What I Heard Inside One Of Those Mysterious Closed-Door Meetings At Davos

The World Economic Forum at Davos is famous for its off-the-record, closed door meetings in which the rich and powerful cut deals with each other that can make or break governments.

As we noted yesterday, so much of the action is going on behind the scenes at Davos that the conference itself is a substance-free kabuki show. If you're actually attending the publicly scheduled panel discussions at Davos, that's proof that you're an outsider, not an insider.

Today, I attended one of those off-the-record sessions. And it was a blast. Davos has an unusual rule about its secret meetings: I cannot identify anyone who was in the room.

But I can give you a taste of the kinds of things I heard.

My session was with the head of a Well-Known International Bank. Every year, he places billions of dollars in investments. This means he gets to have a lot of meetings with various heads of state, who want him to invest in their countries. He had some funny (but harmless) gossip to share about some of those world leaders. I can't repeat it here because that might identify the leaders or the banker. Here is what I can repeat:

• Not all world leaders know what they're doing. The skills you need to win an election are not the same as those needed to run a country, he says. So part of his bank's mission involves sorting the smart guys from the not-so-smart guys, in order to do business with the smart ones.
• Often, the best thing a premier can do is concentrate on winning elections while delegating the business of running the country to smarter people who have the actual skills to pull it off. That means looking lower down the food chain within a government in order to locate officials who can actually get things done.
• Ideology is meaningless. Competence is more important than which way a leader leans politically. In a comparison of Asian communists with European social democrats, he said, "the communists are far more realistic about global market capitalism than the socialists are."
• Many governments don't plan for unexpected crises like earthquakes or pandemics like Ebola. This is a problem, because those governments are looking for loans or offering bonds that they will struggle to pay back if a crisis hits. Often, smaller or less developed nations are looking for loans because they're trying to recover from a crisis. But they're doing that while failing to budget for the next crisis. Needless to say, governments that don't want to plan properly aren't going to get the best deals.

The main impression I got was how refreshing it is to hear about finance and politics talked about in a non-canned, non-press release approved way. Nothing I heard was scandalous or shocking. It could all have been said in public without causing outrage. Most of it was common sense. The nexus of finance and politics is mostly about the struggle to get the most effective thing done. Oddly, the inflammatory rhetoric is the stuff politicians tend to save for the public, not for their smoke-filled rooms.