Davos: What Are We Going to Do In a World Full of Crazies?

THOSE WHO FLUNKED

Davos: It’s No Different from the World, Flunked in Gaza!

I shared with you my first impressions of Davos in 2022. https://www.linkedin.com/pulse/yoksa-davosa-ge%C3%A7-mi-kald%C4%B1k-dedim-ama-d%C3%BCnya-tar%C4%B1m-ve-anti-tr%C3%B6st-%C3%BClker/?utm_source=share&utm_medium=member_ios&utm_campaign=share_via

In 2023, Ali Ülker Bey and Salman Amin Bey, our CEO of pladis, attended Davos. I wrote an article by utilizing their impressions and discussing the notes taken by my friends who watched the conference online. https://www.linkedin.com/pulse/yalanci-i%C3%A7in-yalan-de%C4%9Ferlidir-halk-ise-ger%C3%A7ek-murat-%C3%BClker/?utm_source=share&utm_medium=member_ios&utm_campaign=share_via

The theme of Davos this year was “Rebuilding Trust”. So, actually, the issue focused on was that there was a crisis of trust. Ali Ülker Bey and pladis CEO Salman Amin Bey also attended Davos. Then Ali Bey made a very comprehensive, impressive presentation of “Davos Impressions” to the executives of Yıldız Holding, which was very useful. I organized a discussion session again with my friends, who watched the critical meetings of the conference online. This time, I did something different and summarised a compilation by reading from Le Monde, to McKinsey, from BBC to The Economist, and by analyzing the impressions of Cenk Alper CEO of Sabancı Holding and Tanyer Sönmezer, who attended Davos from Turkey and shared their comments; and I created my own impressions. I have given all the sources below. I’m sharing it with you today.

I think it is necessary to leave aside the debates on whether Davos is effective or not, and whether it can raise the agenda in world public opinion. The 54th Davos is an essential platform for the corporate world to talk about a wide range of issues, from the promise or drawbacks of artificial intelligence to the political risks overshadowing the global economy, with hopes on the one hand and concerns on the other; this year, for example, more statesmen and politicians from around the world attended Davos than in the last two years, and made important statements (3,000 delegates, including 350 government leaders and ministers and 80 national security leaders).

Although Israel’s “disproportionate” intervention in the Palestinian territories is swept under the carpet, unlike the Ukraine-Russia war, what is and is not discussed on the platform presents us with the trends of world business, state, and political public opinion, deserving close observation. As Ali Ülker Bey underlined at the “My Impressions” meeting, our task is to watch Davos closely and decide on our business strategies by thinking and discussing how to incorporate what is being discussed here. To me, it will be instrumental if you consider the information I have given below in this context.

Overview

• Of the 3,000 participants in Davos, including 350 heads of state, government, and ministers, about 28 percent were women. It was pointed out that this is a significant turning point in the 54-year history of Davos.
• Let’s remember that the IMF predicts a decrease in its global growth forecast for 2024. Falling growth below 3 percent and the expectation being around this level indicates that poverty and youth unemployment will increase in the world.
• Digital commerce is 15% of global commerce and continues to proliferate.
• Global trade growth was only 0.8% last year, while there is a more optimistic forecast of 3.3% this year. However, due to recent geopolitical developments, our optimism has decreased. Nevertheless, in any case, it is thought to be better than last year.
• Most start-ups in the technology sector are not profitable, and many will struggle to find financing. Venture capital companies now have to evaluate investments better in an environment where the cost of capital is high.
• The vast majority of economists and executives said in private interviews that they do not expect a recession in the US in 2024.
• In general, the financial situation of North American and European consumers is good. Luxury spending is at an all-time high. There is also plenty of capital coming from the oil-rich Persian Gulf, and this is causing asset prices to rise.
• The interest rate cut used during the global economic crisis was necessary, but one should not always rely on this tool. Inflation, albeit low, is a healthy environment for growth, but it can rise rapidly.
• Many panels focused on ending the use of fossil fuels. Shell, Total, and Aramco have announced that they have come together to discuss how they can help reduce carbon emissions from petroleum products.
• Washington is currently spending 18 percent of its budget on debt repayment, which could force spending cuts; in China, economic prospects are falling, and the property market is declining. These two economies, which account for a third of global GDP, are in this situation.
• Elections are taking place in 50 countries this year, from Indonesia, India, and Pakistan to the European Union, Britain, Mexico, and the USA. But the world has still been unable to heal the epidemic’s wounds.
• Historian Niall Ferguson compared the world’s current mood to the Gilded Age of the 1920s. As income inequalities have increased, populism on both the right and the left has increased. The pandemic has shaken many people’s trust in institutions, and there is concern for the future of the next generation.

