Davos explains itself: The exclusive interview with the World Economic Forum
Tiana Lowe
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Just three years after former President Donald Trump made headlines at Davos, the World Economic Forum’s annual marquee event has cemented itself as a bogeyman in populist circles on the Left and Right.
Ahead of this year’s Davos meeting, the WEF’s Paul Smyke, the head of the regional agenda, North America, and member of the Executive Committee, World Economic Forum, spoke to the Washington Examiner about what the “Davos man” strawman gets wrong and right, why the WEF has banned the Russian government but not the Chinese Communist Party, and whether the WEF is really out to make you eat bugs. Below is the exclusive interview in its entirety.
Washington Examiner: If I’m correct, the 2023 theme is “cooperation in a fragmented world,” so I want to start with a light topic: Russia and China. Obviously, Vladimir Putin and the Russian government were very involved in previous sessions. In 2021, Klaus Schwab called Putin “essential” in world affairs, and then the invasion of Ukraine hits. So the question is, what does what would China need to do to stop getting an invite? Would they need to invade Taiwan? Is their handling of COVID not enough? Is their handling of Uyghur Muslims in Xinjiang enough?
Paul Smyke: I’m so glad you’re diving right in because it gets right to the essence of what the World Economic Forum is and always has been and always will be, which is a meeting place for people who have divergent views of the world. Whether it’s in geopolitical issues, whether it’s an industry issue, whether it’s in societal or economic visions, there’s a lot of different models out there that people can follow and can pursue. And I think one of the misconceptions about the forum is that we have an agenda.
We literally do not have an agenda. The agenda that we produced during the annual meeting in Davos, and in all the activities that we do throughout the year, is merely the compilation and distillation of hundreds and hundreds and thousands and thousands of conversations that we’re privileged to have because we do have in our community all of these world leaders, whether they’re from business, government, academia, civil society. So what I and my colleagues are doing, whether my colleague in charge of the automotive industry or with my colleague in charge of Latin America or Asia, they’re out having conversations just as I’m doing in Washington, Ottawa, around the U.S. and Canada, and sort of saying, “OK, what’s on your mind, what should we be talking about?”
And so obviously, the nature of your question is a topic that I hear a lot when I’m having meetings in Washington and so on. But I think it, in some ways, misunderstands the purpose of the forum. The forum was created as a location — in both Davos but also as a philosophy in terms of why this organization has existed for 53 years — as a location for people who don’t see eye to eye to get together and talk. If we believe in anything, it’s that we’re not going to solve problems by getting into our corner, whatever corner that might be, and just digging deeper. That’s not the way the problems get solved in the world.
Washington Examiner: Back to that idea of Russia in particular, if Putin or if one of his consiglieres wanted to show up to have a conversation about Ukraine, would he be welcome? If this is the ethos that is an open conversation, that it’s not an endorsement of the worldviews at hand?
Paul Smyke: No, absolutely not. And the forum was the first major organization in Switzerland — and there are a lot of organizations headquartered here — that decided to not. We had an annual meeting last May, and we did not have any participation from the Russian government, Russian private sector, or any other Russian entity. And that was very clear. We came out quite early, made that decision because it was so clear, because it was so obvious at that point. So did many other organizations and many other countries. So we were, in some ways, just part of that wave, drawing the line and making a clear case that that participation was not going to be welcomed.
Washington Examiner: So then I guess the question becomes what does it take to be exiled? My understanding is that Chinese Vice Premier Liu He will be attending this session. The Chinese government has been accused of concealing the origins of the COVID-19 pandemic, has been accused of committing genocide in Xinjiang of Uyghur Muslims, has faced protests from their own civilians for how they’ve handled COVID in the last, you know, six months, and yet China still gets an invite. What makes China’s attendance any different than the Russian government’s?
