:00:10. > :00:17.Good evening from Davos, if you throw a snowball here at the right
:00:18. > :00:23.time of the day you can hit a plutocrat and one of the gorillas
:00:24. > :00:29.protecting them. None of those who run the world are women. In this get
:00:30. > :00:33.together the World Economic Forum thinks it sets the agenda about what
:00:34. > :00:38.will happen to mere mortals in the 12 months ahead. We will hear from
:00:39. > :00:42.the Governor of the Bank of England. Have you spoken to Ed Miliband since
:00:43. > :00:48.you dissed his banking policy. Since the second part of the question
:00:49. > :00:51.isn't true... You did! We will see figures about the state
:00:52. > :00:54.of the world that give quite enough problems for its leaders to engage
:00:55. > :01:02.with. We have a minor constellation of
:01:03. > :01:06.famous, infamous figures to gnaw on that, to see whether or not anyone
:01:07. > :01:11.in this non-environmentally friendly stance, an overheated conference
:01:12. > :01:13.centre in an alpine ski resort, has had the chance to think of
:01:14. > :01:19.solutions. We will ask Bill Gates, one of the
:01:20. > :01:21.richest m in the world why the might of people in the developing world is
:01:22. > :01:41.any concern of ours. I get so confused, it is like the
:01:42. > :01:46.middle school. I was the chairman. Well now, the sheer weirdness of
:01:47. > :01:49.this gathering takes some getting your head around, of course it is
:01:50. > :01:55.good to talk, but to be here at all as a corporate partner you have to
:01:56. > :01:58.be able to stump up about $70,000, and even as we speak many
:01:59. > :02:01.organisations are spending hundreds of thousands more on
:02:02. > :02:05.no-expense-spared parties across this town. The World Economic Forum
:02:06. > :02:09.now invites charities and the like to take part. One of them, Oxfam,
:02:10. > :02:15.came up with the astonishing fact that the total wealth of the poorest
:02:16. > :02:19.3. 5 billion people in the world is equalled by the mere 85 of the
:02:20. > :02:24.world's richest people. Believe it if you can. Events inside this
:02:25. > :02:26.conference centre seem to have commandeered much of the world's
:02:27. > :02:37.headlines. Who are these people and in whose interests do they speak in
:02:38. > :02:42.# Picture a mountain top with snow From the outside it might be any
:02:43. > :02:46.conference, a gathering of spark plug manufacturers, or laxative
:02:47. > :02:48.makers! But among them are some of the most powerful and richest people
:02:49. > :02:53.in the world. The people who determine what we earn, what we pay
:02:54. > :02:58.for our mortgages and in some unfortunate places whether we live
:02:59. > :03:03.or die. Most of those milling around aren't the directors of our destiny.
:03:04. > :03:08.They are advisers and goers and guards -- gofferes and guards and
:03:09. > :03:15.those who fancy where the action is. Hold it like a pair of binoculars...
:03:16. > :03:20.Among them are a handful of ernest good folk trying to open the eyes of
:03:21. > :03:24.the world to tragedy largely beneath the attention of the rich and
:03:25. > :03:28.powerful. We put you on a street in Aleppo, everything you hear is the
:03:29. > :03:32.same as a real event. Everything you are listening to is a documentary in
:03:33. > :03:42.VR. It is essentially what it is like. Call it immersive journal I.
:03:43. > :03:48.Others with -- Journalism. Others with ideas to transform economies.
:03:49. > :03:53.What would I do if I was a new producer? So you mean an entire
:03:54. > :04:02.human. Something useful? Let's see we want to print the ear of a new
:04:03. > :04:07.producer. So you can start by printing a cell, scaffolding, then
:04:08. > :04:12.you can have cells go through the scaffolding matrix and then
:04:13. > :04:16.differentiate into an ear. But the central pitch of Davos is that by
:04:17. > :04:21.bringing together billionares and Presidents, professors and
:04:22. > :04:27.functionaries, the world can be made a better place. It is not an ignoble
:04:28. > :04:32.aim nor a modest one. This is the world being carved up between big
:04:33. > :04:39.businesses, Governments and NGOs, is it? Absolutely not, as you have
:04:40. > :04:44.represented society as a whole, so if society is carving up society,
:04:45. > :04:49.that is true! For all big names here deciding our future, one thing is
:04:50. > :04:54.striking, they are not doing it in public. You still never get anywhere
:04:55. > :04:57.near what is happening here, that is the big lie, that some how it all
:04:58. > :05:01.takes place in the open, it doesn't. There is a lot of
:05:02. > :05:06.behind-closed-doors meetings you or I don't go into. This isn't a
:05:07. > :05:09.gathering of self-made and women, no less than the Queen of Belgium is
:05:10. > :05:13.here. Britain is partly represented by an institution you can only join
:05:14. > :05:17.by having the right parents. This gathering may be about many things,
:05:18. > :05:22.it may even do some good somewhere, but it is not what you would call a
:05:23. > :05:26.democracy. Now people have seen stuff about
:05:27. > :05:32.Davos coming out of their televisions all day. But why are we
:05:33. > :05:38.all here? With us now is Martin Sorrell, boss of the world's biggest
:05:39. > :05:44.advertising agency, Za national curriculums Bedows, Economics Editor
:05:45. > :05:51.of the Economist, and Felix Salmon, a disgruntled journalist from
:05:52. > :05:58.Reuters. Let's look at who these people are, there is a lot of jolly
:05:59. > :06:04.smug people as far as I can see looking outside and inside. You are
:06:05. > :06:09.looking at me. I'm looking at the supposed movers and shakers, is that
:06:10. > :06:14.fair comment? The cynicism in your introduction is reasonably well
:06:15. > :06:17.placed. This is a gathering of plutocrats, a gathering of power
:06:18. > :06:22.brokers and hangers on. They are very smug, there is a lot of power,
:06:23. > :06:26.they know it. There is a lot of platitudes, what is the title this
:06:27. > :06:29.year "reshaping the world". Lots of platitude, lots of discussion that
:06:30. > :06:33.is platitude, but that said, there is a lot of useful stuff. You have a
:06:34. > :06:37.lot of leaders in their field, from all over the world. Scientist,
:06:38. > :06:42.academics, all manner of people. I learn a tonne here. Who would have
:06:43. > :06:46.thought an Iranian President. So you have big-picture stuff and big
:06:47. > :06:49.political moments. You also have an awful lot of people get together
:06:50. > :06:54.doing smaller inYIFSH, I think a lot of stuff comes out of it. You are a
:06:55. > :06:57.fan obviously? I have been doing it on and off, mostly on for 25 years.
