By Ryan McCarthy
“The impatience for growth will really take patience” — that’s Bank of America CEO Brian Moynihan in a panel on low economic growth, using the particular kind of language particular to the people who inhabit particular places like Davos. A panel called “No Growth, Easy Money — The New Normal?” (those latter three words another terrible Davos phrase) began with the moderator grimly telling the crowd: “Will we ever return to the normal, free world?” This kind of sentence is ostensibly the kind of English you and I subscribe to, but on further examination, not so much.
Are the Davos elite really worrying about their freedom? Well, no. The World Economic Forum has no shortage of silly phrases, but some of them actually do have meaning beyond the euphemistic. What Davos folks mean when they constantly call for a “growth plan” or “restoring growth” is that no one can see any particular industry that’s going to increase the pace at which they get rich. And, as a result, the rest of us will have fewer jobs.
Ray Dalio, who runs Bridgewater, the world’s biggest hedge fund, had probably the clearest take on this low-growth world. In a post-crisis, high-debt global economy, Dalio said, economic growth can’t come from debt, as it did during the last few decades or so. Economies are still deleveraging, debt won’t rise faster than income and the primary way large economies can grow is by increasing productivity. (CNBC has a bit more on his philosophy here).
What does Dalio actually mean by this? Dalio expanded a bit: the big conversation in politics and economics, he said, will be about how to get more out of workers – growth won’t come from the next Internet, the next real estate boom or any new asset, in other words. This means, he said, hard choices about questions like “How long is a vacation?” or “What is a good life?”
If you unpack this Davos-speak a bit, what Dalio is saying is particularly dire for the rest of us. When the world’s most successful investors tells you economic growth is going to depend on whether or not you take a vacation, it’s time to worry. This is what Tyler Cowen calls “the great stagnation,” a period of declining productivity growth that could hurt living standards.
This isn’t good news for those of us who don’t have Davosian savings to rely on. But there’s another troubling phrase that kept coming up: on Friday, Mario Draghi said the ECB’s actions last year had “removed the tail risk” from the Euro, a phrase that was repeated by a handful of panelists on Friday. This a funny way to put it — as my Reuters colleague Felix Salmon has pointed out at length, tail risk is something that is , by definition, improbable, elusive and generally hard to identify. When a Davos luminary, even one as accomplished as Mario Draghi, starts claiming to have identified something largely unidentifiable, take it with a big dose of non-euphemistic skepticism.
Or, to put it in, Davos-speak: retain your “uber-mindfulness-influence”