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Don Tapscott

Don Tapscott

Posted: February 9, 2011 04:03 PM

It is my custom after attending Davos to formulate my top 10 reflections. These are not necessarily the top issues discussed at Davos but rather some observations about the state of the world.

1. The Age of Wiki Revolutions

Not surprisingly, the historic events in Tunisia and Egypt captured the attention of many at Davos. The timing was impeccable, reminding some of the Davos conspiracy theory -- that the world's leaders organize big events to time well with the Davos meeting.

Tunisia and Egypt are examples of a new species of revolution based on social media. Traditional revolutions have a leadership and are positioned to take power with popular support. The new "wiki revolutions" are so explosive and happen so fast, that there is no clear vanguard to take power, leaving a vacuum. The vacuums that result pose significant challenges for everyone who cares about moving from oppression, dictatorship and fundamentalism to openness, democracy and 21st century governments.

Appropriately, Tunisia's so-called Jasmine Revolution was hailed by many as a model of social and democratic revolution in the Arab world. "We are going to leverage social media to build a horizontal democracy rather than a vertical democracy," said Yassine Brahim, Tunisia's new minister of infrastructure and transport.

The new governor of Tunisia's central bank, Mustapha Kamel Nabli, went to Davos to reassure attendees and the international media that Tunisia was getting back to business as normal.

Nabli said Tunisia plans to move forward following the toppling of President Zine al-Abidine Ben Ali. "The situation is stabilizing and security is back. This means that democracy has taken root. We have come a long way. People had had such depressed feelings for so long that something had to break -- which was fear of the regime. When it was removed everything happened very quickly."

"I would like to convey to investors that that the country has returned to business. Democracy is good for investment," Nabli said. Foreign companies will be "doing business in a much more favorable environment." He promised corruption would be replaced with transparency, and asked international investors not to flee the country or speculate in ways that would hurt the economy.

Yes, everyone was left wondering: what country is next? And how will each of these wiki revolutions play out?

2. Bifurcated Norms for the New Realities

The theme of Davos was "Shared Norms for the New Realities." It reflects what the Forum organizers say is the top global issue: The world is increasingly complex and interconnected, and, at the same time, experiencing an erosion of common values and principles. This undermines the public's trust in leadership, which in turn threatens economic growth and political stability. In the words of the WEF's founder Klaus Schwab, we need to "concentrate on defining the new reality and discuss which shared norms are required for making global cooperation possible in this new age."

Compared to previous Forum meetings, there is growing awareness by corporate executives that business can't succeed in a world that is failing. Environmental sessions at Davos used to be attended by environmentalists only. Now the participation is much broader. This year serious business leaders spoke convincingly of their responsibilities for helping develop a globally sustainable economy. A broad cross-section of business leaders spoke of the urgency of helping Africa.

I chaired two sessions. The first was "Rethinking our Institutions for the New Realities." The second was about how young people around the world share a positive new culture and set of norms, but were bumping up against "old models." At both sessions there was a rich, sometimes exhilarating discussion about the need for change.

But when it comes to norms being shared we've got a long way to go. In fact, a bifurcation is underway. Many CEOs, government leaders, economists and media still view the world in traditional ways. The biggest disconnect was about the state of the global economy. Many executives are quite comfortable with the status quo. They think the financial and economic crisis is over and that we're now coming out of a predictable and traditional business cycle. Implicit in this view is that there are no truly new realities, just variations on the age old business rhythms.

According to the typical CEO, especially bankers, all is well. Profits are good and bonuses can't be far behind. It was reported last week that the top five U.S. banks will pay staff a combined $119 billion for 2010, up 4 percent from 2009. Nevertheless, bankers insist the proper tonic for other sectors of the economy is austerity. Writing from Davos for States News Service, Simon Johnson noted that "Leading bankers, in particular, insisted on the paramount importance of providing unlimited government support to their sector during 2008-09; now they insist with equal or greater vigor that support to all other parts of society be curtailed."

These business leaders are trying to turn back the clock. When they see any signs of improvement they have a natural inclination to fall back on old ways and conclude it is business as usual. This is a big problem. Those who say the global economic crisis is over are wishful thinkers with a false sense of comfort.

There were bifurcated norms on many of the issues discussed. Some were uneasy at the uprising in Egypt, insisting this was bad news and that such instability would be harmful for business. They preferred the old paradigm where the West supports any government -- including despots and tyrants -- if it suits the West's strategic interests. This was in sharp contrast to those who saws Egypt's turmoil as an opportunity for democracy, social justice and economic prosperity. They believe that the main problem for economic growth in the Mid-East is that it is run by despots who act as a brake on their local economies. They agree with the young people tweeting from Tunisia and Egypt that "Democracy is good for business."