:06:58. > :07:04.It was very different in the old days, making we sound very old, it
:07:05. > :07:08.was slightly more personal, it is more impersonal now, there are 2,500
:07:09. > :07:11.people here, there are 300 Government people. This is the
:07:12. > :07:16.largest contingent of Government leaders that we have had at Davos. I
:07:17. > :07:19.think as a talking shop, which is I think what you were getting round
:07:20. > :07:23.to, as a piece of communication it is extremely valuable. It gets more
:07:24. > :07:27.valuable every year. If you look at the agenda it is truly remarkable
:07:28. > :07:33.what they cover. And you are absolutely right, for example, today
:07:34. > :07:37.I was involved in an inYIFSH in the consumers goods industries which is
:07:38. > :07:40.in terms of sustainability is extremely valuable, and I think
:07:41. > :07:54.extremely important. There is no value in just intoneconsumers goods
:07:55. > :07:56.industries which is in terms of sustainability is extremely
:07:57. > :07:58.valuable, and I think extremely important. There is no value in just
:07:59. > :08:01.intoning This is doing, multinationals will engage
:08:02. > :08:08.millennials in sustainability... What is that? Younger people in
:08:09. > :08:14.sustainability. The chances of them engaging them in anything is zero. I
:08:15. > :08:21.would agree. Would you agree there is virtue in some people meeting and
:08:22. > :08:28.talking? The real value was Martin in his party where he invites Larry
:08:29. > :08:31.Summers and Ronaldo to play together, that is where people get
:08:32. > :08:35.to know each other and hang out. There was a strong purpose, this is
:08:36. > :08:38.the year of the Brazilian World Cup, having the World Cup's leading
:08:39. > :08:43.scorer here was a pivitol moment for many, like you, not so much Larry
:08:44. > :08:48.Summer, but Ronaldo. It is all part of it. The Brazilian World Cup and
:08:49. > :08:53.the Olympics are emblematic events for Brazil and Latin America in the
:08:54. > :08:57.context of worldwide development. Douma is coming here tomorrow, I
:08:58. > :09:00.would be interested to hear what she says about the World Cup, which
:09:01. > :09:03.there is some controversy about, as you know, and about the Olympics,
:09:04. > :09:07.where the infrastructure investment is not being put in place. Don't you
:09:08. > :09:10.get the feeling there is a lot of people on transmit and very few on
:09:11. > :09:13.receive here? I think that is probably true. There is a lot of
:09:14. > :09:16.people on transmit. Even if you have a few people on receive, there is a
:09:17. > :09:20.lot of journalists here on receive I hope, rather than transmit. I think
:09:21. > :09:25.that you get something out of that. Even if you have a very high noise
:09:26. > :09:28.to signal ratio, there is something that comes out of it. People like
:09:29. > :09:32.you wouldn't pay for doing this if you didn't get something out of it
:09:33. > :09:35.righ What do you get out of it? We are instructed to think about the
:09:36. > :09:40.big issues, forget about the financial crisis, and I think that's
:09:41. > :09:45.a mistake. To focus on the youth unemployment, inequality,
:09:46. > :09:48.healthcare, climate change. To start thinking about those big issues
:09:49. > :09:54.rather than worry about the financial crisis or the Middle East
:09:55. > :09:57.or whatever. That is a mistake, there is still the grey swans going
:09:58. > :10:01.on in the world that may cause problems. I will give you one good
:10:02. > :10:04.example of an insight we got here. This was the suggestion that there
:10:05. > :10:08.might be a military conflict over the islands between China and Japan.
:10:09. > :10:13.And that was something I think most people had dismissed, but both the
:10:14. > :10:16.Chinese, or rep presentatives of the Chinese have said it is --
:10:17. > :10:19.representatives of the Chinese have said it is a military option, and
:10:20. > :10:23.the Japanese Prime Minister did not rule it out as an option. And you
:10:24. > :10:27.have a number of extremely worried people as a result of this. The
:10:28. > :10:31.parallels are made to previous situations. The World Economic Forum
:10:32. > :10:34.has actually this year has become the World Political forum, we have
:10:35. > :10:39.had the Japanese President making wave, the Chinese, the Ukrainian,
:10:40. > :10:42.the Syrian, I think all the Central Bank governors and finance ministers
:10:43. > :10:46.who have historically been the centre of this event have been
:10:47. > :10:49.sidelined. I don't think it has bun centre any more, it is too big for
:10:50. > :10:53.that. To try to say there is one big Davos team is also a mistake, if you
:10:54. > :10:56.do try to do that it becomes platitudeness. I think there is a
:10:57. > :10:58.lot of things going on with different people in different
:10:59. > :11:01.industries, whether it is the water people or the new technology people,
:11:02. > :11:06.they are all doing useful stuff, talking to each other. And crossing
:11:07. > :11:09.over. We meet the media people, they meeting with the technology people.
