Davos, Switzerland The World Economic Forum has proved to be an uncanny barometer of global trends over the 11 years I've attended. I usually write a column about which countries are in and out as political or economic stars.
Over those years, the United States has been lionized as world leader and economic giant and home of hi-tech wizards such as Bill Gates. When the hi-tech bubble burst, when deficits rose, when the Iraq war went sour, the shine on the American model dimmed. But, despite widespread dismay over U.S. foreign policy, few here used to question America's role as the world's unipolar power.
What a difference a year makes. Davos 2008 has laid bare a world in which no superpower seems to be in charge. The unipolar American moment is deemed over, in part a casualty of Bush political and economic policies, in larger part the result of global economic changes that are shifting wealth elsewhere. Last week's economic crisis seemed like a coda.
But we have not entered a multipolar world: China and India, though on the rise, aren't ready to take the global lead, nor can Europe do so. The consensus at Davos seems to be that we now live in a "nonpolar" world, with America too strong to stand on the sidelines, but too weak to implement its agenda alone.
The metaphor for Davos 2008 came when its executive chairman, Klaus Schwab, suggested onstage to Condoleezza Rice that America was a piano and the world the orchestra. Playing metaphorically on her talents as a pianist, Schwab asked whether the piano and orchestra could play together in harmony. Rice asked whether Schwab wanted to be the conductor. But among the 2,500 top CEOs, politicians and intellectuals at the meeting, many believe there is no conductor at all.
The U.S. financial crisis grew out of years of massive lending for subprime mortgages, during a housing bubble. The collapse of the bubble has undercut banks and revealed serious flaws in the entire U.S. financial system. Yale economist Kenneth Rogoff said here that "we're looking at a situation where the plumbing of the U.S. system is deeply damaged because of the lack of transparency. That's not going to easily sort itself out."
These practices, added to American foreign policy failures like Iraq and debacles like Hurricane Katrina, create an image of American incompetence. (European financial competence was also in question last week as a leading French bank revealed that a rogue trader was able, undetected, to cause the company $7 billion in losses.)
But what makes the American case so acute, in foreign eyes, is that it comes at a time when the United States is massively in debt to China, and oil-rich countries like Russia and the nations of the Arab gulf. As America cuts interest rates to keep banks solvent, the dollar becomes less attractive to those countries who are keeping America afloat. Yet we need their capital to keep our ailing banks afloat.
All this debt and a falling dollar make still-powerful America look like a third-world country. And America's financial plight casts the spotlight on the stunning economic rise of China - and to a lesser extent India. There is even a new name for this pair, who are frequently referred to as "Chindia."
Another new acronym floating around Davos is BRIC, which stands for Brazil, Russia, India and China, countries where income and hopes are rising steadily. Rising oil prices have made countries like Russia (and Iran, and Venezuela) indifferent to U.S. pressures. Russian executives here give huge parties and operate with the confidence that their money talks.
What was also stunning at this year's Davos was the growing self-confidence of Asian nations (except for Japan, which stayed much on the sidelines). China now sends large numbers of English-speaking entrepreneurs to Davos who are investing globally and mix on equal footing with top Western executives. All the panels on Asia were oversubscribed.
"It's remarkable how few have noticed we are entering an entirely new era of history - the rise of Asia," says Kishore Mahbubani, dean of Singapore's Lee Kuan Yew School of Public Policy. "By 2050," he adds, "the world's four largest economies will be China, the United States, India and Japan" - in that order.
He also talks of an Asian continent where young people "are convinced they will do much better than their parents" - which used to be the American mantra. And he asks how long Europe and America could continue to control most international institutions given this ongoing surge of Asian economic growth.
Yet, for the most part, I heard little triumphalism about America's dimming role. Just the opposite. None of the rising powers is ready for a global leadership role. International institutions have little power. And without a conductor to lead the global orchestra, there will be no concert.
Davos 2008 was adrift as its members tried to figure out who might become that global conductor, and handle the orchestra in the collegial manner suggested by Klaus Schwab. Most attendees were casting an anxious eye on U.S. elections in 2008.