View previous stories
	The humbling of Davos Man by John Gapper The Financial Times Switzerland   Jan 28, 2009   It’s lonely at the top. Having journeyed this week up a Swiss mountain valley to the World Economic Forum’s annual meeting in Davos, I find myself in select company. Several members of the global business elite discovered at the last minute that they had pressing business elsewhere.   Where is John Thain, the former chief executive of Merrill Lynch? Back in New York trying to rescue his good name after being pushed out by Bank of America and having details of his $1.2m (€907,000, £839,000) office refurbishment leaked. And where is Sam DiPiazza, chief executive of PwC? In India, where two PwC auditors have been held by police over their role in the alleged $1bn fraud at Satyam Computers.   This is usually the time of year when Davos Man – the global banker and business leader whose fortunes have risen spectacularly during the past three decades – gets to strut his or her stuff. This January, Davos Man is being humbled instead.   It is tricky to be seen at a talking shop in Switzerland when your house is burning down. Even Bob Diamond, president of Barclays, which managed to persuade investors this week that it is not going bust, decided it would be wiser to stay in London.   But there is more going on than a bunch of chief executives temporarily bowing to public relations realities. The ascendancy of Davos Man is under threat for the first time since Klaus Schwab organised the inaugural meeting in 1971. The history of Davos parallels the rise in prestige and power of the private sector and free enterprise. After a blip in the crisis-ridden early 1970s, Mr Schwab’s annual circus of chief executives, politicians and non-governmental organisations has been on a roll.   Companies and banks footed the bill for the frenetic round of debates and dinners, and politicians and others dutifully turned up. It was in their interests because this was where the money, and the power, was.   Davos Man was not always popular. He was condemned from the right by Samuel Huntington, the US political scientist, for his “dead soul”, being a rootless cosmopolitan who disdained the patriotic pride of the ordinary Joe. From the left, anti-globalisation activists accused chief executives of exploiting the poor.   But his power was unquestioned. The election of Margaret Thatcher in the UK in 1979 and Ronald Reagan in the US in 1980 ushered in scepticism about government. Private enterprise filled the gap, with billionaires such as Bill Gates not only building businesses but also usurping the role of the public sector and governments in addressing inequality and social problems.   Now, all that is under threat. The credit crisis has ruined the reputations of Wall Street bankers and handed power to politicians and regulators. “The president of the US and the Treasury secretary have been given a degree of power that no president has had since Franklin Delano Roosevelt,” says Nick Burns, a Harvard professor and former US undersecretary of state.   Suddenly, business leaders lack legitimacy. A US survey conducted by Edelman, the public relations company, last autumn found that the trust of the public in US business had fallen from 58 per cent the previous year to 38 per cent. Only 49 per cent of Americans (Americans, for heaven’s sake!) think the free market should be allowed to function independently.   I find these data worrying because the failures of the credit crisis do not obviate the good things businesses can do. Mr Gates’ philanthropy and other private-sector initiatives to improve the state of the world were more than mirages.   Davos Man now faces a struggle not only to operate freely in business but also to regain his former authority. It seems to me that business people have to do two things to regain trust.   The first is simple enough, although painful: stop behaving like the 18th century French aristocracy. After an extended period of extreme prosperity, and an increasing proportion of financial rewards accruing to people at the very top, it is easy for these people to lose their heads (in this case, figuratively).   Perhaps Mr Thain is being singled out unfairly, since Bank of America wants to make him into a whipping boy, but his lavish office expenses and decision to accelerate the payment of Merrill bonuses speak to being, like many other financiers, weirdly detached from reality. Most people are happy, in normal times, for there to be big disparities of income and wealth, and for business people and entrepreneurs to do well. Many of us, after all, harbour hopes of getting rich ourselves one day. But there must be, as Richard Edelman, head of the eponymous firm, phrases it, some “shared sacrifice”.   The second thing is less painful but harder: to demonstrate competence. Davos Man’s pitch, accepted by most people for many years, was that the private sector was better at doing things than governments. That did not seem a stretch: disasters such as hurricane Katrina exposed the US government’s inability to fulfil its basic duties to citizens.   The credit crisis turned out to be Wall Street’s own hurricane Katrina. It transpired that financiers had no idea of the risks they were taking and could not save their banks from sinking in a storm. The question then naturally arises: if Davos Man cannot do his own job, why should we let him do anything else?   At the moment, even in the rarefied air of Davos, there is no obvious answer to this question. Personally, I hope that business leaders can restore public confidence in their ethics and competence as quickly as possible because the alternative is unpleasant to contemplate. But few people are going to listen to, let alone follow them until they do.