:11:10. > :11:13.I went to the health thing this morning, I got this as a result. I'm
:11:14. > :11:19.much health year. We are all wearing things! We will be back with with
:11:20. > :11:23.you in a moment or two. Of the various advanced economies, plunged
:11:24. > :11:26.into misfortune by the folly of bankers, Britain seems to be
:11:27. > :11:30.recovering better than some, at least according to the International
:11:31. > :11:34.Monetary Fund. Acknowledging there is still a long way to go though. In
:11:35. > :11:38.his only broadcast interview in Davos I spoke earlier to the
:11:39. > :11:42.governor of the the Bank of England, Mark Carney.
:11:43. > :11:45.Mark Carney, when Central Bankers like you get together here or
:11:46. > :11:49.elsewhere, and you think about the state of the world economy, do you
:11:50. > :11:57.think thank heavens that is all behind us? No, not at all. You know
:11:58. > :12:00.where we are, some, its worst of the crisis is behind us, but the
:12:01. > :12:04.aftermath of the crisis is very much with us. In a number of our
:12:05. > :12:06.economies, including the UK, the financial system isn't fully
:12:07. > :12:14.repaired, it is not functioning as well as it could or shut. -- should.
:12:15. > :12:17.We have debt overhangs holding back recoveries for Governments. We have
:12:18. > :12:22.a great deal of uncertainty out there amongst households,
:12:23. > :12:26.individuals and businesses that are preventing particularly investment.
:12:27. > :12:31.So we think those factor, those three factors are going to persist
:12:32. > :12:35.for some time and that helps effect, or that does effect how we set
:12:36. > :12:39.policy. We in Britain had four or five very tough years, so we're just
:12:40. > :12:45.getting to the point where the level of economic activity in Britain is
:12:46. > :12:48.the same it was in 2008 before the crisis. That is some what
:12:49. > :12:51.unprecedented period of time in order to come back. But there is
:12:52. > :12:55.momentum in that economy. The one fly in the ointment is the Bank of
:12:56. > :13:01.England's economic forecasting isn't it? Well, if... It is not good? If
:13:02. > :13:04.our forecast is going to be wrong it is better to be wrong in the
:13:05. > :13:08.direction it was. This is, let's be clear, good news is good news here,
:13:09. > :13:11.we have got unemployment coming down faster, these are private sector
:13:12. > :13:16.jobs, they are high-quality jobs. This is two years ahead of when you
:13:17. > :13:21.said it would happen? It is two years ahead of a, of the most likely
:13:22. > :13:24.scenario we saw at the time. If I can put this into the context of the
:13:25. > :13:29.recovery, it is quite important to the sustainability of the recovery
:13:30. > :13:32.is one of the big questions for the UK more than any other major
:13:33. > :13:36.advanced economy is what will happen to productivity in the economy. When
:13:37. > :13:40.is that going to start to pick up. And what has happened in the early
:13:41. > :13:44.stages of the recovery is there has been very little productivity
:13:45. > :13:47.growth. That is the bad news. The good news is there is this
:13:48. > :13:50.employment growth. We need both ultimately to have this sustainable
:13:51. > :13:55.recovery. We are almost at the point now where you had thought it might
:13:56. > :14:00.be appropriate to look at interest rate levels? We made an easy call
:14:01. > :14:04.when I came in, and which is to say it would not be appropriate to even
:14:05. > :14:09.begin to think about, even begin to think about raising interest rates,
:14:10. > :14:13.until we saw the economy really growing, jobs really growing,
:14:14. > :14:18.incomes really growing. Now we used one figure in order to capture that
:14:19. > :14:24.idea. Was that a mistake? No, not at all. We are now almost at t the
:14:25. > :14:28.unemployment figure? Would you rather be at it two years from now
:14:29. > :14:31.or now. I go back, good news is good news. We have got inflation on
:14:32. > :14:36.target, we have got unemployment coming down, we have got the economy
:14:37. > :14:40.picking up at a rate, finally, that is above its trend, finally starting
:14:41. > :14:45.to close the gap of where it should be relative to where it was. So this
:14:46. > :14:49.is good news and we made it very clear to businesses, and to
:14:50. > :14:55.households across the country, that we're going to take stock once we
:14:56. > :14:59.get to 7%, once the economy gets to 7% unemployment rate and consider
:15:00. > :15:04.the appropriate stands on the monetary policy. We don't see a need
:15:05. > :15:09.to change the monetary policy, we said that thissies. I will enforce
:15:10. > :15:12.-- this week. I will enforce it and say when monetary policy changes,
:15:13. > :15:16.and given the head winds very much affecting Britain, we would expect
:15:17. > :15:19.any adjustment to be very grabbed actual. The important thing is to
:15:20. > :15:22.set monetary policy in a way, in a fashion that's going to ensure that
:15:23. > :15:27.this economy is really and sustainably growing. So it will be
:15:28. > :15:33.re-examined when we get to 7%? We have an inflation report, I know you
:15:34. > :15:36.are an avid reader, it is coming out in February! We will do the
:15:37. > :15:40.examination there, we are close enough to do the co-operation people
:15:41. > :15:44.want to know. Would you imagine that interest rates might rise? There is
:15:45. > :15:48.no immediate need to increase interest rates. If I may give a
:15:49. > :15:53.little more colour to that. Is what we have seen is the unemployment
:15:54. > :16:00.rate come down, we have also seen a lot more Britains Britons want to
:16:01. > :16:03.work, we have seen they want to work longer hours than previously, that
:16:04. > :16:08.is partly because of where wages are going. There are indications of more
:16:09. > :16:14.slack in that labour market. The figure you have chosen of 7% is your
