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Alec Hogg shares with us the most pertinent insights that he has gained from his attendance at the World Economic Forum in Davos, Switzerland this year. Given that the World Economic Forum tends to set the scene for the year to come in terms of political, social and economic trends as leaders and decision-makers return to their lives and responsibilities with fresh perspectives from the annual meeting, this is one update you don’t want to miss. – LF
ALEC HOGG: Well, this is Alec Hogg from the World Economic Forum for the last time. It’s the Sunday morning. We’re about ready to go home. What have I learned on this, my 12th trip to Davos? Well, there are three major issues that came out.
The one that struck me most, because I haven’t really focused on it before, is income inequality. Inequality on the income side – a little bit of a debate there. I liked most of all, what Dr Kim, the Head of the World Bank, had to say in one of our off-the-record sessions; that the World Bank is now checking out what the bottom 40 percent of income earners are earning. So, not getting that strung out about the top end of the equation, but looking at the bottom 40 percent that are growing their wealth faster than the economy, as a whole, and I like that.
The other part where it is just no debate is gender inequality. I did quite a lot of work on that in this Davos, because it is coming more and more, to the forefront of the discussions here. The second big issue to come out – geopolitics. As a South African, you can almost heave a sigh of relief that we aren’t in the rich north for a change. The Ukraine (and listening to President Poroshenko talking about the issues), the very, real issues that Ukraine is having with an aggressive neighbour that signs peace treaties and then just ignores them. The Russians have taken 500km2 of Ukrainian ground and the rebels that they support, since signing a peace treaty agreeing to the borders, four months ago.
If there’s a message in this for South Africa, it is to be very cautious about the relationship that we have with President Putin of Russia. Everybody else in the world regards him as polecat. About the only country that seems to be warm to him, is our own.
Finally, the global economy: Europe is initiating quantitative easing. It’s not certain whether this is actually going to be the silver bullet and it certainly won’t be, if Europe doesn’t use it as an opportunity to restructure – to reform the labour market, which is inflexible. We saw big moves on that front by the Italians and no moves on that front, by a much bigger economy in France. The global economy – generally – outside of Europe, is looking pretty good. The oil price decline is going to stimulate growth. America’s on the move. China is doing okay and the best quote of all came from the Managing Director of the International Monetary Fund, Christine Lagarde, who said ‘there is $2trn of oil price subsidies around the world. Now that the oil price has fallen, that $2trn: at least half of it should be reallocated into something that is going to benefit mankind for the long term – education’. ‘While we’re at it’ she said, ‘let’s give it to the girls’.
This is Alec Hogg from Davos in Switzerland.
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