	2008: Year of the Global Food Crisis by Kate Smith, Rob Edwards The Sunday Herald United Kingdom   Jan 2009   It is the new face of hunger. A perfect storm of food scarcity, global warming, rising oil prices and the world population growth is plunging humanity into the biggest crisis of the 21st century by pushing up food prices and spreading hunger and poverty from rural areas into cities.   Millions more of the world"s most vulnerable people are facing starvation as food shortages loom and crop prices spiral ever upwards.   And for the first time in history, say experts, the impact is spreading from the developing to the developed world.   More than 73 million people in 78 countries that depend on food handouts from the United Nations World Food Programme (WFP) are facing reduced rations this year. The increasing scarcity of food is the biggest crisis looming for the world, according to WFP officials.   At the same time, the UN Food and Agriculture Organisation has warned that rising prices have triggered a food crisis in 36 countries, all of which will need extra help. The threat of malnutrition is the world"s forgotten problem, says the World Bank as it demands urgent action.   The bank points out that global food prices have risen by 75% since 2000, while wheat prices have increased by 200%. The cost of other staples such as rice and soya bean have also hit record highs, while corn is at its most expensive in 12 years.   The increasing cost of grains is also pushing up the price of meat, poultry, eggs and dairy products. And there is every likelihood prices will continue their relentless rise, according to expert predictions by the UN and developed countries.   High prices have already prompted a string of food protests around the world, with tortilla riots in Mexico, disputes over food rationing in West Bengal and protests over grain prices in Senegal, Mauritania and other parts of Africa. In Yemen, children have marched to highlight their hunger, while in London last week hundreds of pig farmers protested outside Downing Street.   If prices keep rising, more and more people around the globe will be unable to afford the food they need to stay alive, and without help they will become desperate. More food riots will flare up, governments will totter and millions could die.   Food scarcity means a big increase in the number of people going hungry, says the WFP"s Greg Barrow. Without doubt, we are passing through a difficult period for the world"s hungry poor. The WFP estimates it needs an additional $500 million to keep feeding the 73 million people in Africa, Asia and central America who require its help. We need extra money by the middle of 2008 so we don"t have to reduce rations, says Barrow.   He also points out that age-old patterns of famine are changing. "We are feeding communities of people we didn"t expect to feed," he explains.   As well as being rural, the profile of the new hungry poor is also urban, which is new. There is food available in the markets and shops - it"s just that these people can"t afford to buy it. This is the new face of hunger.   The food shortages will also affect western industrialised nations such as Scotland, Barrow says. Scarcity means that some foods will get very expensive, or disappear from supermarkets altogether, meaning a move to seasonal, indigenous vegetables. Of the 36 countries named last month as currently facing a food crisis, 21 are in Africa. Lesotho and Swaziland have been afflicted by droughts, Sierra Leone lacks widespread access to food markets because of low incomes and high prices, and Ghana, Kenya and Chad among others are enduring "severe localised food insecurity".   In India last year, more than 25,000 farmers took their own lives, driven to despair by grain shortages and farming debts. "The spectre of food grain imports stares India in the face as agricultural growth plunges to an all-time low," warns India Today magazine.   The World Bank predicts global demand for food will double by 2030. This is partly because the world"s population is expected to grow by three billion by 2050, but that is only one of many interlocking causes.   The rise in global temperatures caused by pollution is also beginning to disrupt food production in many countries. According to the UN, an area of fertile soil the size of Ukraine is lost every year because of drought, deforestation and climate instability.   Last year Australia experienced its worst drought for over a century, and saw its wheat crop shrink by 60%. China"s grain harvest has also fallen by 10% over the past seven years.   The UN Intergovernmental Panel on Climate Change has predicted that, over the next 100 years, a one-metre rise in sea levels would flood almost a third of the world"s crop-growing land.   A recent analysis by the Conservative Party leader, David Cameron, also pinned blame for the global food crunch on the accelerating demand for allegedly green biofuels and the world"s growing appetite for meat.   Meat is a very inefficient way of utilising land to produce food, delivering far fewer calories, acre for acre, than grain. But the amount of meat eaten by the average Chinese consumer has increased from 20 kilograms a year in 1985 to over 50 kilograms today. The demand for meat from across all developing countries has doubled since 1980.   