What I Learned at St. Gallen


I've been in Switzerland the past two weeks in part to participate in the 39th St. Gallen Symposium entitled "Revival of Political and Economic Boundaries." The Symposium brings together 200 people under 30 from 50 countries alongside 400 businesspeople from Europe and Asia. I attended last year (my notes) and loved the international diversity of it all — the opportunity to sit at a dinner table with seven smart people from all seven continents to talk about global issues. I was honored to be invited back this year.

The conference spirit (and the bias of the attendees) was pro-free market, pro-globalization. Even in the face of tremendous stress and market failure, most speakers and participants insisted we musn't undo the interconnected system that has lifted millions out of poverty and generated prosperity around the world.

But even as pronouncements were made to this effect, there was considerable self-doubt. Mark Medish of the Carnegie Endowment made this point explicitly: "This year's conference feels less technical, more fundamental. Less unabashedly optimistic, more concerned and skeptical." He noted that the half-life of conventional wisdom has never been shorter, as we re-visit and challenge many of the most prestigious theories about how the world works: the flat world theory of technology driven globalization, the valuation model for credit default swaps, mark to market accounting, monetary policy based on inflation targeting, the U.S. currency as world reserve currency, the decoupling thesis, and others.

As usual with conferences, I was underwhelmed by the speakers (a topic I will blog about soon) and for me most of the value came from individual chit-chat during the breaks or special sessions. Below are assorted notes.

1. Yes, It's a Mix of Government and Markets. It's pretty shallow to argue that you are neither market fundamentalist nor tax-and-spend socialist but rather a supporter of both, depending. (And offer no further specifics.) Sophisticated businessmen like the CEO of Pricewaterhouse Coopers and the CEO of ABB made this uncontroversial point. They said in essence, We need free and open markets, except when we don't. How bold! The real question is when and where governments ought to regulate markets and how they should do so specifically.

2. Non-Americans More Giddy about Obama than Americans. Every European, Asian, or Latin American I met was positively giddy about Barack Obama. Perhaps their Obama-love is in overdrive because their America-love has been repressed the last eight years. The Americans I met were more neutral and had a wait-and-see approach.

3. The Export Model. Exports are 40% of China's GDP. It will take at least a decade for China to go from an export economy to a consumption economy. Meanwhile it is dependent on American consumption. Yet, finally, Americans are starting to save a bit more, which is slowing China's economy. Until the crisis, people liked to make fun of the American consumer's inability to save and penchant for running up huge credit card debt. But now they discover that American (over?) consumption is key to the whole system working. A dilemma.

4. Pro-Trade, Pro-Globalization. A) When goods don't cross boundaries, tanks will. B) The White House web site does not list trade among the top 24 key issues. C) The millions of people who work for multinational companies ought to be singing the praises of globalization. They're not. That's business's fault. D) There's a split in the Democratic party over the virtues of globalization: Summers vs. Krugman camps.

5. Energy. Obama has said energy is higher priority than health care. Energy security and climate change are interconnected. "We'll see peak oil demand before we see peak oil supply."

6. Assorted Geopolitics Thoughts.

Geopolitics is to climatology as general international relations analysis and news is to meteorology: climatologists think about the long term, meteorologists predict the weather next week. Geopolitics involves thinking deeply about the long-term relationship between geography and politics and power.

* Geopolitics scholars have been predicting China's rise since the 1960s, since they look at stuff like long-term demographic trends and fact that China borders more countries than any other country.

* Historically there's been social unrest in China when economy slows to 6% growth. And the economy has slowed to about 6% growth.

* Axiom of geopolitics: if you have the money, you set the rules. You cannot have a strong foreign policy posture if you don't have a solid economic base / money. This is why India is not very influential: it represents only 2% of the world economy.

* Eastern enlargement of EU cannot be sole European foreign policy. Internal power paradigm doesn't translate into external foreign policy.

* There is "enlargement fatigue" within EU member countries when it comes to expansion east and south. But if Europe does not move into the Balkans, the Balkans will move into Europe. Enlargement helps member countries.

* The next three geo-political giants will be China, Europe, and the U.S.

* China pours money indiscriminately into Africa, regardless of human rights situation or corruption. China is reducing EU and US influence.

* Regime type doesn't usually affect geopolitical status so long as there is internal stability and external relations are okay. This would mean China's non-democratic status is not critical to long-term power prospects.

7. The 'There Are No Hard Choices' Cliche: "We must set aside old ways and develop new ideas…. We must reject false debates… We must be bold and visionary, yet pragmatic." Obama has been the master at uttering vapid catch phrases like this. It seems businesspeople the world over have taken to repeating it themselves.

Particularly impressive people who spoke:

David Smick, author of The World is Curved. He gave a whirlwind tour of the current economic situation. He told us to ignore the optimism, or at least don't buy it yet. The worse may not yet be over.

Misha Glenny, journalist. He gave an engaging presentation about the world of organized crime, and the president of Serbia later acknowledged him as one of the smartest observers on the Balkans.

Parag Khanna, New America Foundation. A tiny bit of arrogance is more than made up by his very strong grasp of international affairs, especially as it relates to the rise of China on the global stage.

Joseph Stanislaw, prominent energy consultant. He made a persuasive case for all things "green" and put substance behind a buzzword.

9 comments on “What I Learned at St. Gallen
  • Sounds like a fun conference. Though it kind of seems like most of the things you learned you could have gotten just by reading The Economist for a weeks!

    I just finished Smick’s book (The World Is Curved.) He seems like a very smart guy but the book is underwhelming at best. Maybe he’s just a better speaker than book writer.

  • Perhaps yes, you could get this sort of info by reading The Economist…regularly.

    For me the presentations at the symposium, be they by some amazing and distinguished personalities (and I would add the Singaporean Minister for Finance to the list of impressive speakers), really serve as stimulus to the event itself which is a useful crucible for bright-minded individuals to interact, exchange ideas and do some networking. If you didn’t go, you probably didn’t miss much info you couldn’t find elsewhere – the general sentiment was nothing new. But you did miss an opportunity to personally meet and learn from the eclectic range of intelligent people (including students) who attend these sorts of events.

  • This is an interesting conference observation- Non-Americans More Giddy about Obama than Americans.

    When he was elected last year, I went to this celebratory party at my university in Australia and from what I see, Australians are also still high on Obama. Would be interesting to learn how he is really being perceived/received atm by those in Muslim countries, in Iraq, Afghanistan and Palestine, where perception/reception of him really matters…

  • You mention “the opportunity to sit at a dinner table with seven smart people from all seven continents to talk about global issues.” Seven continents? Really?!? So there were people there from Antarctica?

  • In relation to Rachel’s statement—“This is an interesting conference observation- Non-Americans More Giddy about Obama than Americans.”

    I was sitting in a class at USC (in LA) on election day. A lot of students were screaming w/ joy…! I went to target after class…excitement gushing out of all the employees…What are ppl’s thoughts about Obama in SanFran…my outside perception is that they still like him…r you noticing changes by the general public?…(I am not in Cali anymore)

    I was going to school in St. Gallen during spring 2008 & everyone was talking about US elections…a lot of ‘smart’ ppl, whatever that means, said Obama will be great…I asked why & most said he will bring everyone together…(no substances backing up their reasoning)…

  • Interesting observation about Khanna. I think his attitude came across a bit in his book, which I found interesting, but a bit more shallow than I could have hoped.

    I wonder why India, just as large as China and soon to have a navy bigger than Britain was not singled out as a dominant power.

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