Davos

Martin Wolf

In his address to the World Economic Forum, the prime minister was his
fluent self. But there was also an obvious tension between his embrace of
a globalised and open UK and his determination to curb immigration.

This led to a very pointed question from a Swedish MEP on precisely this
contradiction. Mr Cameron defended himself by pointing to the case for
curbing access of immigrants from the EU to welfare benefits and the need
to recognise the challenges created by the huge income gaps between some of
the new members and the old members. Read more

Martin Wolf

For a third year I attended a private dinner at which we laid notional wagers on the future.

This time the main question was not the future of the euro. Apparently, the future of the euro is now regarded as so assured that it is not even worth betting against it. I suspect this is too complacent. We did bet last year on Brexit (British exit from the EU), but that was by 2018. So this issue was not raised again this year.

Here are this year’s, rather less significant, bets, with the mean probabilities out of 100 per cent of the participants and my own probabilities below. Read more

Martin Wolf

Eric Schmidt (c) Getty Images

On Thursday Eric Schmidt gave a fascinating talk on technological innovation, in which he warned that broad range of jobs that once seemed beyond the reach of automation are in danger of being wiped out by technological advances.

I raised two questions to neither of which in my view did I receive a good answer.

First, we see IT everywhere, except in the productivity statistics. It is really quite hard to reconcile the idea of a dramatic technology revolution with stagnant or near-stagnant productivity in high-income countries. Read more

George Osborne has just bolstered his support of Bank of England governor Mark Carney’s somewhat embattled “forward guidance” of linking interest rates to the UK’s unemployment rate – saying that he “completely rejects” the suggestion that the policy has been a failure.

In a debate with a panel of central banking heavyweights in Davos, Switzerland, Mr Osborne fairly huffily slapped backed suggestions that Mr Carney’s flagship move at the helm of the BoE has not worked.

Gideon Rachman

Mykola Azarov (c) Getty Images

How humiliating for a political leader to be in Davos – but to be kept away from the Congress Centre itself. That is the fate that has befallen Mykola Azarov, the prime minister of Ukraine, who is in Davos – and was hoping to speak at the forum. Unfortunately, for him, his government’s reputation has now sunk so low that Mr Azarov did not make it inside the security perimeter.

Instead, he is holed up at the Hotel National, about a mile down the road. Among the visitors he received yesterday were Lakshmi Mittal, the steel magnate; Jorma Ollila, the chairman of Shell – and me.

When I asked him whether he regretted being unable to speak at the WEF, Mr Azarov replied stiffly – “The forum had a unique opportunity to listen to the head of government of Ukraine, to get a wider point of view – it’s hard to tell who lost more in this affair.” And why was he in Davos, anyway – given the chaos back home? The Azarov spin was that his presence shows that the government of Ukraine continues to function normally. Read more

By Lindsay Whipp

Some solid newsworthy talk at the world’s most-expensive talkfest hit our
screens yesterday.

Not even a year after Mark Carney introduced forward guidance to the Bank of England, he signalled at Davos yesterday it might already have had its day.

Eric Schmidt, executive chairman of Google, warned that a broad range of jobs once believed to be beyond the reach of automation were under threat.

But as is always the case at the World Economic Forum, there are vital issues that should be exercising jaws, but are garnering very little attention. Gillian Tett points out that debt is one of themRead more

Martin Wolf

Lawrence Summers (c) WEF

On Thursday, I moderated a fascinating lunch-time discussion on “secular
stagnation” with Lawrence Summers, former US treasury secretary,
who has recently propounded this idea.

Other participants were Motoshige Itoh of Tokyo university, Edmund Phelps, Nobel laureate, director of the Center on Capitalism and Society, Columbia University, Adam Posen, director of the Peterson Institute for International Economics, Helene Rey of the London Business School and Kenneth Rogoff of Harvard. This was a notably heavy-weight panel.

The discussion was rich and complex. But here are some conclusions.

First, since the crisis in 2007 and 2008, the equilibrium long-run real interest rate in the high-income countries has been ultra-low and the equilibrium real short rate has been negative. There is no disagreement on this. This was an obvious indicator of sustained and chronic weakness of demand.

Second, the main instrument we have used to deal with condition this has been hyper-aggressive monetary policy. But this creates substantial problems (in some views, at least, including mine): it distributes income towards both the financial sector and the rich, while also generating bubbles. Read more

According to the Kübler-Ross model, there are five stages of grief: Denial, anger, bargaining, depression and acceptance. Jamie Dimon still seems a long way from acceptance.

The JPMorgan Chase chairman and chief executive waded into controversy again at the World Economic Forum in Davos on Thursday by saying that the $20bn legal costs the US bank has paid for alleged wrongdoing before the financial crisis were “unfair”. Read more

FT senior foreign affairs columnist Gideon Rachman reports on his meeting with Ukraine prime minister Mykola Azarov who has not been invited to the main events at Davos. They discuss the violence in Kiev and the sanctions threat.

By Jasmine Whitbread, chief executive officer of Save the Children

This years findings on the low levels of trust in government, with business faring a little better, provoked a serious debate, moderated by the FT’s Gillian Tett. Richard Edelman highlighted the risks and opportunities for business, including partnering with better-trusted NGOs. But unless companies and CEOs put purpose and responsibility at the core of their business instead of seeing this as an add-on, it will backfire on the trust front. NGOs won’t want partners who undermine trust. Being honest about challenges such as supply chain standards, or social impact of products, and transparently taking steps to fix them is the only option that will be trusted.