I lost my ticket to Davos

from Peter Radford

That’s obviously why I wasn’t there.

No? Well how about this: I am a pleb. Sorry about that, I have no right to think that people like me would have anything of importance to say in the presence of such an august and all knowing group. So I never deserved a ticket.

Did I say sorry loud enough?

Come to think of it why does the media throw such a hyperventilated frenzy over Davos?  It is simply an opportunity for the self-important to gather, impress each other, and puff up their collective egos. When puffery meets self importance with sufficient force the laws of physics are inverted, up becomes down, and bad things become good. Sour air turns sweet and, over the appropriate expensive wines, Very Important People realize just why they are very important.

They are, because they are. Which should be sufficient for the rest of us to realize that we have no place at that particular table. We should wait instead to be told what’s right and wrong.

My jaundice stems from a couple of snippets I managed to glean from what otherwise seems to have been a very dull get together.

First, there was the no doubt inestimable Ellen Kullman, CEO of Du Pont, telling us that 2010 was just fabulous. Apparently she wishes every year could be as spectacular as 2010. Irritants like high unemployment, masses of foreclosures, and rotten economies, didn’t stop Du Pont from making out like bandits. Profits were positively stratospheric. The agricultural side of the business was dandy. Ms. Kullman deserves a terrific bonus, which, no doubt, her Board of Directors will duly pay out. She is really important, so we have to hang on every word. Which is unfortunate since most of them appear to be platitudinous. As in:

“As we take a look at 2011, there is optimism for the automotive industry in the United States,” said Kullman. “It will grow, high single digits. There is optimism around new production capability that is coming in, in alternate energy and in new technologies where innovations in science are really changing the game. At the end of the day in the United States it is going to come down to jobs.”

Really? It will all come down to jobs? Wow, I had no idea. And what about those jobs?

Well, it turns out that Ms. Kullman was not too bothered about jobs. Employment is, after all a lagging factor in the economy, so it tends to rise only after the recovery is well under way. So prolonged unemployment is not unusual and should be expected. Now, about those much needed government support programs to boost business …

Ummm.

No.

I get the lagging bit. I can read the data as well. David Ruccio has all those nifty charts he teases us with that show the trajectory of the ups and downs – or should I say the downs and ups? – of a typical employment cycle. And, yes, employment lags behind a recovery. So far we can agree with the great Ms. Kullman. But there’s a wee bit of a problem in being so dismissively and wantonly bland. The last two cycles have been radically different. And I mean radically. They have been much more extended. This last was both more severe and extended than any other since the Depression. Any sober analysis tells us that the current recovery is far too slow to return us to pre-crisis levels of employment any time within the next few years. Indeed the press is full of articles and comments arguing the case that we may never return there because our workforce has magically become useless, either through ignorance, laziness, or simple delinquency. We are, we are being told, facing a structural problem. This is, we are also told, a very bad thing. So, jobs are a really big deal. And this time is very different.

Does Ms. Kullman care?

No. She thinks it will take care of itself. All she cares about are those amazing profits. That rising productivity. And all those nifty “breakthrough” ideas she is floating as she co-chairs this year’s Davos extravaganza. Ever the brave bureaucrat her ideas include:

“The need for collaboration between public and private entities is nothing new,” Ellen said.  “What is new is the urgency to start listening, not to talk past each other and to work toward common goals of finding practical, sustainable solutions that can make real differences to people today and can be replicated for others tomorrow.”

Which, I think, means she sees great profit in supplying the hungry with food. As long as governments do their part by reducing regulation, opening up markets, and generally getting out of the way. Wait: I added that last part, but her pablum suggests nothing new, so I took the liberty of extrapolating from recent performance.

Meanwhile, jobs will look after themselves.

I suppose I shouldn’t be too harsh on the great and good. They live in a bubble, so perhaps I should feel sympathy for their lack of attachment to regular every day issues. They deal in the bored and detached language of formal presentations in which content is reduced so as not to be controversial. They preen in the rarified world of executive suites pampered by armies of industrious sycophants whose primary job is to eliminate air from the outside penetrating the inner sanctum. Inside her limited world Ms. Kullman may actually believe that the jobs will flow any minute now.

What we do know is that they are not her concern.

What else did we learn from Davos? This is the second snippet contributing to my jaundice.

That bankers are put upon. Unfairly so too. Poor dears.

We get this from that paragon of civic virtue, Jamie Dimon, who launched into invective warning us all of the dangers of picking on the bankers. They have fragile egos and need some tender loving care. After all they had a few bad months back there in the crisis and nearly lost all those bonus checks. Or at least part of them. Well, maybe none at all, but they came close to having to worry about getting rid of one or two of their houses. And you all know just how tough it is to sell one mansion let alone a couple. What with all this bad economy and the collapse of the real estate market. Times are tough. We shouldn’t be picking on bankers. It’s just not nice, and Jamie wants us all to be nice.

Now I know why I wasn’t invited. I would have been physically sick. I would have choked.

If there is one abiding memory from this crisis, a crisis that unbeknownst to Ms. Kullman and dear Jamie lingers on throughout the world, it is that the bankers were not bashed hard enough. Indeed in the context of past crises of this proportion, they came out very well. Not many jumped out of windows because they lost all they had. Not many are now impecunious. Few went bankrupt. Only one or two, if that, lost their homes. Masses of them were not laid off to remain unemployed. Even those that were caught up in the downdraft – Lehman and Bear Stearns folks primarily – have subsequently landed back in banking to carry on their old ways. Overall the industry has emerged in good shape. Yes there are fewer banks. No they are not fully reformed. They still exist to undermine the economy, allocate capital inefficiently, and suck cash away from productive enterprise just as they did a few years back. More to the point they still live off our largesse, and are still in total denial of their utter dependency on the goodwill of the ever obliging taxpayers for their high rent lifestyles.

Given that the rest of us still linger in the gutter where the bakers threw us, I suggest it is not too likely we will suddenly feel a great deal of love for bankers, and Jamie might need to try a little harder to win us back. Like actually and proactively get rid of proprietary trading. By eliminating the folks who gave us the derivative mess. By making someone responsible. Or by simply admitting the banks were at fault and encourage a bout of re-regulation instead of spending millions of  lobbying dollars and countless hours purchasing the votes in Congress to thwart the democratic process. But I suppose that wouldn’t be fun, and would require leadership. Something banking lacks.

In the end it appears that the essential credential for being invited to Davos is that you have no idea what the damage you did to the world, mainly because you emerged wealthier than ever; that you are indifferent to unemployment, because you aren’t unemployed; that you ignore inequality, because you are benefitting from it; and that you can read a Powerpoint presentation full of meaningless bureaucratic but Very Important Breakthrough Ideas, because you ant to impress your peers without actually saying anything substantive.

Oh, and you mustn’t say anything nasty about bankers.