Government focus likely at WEF's Davos meeting

Thousands of people took the journey to the Swiss mountains this year to take part in Davos, the annual meeting hosted by the World Economic Forum.

Each year a few hot topics emerge from the meeting but this year, unusually for an essentially business-focused affair, the spotlight is likely to be on government.

January alone has provided more than enough for Davos participants to discuss. The Charlie Hebdo Paris attack has amplified immediate and longer-term security concerns and raised questions about privacy and other civil liberties in pursuit of safety.

Early-year economics also provide debating opportunities, with the dramatic rise in the Swiss Franc against a backdrop of collapsing oil prices, the unbalanced growth of European deflation, breakaway growth in the United States and volatile conditions across emerging markets. Some commentators said that Davos' role as a "coming out" party for emerging markets is on hold this year, with the US taking center stage given its recent, impressive economic track-record.

Parallel to these immediate concerns will be a focus on the prospects of 2015 being a year of sustainability.

In September the United Nations will launch the new Sustainable Development Goals the closest the world has ever come to a set of universally adopted goals.

They are expected to include aims such as targeting poverty eradication, mitigating rising inequality, changing unsustainable and promoting sustainable patterns of consumption and production and protecting and managing the natural resource base.

Equally important will be the global climate change negotiations, which will come to a head in Paris in December, where country-by-country, binding commitments covering emissions and financing are meant to be agreed.

Sustainability is all about underlying enablers of inclusive prosperity, such as equity, education, health, resilient and effective infrastructure, accountable institutions and living within planetary boundaries.

These enablers are the bedrock of sound, long-term economics.

The problem is that few policy makers have any appetite to address longer-term challenges or even opportunities if there are short-term economic, social and political costs.

Indeed, policy bandwidth among shorter-term distress tends to be at a premium and is generally not available to consider the longer game.

What is needed is to bridge the short-term with the long-term agenda and to overcome the "tragedy of horizons", a term coined by the Bank of England Governor, Mark Carney.

Businesses are looking to governments to provide short-term stimulus, unwilling to invest cash surpluses in an uncertain climate themselves.

Yet how best to inject an inflationary charge to the global economy is in, often heated, dispute.

Jeffrey Sachs challenged Paul Krugman's advocacy of debt-financed public investment, arguing that the case of Japan demonstrates that such an approach might not work, while leaving a legacy of public debt to be paid by future generations.

Lord Adair Turner, senior fellow at the Institute of New Economic Thinking, challenged the value of expansionary monetary policy, arguing that a fiscal stimulus would be more powerful and equitable and ultimately less expensive to the state and its citizens.

There will be no consensus in Davos. Lawrence Summers will continue to argue that "secular stagnation", rather than cyclical factors, underpin our current predicament, just as Thomas Piketty maintains his view of a natural growth in inequality.

Neither conclude that there is nothing to be done, quite the reverse. Like business and economic gurus, they point to government as the last resort growth driver, debt-financed public investment in the case of Summers and a wealth tax as Piketty's preferred global fix.

Government will be the underlying trend at Davos, or more broadly the role of the state.

Governments are increasingly present at Davos, but are often the target of criticism and lobbying and occasionally sought after as partners with deep pockets.

Davos' core participants, businesses, have historically been wary of encouraging the state to do more than promote business, provide finance where businesses choose not to and, of course, maintain security.

The World Economic Forum has never focused on the constructive role of state-owned enterprises in development, tending to default to a private business agenda, even in its "Summer Davos" in China.