Paul Smyke: I’m not going to draw parallels, but we can say that there have been protests in just about every country in the world about how COVID was managed. I’m really not here to comment or give an opinion. I understand the nature of your question, but literally responding to a hypothetical would not make sense right now. In the words of Dick Cheney — I’m paraphrasing here — there are a lot of bad guys out there. One person’s definition of a bad guy is another person’s definition of a good guy.
So I’m not describing any nation that way. I’m just saying that, depending on what your perspective is, you can agree and disagree with how another country, what its policies are, and so on. It’s a fine line. If you’re going to be an entity that is a meeting place for all sorts of divergent views, then you’re going to have some controversial opinions there. And by the way, I’ve seen American political figures who will show up, and people will disagree very strongly with them. So again, I’m not passing judgment on any given nation right here.
And I’m sorry I’m not answering your question with the sound bite you’d like, but I’m not here to say here’s the red line. Last spring was a very clear, global moment where there was this just massive reaction, you saw the private sector react in ways that we’ve never seen before. You saw the international community react in ways that we have not seen, if not before, at least in a very, very long time. And the forum was part of that. That made sense, I think. But nevertheless, going back to sort of the DNA and the origins of the forum as a meeting point for divergent views, that yes, you’re gonna have some countries that show up where people are gonna say, Well, why are they there? And why are they there? and so on. That’s part of what being a meeting ground is. And in a sense, we are the ultimate meeting ground of world leaders from all different sectors, public, private, civil society, etc.
Washington Examiner: I want to get, in your words, what the World Economic Forum believes in versus what people project. It was very easy to become sort of a scapegoat because it does have this impression in anti-globalist circles, left and right, of a bunch of elites coming in on private jets, planning things that sound menacing or ambiguous: things like the “Great Reset,” WEF tweets that say, “You will own nothing and you’ll be happy” and “I owe nothing and have no privacy and life has never been better.” So in your words, what does the World Economic Forum and what do you wish people understood about it?
Paul Smyke: Great question. Thanks for asking. I mentioned before the DNA and ethos of the organization. We are all about having people who disagree with each other but are committed to make a change and improve the state of the world. That’s the motto of the organization: “committed to improving the state of the world.” We invite anyone who is committed to having the types of difficult conversations that it’s going to take, having a willingness to be open to a different point of view, and having the willingness to say, Yeah, my ideas and ideology is firmly entrenched. Here’s what I believe in. But I don’t believe I have 100% certainty and lock on the best way for every policy to proceed.
So let me elaborate a little bit. We say often, are you a Democrat or a Republican? To me, that’s the wrong way to phrase things. The question is, do you have a mind that’s open enough to be in dialogue and not scream but to be in dialogue with someone you disagree with? And look at Washington. Amongst Democrats and Republicans, you have both of those. You have Democrats who are so certain of their ideology and other things that they believe in that they’ve essentially cut off dialogue with the Republican Party and vice versa, right? If you look at many elements in the Republican Party, that dialogue is largely cut off. However, conversely, if you look also in both parties — I’m thinking, particularly, of Capitol Hill — there are huge elements in both the House and the Senate, in both the Republican and the Democratic side, there are significant elements of those that are very open to having conversation.
Those are the people who are showing up in Davos — someone whose ideology is very, very strong and very committed. The question is, are they open to dialogue? And are they open to hearing not just how other Americans are feeling but how the rest of the world is feeling? And the reason why I’m saying this is because that’s in some ways, the best use of the annual meeting and why year after year, members of the Cabinet or presidents, vice presidents, senators, congressmen, governors are showing up. It’s not only because they want to make a speech. It’s because, more than anything, they can listen and get a sense of what the pulse of the world is right now. It doesn’t matter your ideology. The question is, are you willing to learn? Are you willing to maybe have your opinions evolve a little bit? That’s the type of person who’s really going to thrive, and where the forum serves an incredible purpose because those venues are few and far between right now.
