round of elections described as decisive for preserving liberalism and stopping extremist political forces from taking the reins. Meanwhile in the East, more autocracy creeps in.

Moreover, the post-Great Recession economic recovery is slowing down and uncertainty has increased with trade wars; we have already seen worried messages from international financial institutions, and the specter of recession is already here.

The trade war between the US and China contributes to the tensions, while Brexit continues to be a test for both the British government and the resilience and the sense of purpose of the European Union; European elections are only a couple of months away and, as has been the case in the past, the anti-democrats and anti-liberals will use this platform to point toward the inconsistencies and faults of the United Europe project.

Great-power politics is also a prevailing mood – as the nature abhors a vacuum, Russia and China advance and bank on the West’s disengagement and missteps.

In the most recent Global Competitiveness Index, the US has regained the top position – the unorthodox policy choices of the Trump administration have, therefore, economic merit. The problem remains Trump’s style, or lack of it.

The strategic question is how to manage a possible Chinese economic slowdown but also transfer a certain kind of economic enthusiasm across the Atlantic, where the initial passion triggered by the election of Macron has worn off.

The Yellow Vests speak for a broader sentiment in the European public and make even more justified a conversation about the defining aspects about a new social contract that will involve not only the citizens and the state, but also the other actors that influence the global economy and politics (multinational corporations, international organizations, non-governmental organizations).

I dare to put forward three ideas that could help us focus on a long-overdue discussion about what needs to change for populism and polarization, together with great-power competition and hard security issues, not to evolve into a toxic cocktail for liberal democracy as we know it.

1. Speak and act for those left behind. The Fourth Industrial Revolution will for sure be transformative, but what it takes to be successful is to truly tackle inequality and to correct the structural issues that have paralyzed the social elevator in many countries. Here, assembling and communicating the narrative of Globalization 4.0 and 4IR so that it could reach everyone will require tremendous effort, but it is the only solution if regaining cohesion and common purpose is the primary goal in our threatened democracies.

2. Pay real attention to the future of work and the future of education. Automation, portability, and delocalization have caused many tensions in our societies and explain partly the recent electoral results. Preparing people to adapt continuously, providing them with comprehensive safety nets and opportunities for innovation, is the right answer to the uncertainty that has provoked so many misunderstandings and cleavages in the West.

3. Overhaul not only the national institutions, but also the international ones. Global governance is in crisis, which is mostly driven by the inability to adapt and to respond to on-the-ground reality. However, the solution is not to give up, but to take advantage of common values and technology.

It may be too much to ask from Davos to provide the roadmap for this new social contract – it will take time and sustained effort. However, with the brainpower and the drive that the Forum brings together, a robust menu for change is possible. It depends only if the topic will be on the top of the agenda and participants have the courage and vision and move forward.

Radu Magdin

Radu Magdin is a global analyst and consultant, and former prime-ministerial adviser in Romania and Moldova. He writes on global risks and opportunities for international players in times of information warfare and great-power competition.

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