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Delusional in Davos

Why the global business elite feel no remorse about the damage they've done.

Federico Fubini

Everything has to change in order for everything to stay the same," wrote the Italian author Giuseppe Tomasi di Lampedusa in his famous novel The Leopard. The novel is set in 19th-century Sicily, but Lampedusa could just as easily have been describing the 2009 World Economic Forum in Davos.

You notice it more in the corridors and the cafes of this exclusive Swiss hamlet rather than in onstage debates. Publicly, the discourse is all about the dangers of "false market assumptions" and the now-infamous "financial engineering." (I seem to remember it being called "financial innovation" last year.) But offstage, top bankers, private equity bosses, and hedge fund stars keep chitchatting and socializing, just as if banks had not had $1 trillion write-downs, the financial markets had not lost $25 trillion, and up to 30 million jobs were not at risk around the world.

To achieve this state of mind, any human being probably needs to construct a formidable mental shield. A survey I personally conducted at Davos this year of 60 top central bankers, financial market regulators, fund managers, and industry opinion-makers gives an idea of what this shield looks like.

When participants were asked whether they think they have done something in their career which "might have contributed, even in a minor way, to the financial crisis," 63.5 percent opted for a clear "no"; 31.5 percent went for a "yes," often adding in the same breath that nobody in the industry can honestly claim otherwise; and 5 percent said "maybe."

The "yes" people were then asked to explain what triggered their wrong decisions. They had three options: "too much optimism" (68.7 percent), "I felt I had to keep dancing while the music was playing" (31.3 percent), or "greed" (0 percent).

David Rubenstein, cofounder and managing director of the Carlyle Group, expressed surprise at the results. "How strange," he said. "I thought 100 percent of them would say they had nothing to do with it."

For all his wry humor, Rubenstein has a point. Psychological self-defense, a Darwinian instinct, is part of human nature, and "Davos Man" is no exception. Feelings of personal responsibility after a collective catastrophe are a matter for psychologists rather than World Economic Forum conversations, but the answers to the survey should come as no surprise.

For all the talk of the more "somber" mood at this year's event, there were about 100 more private jet movements
at the Zurich airport last week than during last year's event. I'm not sure if the irony was lost on the organizers who handed out pedometers to forum participants, to encourage them to walk and reduce their carbon footprint.

The conflicting attitudes of contrition and denial were evident at a special event on the "36 hours in September," when Lehman Brothers collapsed and the world changed. Nassim Nicholas Taleb, author of the bestselling The Black Swan, a book about hard-to-predict events, gave a presentation. The participants enjoyed his talk, which was brilliant and provocative as usual, but as he spoke, one couldn't help wondering if what they were actually enjoying was the simplistic comfort that Taleb's message could provide.

The audience seemed to enjoy the idea that the current crisis is a "Black Swan," a very unlikely, though possible, event. The alternative view is that of a train driven full speed into a wall. Thinking that way requires one to ask who was in the driver's seat, and just maybe recognizing one's own fingerprints on the wheel.

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Federico Fubini is a journalist with Italy’s Corriere della Sera newspaper.

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