The World Economic Forum Weighs In
This is the second of two posts on Global Risks 2012, a discussion document the global elite is considering this week at the World Economic Forum meets in Davos Switzerland.
How Global Risks 2012 Came to Be Written
The World Economic Forum’s Risk Response Network (RRN) was launched in 2004 to provide public and private sector leaders with “an independent, impartial platform to map, measure, monitor, manage and mitigate global risks.” This is the RRN’s seventh annual report. It’s based on surveys completed by 469 international experts in industry, government, academia and civil society about 50 potential global risks across five categories: Economic, Environmental, Geopolitical, Societal and Technological. Risks in each category are rated according to both the potential damage they could inflict and their likelihood of occurrence. In addition, a specific risk in each category is identified as “the center of gravity,” which feeds other risks, both within the specific category and across categories.
How 469 Experts Rated the 50 Risks
- Most damaging: chronic fiscal imbalances (translation – debt) and severe income disparity.
- Most likely to occur: chronic fiscal imbalances and severe income disparity.
- Most damaging: rising greenhouse gas emissions and failure of climate change adaptation (acknowledging that climate change is already occurring).
- Most likely to occur: rising greenhouse gas emissions.
- Most damaging: terrorism, followed by critical fragile states and pervasively entrenched corruption.
- Most likely to occur: critical fragile states and pervasively entrenched corruption.
- Most damaging: water supply crisis, followed by food shortage crisis.
- Most likely to occur: water supply crisis, followed by food shortage crisis.
- Most damaging: cyber attacks.
- Most likely to occur: cyber attacks
Is There a Split in the Ruling Elite?
It’s clear from the spelling (using “our” instead of “or” and “re” instead of “er” at the end of words) that the authors of Global Risks 2012 are either British or Canadian. I find it extremely hard to imagine a report emphasizing carbon emissions and income inequality coming out of the US. I also think find it significant that three of the four companies listed as report “cosponsors” are insurance companies (see * below). If Exxon had helped write this document, it would surely minimize the danger of increasing carbon emissions, if it mentioned them at all.
At times division develop in the ruling elite – between the banking/insurance and the energy/military sectors – over specific issues. Climate change seems to be one of them. Owing to deregulation, there is significant overlap between insurance companies, which derive most of their income from reinvesting premiums, and other financial institutions. AIG, for example, is supposedly an insurance company but had to be bailed out because they owned a substantial chunk of subprime mortgages.
It’s clearly in the interest of oil, natural gas and coal companies for consumers to continue to buy and burn up as much fossil fuel as possible. Insurance companies, on the other hand, serve their shareholders best by reducing carbon emissions. They already face growing claims losses due to a massive increase in weather-related catastrophes. In this context it makes sense for them to cosponsor a World Economic Forum document emphasizing the need for international agreement about reducing carbon emissions. It also helps explain why Wall Street investment banker (and New York mayor) Michael Bloomberg has given a $50 million donation to the Sierra Club’s Anti-Coal Campaign http://www.nytimes.com/2011/07/22/nyregion/bloomberg-donates-50-million-to-sierra-club-coal-campaign.html
* Marsh and McLennan, Swiss Reinsurance Company, University of Pennsylvania Wharton Center for Risk Management, and Zurich Financial Services