Davos prepares for gloomy discussions

It takes a long time for news to get up the mountain, but it seems to have finally reached the alpine area near Davos: things down below where 99 percent of the world lives are getting dangerous. Things are so dangerous that the one percent better pay attention.

The World Economic Forum holds its annual get together at Davos starting January 25th and in advance it has just published Global Risks 2012, a survey of the views of 469 "experts and industry leaders." It is a bleak read. The report is divided into three case studies titled Seeds of Dystopia, How Safe are our Safeguards?, and The Dark Side of Connectivity.

Pull a quote from any page and you will be sent into a dark tunnel of despair:

"Our safeguards may no longer be fit to manage vital resources and ensure orderly markets and public safety."

Part of the despair comes from the thought that the global business and political leaders who go to Davos are only just figuring out that the "safeguards" are not working. Where on earth have they been the last couple of decades?

"On an unprecedented scale around the world, there is a sense of receding hope for future prospects."

The report quotes some Gallup public opinion research to back up that claim. Its chart of "Top 5 Global Risks in Terms of Likelihood" listing severe income disparity at number 1 followed by chronic fiscal imbalances (which we all know can only be redressed by cutting state pension benefits) provides the tersest explanation of Gallup's findings.

The report includes a special section on the Japan earthquake last March as a case study of the interconnectedness of global systems and the unforeseen consequences of lax regulation in one country on the politics and economy of another literally on the other side of the world.

It points out how the Fukushima nuclear plant meltdown led to plans for new nuclear power plants to be put on ice in Germany and cost the "pro-nuclear party of Chancellor Angela Merkel" heavy losses in local election. This took place despite the fact that there was "no credible suggestion" that the canceled German nuclear plants, of a completely different design and with different regulatory supervision, would have been unsafe. Instead the energy Germany needs will be found by burning gas, more expensive and with a larger environmental impact.

Among the X factors posing further risks to a precarious world:

"Constant connectivity" – hooking up to the internet may be "changing our cognition in ways that are less suitable to deal with complexity, uncertainty and sustainability." British neuroscientist Susan Greenfield has been saying that for a while.

"Financial illiteracy" –  (no kidding!!!!!!)

"Mis-information"  – "The gatekeepers of the broadcast news era are gone and the integrity and ethics of mass reporting online are increasingly unknown."

"Neotribalism" – globalization made businesses borderless, now the internet allows subcultures to link up in political and social activities that bypass governments and can overthrow them.

What is interesting is that of the experts and business leaders who took part, none were among the new leaders of 2011's upheavals: no one from the Occupy movement and no one from the Arab Spring is represented or quoted.

It will be interesting to read the World Economic Forum's sister publication to the risk report, The Global Confidence Index, which is published next week. An interim survey published in November says 70 percent of the "one percent" remain pessimistic about the economic outlook and 60 percent have little trust in political leadership to deal with global risks.

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