As I make my way this week to Davos via Riyadh and Zurich, it becomes clear that the chill in the global economy has reached the deserts of Saudi Arabia. I attend a panel at the Saudi Global Competitiveness Forum where each speaker outdoes the next in headlining the many risks of the current downturn and predicting the gravest of consequences.’ Godzilla’ seems to have replaced ‘Goldilocks’ as the defining metaphor for our world markets.
At first, it seems to me that the town of Davos itself is cocooned from the panic. I am staying in the same room at the same hotel, and the same cheery concierge rushes forward to lug up my bag. It is only when I see the glum faces and conspiratorial whispers of the execs milling around that I realize that this year at least, the celebration and paeans to the ‘animal spirit’ will be missing.
But even as we deplore the office refurbishments, the private jets and the lavish parties of what seems to already be a long past, gilded age, it is instructive to note that businesses were not alone in taking a deep and heady drink from the punchbowl. Nations were also afflicted by the same malaise of overconfidence and a relentless focus on the short-term.
The global bubble was an era when the Americans spent too much and saved too little, while the Chinese saved too much and spent too little. Resource-rich countries invested the windfall profits from high commodity prices into sovereign wealth funds rather than investing in human capital and social development.
The Europeans were secure in their belief that they had a better form of capitalism even as the bottom fell out of their banks. And in India, years of bubble-induced growth allowed the country to take the eye off the ball when it came to desperately needed reforms and social investment.
We were all in it together – businessman and politicians, corporations and nations. So I do hope the Davos Annual Meeting 2009 becomes a place where we focus on what to do for the future rather than finger-pointing for the past.
One thing has become quickly apparent in my many conversations here is that the bursting of the global bubble is forcing countries to address hard questions and realities.
Countries will have to tend to basic ‘housekeeping’ concerns, from the health of their domestic markets and rising income inequalities, to the state of their social security nets and the size of their deficits. And to do any of this successfully, our discussions will have to be more about finding solutions than scapegoats.
Nandan Nilekani is co-chairman of Infosys