Hi and welcome to Ones and Twos, FP's economics podcast. Every week we take a couple data points, use them to try to explain the world. I'm Cameron Abati, FP's deputy editor with you in Berlin, Germany. Joining us as always is FP's economics columnist and Columbia University professor Adam Tooze. This week in Davos, Switzerland. Hi, Adam.
So we have one data point for you all that is 70, as in 70 minutes. That was the approximate duration of Donald Trump's speech at Davos, at the World Economic Forum at Davos this week. That speech was scheduled for 45 minutes. It ran long. That's not unusual for a Trump speech. What was unusual was the audience. This wasn't just a captive press corps. It was the world's political corporate elite that gathers every year at Davos, at least those with the badges sufficiently powerful enough to get in the room to be his audience. And yeah, being in that audience was kind of some status signaling. I'm sure that's part of the Davos experience that we've discussed before on this podcast, but it was also an expression of the kind of history making or at least the market making that was at stake in Trump's performance. It seems like the entire week was kind of held captive to the Trump administration's challenge not only to the transatlantic alliance but to the general ideology behind the annual Davos meeting, the ideology of liberal globalism that we've discussed also before and that used to not be controversial on its own terms at these Davos meetings. But this week, rather than an expression of confidence, the conference seemed to be sort of preoccupied with the future of the ideology itself and whether it was being ruptured entirely, to use the pointed word from Mark Carney, that's Prime Minister Mark Carney of Canada, his speech at the conference. Adam, of course, as I mentioned, you are at the conference. You've been there all week. You've been very busy and so before anything else I just want to ask you about the atmosphere in Davos. What have you been seeing? What have you been hearing? What have you been observing? How does it contrast to previous editions of Davos that you've been at?
I've done a few of them and this was by far the most tense. I started going in the first Trump period and this hasn't been anything like anything I've experienced before. I mean in part because Davos, though it is the World Economic Forum, is a distinctly European event and the two singular Davoses in that respect were the one in May 2022 after COVID which was dominated by Ukraine to the point where, I think we've spoken about this before actually on the show, non-European delegates were I think quite put off. And this one was different because globalism aside, which we should come back to, we started the week with the United States refusing to rule out the possibility of the use of armed force to infringe on the sovereignty of a European country, a fellow NATO member, a member of the EU, and threatening unless the demands of the Trump administration were met to impose punitive sanctions that breach an agreement that was reached over the summer, which many of us, and we just talked about this on the show, regarded as a humiliating climb down by the Europeans in the face of Trump's demands. And so the first couple of days of the meeting, Monday, Tuesday, in fact, the weekend, I was in Berlin, we were together in Berlin over the weekend, the mood in Europe was one of uproar. Forget globalization, that wasn't really the issue. It was simply where does the North Atlantic Alliance stand, within which then the question of globalization takes on a different aspect. But that was the central issue and of course in a kind of, we'll talk more about it I'm sure, but in a kind of classic Trumpian climb down, it all just turned out to be not really what any reasonable person would have construed it as being. But just to underline the point about globalization, I mean Davos, though it is a very European event and this time was dominated by the family or the intra-North Atlantic dispute between the US, Canada, Europeans, is a dramatically global event and no one in their right mind would pose the question as to whether or not the world economy continues to develop in a multipolar or globalized way. I mean no one else is really posing this question in the way that the Americans under Trump are. This isn't an administration which managed to pose similar questions in a way which actually did take other people along with it. This hasn't had that effect at all. There's no doubt that ASEAN or China or Australia or even the Canadians, Mark Haney came to Davos from China, Starmer's going to China, Merz was going on about how he'd been in China. The only people who are truly trying to rewrite the script are the Trump administration, and they only impose themselves because of America's structural power and because of the sheer brutish bullying nature of the Trump administration, its appearance at the conference.
