DAVOS, Switzerland

Do you smoke cigarettes despite knowing the risk of cancer? Do you drive after drinking alcohol, despite its being both dangerous and unlawful?

Do you give speeches about climate change at international conferences, having flown there by private jet? Do you ever sit in a big black car in a traffic jam, when you could quite easily have walked, despite knowing that this, too, is adding yet more carbon dioxide to the atmosphere?

The term “cognitive dissonance” was coined by the American social psychologist Leon Festinger. In his seminal 1957 book on the subject, “A Theory of Cognitive Dissonance,” Festinger argued that “in the presence of an inconsistency there is psychological discomfort” and that therefore “the existence of [cognitive] dissonance . . . will motivate the [affected] person to try to reduce the dissonance and achieve consonance.” Moreover, “when dissonance is present, in addition to trying to reduce it, the person will actively avoid situations and information which would likely increase the dissonance.”

My own observations of the human species strongly suggest otherwise, however. On the contrary, I see all around me — as well as throughout history — countless people not merely comfortable with cognitive dissonance, but positively flocking toward situations that increase it.


Take the World Economic Forum, the annual gathering of billionaires, millionaires, world leaders, do-gooders, busybodies, and journalists that takes place each January in the Swiss ski resort of Davos. The overwhelming majority of people attending this year’s conference would, I have no doubt, affirm their commitment to reducing carbon dioxide emissions to avert catastrophic climate change, even while onboard their Gulfstreams and Range Rovers.

I doubt if a single chief executive present at the WEF last week would dare publicly to challenge the view that a modern corporation should rigorously measure and regulate its behavior in terms of its environmental and social impact, as well as its quality of governance (ESG for short). As the US Business Roundtable declared last August, firms must now be run not just for the benefit of their shareholders, but for all their “stakeholders”: customers, employees, suppliers, communities. Milton Friedman is dead. Long live Klaus Schwab — the founder of the World Economic Forum — who pioneered this notion of stakeholder capitalism.


ESG-omania (or ESG-apism) meant that Davos 2020 was an orgy of virtue-signaling on climate change and diversity. To walk down Promenade, Davos’s main drag, was to run a gauntlet of uplifting corporate slogans: “Sustainable solutions for Earth, for life.” “A cohesive and sustainable world starts with data.” “Let’s bring sea level and C-level together.”

Each year, the WEF’s Global Risk Report tells us what the business elite is most worried about. Ten years ago, the top five risks were “asset price collapse,” “China economic slowdown,” “chronic disease,” “fiscal crises” and “global governance gaps.” This year? “Extreme weather,” “climate action failure,” “natural disasters,” “biodiversity loss,” and “human-made environmental disasters.”

In this Green New World, Davos Man must now prostrate himself before Stockholm Girl. Seventeen-year-old Greta Thunberg delivered her latest tirade on Tuesday morning. “We don’t need a ‘low carbon economy,’” she declared. “We don’t need to ‘lower emissions.’ Our emissions have to stop. . . . Any plan or policy of yours that doesn’t include radical emission cuts at the source, starting today, is completely insufficient.” She demanded that all participants “immediately halt all investments in fossil fuel exploration and extraction.”


The only public objection came from US Treasury Secretary Steve Mnuchin. “Who is she? The chief economist?” he asked. “After she goes and studies economics in college she can come back and explain that to us.” Such blasphemy!

Mnuchin’s boss was also present. Four years ago, the very notion of President Donald Trump was inconceivable at Davos. Three years ago, people were stunned by his election. Two years ago, they sniggered at him. Now Trump is treated with more respect — after all, he’s still president, impeachment will not lead to his removal, and the Davos consensus is that he’ll get a second term. But the applause for the president’s speech was no more than polite, and every European participant complained that it was aimed too much at the American electorate. (That made me laugh. Have they no clue what Trump’s campaign speeches are like?)

And this is where you might think — if you had read dear old Professor Festinger — that the cognitive dissonance would become unbearable. For privately, after a glass or two of wine, 9 out of 10 business people I spoke to admitted that they thought Greta Thunberg’s speech economically impossible and Trump’s not altogether bad.

The fact is (unless you are one of those Nobel Prize-winning economists who just can’t bear to admit it) the US economy has been doing rather well under Trump — better, certainly, than its European counterpart. Everyone in business knows this. The latest US growth forecasts may point to a slowdown (from 2.3 percent last year to 2.0 percent this year, according to the International Monetary Fund), but that still beats the Eurozone (from 1.2 percent to 1.3 percent) and Germany (from 0.5 percent to 1.1 percent).


As Trump said, in an uncharacteristically restrained speech, US consumer confidence is buoyant, the unemployment rate is the lowest in nearly a half-century, taxes on business are down, as is regulation, and the stock market is at record highs. Since Trump’s election, the US economy has added nearly 7 million jobs. (In his predecessor’s first three years, total employment actually went down. Housing starts just hit a 13-year high. Most strikingly, earnings growth has been especially strong for less-skilled, lower-paid, and Black workers.

For Middle America, Trump’s populist policy mix — immigration restriction, tariffs, easy money, and deficit finance — is delivering. In quiet corners of the Davos congress center, you could hear Europeans wishing they could have at least a piece of this American action — and complaining that Thunberg’s demand for “zero carbon now” was a recipe for zero growth.

Cognitive dissonance is often like this: You say one thing in public and another in private. It was once the basis of life in communist systems all over the world. It turns out to be something capitalists can do just as easily, with very little of the discomfort predicted by social psychology.


But be warned. It is not always the case that your private thoughts are right and your public ones wrong. If Davos Man has come around to Donald Trump — enough to expect, if not quite to hope, for his reelection — that is no guarantee that Trump will win on Nov. 3. Quite the reverse: If January 2016 is anything to go by, you should probably bet against the Davos consensus and put some money on Bernie Sanders.

And, in just the same way, if it’s climate change the WEF-ers are most worried about, you should probably brace yourself for a coronavirus pandemic. Talking of cognitive dissonance, what the hell were we all doing at a massive global conference last week? Fact: At least three of this year’s WEF attendees were from — you guessed it — Wuhan.

Niall Ferguson is the Milbank Family Senior Fellow at the Hoover Institution at Stanford University.