It is much more than a sign of the times when the president of the World Bank and former deputy secretary of state, Robert Zoellick, is publicly advocating disbanding the Group of Seven in favor of a "multilateral network" twice its size to address major economic challenges. It is true that the flurry of national responses to the banking crisis by the major industrialized economies has been uncoordinated, and ineffective, with respect to the current global credit crisis. But the starker reality is that a new international order has arrived that has yet to be understood fully or accepted widely. The deleveraging and shifting of capital flows occurring globally at this moment are not reversible trends. The economic changes happening now are structural, not cyclical, and therefore truly transformative. – Forbes (Klaus Schwab, founder World Economic Forum)
Dominant Social Theme: The financial crisis shows the need for more international regulation.
Free-Market Analysis: As part of what we hope could be considered a public service, we continue to report on calls for ever deeper and more invasive regulatory fixes, worldwide. These efforts are usually accompanied by melancholy protestations of sincerity. And the breast-beating and carping will continue all the way to the final construction of the last unnecessary bureaucratic clause.
What has the current regulatory environment brought to the world? In the long run, it seems, most of what has been increasing are entitlements, laws and taxes. And now that yet another, deeper economic crisis has come to pass, those same leaders who have presided over the current instability call for more of the same medicine.
Here's how Schwab ended the article excerpted above:
We must remind ourselves that there are other major global challenges, such as food security and climate change, that require our attention. Financial volatility will continue to grab our attention in the days and weeks ahead, but it's worth remembering that 4 billion people, nearly two-thirds of humanity, still do not have access to basic financial services. By the time the World Economic Forum holds its 39th annual meeting in Davos, Switzerland, next January, my hope is that the leaders from government, industry and civil society who will join us will have understood that solving complex global challenges requires understanding how issues, interests and institutions are connected to one another. Appropriately, the challenge next year in Davos will be connecting these dots to come up with solutions. Our objective is to find answers that are not only holistic and systematic, but also take into account all of the stakeholders in our global society.
OK. The same leaders of government, industry and civil society that have recently helped evaporate what may be US$5 trillion of equity in markets worldwide are going to meet once again in Davos with renewed enthusiasm for tackling "food security and climate change." Wow. That sounds like a threat. What exactly is the point? The French are baying for wider and deeper regulatory fixes, the International Monetary Fund wants to enforce Draconian "transparency" worldwide on long-suffering business ventures and in Davos, Schwab wants to ponder ways to provide "basic financial services" to two-thirds of humanity.
It is all too simple for these deep thinkers. Leave business and industry alone. Let people buy and sell as they choose and don't interfere if they wish to use gold and silver (as they will) to make payments for their chosen necessities. The world, the West and individual nation states get into trouble when an elected or unelected few start to make wealth transfers on behalf of the "poor" and "the children." Once they have begun, they will continue with "wealth pledges" and then tax entrepreneurs and print money to redeem these pledges. The pledges are unnecessary; the wealth transfers are, too. (They could be accomplished by private charity.) But without the brief to create legislation to spend other people's money, the monetary elite would be out of a job. More than that, without the inevitable generation of a greater or lesser or bust – as a result of all these unfunded and unnecessary wealth transfers – there would be no reason to pick up the pieces and to meet in Davos for hushed conversations over canapés. Fortunately for these folks, business is very bad right now, and thus, for them, very, very good.