Yeah, that seems apparent. In other words, the United States is not a marginal actor here and that Trump's speech then de facto becomes the kind of centerpiece of this conference even as it's inherently challenging some of the kind of basic premises of the conference itself. So I'm curious, were you able to hear the speech in person? And what is the reaction of other global leaders, elites of various kinds to a speech of the kind that Trump delivered? Obviously it was unstable in all the sorts of ways that his speeches tend to be. And how does the global elite respond to that or accommodate it or process that?
I mean I frankly would not go to see a Trump speech of my own free will. So added to which, I mean I thought the behavior of the vast majority of the delegates at the conference was extraordinarily undignified to be honest. I mean in light of the fact that the vast majority of people there are profoundly at odds with this person's message and his manner and regard it as offensive and stupid, the vast majority of people engaged in a scrumlike surge to get into the main hall. And I just don't understand that. The appropriate response to the president's appearance should have been an empty room. He should have been talking to his own people. And I don't know why anyone went. I only listened to it because I promised a journalist that I would answer questions about it for Chinese television immediately afterwards. And so I felt I had to be briefed and understand what was going on. And it's the first Trump speech I've listened to from beginning to end. And it was a kind of nightmarish experience of, you know, it's the classic experience of things just don't make sense anymore. So you try and follow a sentence and for, as you were saying, 70 minutes it's just this undigested vomit of stuff. It's not a word salad. Salad's far too precious. This is just garbage. So that's one of the ambiguities of this event is that people go, it's not political enough. So I watched with a disaffected bunch of global journalists who sat in the lounge and saw it on TV and just kind of laughed and giggled with each other until we got really, really dispirited and then we started talking about crazy battleships. The hilarious moments was giggling with Chinese colleagues around the windmill, these ridiculous things about Chinese wind turbines being a pump village. I mean you couldn't stop laughing at that point. And then as it went on and it went on and the reality sank in that this is the president of the United States and he has, you know, whether he's lost his marbles, he may never have had any in the first place, but it was, after my experience with how it looked like the day before, it was about as much of this version of America as I can take to be honest. Yeah, it was difficult to digest. And Lutnick's a different case altogether because he's just a really quite streamlined powerhouse bully character who will deliver the two and a half minute version or the three or four minute version of MAGA's message quite effectively. He's quite eloquent when he gets going. And he just flat out said on the panel, we disagree. We are against every, they're invited, they use the stage and then just flat out denounce it. I mean, it's an experience I will be digesting for some time.
Yeah, it's interesting. I mean, I do think the impulse to laugh at Trump is entirely understandable. In some ways it reminds me that I think in his first term that was the literal response sometimes to speeches he gave. But I don't think it's any longer a response that's afforded to his audiences anymore. And in that sense I guess I can understand why people want to listen. It is one is obliged to the very fact...
We listened. Yeah. I just don't think you should be in his audience.
I mean, we have to know. I mean, I had to know. Well, has to know. And after all, in the speech, he did say something significant or something we take to be significant, though it's unclear which bit of world geography it applied to. But he seemed to be saying that he was unlikely to use military force against either Greenland or maybe it was Iceland or maybe it was Denmark. But in any case, the words that he said were that there wasn't going to be the military attack, which is what was really preoccupying the European political elite. And so it was worth listening in. And apparently that wasn't in the script. So his script writers had written him a speech which left that in suspense, which gives you an idea of the sort of people that work around the Trump administration. They had left all of that out. He wasn't supposed to talk about, he made a joke about it as a concession to the audience. And the speech he'd actually had written was all about domestic policy because they're obviously anxious about the midterms and the fact the president appears to care about a whole bunch of other things far more than the actual situation of ordinary Americans. And so there was this sort of deranged central passage bracketed on either end by standard boosterism about the US economy and gestures to drug prices, that whole rambling bizarre thing about his conversations with Macron, housing costs, credit cards, which was the kind of effort to package Trump as a bona fide populist. Yeah, increasingly I do think the Wilhelm II analogy is actually underexplored. You know, the last Kaiser of Imperial Germany who was a very unstable, narcissistic personality himself. Increasingly, I sort of want to go back and look at the international crises, even preceding World War I, that Wilhelm triggered. And it's actually sort of worth seeing how other international actors respond to this kind of personality. And again, where laughing is just simply not really an option. But crisis becomes the inevitable result. But regardless, Trump aside, the Trump administration was represented by various other figures, including you mentioned Howard Lutnick, the commerce secretary.
