January 27, 2006, 8:17 a.m.
In Davos, Part III

Thanks for joining me, for Part III of this journal. Part I appeared on Wednesday, and can be found here. Part II — published yesterday — is found here.

Where were we? I think I was talking about Angela Merkel, the new chancellor of Germany. She gives a major address, and it is a surprising (to me) and splendid address: I wish I could link to it, but apparently there is no transcript. Not to worry: I will give you a strong taste of it, from my notes.

First, let me say that I myself have not sufficiently reflected on the fact that there is a woman chancellor in Germany. A female chancellor! The occupant of Bismarck's chair is a woman! This seems to me more extraordinary than that there was a woman leader in England, or India, or Israel, or Indonesia. (Okay, Indonesia is a little unexpected.)

I desire to confirm this — the extraordinariness of a woman chancellor — with an astute German analyst here, and do: She says that it is amazing, and adds that only Merkel could have pulled it off. She was the only woman in the country who could have been elected — so says my source.

As Merkel sits in the Congress Center, waiting to speak, she could not look more unassuming. A bit drab, very ordinary — a bit of a hausfrau. But when she opens her mouth, she reveals a formidable intellect, and a good deal of heart.

I'm getting ahead of myself, just a little. I want to record that, when Klaus Schwab — father of the World Economic Forum — introduces Merkel, he states that she has been coming to Davos since 1993, after she joined the cabinet of Chancellor Kohl. At the time, she was a "Young Global Leader of Tomorrow" — that is a category here in Davos. "And here you are today, as leader of your country!" exclaims Schwab.

The theme of Merkel's speech, essentially, is freedom. She sounds like a woman who grew up in a Communist country (which she did). Great chunks of her speech are thoroughly Reaganite, or Thatcherite. Heretofore, my impression of Merkel has been that she is a bit of what we, on the American right, would call a "squish." Sort of a German Nancy Johnson (congresswoman from Connecticut). But no: She certainly doesn't sound like that. At all.

Throughout her speech, she stresses the need for reform, and for flexibility, and for open-mindedness. In the past, Germany has been "paralyzed," she says, "by events and situations" — and that's no good. She asks for "more freedom of movement, more leeway, more freedom of action." She says that "we have to remove obstacles, open windows, breathe deeply fresh air." Germans and Europeans "have to see risks as opportunities, rather than hazards."

Not that she's a wild-eyed libertarian, mind you: "We are not exempt from responsibility," and the state has a strong role to play. But the individual — the creative individual — "must have the liberty to take action."

She says that, "as I prepared this speech," she thought of her predecessor, "the father of the social market economy": Ludwig Erhard. He knew that freedom and responsibility required order. He wanted men and women to have the freedom to pursue their own destinies, with a state allowing them to do that.

And get a load of this, folks: This new European leader, Merkel, says that she believes in "the mature citizen," able to think for himself, and take care of himself.

And people have always feared change, such as when society changed from an agricultural one to an industrial one. And now we are undergoing another change: to a "knowledge society," meaning that we have to "rethink."

This may sound Simple Simon to you, but it seems somewhat revolutionary out of a European leader's mouth.

Merkel says that "we have too few young people," and that Germany and other European countries are saddling future generations with debt — also "narrowing the room for investment and development," which is "morally indefensible."

Morally indefensible!

The economic environment must be congenial to the entrepreneur. "Increasing freedom has always led to better development in Germany." For decades, the country has bent under "overly rigid regulation," and "we must become more flexible now." Problem is, "we're binding, fettering, enormous energies in Germany," out of a social fear.

And you will especially enjoy this, I believe: "It is difficult for politicians to dismantle something they have created." Remember what conservatives said in Reagan's Washington, in the 1980s? We said that the capital had its own Brezhnev Doctrine: Once a program or agency is established, it's forever, irreversible.

Merkel: "We must get away from the idea that a directive is in place for all time, and must never be reconsidered" — because such stubbornness must "lead to greater insecurity for Europe."

And here is a very simple — and beautiful, and true — statement from this daughter of East Germany: "Freedom is an elementary good for mankind." Later, she mentions that "I did not expect to live in a free society before I reached the age of retirement." And so she is — and not just living in one, leading it.

Toward the end of her speech, she talks about James Watt, the inventor of the steam engine. "Two hundred years ago, he said that the most important thing in life is to invent." Where is this invention today? Merkel says that "we Germans" built the first computer, introducing the computer age. But "when I look at Microsoft, when I look at Google — I see that we haven't participated in" the ongoing revolution. And "this is a painful recognition."

Merkel enunciates a kind of credo (and I paraphrase, slightly): "I want to use my own strength, take on the risks of my own life, captain my own fate — and you, the state, must see to it that I'm in a position to do that." She continues: "The task of politics is to shape conditions in which people can have hope." Europe must junk a "protectionist point of view," looking instead to "competition that fosters the best ideas within the framework of the creative imperative."

And "The Creative Imperative," as I've noted, is Klaus Schwab's theme for the Annual Meeting this year.

Whew.

The applause for Merkel is not thunderous, but — significantly, I think — it is sustained. Hundreds of people just don't want to stop clapping. Schwab has Merkel stand up again, and acknowledge this applause — rather like a conductor encouraging a soloist.