Ukrainian – Palestinian Wars, Geopolitics

• Israel’s disproportionate use of force in Gaza was surprisingly little raised at discussion panels or planned corporate events in Davos, given its global significance. A few regrets were expressed; a few solutions from the countries of the Muslim Middle East were proposed. It was almost covered up. However, last year the Ukraine-Russia war occupied the agenda a lot. Even this year, the Ukraine-Russia war is still being talked about more than the Israeli-Palestinian War. Ursula von der Leyen, President of the European Commission, said: “Ukraine may prevail in this war, but we must continue to strengthen their resistance.” She called on Kyiv’s Western allies to continue their arms deliveries and financial support. The participants from the Middle East, who listened in silence to the speeches of the dignitaries, refrained from commenting. However, many pointed out that there was a conspicuous absence of discussion about the rise of global antisemitism at the conference. As you can see, Davos is the mirror of the world; just as the world failed to prevent Israel’s disproportionate actions with its laws, regulations, institutions, and public opinion, Davos also flunked.
• Attacks on ships in the Red Sea by the pro-Iranian Houthi group in Yemen were said further to increase the cost of shipping from Asia to Europe. CEOs said they are working on alternative supply routes. Yemen’s Vice President and Iran’s Foreign Minister said the attacks will not stop until Israel ends the war in Gaza.
• The US sent Antony Blinken and Jake Sullivan from the Biden administration to Davos this year to emphasize that “we are not turning inwards” in foreign policy. They described the Biden doctrine as “variable geometry” that varies by region, situation, and time. It’s a mix of ideals and interests that Sullivan calls “strategic competition in an age of interdependence”, but from this point of view, it’s no different.
• German Finance Minister Christian Lindner said that Europe needs to strengthen its level of technology and economic independence for its defence. Well, then Europe is not independent…
• Chinese Premier Li Qiang said Chinese GDP would grow by 5.2% in 2023, lower than before the pandemic. The country is fighting a trade war (semiconductor) with the US, losing foreign direct investment. India has overtaken China in terms of population. China is experiencing significant structural economic difficulties.
• China’s population shrank for the second time in a row in 2023. Birth rates are meagre, and the city is currently home to the world’s largest number of senior citizens. Li called on Washington to lift trade sanctions, reverse academic bans, and pull back from technology restrictions that have scared many companies from doing business in China. Investments have shifted significantly to Vietnam, Indonesia, Mexico, and India.
• The message of the Americans and Europeans is clear: they will no longer rely on a single country or region for their needs.

