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So the global economy’s staggering inequality and wealth gap is on the agenda at the annual conference of the World Economic Forum (WEF) in the pristine, wealth-oozing Swiss town of Davos this week.
You have to wonder precisely how much comfort this news will provide the world’s poorest 3.5 billion people and the rest of us being squeezed in the middle. According to Oxfam, the 3.5 billion poor have a combined wealth of about $1.7 trillion (R18.5 trillion), which is equivalent to that of the 85 richest people in the world.
Many of those 85 people will either be in attendance at Davos or, more likely, will have sent delegates to represent them and their interests. Because WEF peddles a “new age”, all-inclusive image, there will be a few people there to speak on behalf of the 3.5 billion people eking out an existence at the bottom end of the economic pond. But these representatives of the poor are unlikely to score access to the behind-closed-doors networking sessions where the serious talking and strategising takes place during the Davos assembly.
The reason this year’s annual WEF meeting will be discussing the gap between the rich and poor is because it has identified this as the most likely threat to the global economy in the coming years. A report released by the WEF last week identifies this as the most pressing of 31 threats facing the global economy.
The idea that the world’s wealthiest and most powerful business and political players are interrogating the risks stemming from the wealth gap is rather like a meeting of Coca-Cola and McDonald’s executives interrogating the risks from the growing incidence of obesity. It would be hard not to suspect that the Coca-Cola and McDonald’s executives have little or no interest in the challenges faced by obese people but are deeply concerned about ensuring that obesity does not interfere with their ability to sell more of their products.
Similarly, the guys at Davos are unlikely to really care about the extreme difficulties facing huge numbers of people across the globe but they will be deeply concerned about the possibility that these difficulties might suppress their ability to do business, not just because people will not have money to buy “stuff” but because the social capital needed to hold economies and societies together is disintegrating.
Will whatever talks are held at Davos acknowledge that the current capitalism-on-steroids system that dominates the global economy may have played a role in creating the dangerous wealth gap?
Or will the rich and powerful assume that the 3.5 billion are hapless victims of inefficient government policies? Or perhaps the attendees at Davos will persuade themselves that these 3.5 billion are just feckless individuals who have not bothered to embrace the bountiful opportunities offered by capitalism.
It is difficult to challenge the assertion that capitalism is an extremely productive economic system. That said, it has lost its balance. It has been allowed to degenerate into a winner-take-all extraction process.
The collapse of the Soviet Union and the acceleration in globalisation over the past 30 years has enabled the key players in the process to shake off any restraints that might previously have been imposed by national governments concerned about the welfare of all of its citizens. The result is that the bulk of the rewards from the capitalist system are allowed to accrue to a relative handful of well-placed individuals.
This process of “wealth” creation and distribution is most evident in the global financial sector, where key executives have been able to extract even greater wealth for themselves in the wake of the crisis that ruined the lives of millions worldwide.
But it is also evident in other sectors, where executives have been incentivised to harvest the investments of previous generations at any cost – including the use of anything that helps to reduce the cost of having to employ people – in a bid to secure their obscenely generous remuneration packages.
And of course there’s the information technology industry, which will be represented at Davos by Google’s Eric Schmidt, who will be hosting a “fireside chat” with journalists. The self-obsessed executives of that sector are so utterly pleased with themselves that they fail to understand the concept of tax. They make philanthropic donations in their name instead.
Perhaps next year at Davos we can look forward to the 70 wealthiest individuals discussing the poverty suffered by the world’s 4.5 billion poor.