Washington Examiner: I know that there are roughly three components to the “Great Reset,” and I want to get into all of those but kind of in order. So first, we could talk a little bit about stakeholder capitalism. There have been two main critiques of it. One, is it an abandonment of fiduciary and legal duties to shareholders? And then second, how has it really panned out? A prominent example I’m thinking of is Disney, which lost its Florida tax benefits when it’s trying to placate you know, more activist employees? Doesn’t stakeholder capitalism have a record at this point? It’s been in some sort of a trial mode at least for half a decade. Has it proven a success? Does Davos still stand by the premise of stakeholder capitalism over the kind of capitalism, shareholder capitalism that worked for the last 300 years?
Paul Smyke: Thanks for asking. The concept of stakeholder capitalism has been taken into some places where, frankly, it was never intended to go whatsoever. So there is a misconception. Stakeholder capitalism, at the end of day, is relatively straightforward. Klaus Schwab, the founder of the forum, did elaborate this over many, many years. The first time the term was used was in 1973, so this is hardly a new concept. It’s really just meant to encompass a little bit of what I was saying earlier in our conversation, which is to say that staying entrenched in whatever it is — if you’re a CEO and you’re only looking at the concerns of your bottom line, that actually would be short-sighted and ultimately not be in the interest of your bottom line.
When people show up [in Davos] all of next week, they’ll go home with so much more data, information, and understanding of what the issues are that they are confronting. Whether that person is running an NGO or a multinational or a government or ministry or university, whatever it might be, that person, by virtue of being in Davos, is going to understand that landscape. Stakeholder capitalism is simply saying, yes, [if] you run a company, and you should absolutely be concerned about your bottom line and your shareholders. All stakeholder capitalism is saying is that there are other elements that you may want [or] need to take into consideration for the ultimate benefit of your shareholders but also of society.
And so it’s not much more complicated than that. It’s just saying, take the helicopter above the trees a little bit. I may run my company, and I make widgets really well and really efficiently, but if your employees are unhappy, that’s not going to really serve you very well. If there’s a geopolitical shock that’s coming down the road and you’re not aware of that, that’s not going to serve you very well. So it’s really just take the helicopter above the trees, have a broader sense, and, frankly, have proactive consultation with those different stakeholders. So whether those stakeholders may be — they may be climate-related, they may be your employees, they could be the government, the entities that are involved in your business, and so on. It’s really just saying, take that broader perspective and don’t forget about your bottom line for sure. This organization believes deeply, deeply in entrepreneurship and capitalism. But back to my earlier conversation, we’re also open to the notion that as society in the world gets more complicated and more interconnected, whatever you’re running, you better have a pretty broad perspective of what’s influencing.
Washington Examiner: Let’s take a company, for example, TikTok. I believe that the TikTok CEO is reported to be attending this upcoming meeting. If we’re applying that whole idea of stakeholder capitalism over TikTok, let’s even leave aside the allegations that TikTok serves as espionage for the Chinese Communist Party. Let’s just talk about TikTok’s impact on the mental health of young people. We have absolutely seen a direct correlation that’s arguably causal between apps like TikTok and declining mental health of Western youth. Will the CEO of TikTok be made to answer for something like that? Does TikTok as a company fit into the morals of what you consider the platonic ideal of stakeholder capitalism?
Paul Smyke: There’s such a broad canvas of people at the annual meeting, and I’m going to have to have you confirm. But whether it’s TikTok or someone else [is] the example, will people be challenged? That’s why we’re here. We are here so that they are challenged because otherwise we’re not really doing our job. Now, there are different settings where that can happen. Sometimes it’s a public setting. Sometimes it’s a private setting. Sometimes it’s standing at the coffee bar. Sometimes it’s during an interview with media. So yes, I think that will be considered.