:16:15. > :16:19.choice, could it be defined and be 6%, 6. 5 perks 6. 6.9%? There is a
:16:20. > :16:23.broad range of things that we could do. I wouldn't jump to that
:16:24. > :16:28.conclusion though. First off it is a decision of the entire monetary
:16:29. > :16:32.policy committee. And secondly, what we are trying to get across, and
:16:33. > :16:36.what has, people understand, it is really about overall conditions in
:16:37. > :16:41.the labour market, overall amount of slack in companies. That's what
:16:42. > :16:44.affects it. So we wouldn't want to distract from that focus which is
:16:45. > :16:50.really properly developed in the market and in amongst business
:16:51. > :16:55.people by unnecessarily focussing too much on just one indicator. It
:16:56. > :16:59.has a nice clarity to it doesn't it? It has. I will remind, if I may,
:17:00. > :17:07.that when we put this in place we were just coming off the cusp, the
:17:08. > :17:11.of a triple-dip scare for a recession. There was tremendous
:17:12. > :17:14.uncertainty about the stance of monetary policy, there was a split
:17:15. > :17:18.MPC committee. And business had been facing a lot of uncertainty and
:17:19. > :17:21.households. We were looking to provide collaterality. I think we
:17:22. > :17:27.are in a different place now. Sound to me as if you feel like a man
:17:28. > :17:35.rather on the hook of his own making which he wishes he didn't have. I
:17:36. > :17:44.will repeat myself, inflation is back on target, 300,000 jobs,
:17:45. > :17:48.private sector created in the last quarter measured. One of the
:17:49. > :17:52.strongest growing economies in the advanced world, the recovery has
:17:53. > :17:56.taken hold, and the question is converting it into a sustainable and
:17:57. > :18:00.balanced recovery. Do you worry about a housing bubble? We worry
:18:01. > :18:02.about the momentum picking up in the housing market, that without
:18:03. > :18:07.question. What we have done, what we did in November is we took some
:18:08. > :18:12.initial steps to address that momentum. We took our foot off the
:18:13. > :18:16.accelerator. We are not hitting the brake on the housing market, because
:18:17. > :18:19.transactions are about three-quarters of what they were
:18:20. > :18:24.before the crisis, the long-term average. Mortgage approvals are
:18:25. > :18:27.about the same level, prices have bounced off recent lows, there is
:18:28. > :18:30.much more to the housing market, as you are well aware, than just what
:18:31. > :18:34.is happening in London and the south-east, we have to make national
:18:35. > :18:38.policy. Can I raise very briefly three other points with you. Have
:18:39. > :18:43.you spoken to Ed Miliband since you dissed his banking policy? Well,
:18:44. > :18:51.since the second part of that question isn't true. You did! It
:18:52. > :18:55.would be impossible for me. You said capping bankers' bonuses in the way
:18:56. > :18:59.he was proposing wasn't helpful. You further had queries about his ideas
:19:00. > :19:03.of cutting banks down to market share? Two things, we have
:19:04. > :19:07.responsibility for financial stability at the Bank of England.
:19:08. > :19:09.When we look at the banker bonus issue we look at it from the
:19:10. > :19:14.perspective of financial stability. It is worse for financial stability
:19:15. > :19:18.to pay a banker all in cash today than to hold a bunch of that money
:19:19. > :19:23.back and put it in shares and other things and have the ability, and for
:19:24. > :19:27.that money only to show up well down the road, when the risk that banker
:19:28. > :19:30.has taken shows up, or the misconduct he has performed shows
:19:31. > :19:35.up, and have the ability to claw that back. Could Ed Miliband's
:19:36. > :19:40.banking policy possibly work? Well, there is range of objectives, I
:19:41. > :19:44.think what the leader of the opposition said, subsequent loo nigh
:19:45. > :19:48.comments about different aspects of the issues that he subsequently said
:19:49. > :19:52.in his speech, was that he was going to refer to the relevant
:19:53. > :19:54.authorities. Which are not the Bank of England, it is the competition
:19:55. > :19:59.market authority. So they would make that decision if it were to come to
:20:00. > :20:03.that. Let me invite you to stick your hand into another hornet's
:20:04. > :20:09.nest. Could the independent Scotland retain the pound? There are issues
:20:10. > :20:12.with respect to currency unions. We have seen them in Europe. It is one
:20:13. > :20:16.of the factors that affects the outlook for the UK economy, it has
:20:17. > :20:20.affected over the last five years and affects us going forward. The
:20:21. > :20:26.challenges of having a currency union without certain institutional
:20:27. > :20:32.structures. I'm actually going to speak this issue in Scotland next
:20:33. > :20:35.week and I'm certainly going to meet with the First Minister prior to
:20:36. > :20:40.doing so. Would you look forward to managing a currency of which
:20:41. > :20:43.Scotland was a part? I'm a public servant and I and my colleagues
:20:44. > :20:51.would implement whatever remit we were given. One other question, I
:20:52. > :20:56.wonder when you look at the called krypto-currencies, like Bitcoin and
:20:57. > :21:00.the like. Do you ever think that the life expectancy of someone in your
:21:01. > :21:05.position, not you obviously personally, but the life of national
:21:06. > :21:09.bank governors is distinctly limited? No, I don't actually for
:21:10. > :21:14.this reason, certainly it is interesting what is happening in
:21:15. > :21:18.this regard. But the experience of what I would call free banking, the
:21:19. > :21:21.experience in the 19th century in the US and Canada, where banks
:21:22. > :21:26.themselves could issue their own notes was that you had much higher
:21:27. > :21:31.rates of failure, because almost inevitably, not in every case, the
:21:32. > :21:34.incentive to issue more notes in order to keep things going is there.