I think literally everyone. Yeah.
And these are, you know, obviously in traditional ways more capable policy and political figures than Trump himself according to traditional measures. And yet, rather than offering constraints to Trump's worldview, there seemed to be a sort of general effort to channel Trump's impulses into a consistent policy line. And the way that sort of came across to me observing it from afar is just a kind of general consistent contempt that was being expressed for Europe in public by these various officials at every opportunity. Like Bessent's various quotes basically instructing Europe not to retaliate, suggesting that it doesn't matter. Lutnick in the ways you were just describing. I mean, obviously this is more than just a coincidence. It seems to be a broader strategy that's informing this posture. And again, leaving Trump's impulses aside, what do you sense is the kind of broader posture that the United States was taking here?
Yeah, condescension, I think, is a key element of it. Hostility and condescension. I mean, I think we've talked about it on the show before. My general view is that the more ideological elements of MAGA are much more preoccupied with Europe than they are with China or Russia or anywhere else in the world because they're not universalists, so they don't regard those places as at all relevant really to the American political struggle, which is their top priority. But quite reasonably they regard Europe as an extension of the professional managerial class, liberal elitism, or is it elitism, I mean liberalism, that they despise in the United States. And as you were saying the first time round, and if you look at the climate policy, which I'm trying to finish this book about, it's very clear in 2017, as Trump took office, America's climate-concerned liberal corporate elites basically rallied around the Paris Agreement of 2015 and Davos and continued on in defiance of the president's effort to shape a national MAGA anti-climate strategy. And so they're not wrong to think that if they want to wage a comprehensive political and cultural struggle in the United States, Europe is a relevant battlefield. And the precise logic of it is a little more complicated especially when it comes to promoting far-right parties in Europe who over Greenland, Ian Crass and I did a conversation, he vividly described how if you watch the sort of C-SPAN equivalent of the European Parliament, centrist parties all go up to say no we will not ratify the trade agreement with the United States and then slowly, slowly, slowly the representatives of the far-right parties realize oh god we're going to find ourselves isolated and unpatriotic unless we join the opposition to Trump, and many of them do. So Meloni has been struggling with this in Italy, how to position herself. So I think that element of the MAGA program of extending the political and cultural war to Europe is a key element. But again, the national security strategy did not focus squarely on Greenland in the way that we have been forced to do in the last couple of months. It didn't say jeopardize relations with Europe for the sake of Greenland. Something's happened there where the president has got a bee in his bonnet. And as you're saying, the single rule of membership in the Trump government seems to be just complete loyalty to whatever nonsense the president says. Whatever he says goes and when you push people like Lutnick and Bessent on broader issues they basically just hand it off, that's not my bag. There's no sense of classic cabinet responsibility for the salient issues of the day. Even when in this joined-up way that Stephen Miran has taught them to think about American power, they are using trade protectionism as a weapon to pursue the president's whims over Greenland. So I don't think we should, the hostility to Europe is real. The hostility to European liberalism is absolutely real and abiding. I think what we particularly saw this week was these people who were desperate to deliver on the president's demands facing quite concerted pushback and basically just saying get lost, get out of the way. Bessent's phrase was something like let nature take its course, like, yeah, you know, what exact type of nature does he exactly have in mind? Like big bad wolf Trump eats little Denmark or something. It's beyond comprehension at times and the closer up I have to say, realism in international relations coming at you in a room, it's obviously not the same as being invaded in Ukraine but all of a sudden it takes on a violence and a force that is of a different order. These aren't light chats.
