Et Tu, Davos?

In the early 1930’s John Maynard Keynes was asked by a reporter if there were any precedent for what had happened to the world's economy. He replied yes, it lasted four hundred years and was called the Dark Ages.

If there is a difference between the current crisis and that of the 1930’s, a leading candidate is the level of denial by the professional class. Perhaps too many of today’s generation of leaders and pretenders still believe their economics 101 professors who told them a depression could never happen again.

In a trivial sense that may be true. There may not yet be twenty-five percent unemployment and a one third decline in output. But, there are other possibilities just as dire, if not more so. Fear and panic play on many tracks in the global village. No one is ready to throw in the towel quite yet on the free markets and democracy. But still, civil unrest comes easy in a sensitive age. And besides, we are still in the early stages.

Consider Davos, where the intelligentsia of globalism and trade just met. For the true believers of Davos, a gut wrenching crisis like the present is not supposed to happen. They still cannot contemplate worst-case scenarios that could yield one of the great upheavals in human history.

“There’s a ‘Great Gatsby’ quality to Davos,” said Niall Ferguson, a professor of history at Harvard University in Cambridge, Massachusetts, referring to the novel by F. Scott Fitzgerald. “When people look back at this gilded age, I’m sure there will be images of the investment bank parties at Davos, just as people looked back at flappers after the 1920s. People are still in denial.”

Ferguson, author of “The Ascent of Money: A Financial History of the World,” and a first-time Davos delegate, said “There’s a sense of ‘let’s have the party anyway,’ and ‘let’s talk about the post-crisis world,’ as though that could be soon.” (http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=abAA1ieh6wTk )

Perhaps the Davos crowd would do well to recall the words of Aleksandr Herzen, speaking a century ago to a group of anarchist about how to overthrow the czar, “We think we are the doctors. We are the disease.”