:21:35. > :21:39.Whether those notes are electronic or physical, there is a need to have
:21:40. > :21:42.an independent eptity, this is what we have learned over centuries, an
:21:43. > :21:46.independent eptity with a clear remit, a clear objective, like a 2%
:21:47. > :21:51.inflation target, as the Bank of England does, that is accountable to
:21:52. > :21:58.people and part of that accountability is meeting you. Do
:21:59. > :22:07.you have any Bitcoins yourself? I do not. Would you like some! I can't
:22:08. > :22:14.invest any money so...! Investing in my children, Jeremy! Well now, what
:22:15. > :22:18.do you reckon we should make of the unemployment target and the
:22:19. > :22:28.inflation, and the interest rate level? I you gave Mark Carney a hard
:22:29. > :22:35.time there. I think the coming down of the and the UK doesn't need a
:22:36. > :22:39.rate hike any time soon. But laying out a threshold not a trigger is
:22:40. > :22:44.going to be problematic now we are close to it. It is true that it is
:22:45. > :22:48.one figure that was a sort of proxy for broader slack, as economists say
:22:49. > :22:52.in the labour market, now they have the problem of how are they going to
:22:53. > :22:55.convince you that they won't raise rates very fast, when we are close
:22:56. > :22:58.to the rate now. It is interesting because the same kind of thing is
:22:59. > :23:01.happening in the US, for different reasons but the same kind of thing
:23:02. > :23:05.is happening. There was a threshold set, we are getting very close to
:23:06. > :23:09.it, the Central Bank don't want to raise rights wraiths any time soon.
:23:10. > :23:13.They shouldn't. But giving clarity in that environment, and maintaining
:23:14. > :23:18.credibility is going to be tricky, and you saw Mark Carney squirm a
:23:19. > :23:21.little bit. There has been very little discussion about tapering or
:23:22. > :23:26.the impact of tapering, a bit but not a lot. I think we saw the
:23:27. > :23:30.markets get very nervous when tapering was even mentioned. They
:23:31. > :23:34.got nervous last year and there was a lot of discussion and when they
:23:35. > :23:39.did it it was no long sore sure. We priced in, we had the taper tantrum
:23:40. > :23:45.last year, it is over and done with, we have screamed and cried like the
:23:46. > :23:48.red Queen in Alice in Wonderland. It will come again, one of the things
:23:49. > :23:54.we are all focussed on is unemployment and youth unemployment.
:23:55. > :23:57.We talk about 6. 5-7% and youth unemployment employment is double
:23:58. > :24:06.that rate, 12-14%. What is interesting is the foreguide yarns
:24:07. > :24:11.you start to -- foreguidance, you start to look at it, years earlier
:24:12. > :24:16.we were all focussed on full employment and the inflation was the
:24:17. > :24:18.threat. The inflation rate is back to target, and the economy is just
:24:19. > :24:23.getting up to where it was before the crisis. There is not any sign of
:24:24. > :24:27.overheating in the vaguest sense in the economy, there is no wage
:24:28. > :24:32.pressure. So the risk I think is still that central banks act too
:24:33. > :24:40.fast and too quickly and do too much. This recovery is not secure? I
:24:41. > :24:44.don't think it is secure. It is a gentle recovery. Everything that was
:24:45. > :24:49.said in the interview about there being too much debt, too much debt.
:24:50. > :24:53.Nobody is advocating massive rate heights because we hit some arbitary
:24:54. > :24:58.target. Look at what the recovery in the UK is based on, it is consumer
:24:59. > :25:03.spending from rising house prices and the housing bubble we can talk
:25:04. > :25:10.about. Investment is flat on its back. Investment is on flat rate
:25:11. > :25:13.across the board, corporated sitting on trillions, they are not making
:25:14. > :25:18.investments banks. The biggest risk for our business this year is
:25:19. > :25:23.failure by business to invest in brand or capital investment. Do you
:25:24. > :25:27.feel confident in your business? Do I feel confident in it. Not in your
:25:28. > :25:33.particular business, does your business, as a whole, feel secure in
:25:34. > :25:38.the state of the, the pace of recovery? I think there was a
:25:39. > :25:49.quantum shift in corporate opinion and behaviour post Lehmans, post
:25:50. > :25:56.September 2008, people talked about people but it was corporate. Our
:25:57. > :25:59.sweet spot has become less powerful, I think that is the problem. In
:26:00. > :26:04.order to get to numbers they cut costs, they then invest in top line
:26:05. > :26:09.growth and part of the reason is GDP growth is still below trend. The
:26:10. > :26:15.sort of GDP growth we see on a worldwide basis is less than
:26:16. > :26:18.pre-2008, it is like Mark Carney saying the UK economy is just
:26:19. > :26:26.getting back. People are very cautious. What I worried about is
:26:27. > :26:29.not focussing on the top line. You mentioned one of the things talked
:26:30. > :26:33.about here, youth unemployment, which has the capacity to throw all
:26:34. > :26:38.calculation off at some point. This is a phenomenon right across the
:26:39. > :26:41.world. Are there other things that could really throw off any kind of
:26:42. > :26:48.calculation or assumptions made about the future? Technology. All
:26:49. > :26:55.the improvements, most of the improvements in technology are
:26:56. > :27:03.capital intense, if not labour-intensive. 3 -D printing, and
:27:04. > :27:07.the management processes and lack of need there of. This will have a very
:27:08. > :27:10.significant impact on unemployment, and youth unemployment, it is
:27:11. > :27:15.something I think that is the critical issue, the critical
:27:16. > :27:18.long-term issue. Inequality stems from that. Young people f they miss
:27:19. > :27:23.out on a job for the first five years of their career, their
:27:24. > :27:29.lifetime earnings are drastically reduced. I think we radically
:27:30. > :27:33.oversimplified, if you look back over the last 30 year, we had a
:27:34. > :27:38.digital revolution, on going and gathering pace. The consequence is a
:27:39. > :27:40.big shift way from workers towards capital, strength of capital,
