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Capitalism under microscope at Davos

Diane Francis Jan 21, 2012 – 2:50 PM ET

(image/Snow-covered buildings stand illuminated at night in the town of Davos, the location for the World Economic Forum's (WEF) 2012 annual meeting, in Davos, Switzerland, on Tuesday, Jan. 17, 2012. )

Besieged capitalism will be the subtext next week at the World Economic Forum held in Davos. The five-day conference is the world's most elite gathering of political and business leaders, academics and, occasionally, scoundrels. For 42 years, conference organizers have trotted out a theme, but this year, as in most years, a pervasive mood has hijacked all plans and causes some cancellations.

Last year, Arab Spring was just getting into full swing so the despots and dictators from the Middle East who usually attend either stayed at home or stayed quiet.

This year, Davos copes with capitalism's critics and concerns. To underscore this, CEOs recently polled on the biggest global risks did not cite terrorism or soaring commodity prices but responded that income inequality posed the most severe threat to economic stability.

"Occupy" movements are everywhere, and a U.S. poll showed only 50% react positively to the word "capitalism" while 40% of Americans react negatively.

The rich-poor divide is why a Barack Obama White House has boycotted this conference for its entire term, unlike Bill Clinton or George W. Bush, who sent their vicepresidents or came themselves. U.S. Treasury Secretary Timothy Geithner will attend but mostly to meet his financial and institutional counterparts such as IMF boss Christine Lagarde or the head of the European Central Bank.

Also missing will be the usual parade of high-profile leaders, eager to promote their economies and nation-states as great capitalist destinations.

The "headliner" will be German Chancellor Angela Merkel, and plans are that her speech will lead directly into a debate on stage on whether capitalism is failing society. Germany, like Canada, has sailed through the mess of the past few years mostly unscathed, as have Australia, Singapore, Switzerland, Turkey and the Asian economic miracles.

Other no-shows will be politicians who have been voted off their respective islands or who are about to be. Russia's Vladimir Putin was touted to be the big headliner this year. But Russian voters, protesters and rivals have put a damper on that. If he comes, he will likely park his swagger at Zurich Airport.

The tone, therefore, will be stern, not triumphant. Few speeches about doing business in Bora Bora, or wherever, and more leaders coming up with ways the 1% can fix or replace free enterprise to spread the wealth to more of the 99%.

Of course, this is simply another fad. Until Wall Street and London brought the world to its knees, socalled "Anglo Saxon" capitalism was the favoured economic religion. Then 2008 happened.

The next year, the Europeans pilloried Wall Street and the City of London. They proffered that their gentler, kinder, traditional, glacial form of Euro capitalism provided a better alternative.

Then 2010 happened. They were exposed when the world found out they couldn't run a pop stand either and were hoodwinked by some of their own members.

Now in 2012, China, and others with "planned or controlled economies," will be strutting their stuff and tut-tutting the rich for being spendthrifts, too laissez faire economically and lazy.

Of course, they will slowly get their come-uppance because their system doesn't work better in all respects. Remember 1989 and all those social, financial and environmental benefits that the communist command economies delivered.

This time it's different, says China. Its new economic religion has been gussied up as a mixture of both: Capitalism with "Chinese characteristics." Of course, the jury's out on that one too, and labour unrest combined with corruption are sure to bring that system down around the heads of leaders again. In some ways, China is still a communist military dictatorship, but with rich politicians and their rich friends.

What's fixed this anti-capitalist mood is the reality that free-enterprise cheerleaders – U.S. Republicans – have joined its critics. They have been pummelling their presidential candidate, front-runner Mitt Romney, for the "crimes" of being tax-efficient, risk-taking and wealthy.

He's done nothing wrong legally, but morality is shifting and a growing consensus is that a guy worth US$200-million paying 15% income tax is unacceptable, even in the United States.

Hand-wringing is underway in The Wall Street Journal, on Fox TV, in the venerable Financial Times of London and other media outlets read and watched by the privileged 1%. These capitalistic apologists are becoming introspective and running criticism about capitalism's failure to address income disparity and corporate skulduggery or CEO greed.

All of this will be 2012′s Davos milieu. Its panellists and speakers will be preoccupied with tweaking capitalism, resurrecting socialism or inventing some "responsible capitalism" hybrid.

Frankly, any system run by humans is doomed. As Winston Churchill put it: "The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery."

(too soon for comments)
here the 5 Things Everyone's Talking About
By Jim Frederick | January 27, 2012

Read more: http://business.time.com/2012/01/27/five-major-themes-of-this-years-davos/?iid=biz-main-lede#ixzz1kpAUY2HN

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