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Participants take a break between sessions at the annual meeting of the World Economic Forum on Jan. 23, 2014. (Ruben Sprich/Reuters)
Participants take a break between sessions at the annual meeting of the World Economic Forum on Jan. 23, 2014. (Ruben Sprich/Reuters)

Davos diary: A new angst settles over the world's elites Add to ...

The Google Club Lounge is a step removed from Davos, in distance and spirit.

Anchored in a new hotel, high above town, it seems designed to send a message. The customized pad has sliding doors, fireplaces, a long bar and panoramic views of the Alps, as if to say, “all you governments meeting down in the valley can’t see the future.”

This evening, the Lounge is also a hotbed of debate.

Eric Schmidt, the tall and strapping executive chairman of Google, is in a verbal tussle with Martin Wolf, the shorter and rotund economics guru from the Financial Times, over – and only in Davos could this be called an “It” party – productivity. Like a school master at exam time, Mr. Wolf is distressed by the world’s inability to generate more growth and more jobs, and it’s all because we can’t find a way to be more productive. Every banker in the room seems to agree with him. Mr. Schmidt doesn’t. He says we’re using the wrong numerator, that we’re all producing lots more than we know thanks to, well, Google, and a lot of other disruptive technologies. We’re producing more, consuming more, enjoying more.

As the Google crowd nibbles on prosciutto and sips Chablis, there isn’t much room for the fusty old views of John Maynard Keynes, that in such times of distress it’s the role of the state to guide the economy and create jobs. At this party, the hidden economic god is Joseph Schumpeter, the author of “creative destruction.”

In Schumpeter’s day, high-speed freight trains were ruining small-town America, and lots of jobs along the way. Suck it up, was the economist’s message. Those trains would help build a new economy rooted in cities and factories, and a scary new threat called supply chains, across the land.

Once again, the argument between creative destruction and state-funded stability is the talk of policy-makers, who have woken up to a new year of economic growth around the world and yet a dreaded sense that this global expansion will not bring nearly enough jobs and wage increases to satisfy any public. It’s a tension not seen, perhaps, since the late 1930s, when Schumpeter made his case and a three-decade-long burst of innovation proved him right. For then.

Another machine revolution is upon us. There is a new wave forming behind the past decade’s surge of mobile technology, with disruptive technologies like driverless cars and automated personal medical assistants that will not only change lifestyles but rattle economies and change pretty much every assumption about work.

The talk of one Davos session this week was 3-D printers – for housing. A prototype, it was claimed, is already printing small houses fit for human habitation. Within five years, the entire construction industry could be replaced by a phalanx of printers. Goodbye, a million construction jobs. Hello, a thousand code-writers.

“It’s a race between humans and computers,” Mr. Schmidt tells another audience, in another hotel room, over another meal. “And it’s important the humans win.”

The state of the state

Davos is a tranquil mountain town that seems perfectly content and productive 51 weeks of the year. Then comes this week in January when the World Economic Forum descends on it and brings along every problem known to mankind. Never mind the pristine, snow-capped Alps, sausage stands and tourists walking the boulevard, skis on shoulders; there’s round-the-clock debate about death and disease, terrorism, cyber-attacks, financial collapses and private wars.

Inside the high-security zone, billionaires (S. Schwarzman), economists (J. Sachs), movie stars (M. Damon), prime ministers (B. Netanyahu), rock-star commentators (T. Friedman), even aging rock stars (P. Gabriel) seem eager to take on problems that most of them won’t be going home to.

But this year may be different, paradoxically so. For the first time in five years, the world does not seem to be in a financial or economic crisis. The U.S. economy is looking to hit 3-per-cent growth this year. Europe is back in the black. Even Spain mustered a quarter of growth recently. In Asia, Japan is threatening to roar, and China and India are doing fine.

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