:27:41. > :27:44.strength of profit and firms. You have seen a big rise in income and
:27:45. > :27:48.equality within workers, you have seen the returns going
:27:49. > :27:51.overwhelmingly to people who are skilled. Then you had the financial
:27:52. > :27:55.crisis on top of. That you had the huge recession and huge downturn, we
:27:56. > :28:01.are recovering from that. But the big secular trend is still there and
:28:02. > :28:04.intensified. We had the problem of the Chinese labour force entering
:28:05. > :28:08.the global market, flooding the world with cheap labour, now the
:28:09. > :28:13.Chinese labour force is being replaced with robots which means all
:28:14. > :28:16.of those Chinese workers will want higher-skilled jobs. If they
:28:17. > :28:21.compete, which they will in a global world with our youth, our youth is
:28:22. > :28:26.going to find it really, really hard. We haven't even touched upon
:28:27. > :28:29.the political anxieties. Go on? What is really interesting about the
:28:30. > :28:33.debate you had with the governor is what does it mean politically. It
:28:34. > :28:37.looks to me as though the Conservatives are, as we go into
:28:38. > :28:40.2015 going to be in a stronger position than others thought. And
:28:41. > :28:43.the coaliti will be in a stronger position. You have Ed Miliband
:28:44. > :28:46.taking the party to the left, chastising business, you saw stuff
:28:47. > :28:49.in the papers this morning about the reaction from business to that. I
:28:50. > :28:54.think it is really interesting politically. The other factor, of
:28:55. > :28:57.course, is the referendum, if Cameron winds, well coalition wins
:28:58. > :29:01.we will have a referendum. If Ed Miliband wins we won't. It is the
:29:02. > :29:04.devil and the deep blue sea. This is as nothing compared to some of the
:29:05. > :29:09.international political problems that could upset all calculation?
:29:10. > :29:15.The big one being Syria, or China-Japan. There is any number of
:29:16. > :29:20.potential massive war configuration that is could happen overnight. And
:29:21. > :29:25.Davos has not been a good predictor of the black spots! As I mentioned
:29:26. > :29:29.earlier, the World Economic Forum isn't modest in its scope, but then
:29:30. > :31:39.there is no shortage of things to worry about.
:31:40. > :31:45.Now this gathering is supposed to be about dealing with global issues, so
:31:46. > :31:51.here in defiance of the institutional prejudice against
:31:52. > :31:59.those who don't have the Y-sex chromosome, we have the Ugandan
:32:00. > :32:04.Finance Minister. The lady who worked her way up from a sweatshop
:32:05. > :32:11.to become one of the richest women in China, and Ella, my Turkish is
:32:12. > :32:17.pretty bad, she's the most read female author in Turkey. Do you
:32:18. > :32:22.feel, let me start with you, it is striking how few women there are
:32:23. > :32:28.represented at a senior level here isn't it? In the forum. Yes, I have
:32:29. > :32:35.noticed that. Why? That is what I was going to ask you what is the
:32:36. > :32:42.answer? It is puzzling because taking Uganda for instance, there is
:32:43. > :32:48.no legal barriers for women coming up in business or in Government. For
:32:49. > :32:53.instance we have a requirement that in every constituency has a woman
:32:54. > :33:00.MP. That is a third of the MPs in parliament are women to begin with.
:33:01. > :33:05.I don't know. What's your view? You know I would say just the opposite,
:33:06. > :33:10.I have been coming here for the last almost ten years, I have noticed
:33:11. > :33:14.this recent two years that women's participation has hugely increased.
:33:15. > :33:18.Is that your impression too, you have been before haven't you? That
:33:19. > :33:23.is not my impression, of course it is true in the sense that in the
:33:24. > :33:27.audience, among the listeners there are many women and there are
:33:28. > :33:32.beautiful conversations, but when we look at the numbers and statistics,
:33:33. > :33:37.85% of the participants at Davos are male, 15% are female. There is a
:33:38. > :33:42.big, big gap. Unfortunately this year it has even fallen under the
:33:43. > :33:46.statistics of two years ago. Now you weren't able to see all that some of
:33:47. > :33:50.those amazing statistics that were just running through, but one of the
:33:51. > :33:55.most striking things is that the difference in what's changed in
:33:56. > :34:01.Africa compared to the difference to what has changed in China, now why
:34:02. > :34:06.is this? Why has China forged ahead so much and Africa not forged ahead
:34:07. > :34:11.in anything like the same level in the last ten years. What's your view
:34:12. > :34:16.of that? I think in Africa our Governments went through about two
:34:17. > :34:22.decades of finding their feet, so to speak. We went through coups,
:34:23. > :34:27.military dictatorships, but in the 1990s we got our act together,
:34:28. > :34:31.governance, fiscal discipline, focussing on the priorities. And it
:34:32. > :34:40.has happened to coincide with a time when China was coming up. I think
:34:41. > :34:44.what's now, our natural resource bases offer a lot of interest to
:34:45. > :34:48.many people. Africa is now on the cusp. But we have a big deficit and
:34:49. > :34:52.we need to keep concentrated. We have an infrastructure deficit. We
:34:53. > :35:01.have a human productivity deficit, we need to take our advantages and
:35:02. > :35:04.define them. Is there something about Chinese society that makes it
:35:05. > :35:12.naturally able to progress faster? Well you have a relatively simple
:35:13. > :35:18.and one-party ruling politics which makes decisions easy. You also have,
:35:19. > :35:27.in China, previous to the recent 30 years of reforms a very suppressed
:35:28. > :35:31.social system. So that the recent reforms have unleashed all the
:35:32. > :35:35.energy. And plus the huge population, very disciplined, hard
:35:36. > :35:40.working work force. Now when you get a successful
:35:41. > :35:45.transformation taking place, as is happening, to some degree in Turkey,
:35:46. > :35:49.it sets off all sorts of social tensions doesn't it? Turkey is a
:35:50. > :35:53.very interesting case, and a very complicated case, if I may say so.
