Davos Elite No Better Predicting 2017 Than Anyone Else

There's a fine line between what you want to believe in and what really happens that even Davos attendees fail to appreciate. At the start of 2016, the conventional wisdom was that neither Trump's election nor Brexit were on the cards. We know how those things turned out. The interesting question is, how much better at prediction were the creme de la creme at Davos than the rest of us mere mortals? Alas, the answer was that they were no better:

“If you bother to read some of the serious analysis of Trump’s support, you realize that it’s a very fragile thing and highly unlikely to deliver what he needs in the crucial first phase of the primaries,” said Niall Ferguson, a senior fellow at Stanford University’s Hoover Institution. “By the time we get to March-April, it’s all over,” Ferguson said at a panel last year co-hosted by Bloomberg. “I’m really looking forward to it: Trump’s humiliation. Bring it on.”

Almost as confident was Martin Sorrell, the chief executive officer of WPP Plc, who expressed surprise at Trump’s early successes. “It doesn’t matter who the Republicans put up,” he said. “Hillary will win.”

On Brexit, there seems to have been no lesser a consensus:

The year’s other big politico-seismic event, of course, was the U.K.’s decision to quit the European Union. There, too, the Davos crowd didn’t get it right. Many pundits at last year’s meeting -- Eurasia Group President Ian Bremmer, former Italian Prime Minister Mario Monti, then-French Prime Minister Manuel Valls – said Brexit was highly unlikely.

Cameron, of course, offered an optimistic view. “My aim is absolutely clear,” he said in a keynote address at the forum. “I want to secure the future of Britain in a reformed European Union.”

Yeah whatever, bub. To be fair, Trump's election and the Brexit referendum result were fairly close-run events. Trump lost the popular vote decisively even if he won the electoral vote. The vote to leave the EU won by a slender margin, too. That said, the Davos folks seem to be less confident in predicting crucial political-economic events in 2017, having been proven wrong the year before.

In short, they too are struggling to see what will happen in 2017. Or maybe they simply don't want to see further de-globalization as elites that have benefited the most from the reduction of barriers globally to movements of goods, services, capital and labor:

Beneath the veneer of optimism over the economic outlook lurks acute anxiety about an increasingly toxic political climate and a deep sense of uncertainty surrounding the U.S. presidency of Donald Trump, who will be inaugurated on the final day of the forum.

Last year, the consensus here was that Trump had no chance of being elected. His victory, less than half a year after Britain voted to leave the European Union, was a slap at the principles that elites in Davos have long held dear, from globalization and free trade to multilateralism.

Trump is the poster child for a new strain of populism that is spreading across the developed world and threatening the post-war liberal democratic order. With elections looming in the Netherlands, France, Germany, and possibly Italy, this year, the nervousness among Davos attendees is palpable.

"Regardless of how you view Trump and his positions, his election has led to a deep, deep sense of uncertainty and that will cast a long shadow over Davos," said Jean-Marie Guehenno, CEO of International Crisis Group, a conflict resolution think-tank.

Moises Naim of the Carnegie Endowment for International Peace was even more blunt: "There is a consensus that something huge is going on, global and in many respects unprecedented. But we don't know what the causes are, nor how to deal with it."

As for me, I am hoping for the best, preparing for the worst--and you should too, probably, than putting your faith in "professional" prognosticators.