The World Economic Forum in Davos is a pricey event, running into thousands of dollars for many attendees even as it brings together the heads of corporations and the heads of nations. Yet on Thursday another common theme emerged as attendees heard a call to share the wealth. Speakers warned of unrest if concern for the poor, the jobless and the disadvantaged did not bring change.
Greek Prime Minister George Papandreou said that constant efforts to combat the global economic crisis had led to an “unsustainable” race to the bottom for social safety nets and labor standards in developed nations. In a speech, Papandreou said: “Politically, I believe we are at a turning point where … there are signs in Europe of more nationalism, more racism, anti-Muslim, anti-Semitism, fundamentalisms of all types. We need to look to a different model.”
Although corporate leaders have relied on the surging economies of India and China as a means to keep their businesses profitable, despite waning trade in other regions, some speakers warned that this was a misplaced strategy. Former President Bill Clinton said that an essential part of business growth in this century had to be a means of dealing with income inequality, and U.S. economist Nouriel Roubini stated that continued budget cuts in Europe would lead to a backlash if people could not see an end to the hardships those cuts visited on them.
“People are willing to do austerity, willing to do sacrifices and reform as long as there's light at the end of the tunnel,” he said.
Maurice Levy, chairman and chief executive of French advertising firm Publicis, pointed directly toward “huge suspicion about CEOs, bankers, corporations.” In a panel discussion, he said, “People do not understand that these large corporations are doing extremely well, while their lives have not improved, and without the support of the people, there is no way we will be able to grow.”
Mthuli Ncube, the Tunis-based chief economist for the African Development Bank, referring to the current turmoil in both Tunisia and Egypt, said that if growth’s benefits were not shared more evenly, more trouble was likely. “If you are not even creating jobs, not even sharing the economic growth that is coming through, then there will be pushback," he said. "It's one thing to get good growth going. It is another to share that.”
German discount retailer Metro’s chief executive, Eckhard Cordes, said that better education and jobs requiring higher skills were the only way to dissolve the large numbers of young people without jobs throughout Europe. “We’ve got no choice,” he said, “in countries like Germany. What we have to do to at least keep the wealth we have today is to invest in education, train people, educate them.”
U.S. aluminum company Alcoa’s chairman and CEO, Klaus Kleinfeld, had a different notion, suggesting health care be regarded as a “growth engine”: “Elderly people you don't outsource, these people stay in the country.”
Previously, in an Associated Press report, financier George Soros had warned that richer and poorer EU nations were being divided by the euro instead of united, and that it was causing a “two-speed Europe” that would be “politically disruptive” and could cause Europe to “fall apart.” He had also said that richer nations should be investing and expanding more in poorer ones.