- This year the Davos crowd of business executives tepidly accepted President Trump, and that acceptance exposed a dirty secret.
- For all the CEO talk about the benefits of free-market capitalism and open societies, the people of corporate Davos have shown they’re willing to set those values aside if the economy keeps making them richer.
- Not that Trump should take a victory lap yet. This set is notoriously fickle. One year you’re in, the next you’re out.
- This is an opinion column. The thoughts expressed are those of the author.
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Say what you want about President Donald Trump, but there’s no doubt that, as with many polarising figures, he exposes the truth about where people stand. You’re either with him or against him. You either stand up to him or you let him talk down to you.
And so it was at this year’s World Economic Forum, in Davos, Switzerland. It is an event best captured in whispers and cocktail gossip, in quotes from unnamed CEOs and government officials. Collectively, it represents the amorphous consciousness of the global elite.
And this year the Wall Street wing of that consciousness seems fine with Trump.
As New York Times columnist Andrew Ross Sorkin put it, “Even Mr. Trump’s most ardent detractors acknowledge that an acceptance of the president is settling in among the Davos crowd.”
For years, the Davos crowd by and large shunned the president, and for good reason. Trump stands in contrast the values the conference purports to embody – open societies, liberalism (with a little “l”), human rights, and free trade. And specifically in the conference’s corporate set, invitees are the architects and victors of this global framework; they represent the pinnacle of capitalism as it is practiced in our times. They owe their wealth to it.
Trump’s rejection of that order was anathema to them, and it should still be if they purport to subscribe to the values the forum embodies. The speech he delivered this year was essentially one long chest beat for nationalism.
And his ongoing trade wars seemed to be a form of reckless hostility toward friend and foe alike that could topple the global economy. This is why he was generally seen as a source of risk and instability by conferencegoers in 2017, in 2018, and in 2019. By contrast this year, Klaus Schwab, the forum’s founder, introduced Trump by praising him for his “inclusiveness” and “optimism.” What changed?
Despite the fact that Trump seems dedicated to eroding the Davos crowd’s value system, those who were rich are still rich and getting richer. And so at the very best, it seems a resignation has set in among comfortable corporate people – one that has made them passive at a conference where they’re supposed to express their values.
After all, the US stock market is hitting record highs, a cessation of trade-war hostilities is giving CEOs hope, and JPMorgan CEO Jamie Dimon even said companies might start investing in the economy again (a big deal given that business investment was one of the biggest drags on the US economy in 2019). That’s why, as reports from the conference seem to indicate, Wall Street Davos is not actively sounding the alarm for free-market capitalism for the moment.
But that’s just for this moment. This set is notoriously fickle. One year you’re in, one year you’re very much out. What matters, ultimately, is what you’ve done for them lately.
In with the in crowd
By way of illustration of how quickly fashion can change at Davos, let’s walk through a few things that have happened in the past few forum meetings.
- In 2017, Chinese President Xi Jinping dazzled the crowd with a full-throated defence of free-market capitalism and globalization. Xi admonished the Trump administration for starting trade wars that could endanger the world’s prosperity. Everyone impressed by the speech either forgot, was ignorant of, or ignored the fact that China had started turning inward as early as 2014, supporting state-owned enterprises over the private sector. After Xi’s speech, later that year, China would start its chilling crackdown on Muslim minorities in the country’s Xinjiang province.
- In 2018, Trump attended the forum for the first time as president. It was a disaster. His speech was badly received, and Treasury Secretary Steven Mnuchin sent markets reeling when he failed to reiterate the administration’s support for the US’s decades-long strong-dollar policy.
- In 2019, Trump skipped Davos, and the crowd turned its ire on Xi after billionaire investor George Soros became the toast of the conference after assailing China as a danger to open and democratic societies. China – Soros said – was using advanced technology such as facial recognition and AI to repress its people. “This makes Xi Jinping the most dangerous opponent of those who believe in the concept of open society,” Soros said.
- That brings us to 2020. Xi is not there, but Soros’ speech seems to have been forgotten too. Despite the encroachment of China’s sprawling surveillance apparatus, Microsoft CEO Satya Nadella told the crowd that the country “cares deeply” about AI ethics. Never mind how such technology is being used to violate human rights in Xinjiang. Finally, this year the talk of the conference is the corporate crowd’s sometimes resigned acceptance of Trump, the man who made markets puke two years ago.
As I said, fickle.
What do you stand for?
Given this track record, it shouldn’t be a surprise that Davos’ Wall Street wing eventually warmed up to Trump. They are a people of consistent inconsistencies. I’ll give you another example from the CNBC interview with Jamie Dimon I mentioned earlier.
Early in the conversation, Dimon seemed to be advocating for more coordination between the White House and the Federal Reserve, two institutions that have been historically independent.
“I … think we have to have coordinated fiscal monetary policy and regulatory policy,” he said. “You see China do that. In the United States, you don’t see it so much – industrial regulatory, fiscal. If you want to grow faster and not cause some of the problems that could be caused by rapidly rising rates … .”
CNBC host Becky Quick did a bit of a double take and said China also tells its companies what to do and directly intervenes in its economy (you know, kind of like socialism).
Dimon brushed that off, saying that Chinese policymakers can “manage their economy much better, and we failed to do that.”
This exchange would have been all right if a few minutes later Dimon hadn’t gone into a rant about how terrible socialism is because it means the government controls companies (like his). It always ends up with countries looking like Venezuela, he warned.
A cynical read of all that might lead you to conclude that Dimon would like the government to intervene when it suits his business, but would also like the government to keep its hands off his business.
In short, he’d like the government to maintain the conditions under which he can continue growing his gargantuan company and generating more wealth. Socialism when it suits him, capitalism when it suits him. Either is fine.
For the capitalists, the forum is supposed to be one where the business community can gather and discuss long-term goals that fit within the framework of open societies, whether those goals be to slow the march of climate change or uphold human rights.
By not actively pointing out the dangers to those ideas posed by Trump – who has consistently proven to be anti-trade, anti-sustainability, and human-rights-agnostic – business executives show they’re more interested in attending the forum to demonstrate their proximity to power than anything else.
If power is what concerns them, then their standard bearer might as well be Xi Jinping or Donald Trump. Either one will do as long as money is made.