What Are The Future Shocks?

Davos: Shocks come from places where we least expect them. Or so proves economic history. A star-studded global CEO panel came up with an amazing set of worries, from low trust levels to the unknown kind of society arising from the underground world of blogs and tweets, after an hour-long discussion on “The next shock — are we better prepared?”

Is it 'the unknown unknown', asked Fareed Zakaria, CNN, who was moderating the session. Maurice Levy, Chairman and CEO, Publicis, said "What I cannot see, what I cannot expect is my big worry." He is not sure if he understands the kind of society evolving from the world of internet today, or if he will understand even tomorrow.

If there was a common string to what James Dimon of JP Morgan & Chase, Kleinfeld Klaus of Alcoa and Dominic Barton of McKinsey said, then it was about understanding the qualitative aspects of human behaviour - of greed, trust, expectations, right human choices and awareness about unemployment.

Of course, that is not to undermine the dangers that a volatile currency made more volatile by technology and asset price bubbles due to rapid urbanisation in emerging markets or the high indebtedness of Europe, present to the global economy. These can be tackled if right human choices are made by countries and corporations, trust is maintained with consumers and capitalism is practiced with a long-term view, the CEOs said.

For example, Eckhard Codes of Metro Group says, the indebtedness of Greece and Portugal can be or should be taken care of by Germany and, possible France. "Germany gained significantly from the Euro zone. An Euro that did not appreciate much helped Germany's economy that is driven by exports today. So, it is only moral, that it pays back," he said.

Dominic Barton of McKinsey continues to be a votary of capitalism post crisis, but stresses the need for long-term capitalism. "One, shift away from the practice of quarterly results. Unilever, Coke are doing it. This will force investors to think long-term. Two, companies need to think about the broader community. They need to understand underemployment," he says.

Millions lost their jobs, were thrown out of their houses because of the crisis, said Maurice Levy of Publicis. "People don't understand why large companies doing well, but they aren't. Without support of people, there is no way we would be able to grow," he said. According to him, if there had been a crisis, it is because the CEOs have not dealt ethically.

"They felt we have been led by greed and bottomline and sacrificed the workers to please the shareholders," he added. Klaus Kleinfeld of Alcoa said it was true that demand from emerging economies, given their rapid urbanisation, would lead to a rise in commodity prices and may result in a shock. "But, having said this, we are underestimating the human genius. There are lots of stuff we don't know about, and some of this will be good."

Source: Indian Express