Ardern to promote ‘wellbeing agenda’ at Davos

Prime Minister Jacinda Ardern is attending the annual World Economic Forum in Davos in Switzerland soon (January 22-23), and while there will promote New Zealand’s ‘wellbeing agenda’ as some sort of  revolutionary new way of doing economics.

Beehive: PM to promote trade and wellbeing at World Economic Forum

At the World Economic Forum in Davos the Prime Minister will be promoting the Government’s approach to inclusive growth through the Wellbeing Agenda, and the delivery of the world’s first wellbeing budget in May this year.

She will be participating in a range of panel discussions at Davos including one focused on wellbeing and options beyond GDP with the head of the OECD, the future of the international trading system with the head of the WTO and a panel focused on mental health with His Royal Highness Prince William.

“Our wellbeing approach is generating significant international interest, particularly at a time when the international rules based order is under strain and leaders are grappling with constituencies dissatisfied with the status quo.

“I hope other leaders will come to see more compassionate domestic policy settings as a compelling alternative to the false promise of protectionism and isolation. “

Donald Trump won’t be at Davos this year  but “the false promise of protectionism and isolation” sounds like a swipe at hime, or at least an attempt to paint a contrast with his approach and Ardern’s.

New Zealand’s “wellbeing approach” is little more than theory at this stage. It is too soon to tell whether it will be a substantive new approach to budgeting and governing, or if it amounts to little more than grand talk with little action.

It’s not as if past governments and past monetary policies have ignored the ‘wellbeing’ of people. That is largely the purpose of government – the wellbeing of the people of the country.

A move to “more compassionate domestic policy settings” may be incremental change, or it could be a radical shift, but so far the only significant change is in the use of words, and the promotion of a Wellbeing Agenda as some sort of big thing.

Does anyone know what it will actually change for us, the people?

Ardern needs to be careful she doesn’t get too caught up in the wellbeing of her international profile at the cost of actually doing stuff of worth at a domestic level.

She and her government need to prove that their agenda is worthwhile and workable here in new Zealand before they claim too much credit overseas.

 

 

Global risks perceptions

The World Economic Forum has published a report on their annual global risks perception survey.

Included: “reforming market capitalism must also be added to the agenda”. This is on New Zealand’s agenda after the change of Government late last year, with indications from Prime Minister Jacinda Ardern that we will move towards responsible capitalism with more social considerations.

From the preface:

The year 2016 has seen profound shifts in the way we view global risks. Societal polarization, income inequality and the inward orientation of countries are spilling over into real-world politics. Through recent electoral results in G7 countries, these trends are set to have a lasting impact on the way economies act and relate to each other. They are also likely to affect global risks and the interconnections between them.

Against the background of these developments, this year’s Global Risks Report explores five gravity centres that will shape global risks. First, continued slow growth combined with high debt and demographic change creates an environment that favours financial crises and growing inequality.

At the same time, pervasive corruption, short-termism and unequal distribution of the benefits of growth suggest that the capitalist economic model may not be delivering for people. The transition towards a more multipolar world order is putting global cooperation under strain.

At the same time, the Fourth Industrial Revolution is fundamentally transforming societies, economies, and ways of doing business.

Last but not least, as people seek to reassert identities that have been blurred by globalization, decision-making is increasingly influenced by emotions. In addition to these gravity centres, this year’s Global Risks Report presents deep-dive discussions of risks posed by ongoing political and societal transformations, including challenges to democracy, closing space for civil society, and outmoded social protection systems.

Summary:

For over a decade, The Global Risks Report has focused attention on the evolution of global risks and the deep
interconnections between them. The Report has also highlighted the potential of persistent, long-term trends
such as inequality and deepening social and political polarization to exacerbate risks associated with, for example, the weakness of the economic recovery and the speed of technological change.

These trends came into sharp focus during 2016, with rising political discontent and disaffection evident in countries across the world. The highest-profile signs of disruption may have come in Western countries – with the United Kingdom’s vote to leave the European Union and President-elect Donald Trump’s victory in the US presidential election – but across the globe there is evidence of a growing backlash against elements of the domestic and international status quo.