:35:54. > :36:03.It is not like any other country in the Middle East. It is not a
:36:04. > :36:05.typically authoritarian country or democracy either, it is somewhere
:36:06. > :36:10.inbetween. It is difficult to analyse the country. We have had a
:36:11. > :36:17.strong economy, especially in the last decade, but afterwards, what
:36:18. > :36:20.followed was especially along with political unrest, because I think
:36:21. > :36:24.politics affects everything. I don't think there is enough emphasis on
:36:25. > :36:31.these things. We're always talking about emerging markets, how you know
:36:32. > :36:38.Mexico, Nigeria, Turkey, independent nearings are the new e-- Indonesian,
:36:39. > :36:41.are the new emerging markets but we don't focus on the political
:36:42. > :36:48.circumstances. It seems to be accepted here that inequality in the
:36:49. > :36:54.world is a danger. Do you see it that way, if so how is it a danger.
:36:55. > :36:58.Surely it has always existed? Inequality has always existed but
:36:59. > :37:04.now with the pace of progress and globalisation and technology, you
:37:05. > :37:08.know in the global media. People now see and here things they never used
:37:09. > :37:14.to see or hear about. In the most remote villages they can see big
:37:15. > :37:21.cars, leather jackets, people going on space shuttles to the moon, and
:37:22. > :37:25.they say why can't I have that. The aspirational aspects of life I think
:37:26. > :37:31.are now much more immediate in our children's generation and in the one
:37:32. > :37:37.after them. But I'm not sure I think that we should concentrate now on
:37:38. > :37:41.the inequality and forget about forging ahead. Because you need to
:37:42. > :37:47.grow the pie before you can share it out. It is this place that's talking
:37:48. > :37:56.about the dangers of inequality. Yeah. It is, and looking at it from
:37:57. > :38:02.my perspective, from in the African perspective, I say that growth, for
:38:03. > :38:10.instance, in Uganda, we have got an index whereby our poverty level has
:38:11. > :38:15.dropped from 24% to 20%, but there was an inequality. You can't say you
:38:16. > :38:21.are going to hold everybody back in order to make sure that there is no
:38:22. > :38:26.inequality. You have to let people go ahead and get the people able to
:38:27. > :38:32.go ahead to go ahead and come back and pick up the others. I will
:38:33. > :38:36.explore it a few moments from now. Earlier I caught up with Bill Gates,
:38:37. > :38:44.the founder of Microsoft, he made money beyond the dreams of of a var
:38:45. > :38:48.Ritz, and decided a -- avarice and decided to spend the money helping
:38:49. > :38:51.others. I wanted to know what he thought about foreign aid and the
:38:52. > :38:55.gap between rich and poor. When you hear the statistic from
:38:56. > :39:00.Oxfam that the poorest half of the world's population own about as much
:39:01. > :39:06.as the 85 richest people in the world, including you, does that make
:39:07. > :39:09.you feel uncomfortable? What makes me uncomfortable is that children
:39:10. > :39:12.die, that people don't get a good education, they don't get enough
:39:13. > :39:17.nutrition. That is what I have devoted my life to working on. So
:39:18. > :39:21.all of that money that's in my hands is actually going against those
:39:22. > :39:26.problems. But you don't deny the gap between rich and poor seems to have
:39:27. > :39:31.got worse? No, the gap between rich and poor is not worse, thank
:39:32. > :39:38.goodness. Less children are dying, people a living longer, people are
:39:39. > :39:46.more literate. If you geoback far enough everybody was poor. You just
:39:47. > :39:49.want everybody to be the same, 200 years ago life was very short. A
:39:50. > :39:56.third of all children died before the age of five. That was an age of
:39:57. > :40:01.strong equality. Do you think enough is being spent on international aid?
:40:02. > :40:06.I would like to see that increased. Particularly the programmes where
:40:07. > :40:11.you are buying Malaria bed nets and preventing deaths there. You are
:40:12. > :40:17.buying vitamin A, you are buying AIDS drugs, you are inventing n
:40:18. > :40:21.seeds, giving them out, educating farmers how to use those things. We
:40:22. > :40:32.have seen phenomenal benefits in the aid programmes we are partnered in.
:40:33. > :40:38.You are a notable philanthropist, why is it British tax-payers or
:40:39. > :40:42.anywhere else in Europe and the world should they spend money on
:40:43. > :40:48.poorer people in poor countries? You have to decide do the lives in
:40:49. > :40:55.Africa have any value or not? Do we as we see them starving, not having
:40:56. > :41:00.enough nutrition, not having access to vaccines, having diseases that
:41:01. > :41:03.more money is spent on solving baldness than spend on a disease
:41:04. > :41:07.that kills a million children. Does that bother us or not. Are we
:41:08. > :41:13.willing to take, in the case of the UK, less than 2% of all Government
:41:14. > :41:17.spending and have it go towards the very poorest, which in fact is very
:41:18. > :41:24.generous. You could completely alter the picture of the world if you went
:41:25. > :41:29.for a genuine redisputive method in taxation? You mean like North Korea?