Technology – Artificial Intelligence

• Crypto discussions dominated the panels at Davos last year. This year, artificial intelligence has become the cool kid in the neighbourhood.
• The tone of the AI discussions was optimistic rather than pessimistic. AI stands out with its productivity increase and green growth potential.
• OpenAI CEO Sam Altman, a member of a group that has previously warned that AI could lead to the extinction of humanity, said during the week that AI “will change the world much less than we all think.”
• But Bill Gates told the Davos audience that he thought the impact of artificial intelligence would be more significant than the invention of the internet. The discussions focused on the power of the three major cloud providers, Amazon, Microsoft, and Google, and their dominance over “data”, the only fuel of artificial intelligence.
• The International Monetary Fund (IMF) warned about the economic inequalities created by artificial intelligence between regions and generations.
• European leaders in particular, emphasize their intention to regulate AI even if it slows down innovation, while the US and the UK take a more tolerant approach and prefer to correct missteps.
• Many companies are using AI to improve the performance of sales teams, call centers, and coding teams, as well as reduce the time it takes employees to produce reports.
• It is very important for the adoption of these innovations that the top management of companies are individuals who know how to learn, not individuals who know everything.
• In environments where workforce mobility is increasing, companies do not want to invest in employees with low loyalty. It may be necessary to create a state-funded pool of skill-acquisition programs.
• If you can be flexible in learning and have high social skills, you are quite likely to succeed. Aptitude for online education and the ability to self-educate are important.
• In order to benefit from the creative power of artificial intelligence, the focus needs to shift from technology to organizational culture and learning. Instead of thinking that artificial intelligence is a superhero, we need to think about how to put a superhero cape on every employee. (I recently wrote an article about this, I’m sharing it again. https://www.linkedin.com/pulse/yapay-zeka-insan-zekas%25C4%25B1n%25C4%25B1n-yerini-alacak-m%25C4%25B1-murat-%25C3%25BClker-dkicf/?trackingId=nyyBNw7ZTNCHRSatnQIuuw%3D%3D)
• Countries need to adopt AI in order to maintain their competitive advantage. The export restriction imposed on AI chips in the recent period is seen as a measure taken to protect the competitive advantage of the United States in this field in the short term.
• CEOs and leaders need to understand Artificial Intelligence in-depth and operationalize it effectively. Especially providing employees with the necessary new competencies in the AI era is a mission that requires much effort.
• The most considerable productivity increase will be in coding (20% -30% increase), customer service, and other digital jobs.
• AI will do an essential part of their work, and the most important competence for white collar will be “Critical Thinking”.
• If you are using general AI tools, we should pay attention if the data comes from everywhere. The right thing to do is to use AI on a controlled data set of our own creation.
• Now, the algorithms are very biased. We need to feed with more variety and a lot of data.

Fintech – Artificial Intelligence

• London Stock Exchange Group is partnering closely with Microsoft to integrate data analytics and generative artificial intelligence into its existing products and services. (in 2022, Microsoft became a 4% partner in the London Stock Exchange). They are developing intuitive tools with natural language and generative artificial intelligence to improve the user experience. They focus on verifiable data to address risks and ensure confidence in AI results.
• Visa focuses on preventing fraud by using machine learning and artificial intelligence to make quick transaction decisions. Currently, within 5ms, they are able to decide whether the transaction is fraud or normal.
• For innovation in finance, regulators must focus on business results rather than strict rules.
• In the field of fintech, states are striving to catch up with technology. However, regulators are lagging behind in pursuing the technology.
• The private sector and public cooperation are crucial for using AI in finance.  
• In the human world, video is used more than text as a source of information. The use of artificial intelligence in this field is limited.
• Generative Artificial Intelligence is primarily about correlation, not causation. For this reason, they have limitations in terms of sensitivity and foresight, as well as logic and reasoning. This is the reason why computers cannot have common sense.

