Video Duration 25 minutes 00 seconds
From: Counting the Cost

Global inequality: Bridging the gap

Can the World Economic Forum – or new President Trump – make a difference to the growing global wealth imbalance?

This week, international charity Oxfam released a statement alleging that the world’s eight richest men – including Microsoft’s Bill Gates and Facebook founder Mark Zuckerberg – control as much wealth as half the global population combined. 

The rich get richer and the poor get poorer... it's been going on now for 20 years. Everyone talks about it and say 'what are we gonna do about it' and the answer is: they do very little.

by David Buik, analyst, Panmure Gordon & Co.

Widespread anger over the growing gap between rich and poor led to the rise of populism in the world’s largest economy – the United States. With new President Donald Trump sworn into office for the next four years, expectations look to him to restore the “American dream” as he promised throughout his campaign.

But will the new US president actually make a difference to the livelihoods of the working class he has promised so much to or do private citizens have more power than we think to change things?

The World Economic Forum’s annual summit in Davos, Switzerland puts inequality high up on its discussion agenda for this year. However, some argue that the event itself is actually part of the problem.

David Buik from the London-based investment bank and corporate broker Panmure Gordon is of that same view. He says: “Absolute waste of space … this year might be a little different. The reason is, President Xi of China has been there and gave a very [thinly] veiled threat and warning about the problems with trade with the United States as and when Donald Trump becomes the 45th president of the United States.” 

With the gap between the rich and poor growing ever larger, Buik believes the responsibility must be shared. 

“Corporations – the major shareholders – are in abrogation of their responsibilities. They have the responsibility of stopping these gargantuan bonuses and salaries. When you have the difference between a manager and an entrepreneur, the relationship of pay should be nothing like the same. A manager of a great corporation is that, a manager, and should get paid a manager’s salary. An entrepreneur builds his business from scratch over a period of 20 years…” 

Also on this episode of Counting the Cost: 

Natural gas shake up: With an abundance of natural gas on the market and prices at an almost two-decade low, the future of the resource is in question. Gas-producing countries like Qatar, Russia and Iran have therefore laid out a plan for what they forecast the next few years to look like for the industry – and it seems to still be bright. 

“The gas industry is a promising one in comparison with other sources of energy,” says Dr Hossein Adeli, Gas Exporting Countries Forum (GECF) secretary-general. “According to the GECF outlook we are releasing, demand for gas will increase by 50 percent over the next 25 years.”

With so much attention constantly placed on the state of the oil industry and OPEC’s decision-making processes, the natural gas industry is often swept aside. To what extent – especially as the industry grows – are the two linked? “They are very much linked because they are substitutes of each other,” says Adeli. “And the gas price follows the oil price.”

Regional expansions into the industry, with gas fields in Australia, among other countries, more strategically placed for the larger markets in Asia, are also set to change the landscape. But Adeli argues that this will be for the better: “The more we are able to produce gas and supply gas, the better for the whole world because the share and penetration of gas would increase,” he says. “Because gas is the cleanest fossil fuel, with high efficiency and less pollution, and less CO2 emission, this will be good for the gas exporter, and the whole world, from an environmental point of view.”

Brexit clarity: Many people welcomed more clarity on Brexit this week as Prime Minister Theresa May outlined her plans for a full exit from the European Union. When May confirmed the United Kingdom would be leaving the single market, British bank HSBC confirmed plans to move 1,000 bankers to Paris.

This move comes on the back of multinational banks based in London now risking losing the right to do business in EU countries. Jurg Zeltner, president of Swiss global financial services company UBS’s Wealth Management – another bank affected by Brexit – says, it is too soon to make any decisions. “We want to understand the relative positioning of the financial market in the UK and then we can reconsider it and we have all options to play,” says Zeltner. 

Year of the Rooster: The countdown to the Chinese New Year on January 28th means rooster merchandise is flying off shelves. However, young consumers in China are increasingly turning their backs on big brands. 

Millennials are looking for local designers with an international flair to reconnect with their roots and be able to buy clothing that “captures the essence” of China. Second-hand markets have also become more popular, with consumers encouraged to boycott new items and look for better value elsewhere.