At the World Economic Forum in Davos this year there was a lot of uncertainty due to unanswered questions about the financial crisis: What caused it? Who is to blame? What do we change?
I have been going to Davos for 15 years. It is a gathering of powerful business people and politicians discussing important issues, but it is viewed with some suspicion by those not present.
When I started going in the 1990s the focus was on the wonders of technology and the hot panels were the ones where engineers like myself would discuss how things would improve using technology.
There is some focus every year on reducing the inequities between the rich and the poor which is why the Bill & Melinda Gates Foundation has found it a good place to discuss new health initiatives. This year we announced our $10 billion commitment to vaccines over the next 10 years.
The focus this year was the huge hangover of unemployment and budget deficits caused by the financial crisis.
There was a mood of uncertainty I hadn’t seen before. I believe it was the combination of doubts created by the economic downturn along with the rise of countries with different economic and political models, particularly China, plus the challenge of aging populations and unaffordable medical costs.
A much-discussed topic this year was climate change—perhaps partly because you can criticize people who clearly have it wrong and it is an issue that requires a global solution unlike anything else except a pandemic or world war.
I had a very interesting Q&A session with a group of leaders under 40 who were at the conference. One person asked whether the crisis would lead to reduced risk taking and wondered if that would be a bad thing.
I tried to separate out the risk from financial instruments like collateralized debt obligations where the benefits accrue only to the few from the risk taken by a company working on a new drug or a better way of growing food or making energy.
There has always been some discomfort at how much more of the profits seem to stay with rich financiers compared to inventors of new medicines or companies that build new things. This discomfort is now quite acute.
The value to society from inventions is far greater than the financial reward that the inventors themselves receive. This is the opposite of most financial innovations.
The questioner asked if I knew how to avoid the financial excesses without reducing funding for good risks. I said that is hard and I would think about it but most likely the new idea will come from someone under 40, just like the personal computer did—maybe even from someone in the room.