Climate Change

• The decline of biodiversity is a severe threat.
• Scientists are people with low communication skills, and some of them also like to be mysterious. We must learn to communicate.
• With all the excitement of developments in artificial intelligence and geopolitical concerns, climate issues seemed to have diminished in importance at Davos. Now that everyone has accepted the problem, projects are being discussed. Habitually, implementation of more decarbonization projects in quantities and barriers to this were discussed. The lack of global industrial carbon pricing, compliance costs, and the lack of working models for blended finance between government, investors, and banks were basic issues.
• In this period of rising interest rates, it was discussed that better rates of return are necessary, especially in renewable energy, where the world aims to triple capacity by 2030. Nevertheless, this will not be easy, as legal regulations and society’s resistance to this prevent this growth. Economist Mariana Mazzucato said, “Perhaps climate change needs to be addressed as urgently as war.” said.
• Climate change requires a global carbon tax and incentives for transition to clean energy in developing countries. However, this was already attempted after the Paris Agreement of 2014 and was not successful.
• The world is on track to add an equivalent amount of housing to China’s housing stock over the next 25 years, especially in developing countries where millions of people are migrating to cities. India alone is adding the equivalent of another Chicago city every year. The construction and use of buildings account for 26% of the world’s emissions. First of all, we need to change our heating and cooling systems. But we also need to transform the building materials of all new buildings – bricks, concrete, glass, and steel.
• Europe has taken the lead in the field of recycled building materials. But this supply needs to double by 2030. The problem is that even in Europe, every city wants to implement its own individual building legislation, which prevents suppliers from setting up collective recycling facilities. In developing countries, where most of the new buildings in the world will be built, there is no development in recycling.
• 90% of international trade is carried out by sea transport. By 2030, we must have 30% of the oceans under protection.
• We need to decarbonize maritime transport and switch to green shipping. These include reorganizing routes to protect the ecosystem, getting rid of plastics, and turning to renewable energy. The business world should come together around these issues and produce clear solutions together. Everyone involved in this issue, from fishermen to insurers to carriers, should come together and be part of the same action plan.
• Investors should look at Africa from a long-term perspective, appreciate the reforms made, and see the potential alongside the challenges. This is only possible by being a part of the great transformation. This contribution will be made through infrastructure development, research and development investments, and modern agricultural practices.
• Food production accounts for 30% of global greenhouse gas emissions, 70% of freshwater use, and 80% of tropical deforestation. In a world with a projected population increase of more than 500 million by 2030, it was discussed that governments would force farmers to switch to “climate-friendly” agriculture by finding new ways of financing production.
• The Dataland project, launched by Refik Anadol in Los Angeles in 2023, will be an Artificial Intelligence Museum to transform data visualization and artificial intelligence into art. Dataland, a physical and virtual museum at the same time, is focused on developing the world’s first open-source generative artificial intelligence model, the Large Nature Model. Within the scope of the project, audio, image, text, climate, and smell data from 16 nature areas consisting of various regions of the world have been recorded on the blockchain as open source. While the beauty and diversity of nature were exhibited, the Amazon region ecosystem was used intensively in this project. The AI model provides the opportunity to understand nature in depth with the ability to activate static images.

Optimism prevailed in Davos. Furthermore, frankly, I’m optimistic despite all kinds of negativity. This year, in many countries, many people will vote in elections. People demand “trust”. Global trade, a measure of trust, is increasing. As long as humanity does not die as in Gaza, and that the rich and perhaps the powerful do not only refer to certain countries/regions when they promise the world rights, justice, and equality. Let them be fair-minded, not callous.

Resources:

https://www.weforum.org/videos/joseph-stiglitz-can-we-make-a-gobalization-that-works/
https://www.weforum.org/agenda/2024/01/davos-2024-highlights-ai-growth-climate-security/
https://www.mckinsey.com/featured-insights/themes/10-key-takeaways-from-davos-2024
https://www.reuters.com/world/heard-davos-what-we-learned-wef-2024-2024-01-19/
https://www.bbc.com/worklife/article/20240119-davos-2024-the-future-of-sustainable-business-is-regeneration
https://www.cnbc.com/2024/01/19/takeaways-from-davos-wef-2024-us-recession-ai-china-economy.html
https://thoughtleadership.rbc.com/davos-2024-a-year-of-creative-destruction-or-just-destruction/
https://www.youtube.com/watch?v=9nJZfzweCWs.
https://gazeteoksijen.com/ekonomi/sabanci-ceosu-cenk-alper-surdurulebilirlik-kulturel-evrimin-bir-parcasi-200454

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