The Global Risks Landscape

One of the key inputs to the analysis of The Global Risks Report is the Global Risks Perception Survey (GRPS), which
brings together diverse perspectives from various age groups, countries and sectors: business, academia, civil society and government.

This year’s findings are testament to five key challenges that the world now faces. The first two are in the economic
category, in line with the fact that rising income and wealth disparity is rated by GRPS respondents as the most important trend in determining global developments over the next 10 years.

This points to the need for reviving economic growth, but the growing mood of anti-establishment populism suggests we may have passed the stage where this alone would remedy fractures in society: reforming market capitalism must also be added to the agenda.

With the electoral surprises of 2016 and the rise of once-fringe parties stressing national sovereignty and traditional
values across Europe and beyond, the societal trends of increasing polarization and intensifying national sentiment are ranked among the top five.

Hence the next challenge: facing up to the importance of identity and community. Rapid changes of attitudes in areas such as gender, sexual orientation, race, multiculturalism, environmental protection and international cooperation have led many voters – particularly the older and less-educated ones – to feel left behind in their own countries.

The resulting cultural schisms are testing social and political cohesion and may amplify many other risks if not resolved.

Although anti-establishment politics tends to blame globalization for deteriorating domestic job prospects, evidence suggests that managing technological change is a more important challenge for labour markets.

While innovation has historically created new kinds of jobs as well as destroying old kinds, this process may be slowing. It is no coincidence that challenges to social cohesion and policy-makers’ legitimacy are coinciding with a highly disruptive phase of technological change.

The fifth key challenge is to protect and strengthen our systems of global cooperation. Examples are mounting of states seeking to withdraw from various international cooperation mechanisms.

A lasting shift in the global system from an outward-looking to a more inward-looking stance would be a highly disruptive development. In numerous areas – not least the ongoing crisis in Syria and the migration flows it has created – it is ever clearer how important global cooperation is on the interconnections that shape the risk landscape.

Further challenges requiring global cooperation are found in the environmental category, which this year stands out in the GRPS. Over the course of the past decade, a cluster of environment-related risks – notably extreme weather events and failure of climate change mitigation and adaptation as well as water crises – has emerged as a consistently central feature of the GRPS risk landscape, strongly interconnected with many other risks, such as conflict and
migration.

This year, environmental concerns are more prominent than ever, with all five risks in this category assessed as being above average for both impact and likelihood.

Links:

Merkel may now attend Davos forum

There could be more attention to the World Economic Forum due to be held in Davos, Switzerland in about two weeks, with US President Donald Trump scheduled to attend. It is seen as contradictory that Trump would want to attend a forum focussed on globalisation given his preference for US isolation.

Reuters: Swiss mountain town Davos relishes its turn in Trump spotlight

The Swiss Alpine town of Davos is used to celebrities and high-rollers, but even it is relishing the new challenge posed by U.S. President Donald Trump’s decision to attend the World Economic Forum this month.

“This is the 48th WEF,” said Reto Branschi, CEO of Davos Klosters Tourism. “Every year, we have 20 presidents from all over the world. We are used to the visits of presidents.”

Trump’s visit to Davos for the annual meet-up of global political and business leaders will be the first by a sitting U.S. president since Bill Clinton came in 2000.

“It doesn’t get any better than this,” said Ernst Wyrsch, who was director of the hotel where Clinton stayed during his WEF visit and now heads the region’s hotel association.

“Davos, for at least a couple of days, will be at the center of the world.”

While dignitaries come each year — British Prime Minister Theresa May and Chinese Premier Xi Jinping made the trek to the town last year — they lack the media pulling power of a U.S. president that throws a spotlight on a community reliant on tourism.

Trump, whose entourage will include Treasury Secretary Steve Mnuchin, Secretary of State Rex Tillerson, Commerce Secretary Wilbur Ross and Trump’s son-in-law Jared Kushner, may drop in for just a day, give a speech and then depart.

There is something of a contradiction in all this.

The WEF is a haven for supporters of globalization espousing the very free trade pacts that Trump has blasted as unfair to the United States.