Yeah, there is something, I mean there is something gratuitous about it and that seems to me part of the logic of it. And in other words, one can't be contemptuous or condescending without imagining there will be some response to that. Right? And I wonder in private how all these various other elites respond to this kind of condescension. Like there must be a kind of backlash that is precisely inherent to the logic of it. I mean it seems like, and that I guess is the overall question I have about the strategy from the US perspective, which is it's a strange seeding of power as at the same time it's expressing power, there's a strange, but yeah, it is interesting to hear sort of behind the scenes, I read that Lagarde left, got up and left a dinner where Lutnick was speaking, didn't surprise me. In other words, it seems like this is the logical end point of how these kinds of interactions would go. And yet then in public, I think most people took a more temperate stand in public. And one exception was the kind of speech by Mark Carney that I mentioned at the outset, in which he very bracingly described the rupture of the old liberal order that was underway. And I think a lot of people took note of that. But I was curious about your thoughts about what he was prescribing. In other words, for middle powers, as these other great powers he's describing are taking this realist posture, what exactly did he think middle powers should be doing? Because it struck me that in some sense he was arguing that they should continue pursuing liberalism with one another, just I guess from some new less naive vantage point. Is that what he was basically sketching as a plan going forward?
I mean, I think this goes back, I did a newsletter about it, I think this goes back to Mark Carney's thinking about the monetary system in the 2010s in the first Trump administration. He was governor of the Bank of England and he gave a very interesting paper at Jackson Hole in 2019, the big central banking conference, in which he outlined a future for the global monetary system in which over the long run at least, and this is where I think the transition phrase comes in, Carney is in a sense referring to his own previous thought that in 2019 he was talking about a long-range transition to a multipolar, more balanced financial monetary system to match the realities of the multipolar economy, the real economy. And now what he's saying is it's happening much more dramatically and it's happening not just in the economic sphere but in all of these other dimensions. And so we're dealing with a rupture. And I'm profoundly in sympathy with the way in which he articulated at the conference the visceral shock of dealing with the Trump thugs. It's qualitatively different. What he's aiming for, for me I think actually the final part of the speech, people should check it out or look at the newsletter where I've discussed it. FP I'm sure will be covering it in lots of different versions. The final passage to me is very straightforward. It's not liberalism in general. It's liberalism with whom you can do liberalism. So pick your partners and obviously the Europeans would be one sort of partner that you might be able to do that with, or the Japanese for instance, or the Australians, Latin America. But Carney demonstratively went to Beijing and did a deal with them. And if you read the speech, what he says is right now the priority for middle powers should not be the kind of deep values-based arrangements. So this is what he's giving up. The exclusive focus on deep value-based arrangements is what we cannot any longer assume is going to be the norm. Certainly one that can't generalize. So in the absence of that what we have to be willing to do is much broader thinner deals with countries with whom one doesn't necessarily have values agreement on issues however on which one can agree and that's what the trip to China was supposed to demonstrate and the Brits are following up, Starmer who wasn't at Davos will be going to Beijing by all accounts I think pursuing something quite similar. So one of the elements of substance is precisely sacrificing a consistent coherent all-embracing universal commitment to thick agreement at all levels. Instead, in favor of a mix-and-match approach where with those with whom you have deep agreement you do deep bargains and with those with whom you don't, you settle for something less. Implicitly of course that also leaves room for dealing with MAGA in the United States which ought to be treated by rights as a pariah but obviously if you're Canada you can't. So what do you do? You do the kind of arrangements that you can make work with the United States but let's stop pretending, certainly in its current incarnation, or I think in general one has to say that American democracy is a reliable partner for any kind of sophisticated modern international deal, because the Obama administration and the Biden administration were. But that's the whole point of democracy and given America's polarization right now, one has to take that absolutely seriously and the Trump administration is demonstrating quite how seriously one has to take it. So that's what I think the import of Carney's message is, that the assumption of universality, of convergence, of deep convergence is dead. So instead what we do is we look around realistically at those with whom one can reach that kind of agreement and with others moves to a more minimal kind of conception but potentially much more embracing because you're not going to wait around as the Biden administration would want for Canada to agree a policy with the United States on China. If that's the neuralgic issue of the current moment, that's done. The effort by the Biden administration early on in 2021 to rally all of the democracies against China, America no longer serves as an effective anchor for that kind of alliance building.
