Economy

Statement | After Davos, I am optimistic about the future of the world

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Davos is back with a bang. After returning to face-to-face meetings in a delayed, toned-down version last May, the World Economic Forum’s annual conference this week has been packed with attendees trying to learn more about the world of 2023. It’s not a bad place to sample. The conference was a truly global event; I was able to meet with Chinese officials, American CEOs, Ukrainian human rights activists, and Middle Eastern entrepreneurs.

Every year some country or trend is surrounded by buzz. This year there were three such topics – Gulf States, India and Artificial Intelligence. Saudi Arabia and the United Arab Emirates, Flush with oil wealth, showcased their formidable ambitions. From India, perhaps the most optimistic country in the world right now, came representatives of many of its states competing with each other for attention and investment. And artificial intelligence was the futuristic topic that almost no one seemed to understand, but everyone was discussing.

Outside of these pockets of energy, however, there was definitely a lot of gloom and doom. The big geopolitical topic was of course Ukraine, where most people see a long, hard and expensive battle. On the economy, large companies such as Microsoft and Goldman Sachs have announced layoffs and others, write-downs. In the West, people worry about inflation. In many developing countries, they strive for debt crises and default settings.

The challenges facing the world are real, but I came out of Davos thinking that the big story is actually much more positive. Despite a series of severe shocks – covid-19, the Russia-Ukraine war, global energy and food crises, inflation – the West and its partners, from Kenya to Singapore, stepping up, collaborating and breaking new ground.

The US is in remarkably good shape. The Federal Reserve appears to be on track to tackle inflation. President Biden has signed off on some of the largest, long-term investments in the American economy since the Lyndon B. Johnson era half a century ago. American technology companies continue to lead the way in all areas from AI for new RNA substances.

In Europe, however, most people at Davos were pessimistic. But even here I find it striking that, faced with enormous challenges – the first full-blown geopolitical crisis on its doorstep in decades, a catastrophic energy crisis – they came together and stayed together.

As Matthias Matthijs points out in an excellent history in foreign affairs, Europe can boast several achievements. Despite the costs of war, high energy prices and the burden of Ukrainian refugees, Europe remains strongly united on Ukraine. It is weaning itself off Russian energy much faster than anyone predicted. The European Central Bank, like the Federal Reserve, manages inflation reasonably well. Populists in Europe, such as Viktor Orban and Giorgia Meloni, have not been able to grasp the agenda. If anything, they have had to trim their sails. The one European country that rumbles is Britain, but in a way that actually highlights the costs of Brexit and the virtues of European unity and cooperation.

Meanwhile, the biggest rogue state in the world, Russia, is largely isolated, fighting to sell his natural gas (about three quarters of which used to go to Europe) and cut off from modernity technology it must modernize its economy and war machine. Even China has signaled greater distance between itself and Russia in recent weeks.

There are plenty of issues out there, from Ukraine’s future to inflation to climate change. But the great story is the unity and determination of the democratic world. That unity is much stronger than at any time during the Cold War, when major divisions between Europe and the United States were common.

We have wondered for some time what would happen around the globe when America’s role as sole superpower ebbed and lost the capacity or will to be the world’s policeman. Many predicted that we would see a return to anarchy or the law of the jungle, where authoritarian states would ensure that power is right. But there are encouraging signs that what we are actually witnessing is a new kind of order built on unity and cooperation among the free nations of the world. To be sure, coalitions of the free are always messy and contentious: their unity must stand, their cooperation must grow. But it is possible that we will look back on these years and see that the age of American leadership was slowly replaced by one of democratic leadership.

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