It had been thought that German leader Angela Merkel would not attend but after a preliminary agreement on a coalition was reached last week this may change.

Reuters: Merkel could join Macron in Davos for epic clash with Trump

German Chancellor Angela Merkel is considering joining French President Emmanuel Macron at the World Economic Forum in Davos next week in what could turn into an epic clash of competing world views with U.S. President Donald Trump.

Merkel, who has been struggling to put together a government since a German election in September, had been expected to skip the annual gathering of leaders, CEOs, bankers and celebrities in the Swiss Alps for a third straight year.

But after clinching a preliminary coalition agreement with the center-left Social Democrats (SPD) on Friday, German officials said Merkel could travel to Davos after all, possibly setting up a major confrontation with Trump, who is expected to speak on the final day of the forum.

An appearance would signal Merkel’s return to the world stage after months of political limbo in which she has avoided the limelight and been dismissed by some in the German and international media as a spent force.

It would also allow her and Macron, who is scheduled to speak at the forum on Jan. 24, two days before Trump, to reaffirm their commitment to reforming the European Union after Britain’s decision to leave, and to defend liberal democratic values in the face of Trump’s “America First” policies.

Brexit plus Trump’s “America First” aims are likely to change international affairs and alignments significantly.

However it seems that the New Zealand Prime Minister won’t be at Davos.

Stuff: The international year ahead: What international trips could be on the prime minister’s radar?

World Economic Forum: This is held in Davos, Switzerland, every year and Trade Minister David Parker is going. And incidentally, the US Government has just announced President Trump will be there. But it’s not a common one for the leaders to visit every year, and it’s unlikely Ardern will have the chance to attend this year – the meeting is just two weeks away.

There are no plans (made public anyway) for Ardern to meet with Merkel, but that would be a significant event if it happened. New Zealand is working towards a trade agreement with the European Union.

A meeting with Theresa May would also be significant as the UK looks for trade deals outside the EU. May attended and spoke at Davos last year and is expected to attend again this year.

Ardern will probably be happy to not meet Trump in the US.

Inequalities the big issue?

In his ODT column today Colin James suggests “inequalities are the big political issue for 2012 and beyond”  (and to his credit he doesn’rt mention poverty at all).

That’s not because the Left is about to surge – the Left has yet to connect principle to modern conditions.

It is because the economic efficiency justifications are crumbling.

After detailing a bit of history of income inequality he comesa to the recent past:

Angst about this used to be the preserve of the political Left. But increasingly, over the past six months, it has been bothering the political Right.

The World Economic Forum of major companies:

last week rated “severe income disparity” its top global risk for the next 10 years.

Financial Times Lawrence Summers (a former banker and United States Treasury secretary):

“The extent of the change in income distribution is such that it is no longer true that the overall growth rate of the economy is the principal determinant of middle-class income growth.

How the growth pie is distributed is at least as important.”

Financial Times’ Martin Wolf:

…declared in his column that the “huge rewards” for those with “ultra-high incomes” were “both unjust and inefficient”.

He demanded “a huge agenda” of government intervention, a “divisive” debate which “cannot be avoided if Western democracies are to stay legitimate in the eyes of their peoples”.

James closes by throwing the problem at our own government:

If such people, and rafts of others, think addressing inequalities is a political imperative in the north Atlantic countries, expect inequalities to feature here, too.

How that plays out, and particularly how, or if, John Key comprehends and addresses it, will be this year’s most serious political show.

I’m sure our politicians can do something to try and address this – if they choose to.

I don’t think they need to do what Singapore (slash politician’s pay) because compared to private sector pay rates I don’t think they are exhorbitant.

They could surely come up with something to fiddle with to be seen to be trying something.

But I think this is one of our biggest mistakes that leads to much frustration – our habit of expecting our politicians to fix every problem.

Shouldn’t we the people be looking at what we can do about it ourselves? We are the market, we can use that power to demonstrate to company officials that we don’t find their huge self rewards acceptable and we can pressure them to be far more reasonable.

Or we can keep kicking down the road towards our politicians.

That is of course if we give a stuff what company high flyers earn and think it’s a problem.