But I believe that major wealth disparities that are growing in China are probably not as important as Chinese nationalism as a factor in determining where cleavages and where conflict are likely to really pop up over the coming years. And that may very well be true in Russia as well. In other countries -- in countries that Nouriel knows exceptionally well -- in places across Europe, I think the economic cleavages are huge and are becoming bigger.
NR: I don't want to overstress class factors -- nationalism, race, religion, even inter-generational cleavages. Yes, they are going to be important, but there's a broad nexus of economic and financial concerns. It's about income and wealth inequality, but it's also about jobs -- whether your children are going to be better off than you. It's about economic insecurity, about whether the benefits of social security, health care are going to be there. It's about underemployment, or unemployment. So it takes different manifestation in different places, of course. There's the Arab Spring, Occupy Wall Street, the riots in London, the middle class in Israel demonstrating because they cannot afford their homes, the Chilean students that cannot afford good education, anti-corruption in India, people saying enough of what's going on in Russia, and in China where people cannot go out on the streets to protest so they turn to the microblogs to voice anger about corruption and inequality.
So it's a whole nexus of things that have to do with economic insecurity, whether it's poverty, education, skills, the ability to compete in a global economy, keeping your old-age benefits, and then inequality. The manifestation of them can be class warfare as opposed to nationalism, or religious warfare as opposed to inter-generational cleavages between young and old. But I think there's a complex nexus of economic concerns that are at the basis for many of the things that are happening in different ways in different countries.
FP: Ian, you've both mentioned a lot of risks and fears that people have going into this year. But what are the big stories and personalities in Davos in 2012?
IB: You know, it's funny, because last year [IMF Managing Director] Christine Lagarde did incredibly well at Davos, and so did [German Chancellor] Angela Merkel. But the IMF is in a more marginal role today than it has been historically. It's weaker. And the Germans are too -- so there are more questions to what extent the Germans are going to be able to get things done, although they're clearly taking on a lot of leadership. So, I think Europe is going to be the focus of a lot of scrutiny, but they're not going to look like winners.
The United States would be a winner because the U.S. economy is doing better. But the U.S. does not typically take Davos very seriously -- especially during a presidential election, where we're talking about Occupy Wall Street and the 1 percent and Mitt Romney's 15 percent tax. So I think a lot of people will be seeing that the United States is doing better, but it won't get a lot of attention. American corporate CEOs will be feeling a lot better, if even still skittish and gun-shy, given the volatility in the world, they'll look like comparative winners.
Beyond that, I mean, you've got to look at China. They're in the middle of a leadership transition, and they're handling it incredibly competently and confidently. They're still showing very, very strong growth, though, obviously it's coming off the burn. And, yes, there are 180,000 demonstrations a year, but those numbers are going up in large part because urbanization is going up in China. Of course, there are more people demonstrating in the cities -- there are more people in the cities. But actually, given the massive transformation that's been going on in that country, they've been handling it very, very well. And I think there's a reason the Economist runs with state capitalism as their cover for the week that Davos is going to be in town. Frankly, it's because this has moved to becoming conventional wisdom.