The world"s grain stocks are at their lowest for 30 years, Cameron warns. "Some analysts are beginning to make some very worrying, very stark predictions. And these analysts say politicians should start to rank the issue of food security alongside energy security and even national security."   Another key driver has been the high cost of oil. As well as increasing transport costs, oil makes crop fertilisers more expensive.   According to the World Bank, fertiliser prices have risen 150% in the past five years. This has had a major impact on food prices, as the cost of fertiliser contributes over a quarter of the overall cost of grain production in the US, which is responsible for 40% of world grain exports.   Tackling hunger has become a "forgotten" UN millennium development goal, says the bank"s president, Robert Zoellick. But increased food prices and their threat - not only to people but also to political stability - have made it a matter of urgency," he says.   Scottish farmers warn that food security is becoming an issue for the first time since the second world war. This is a perfect storm and the effects are being felt right now," says James Withers, the acting chief executive of the National Farmers Union in Scotland.   "At the same time as demand for food increases, the amount of land we have available to grow food on is reducing," he adds. "An area twice the size of Scotland"s entire agricultural area has been swallowed up by Chinese towns and cities in the last 10 years."   One response from the UK and Scotland should be to grow more of our own food, and to try to reverse the decline in self-sufficiency from 75% in 1986 to 60% now, he says.   It is possible for the UK, and the world, to feed itself, argues Robin Maynard from the Soil Association, but it will require big changes. This is a wake-up call," he says. The choices we make now will determine whether we can feed ourselves in the future.   Richard Lochhead, the Scottish government"s environment secretary, has launched a public discussion to develop Scotland"s first food policy. "I am conscious our generation has not experienced food shortages, but we should never take food for granted," he says.   The global drive for a new green fuel to power cars, lorries and planes is worsening world food shortages and threatening to make billions go hungry. Biofuels, enthusiastically backed by the US, UK and other European governments, have been sold as the solution to global warming. Making fuels from growing crops has been marketed as the way to cut climate pollution while continuing to drive.   But now experts are warning that this could all be a disastrous mistake. Converting large amounts of land to crops for biofuels is reducing food production just when the world needs to increase it.   Last year a quarter of the US maize crop was turned into ethanol to fuel vehicles - and the US supplies more than 60% of the world"s maize exports. According to the World Bank, this is putting pressure on countries precarious food supplies.   "The biofuels surge makes things worse by adding high demand on top of already high prices and low stocks," said one of the bank"s leading economists, Don Mitchell. "Ethanol and biodiesel produced in the US and European Union don"t appear to be delivering on green promises either, making them very controversial."   There are plans by more than 20 countries to boost production of biofuels over the next decade. The US is talking about trebling maize production for ethanol, while the European Union is aiming to make biofuels 10% of all transport fuels by 2020.   The dash for biofuels came under fire last week from the UK government"s newly appointed chief scientific adviser, Professor John Beddington. In a speech in London on Thursday, he said that world food prices had already suffered a "major shock" as a result.   Biofuels were often unsustainable, he argued. "It"s very hard to imagine how we can see the world growing enough crops to produce renewable energy and at the same time meet the enormous demand for food."   Some of the proposed biofuels schemes were "hopeless", warned Beddington, formerly professor of applied population biology at Imperial College, London. "The idea that you cut down rainforest to actually grow biofuels seems profoundly stupid. You could feed a person for a whole year from the grain that produces just one tank of fuel for a sports utility vehicle (SUV)," he said.   Robin Maynard, from the Soil Association, which certifies organic food. "The US currently grows one-sixth of its grain harvest for cars, which is madness," he told the Sunday Herald. "It is perfectly possible for the world to feed itself, but it depends on how we are growing food. If we continue to grow crops to feed cars rather than people, we"re in trouble."   It is the new face of hunger. A perfect storm of food scarcity, global warming and world population growth that is plunging humanity into the biggest crisis of the 21st century by pushing up food prices and spreading hunger and poverty from rural areas into cities.
	View more stories