WEF 2018: The problem with Davos

Davos, a tiny town in the Swiss mountains, has hosted the annual World Economic Forum for the past 46 years. The rich, powerful and famous mingle over five days of sessions and networking with the stated aim of improving the world.

High in the Alpine air, problems of inequality are discussed by some of the planet’s richest and most successful leaders. Here too environmental issues are discussed by some of the worlds’ biggest polluters. 

The international elite are acutely aware of the widening gap between rich and poor, gender inequality and the deteriorating state of the environment. And they are nervous about the political fallout. But are they truly addressing the need for a more just global economic system?

Gregor Irwin, chief economist at Global Counsel, says “there’s partly inequality between countries … and inequality within countries … The global economic system is certainly working for some and it’s certainly delivering and has delivered over the past 10 years an improvement in the living standards of many people. But there are real questions about just how widely shared the benefits are.”

“We are seeing not just the concentration of incomes among richer people, but also wealth inequalities, perhaps more important now than income inequality. That’s tied with this question of monetary policy, low interest rates, and asset prices become much higher and inflated, that boosts the wealth of the wealthiest and that’s one of the reasons why we now see wealth concentrated in such a small group of people – many of whom are in Davos this week.”

The global economic system is certainly working for some and it's certainly delivering and has delivered over the past 10 years an improvement in the living standards of many people. But there are real questions about just how widely shared the benefits are.

by Gregor Irwin, chief economist, Global Counsel

According to Irwin, “one issue people at Davos will need to consider is executive pay – whether it really is grounded in reality … Beyond that, when you look at new technologies – the prospects of digitalisation for artificial intelligence, the effect they will have on the economies of the future. We’re seeing new technologies becoming mainstream, so that’s going to open up a new set of issues around disruption of jobs and potentially widen some of the inequality gap.”

Africa: Air transportation as an engine for economic growth?

It’s about to get easier for almost 700 million Africans to travel across the continent by air.

The idea of a single African air transport market was first put forward at the African Union 30 years ago, but it’s now finally being launched. It’s one of the AU’s pan-African Agenda 2063 flagship projects, which aims to use air transport as an engine for economic growth. 

So will it prove a game changer for the region’s economy? Tania Page reports from Johannesburg.

While “there’s an opportunity for carriers to be growing and it would make it easier with an open skies agreement,” says Charles Robertson, global chief economist at Renaissance Capital, “but what would be more helpful would be a free trade arrangement within Africa … that might make more of a difference. The most important trade growth is going to come from selling to the rest of the world.”

“You’ve got over a billion people in Africa, but in terms of GDP it’s about 2 percent or so; 98 percent of the wealth is outside of Africa, and tapping into that wealth is what will bring manufacturing and industrialisation to Africa and much stronger growth rates,” says Robertson.

Also on this episode of Counting the Cost:

Seafood slavery in Thailand: Thailand exports 1.8 million tons of seafood annually and is one of the top five global exporters of shrimp. Seafood from Thailand ends up in supermarket frozen ailes and even as canned pet food. The three biggest markets for Thai seafood are the US, Japan and the European Union.

A recent 134-page report, “Hidden Chains: Forced Labor and Rights Abuses in Thailand’s Fishing Industry,” authored by Human Rights Watch (HRW) describes how migrant fishers from neighbouring countries in Southeast Asia are often trafficked into fishing work, prevented from changing employers, not paid on time, and paid below the minimum wage. Migrant workers do not receive Thai labour law protections and do not have the right to form a labour union.

Thus, the seafood on your plate and in your sushi could still be fished by what’s being called slaves. As a result there are calls for seafood companies and supermarkets to take more responsibility for proving supply chains are free from rights abuses. While multinational companies say they investigate allegations of abuse in their supply chains, they rarely share negative findings, reports Victoria Gatenby.

Hong Kong lights: Hong Kong may be famous for its bright neon signs and glittering skyline, but it’s also earned the title of one of the worst cities in the world for light pollution. In cities such as Shanghai, Seoul, Paris and London, billboard lighting and signage is regulated and there are penalties for violators of the law. But in Hong Kong there are no such laws, reports Sarah Clarke.

US tariffs: China and South Korea have condemned a US decision to impose steep tariffs on imported solar cells and washing machines, as Adrian Brown reports from Beijing.