Then, Schwab facilitates a brief exchange between the German chancellor and two businessmen from America: Henry A. McKinnell, chairman and CEO of Pfizer, and Michael Dell, of Dell Computers. McKinnell praises Merkel's "tone," saying that it is "frankly overdue in Germany," and in the rest of Europe. He says that creativity should be rewarded. You know, "it's okay to reward creativity" — you don't have to stifle it, to say nothing of punish it.

Merkel, of course, couldn't agree more.

At the close of the session, Schwab asks Dell to give Merkel one piece of advice — what is the one piece of advice he would impart, if he had the chance? (And he does.) Dell thinks for a moment and says, "You shouldn't earn as much when you're not working as when you're working." (We use the word "earn" loosely, please understand.) Merkel smiles, concurring: "Yes, yes: You have to have more when you work than when you don't. This principle isn't always applied in Germany, and that means we've had no real incentive." All the while, Merkel has been speaking in German. But at the end here, she smiles at Dell and says — in English: "Good advice."

Ladies and gentlemen, this has been an amazing performance. Again, all of this may sound elementary to you — but it's astounding, in the context of Davos, and of "Old Europe" generally. As a (right-leaning) buddy of mine remarks, Merkel, in her speech, said "freedom" about a hundred times. And she was amazingly self-critical — critical of her own country, critical of countries that have pursued a similar path. She didn't blame America once, for anything. There was no self-pity, no excuse-making, no self-congratulation. No resentment, no whining, no petulance. Just clear, sweet thought.

Watch this lady, and see if she can get creaking European machinery moving, just a bit.

Want to go to a party? Well, Forbes mag holds a party every year, and it is usually presided over by at least two Forbes brothers: Steve and Bob. Steve isn't here this year, but Bob is, acting as a genial host. His son Miguel is on hand as well. A few years ago, I saw Steve and said, "It's nice to see a free-marketeer!" He answered, "Yes, there are so few of us here." He would have liked the gust of fresh air provided by Frau Merkel.

At this party, I meet a lady who has been playing golf for five years — a measly five years. And already this newcomer has played Augusta National — get this — three times.

Well, I've played it a million times, in my dreams — and far better than I would if my shoes actually touched Georgia soil. Maybe I shouldn't be resentful (speaking of no whining, petulance, etc.)!

Did I mention fresh air earlier? The air is so fresh up here in the Alps, I almost choke on it, coming from Manhattan. It is almost too pure — foreign to the system. And the walks, as usual, are glorious. In past years, I have rhapsodized over the walk around Lake Davos — along the "Seeweg." It is like some sort of Swiss fantasy, with the evergreens, and the white mountains, and the blue sky. Occasionally a red train chugging through (more like purring through). Indeed, the Seeweg is one of the great walks I know.

At one extreme of Lake Davos, the Audi people have set up a driving-on-the-ice course. They do this every year. You can get in a car, and careen around the lake — a portion of it — being taught how to negotiate such conditions. I watch people do this: and there's a guy standing on the lake, unprotected, sort of guiding things, as the cars lurch and slide. Brave fellow.

Bill Gates is here, and one of his activities is to be interviewed by the New York Times columnist Tom Friedman — at 7 in the morning. (This is a public interview, I mean — a Davos session.) I want to make it, but can't, really. Not because I'm lazy, but because I need to — or want to — scribble these notes for you. But you may recall that, a couple of years ago, Gates, in a late-night session, said that in two years spam would be history: We wouldn't have to deal with this inbox nuisance any longer.

As an article in the International Herald Tribune notes, it hasn't quite worked out that way. A Microsoft official is quoted as saying, "We all maybe cringed a little bit when Bill made that statement." But, but: "One great thing about Bill's statement was the call to action for the industry to work on it."

Okay: Please work harder, creative and unstoppable ones! (But not as unstoppable as spam, I fear.)

The other day, in these notes, I listed the musicians in attendance — and how could I have left out Bono, the most Davosian musician of them all? He creates buzz wherever he goes, in those prominent glasses. Someday, someone may want to do a paper on rockers and eyewear. Someone probably has — perhaps a U-C, Santa Barbara, dissertation?

I'm not quite sure that Bono is a rocker, and would like to avoid a crush of corrective mail. Let me just say — as I've said before, recently — that I'm bad at these musical categories, and that they're all sort of rockers to me. I beg your indulgence. (I realize there's a musical difference between the biters-off-of-chicken-heads and, say, Mariah Carey. Right? Okay.)

Bret Stephens, of the Wall Street Journal editorial board, is here — one of those Young Global Leaders, like Angela Merkel, back in the early '90s. Bret Stephens, president of the United States? We could do worse, my friends — a lot worse. Anyway, he is terrific, and I want to remind you of a piece he wrote about one of our favorite subjects: Jimmy Carter. Bret had the courage to read Carter's latest tome, Our Endangered Values, but only for the purpose of reviewing it. And that review, printed in November, is a magnificent devastation. If you haven't read it, treat yourself to it, here. And if you did read it, back then: You may want to treat yourself again.

This review is a small masterpiece of Carterology (i.e., the science of understanding our 39th president, and most pestiferous ex-prez).

Folks, I've gone on a bit, and will be back at you shortly, with much, much more: Musharraf, Karzai, Clinton (Bill), Chertoff, Queen Rania, Pele . . .