Again, if he’s here, I’m not aware of his program so I can’t say where, when, what moment, what time of day, etc. My beat, right, is more the U.S. political establishment, so I can tell you I have many, many [past participants] who have told me over the years, Oh, yeah, I’ve been challenged in Davos, and you better be ready for it. I love hearing that because if everyone’s just coming up and feeling super comfortable, we’re not really going to improve the state of the world. I often say we’re doing our job when we turn up the heat on everyone in the room, whether that’s a business person, civil society, or whatever — that’s what the forum can do, is sort of challenge a little bit. And that’s what I think we’ve actually been quite good at over the years, is sort of creating these discussions, these environments, these settings where that happens.
Washington Examiner: I will get to central banks soon, but just before we get there, the last thing I want to get to as a part of this Great Reset is the Fourth Industrial Revolution, which includes some things that are obvious, like self-driving cars, Internet of Things, but it crosses a line into biometric data that has a lot of critics concerned about rights to privacy. One of the critiques of the World Economic Forum as an institution, especially with the slogan, “You own nothing and you be happy” and “I own nothing, have no privacy, and life has never been better,” that’s been very memed in sort of the anti-globalist Left and Right. Is [there] any institutional stance on right to privacy? Or is it just considered a cost of advancing a better economy, improving the world? Is that just collateral damage? Or is there a way to balance that right to privacy?
Paul Smyke: I don’t know if you know the background of that slogan, “You will own nothing and you will be happy.” The forum has a blog, which is essentially the opinion section of our website. I think six years or so ago, someone wrote a contribution to that blog that used that line. Sort of controversial, but it was one person’s opinion. The point they were making is, as we go more and more into a society of Airbnb and Uber and whatnot, that actually, you don’t need to own a car, you can just take Ubers, or you don’t need to own a home. I’m not advocating for this. I’m just paraphrasing what the person was saying. So please, I’m not saying this is the forum’s policy or perspective. But that individual was simply making the point that as a society, we are greatly evolving. Now, frankly, our opinion section on our website gets a ton of different points of view. But we have never, ever iterated, you will owe nothing and be happy as sort of a forum policy or objective or grand mission. So you’re quite right — that has been distorted and taken into places that is, frankly, absurd. At its origins, it was an opinion piece on our website. So you’re quite right about the memes, and let me just clarify that because there are other things that are sort of attributed to the forum that were published. The insects, all right, “you will eat insects.” Well, somebody wrote an opinion piece on that also. So what should we do? Should we have like the blandest of opinion sections and just talk about the color of the sky? No, let’s have a robust and vigorous debate on that opinion page. Nobody at the Times or the Examiner or anyone else [who] publishes an op-ed suddenly gets accused of that being the only policy. On the Fourth Industrial Revolution, I think we have to take ownership as an organization that … some of these ideas that we think are sort of influencing the world right now. We have to keep pounding them home and explaining what do we mean by them, so I appreciate the opportunity to clarify a little bit. The fourth IR was simply a way of saying, the pace of technological change, whether it’s in a digital setting, whether it’s in engineering setting, whether it’s in a medical or biotech setting, the pace of technological change and the change of business models associated with it right there — Facebook, Uber, Airbnb, that, all of that combined — leads to some really important questions that need that society needs to answer. Privacy is right up there. So the forum, again, doesn’t have a stance. We’re not saying it shouldn’t be this or it shouldn’t be that. We’re saying, if you’re in your garage in Palo Alto or in Accra, Ghana, or wherever, creating the next huge, big thing, you may want to be thinking about this because there’s a pretty sure possibility that regulators and government are going to come after you because your model has this sort of disruption. That disruption can be to the individual, and that disruption can be to companies, to countries, to societies. The reason we created the forum is because we need to be thinking about this disruption and thinking about it proactively, not after the fact.