3. A New Era of Global Risks

We haven't come to grips with what it means to live in a networked and increasingly interdependent world. There are traditional risks like nuclear war, terrorism, climate change, infectious diseases, economic crisis and failed states. But new risks are emerging everywhere. Consider something as seemingly mundane as the global supply chain. The vast networks that provide the world with food, clothing, fuel and other necessities could handle an Iceland volcano and one other catastrophe like the failure of the Panama Canal. But according to experts, a third simultaneous disaster would collapse the system. People around the world would stop getting food and water, leading to unthinkable social unrest and even a disintegration of civilized society.

By tackling this issue, the Forum is filling a void that no other organization addresses. It gets people talking constructively, in sharp contrast to the recent failures of other bodies such as the Doha Development Round of the World Trade Organization and the Copenhagen Conference on climate change.

This year the Forum inaugurated a Risk Response Network. Risk Officers from top corporations, governments and international organizations will be brought together online. They will draw on insights from the Forum's communities and contributors, including expert Forum working groups and a network of the world's top universities. If some new global crisis arises, these leaders could spring to action on a secure network, drawing on insights from the any of the Forum's 50 communities.

It is hoped that rather than just reacting to unanticipated problems like the European Sovereign Debt Crisis, leaders could be more proactive and take preventive action. Chancellor of Germany Angela Merkel warned participants against being complacent about the risks of a further financial crisis, saying that the international mechanisms needed to prevent another crash are not yet in place. She stressed that Germany stands firmly behind the Euro and will continue to defend the currency.

4. For Growth to be Sustainable it must be Inclusive

In the Davos wrap-up communiqué this was one of four themes, but again there were big differences in the views of participants. Some CEOs don't really care, believing that the world economy can continue to grow without concern for how the wealth is shared. As far as they were concerned, the global economy is back on track and business is back to usual. I said you can't call it a recovery if it's not inclusive. The people at the very bottom aren't benefiting. Huge parts of the world are mired in economic stagnation. This has huge risks, as is illustrated by the developments in Egypt and Tunisia.

In one television interview I argued that we're in more than a global slump. The journalist challenged me, saying "what slump - economy is doing great, already running at 4 percent growth." I replied that he should tell that to the millions of young people who are unemployed - to them the term jobless recovery is an oxymoron. The incident was reflective of the divide.

United Nations Secretary-General Ban Ki-moon said that a "revolution" is urgently needed in thinking and policy to bring about sustainable economic growth that can both protect the environment and raise living standards. Chanda Kochhar, managing director and chief executive officer of the ICICI Bank of India, said we will only make growth sustainable "if we make our growth inclusive."

Greek Prime Minister George Papandreou said there had been a "race to the top" among the rich. More and more wealth was concentrated in fewer hands, while the middle and working classes were being forced to make do with less and less.

Despite the well-meaning concern, there was inadequate about how to achieve inclusive growth. In the United States 80 percent of new private sector jobs come from companies less than 5 year old. But smaller companies are having a tough time. There is lower demand due to recession and some behavioral change from consumers along with very high levels of uncertainty in the economy. There is a credit crunch as banks are not lending money and there is a lack of venture funding. Internationally the situation is ever more complicated. These problems need to be addressed with fresh thinking.

5. The Potential of a New Global Youth Radicalization

As the events of Tunisia and Egypt unfolded I became convinced that a new youth radicalization is underway.

First, there is a massive generation of young people coming of age. Born between 1977 and 1997, the children of the baby boom in North America outnumber their parents. The echo is larger than the boom itself. In South America the demographic bulge is huge, and even bigger in Africa, the Mideast and Asia. A majority of people in the world are under the age of 30 and a whopping 27% under the age of 15.

Second, despite the digital divide, this generation is the first to grow up digital. They have been bathed in bits; computers, the internet, and interactive technologies are a fundamental part of the experience of youth. To them, technology is like the air. When young people today use digital devices, they are interacting, searching, authenticating, remembering, collaborating, composing their thoughts, and organizing information. They interact with the media and know how to inform themselves and use technology to get things done.

Third, as they become adults, they are entering a world that is broken. Youth unemployment is high around the world. In Spain more than 40 percent of young people are without work. In France the rate is over 20 percent. Many failing institutions are in need of reform. Throughout the Mideast there are undemocratic regimes with few human rights. Women want to be part of the work force but in many countries are denied full opportunities to do so.

Put these three factors together and there is a perfect storm brewing. During the 1960s there was a generation gap where young people and their parents had different attitudes towards many things, from civil rights and women's role in society to war. The youth radicalization of the time brought about significant changes in society, among them the end of the war in Vietnam.

But this time is different. Today a huge, deeply frustrated generation has at their fingertips the most powerful tool ever for finding out what's going on, informing others and organizing collective responses. The leaders of Iran, Tunisia, Egypt , Syria, Saudi Arabia or even China can take steps to prevent them from communicating with new media, but ultimately this will not work. Turning off the Internet, as Egypt has tried to do, only broadens dissent as outlying nodes on the human network become engaged and for everyone the best way to communicate is to come into the streets. Further, as the Internet becomes an essential part of the economy's infrastructure, shutting it down is akin to self-inflicting a general strike.


 

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