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[IWS] WEF: Unlock Trillions to Tackle Global Inequality and Create Jobs, Panel Urges [23 January 2015]

IWS Documented News Service

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Institute for Workplace Studies-----------------Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor--------------------Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

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World Economic Forum (WEF)

 

Press Release 23 January 2015

Unlock Trillions to Tackle Global Inequality and Create Jobs, Panel Urges

http://www.weforum.org/news/unlock-trillions-tackle-global-inequality-and-create-jobs-panel-urges

 

 

·         Remove $2 trillion of global energy subsidies and invest it in job creation and education, particularly for women

·         $18 trillion stashed in tax havens could be ploughed back into the economy

·         $7 trillion on balance sheets remains uninvested

·         For more information about the Annual Meeting 2015: http://wef.ch/davos15

 

Davos-Klosters, Switzerland, 23 January 2015 – With the price of oil rock-bottom, now is the perfect opportunity to cut $2 trillion worth of energy subsidies across the world and invest it equally in job creation and education, with a special focus on women, said Christine Lagarde, Managing Director, International Monetary Fund (IMF), Washington DC. She was speaking at a panel debate examining global economic growth, inequality and the role of technology at the 45th World Economic Forum Annual Meeting.

 

“Excessive inequality is not good for sustainable growth,” Lagarde said, adding that inequality had worsened since the financial crisis. “Distribution per se matters,” she said, because “if you increase the income share of the poorest it has a multiplying effect on growth.” These views, once considered extreme, are now mainstream, she added.

Winnie Byanyima, Executive Director, Oxfam International, United Kingdom; Co-Chair of the World Economic Forum Annual Meeting 2015, acknowledged that the rich are producers of great wealth. However, she added, the issue is about political capture. “Extreme wealth takes over the role of public decision-making,” she said.

 

In the United States alone, during 2013 businesses spent $400 million lobbying political decision-makers to shape the market in their favour, while many thousands in the developing world die of Ebola and malaria, Byanyima said. “Let the companies stop lobbying and put the money into medicine,” she proposed. Calling for global tax reform, Byanyima said that $18 trillion is stashed in tax havens – money which could be ploughed back into the economy to create jobs and lift people from poverty.

Defending the role of capitalism, Klaus Kleinfeld, Chairman and Chief Executive Officer, Alcoa, USA, pointed out that the share of the world living in poverty had shrunk from 72% in 1950 to 14.5% in 2011 due to the wealth created by industrialization and globalization.

 

Sir Martin Sorrell, Chief Executive Officer, WPP, United Kingdom, agreed that this upward trend would continue in emerging economies, but added that we should not forget the poverty haunting the streets of Europe. He sounded a note of caution on quantitative easing, claiming that “cheap money has driven asset appreciation since 2008”, while structural reforms remain untackled. He said we are stuck in a low-growth trap, with too much focus on cost and $7 trillion on balance sheets remains uninvested.

 

Mark J. Carney, Governor of the Bank of England, welcomed the steps taken by the European Central Bank yesterday as “absolutely necessary”. He said it is crucial that inflation is “in the right spot” as it can hurt the poor more than anyone else. He acknowledged that inequality is increasing dramatically in virtually every emerging market and focused on “equality of opportunity” as a key factor in reducing poverty. Carney pointed to the disruptive role of technology and its ability to displace jobs: “Everything I did at Goldman Sachs can be replaced by technology today.”

 

Robert J. Shiller, Sterling Professor of Economics, Yale University, USA, sounded an even more sombre note, saying that “artificial intelligence is coming and it will replace your job”.

More than 2,500 participants are taking part at the 45th World Economic Forum Annual Meeting in Davos-Klosters, Switzerland from 21 to 24 January 2015.

 

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