Washington Examiner: Flashing back to the Trump administration, Donald Trump, who was first of all high-profile Republican at Davos, he used the opportunity to blast Jerome Powell’s more hawkish tendencies at the Federal Reserve well before COVID. He even entertained the possibility of negative interest rates. Quantitative easing is something that’s been backed at Davos, defended pretty publicly at Davos. And now we’ve seen a massive shift away from it. The Federal Reserve here in the states is telegraphing that rates, in the long run, will be higher than they were ever sustained after the Great Recession, right? So if inflation is the biggest concern, will the proponents of quantitative easing and perennially zero interest rates be made to explain themselves? Does Davos has an official stance on the future of central banking?
Paul Smyke: Does the forum have a formal stance either on the direction of quantitative easing the easing the value of it, or directionally, what should be happening? No. Does the forum feel like this is an incredibly important topic, that it would behoove us to have a chance for finance ministers, government, central bank, governors, industry, ministers, trade ministers, CEOs, civil society, labor leaders, of which there a number here to weigh in on this topic? Absolutely. So again, I just want to be clear there, there are precious few topics where the forum is going to come out and say, this should happen. That’s not our role. We’re not Brookings and we’re not CSIS, where we’re publishing a policy paper.
What we are doing is creating the opportunity for people who usually don’t interact to interact. Look at the community you’re mentioning. Central bankers get together amongst themselves in Basel and some other meetings along the way. The interaction with finance ministers alone is more unusual. And particularly, this is where you come back to Davos [and its] DNA. Why do people keep coming back? Because the type of interaction is very unstructured. The forum’s job is to create the opportunity for conversation to be had. Yes, we’ll steer with an agenda. I told you earlier that we sort of listen to all these different stakeholders and say, this is what we feel should be an agenda. That might be an interesting way to sort of launch the discussion, but we don’t have a policy that we’re trying to implement to be very clear. Fundamentally, we’re not in the business of trying to say, this is what central bankers should be doing. We are in the business of saying, are you — again, think about stakeholder capitalism — taking into consideration all that sort of broader kaleidoscope of issues that you need to be in doing this?
Washington Examiner: For those people who view Davos as elitist — that’s the word that’s obviously thrown around a lot, and the syllogism the Davos man means something very palpable — what do you think they misunderstand about the World Economic Forum? And do you think that they’re right to consider that these changes that are being made and these conversations are made with the goal of enacting top-down change? Do you think that their concerns about privacy and democracy are correct? What do you wish they would understand?
Paul Smyke: There are some 50 heads of government here. That’s about a quarter of countries in the world present at the top level. Finance ministers, Cabinet ranking officials, CEOs, the heads of NGOs, the heads of labor, organizations, academics, and so on. We understand it is a gathering of leaders, and we therefore understand that it’s easy to sort of take away that the elitist label will be pinned on that. But over 70% of what’s happening in Davos this year is livestreamed. There’s also a media presence here, which is also covering the event.
On the one hand, that sort of shorthand label, yes, that’s going to happen. But why do we have several dozen youth leaders here? Why are there several different civil societies, like labor leaders? There’s a lot of different opinions here. Just look at the range of ideologies on the political spectrum as well. The elitist label, if you will, comes with the fact that we are an organization that gathers leaders together to try to make make a difference and challenge them in their thinking.
I think one of the great things that the forum can do, frankly, is sort of highlight some of that positive messaging, whether it’s in Davos or in the year-round work that we’re doing because the fact is, for all the problems the world faces, there’s a lot of really cool innovation, a lot of really cool people doing good stuff and interesting stuff and fascinating stuff. Being able to transparently showcase everything we’re doing here is part of making sure that there is engagement. Why do we have that blog? So that there can be engagement. When you mentioned the Great Reset, that also has been memed in ways that are, frankly, quite shocking. The only point of using that term — and we were not the only people using it — clearly when the pandemic hit in 2020, everybody had a sense of, we can’t go back to normal, so whether it’s the way we work, like we’re working from home more than we were previously, or whatever it might be the way we travel, things are going to be a little bit different. So the Great Reset, again, was taken into directions that serve the purpose of whoever was doing that but were never remotely intended by the World Economic Forum when that term was used.