Economics and the inevitable

By David Ignatius (THE WHASINGTON POST, 27/01/06):

As the throngs of ebullient Indian and Chinese executives make their way through the salons of the World Economic Forum this week, it’s hard for an American not to reflect ruefully on what life must feel like for autoworkers in Detroit — stuck in the slow lane of the global economy.

The global titans would doubtless give autoworkers in Michigan the same advice they would offer to workers in an outmoded Chinese steel mill or an unprofitable European textile plant: Get over it. Learn new skills and find new jobs in more productive sectors. The flat world, as my colleague Tom Friedman likes to call it, is ruthlessly fair in that respect. Everybody must live on the knife edge of the global marketplace.

If it were my job at Ford being cut, I would find such bromides infuriating. They sound like a 21st-century version of utilitarianism: an insistence that the free market produces the greatest good for the greatest number, which does you no good at all if you’re among the unlucky lesser number. But the fact that the Davos ethic is galling doesn’t mean it’s wrong.

Davos has come to symbolize the dominant force of our time — the wealth-creating, job-destroying whirlwind of the global economy. Each year I come here I marvel at the reach and leveling power of this economic hurricane. There are more Chinese, Indians and Arabs every year, and less of an American presence. U.S. investment banks, technologists and venture capitalists may have spawned the globalization movement, but it has now floated free. The dealmakers come from all over the world. The one thing they seem to have in common is that nearly all were educated in the United States. That may not be much comfort if you work at an assembly plant in Dearborn, but at least America still does one thing well: running universities.

My superstars at Davos this year are the university presidents. Larry Summers at Harvard, Rick Levin at Yale, Lee Bollinger at Columbia and a half-dozen more are transforming their universities into global institutions — seeking the best students from around the world and sending them to far-flung places to learn the skills that will secure them places among the global elite.

“We want the brilliant mathematician whose mother is a chambermaid in Romania,” says Summers. That’s the most attractive face of globalization — the idea that the great universities are creating a colorblind meritocracy that doesn’t care where you’re from as long as you did well on the SAT. But in this global empire of knowledge, there is an echo of Dickens’s parody of utilitarian thinking, Mr. Gradgrind, who in the novel “Hard Times” famously admonished his students: “Facts alone are wanted in life. Plant nothing else, and root out everything else.” Mr. Gradgrind’s students were productive, but quite miserable.

The impresario of Davos, Klaus Schwab, has tried hard over the years to humanize the free market his forum celebrates. I spent time yesterday meeting with some of his “social entrepreneurs,” people who are building pay toilets in Nigeria, teaching sustainable agriculture in Paraguay, training rape victims in Cambodia how to run a catering business. Inspiring stories, and there is something marvelous, too, about a conference attended by people who are so eager to invest in the booming, free-market economies of India and China.

The change machine is relentless, as I discovered at a session here for technologists and venture capitalists. The group selected hot technologies for the next few years — sensors that can operate without batteries, stem cells for cardiac patients that can regrow heart tissue; solar technology that can produce energy at half the cost; microbial factories that can make molecules for drugs in the laboratory, for a tenth of the cost of finding them in nature. It was a dazzling discussion — not least because these life-giving technologies will make the people in the room even richer.

“I’m a technology optimist,” a prominent venture capitalist named Vinod Khosla explained. He argues that innovative, bottom-up methods will solve problems that seem intractable, from energy to poverty to disease. “Every problem is an opportunity to a technology pioneer,” he said.

Business today is the leading agent of social change. That’s really the message of Davos. It can be a pitiless process, and its seamless efficiency is in frightening contrast to the incompetence and mismanagement of the public sector. Globalization can be tamed, but it can’t be stopped — nor should it be. I just wish other things in the world worked as well.