:41:30. > :41:33.No, by democratic consent? Well yeah. You could do that? You could,
:41:34. > :41:40.we have many democracies they have all have different taxation
:41:41. > :41:48.policies, the Nordic countries have certain taxation policies and the UK
:41:49. > :41:55.has different ones, I'm nott an expert on any -- I'm not an expert,
:41:56. > :42:00.except in the US. Would you want the levels to change? I have been a big
:42:01. > :42:04.opponent of the estate tax. I believe that income on capital we
:42:05. > :42:09.could tax that a bit higher. When you saw the results of the Senate
:42:10. > :42:15.investigation into Microsoft's tax affairs, and the allegation that
:42:16. > :42:19.about $4 million of taxes a day wasn't being paid because of the way
:42:20. > :42:23.that Microsoft managed their fares, what did you think? I think that's
:42:24. > :42:25.about as incorrect a characterisation of anything I have
:42:26. > :42:31.ever heard. It was the allegation that was made? No, no, it is simply
:42:32. > :42:36.hog wash. Which aspect is hog wash? The idea that Microsoft didn't pay
:42:37. > :42:41.its taxes. It is not that Microsoft didn't pay taxes, it is that they
:42:42. > :42:45.could have paid more taxes? Voluntarily? Yes, by choosing to
:42:46. > :42:50.organise their affairs differently rather than running them through
:42:51. > :42:54.Puerto Rico? Your numbers are completely wrong. Let me put it
:42:55. > :42:59.another way, as statement of principle are you in favour of
:43:00. > :43:05.people saying as much tax as possible? I think that if your
:43:06. > :43:10.Government should pass the tax laws that they need in order to collect
:43:11. > :43:14.the revenue they want to collect, I don't think you know saying that
:43:15. > :43:20.people should volunteer to pay taxes is likely to raise that much. It can
:43:21. > :43:25.be tried. But you know, the rules are set, I paid more taxes than any
:43:26. > :43:30.individual ever and gladly, so I should pay more. I have paid over $6
:43:31. > :43:34.billion in taxes. How do you persuade people it is their
:43:35. > :43:38.political or moral duty to pay tax, in order that there can be some sort
:43:39. > :43:42.of redistribution? You make sure that they follow the law and pay
:43:43. > :43:48.their tax, if you don't you put them in jail. It seems to work! Bill
:43:49. > :43:55.Gates thank you very much. What do you make of his approach? I don't
:43:56. > :44:00.know, I mean it is very interesting to say that, in China we are on the
:44:01. > :44:05.different side of it, because you know we're in an economy that's
:44:06. > :44:10.trying to boost consumption versus just boosting investment. Part of it
:44:11. > :44:14.is how do you get people to spend money. They need to have more cash
:44:15. > :44:18.in their hands. By doing so the Government needs to lower the income
:44:19. > :44:23.tax, not raise the income tax. This question though of aid, Bill Gates
:44:24. > :44:28.has been a generous man, particularly to countries in Africa.
:44:29. > :44:33.And yet you get to this point that gets to there where he refuses to
:44:34. > :44:41.take a moral position about whether people should pay more tax in order
:44:42. > :44:46.to give more in aid. He sees it as a political decision or personal
:44:47. > :44:50.decision. What do you think? Looking at it from the point of view of an
:44:51. > :44:56.African Finance Minister, yes the Government has a duty to tax and as
:44:57. > :45:01.a redistribution of wealth. But we must make sure that since the taxes
:45:02. > :45:05.in our countries are so precious, we must make sure they go into
:45:06. > :45:11.sustainability, they go into the areas where the private sector can't
:45:12. > :45:15.do. For instance in Uganda we are concentrating on narrowing the
:45:16. > :45:22.infrastructure gap, roads and power, we are concentrating on the human
:45:23. > :45:28.productivity, health and education. For the rest, making sure that the
:45:29. > :45:32.macro environment is such that the private sector can forge ahead. And
:45:33. > :45:36.trying to spend the tax revenues with governance and accountability.
:45:37. > :45:40.You see if you give accountability, if people can see where their tax
:45:41. > :45:46.money is going and what it is doing, they are not, they are not adverse
:45:47. > :45:50.to paying taxes. What's your take on this, on the question of how you
:45:51. > :45:54.persuade people it's worth paying taxes to narrow the gap between rich
:45:55. > :46:00.and poor? Find it very important that this year in Davos the main
:46:01. > :46:03.subject is inequality. There is so much inequality all over the world.
:46:04. > :46:08.It is such a pressing matter, you know. Not only among countries when
:46:09. > :46:12.you look at the list of countries and their level, within every
:46:13. > :46:18.country as well. We see big huge regional differences and this has
:46:19. > :46:20.big social implications and political implications. And I think
:46:21. > :46:25.more and more people are recognising that all the rest adds up and comes
:46:26. > :46:29.back to the economy again. It is a circle, you cannot separate these
:46:30. > :46:32.facts from one another any more. What is happening in the political
:46:33. > :46:35.world is affecting what is happening in the economic world. What is
:46:36. > :46:39.happening in the social, the class gap is affecting the financial
:46:40. > :46:45.situation. Everything is interconnected. I don't want to be
:46:46. > :46:51.apot hintic, we are sitting -- apocalyptic, we are sitting here in
:46:52. > :46:56.2014, and with a world war or catastrophe that nobody saw coming.
:46:57. > :47:00.Are we talking about these stakes when it comes to inequality and
:47:01. > :47:05.chnology change and the rest? There is a lot of hope and there is a lot
:47:06. > :47:10.of reasons to be pessimistic as well. They are two completely
:47:11. > :47:19.opposite trends working at full forced to. On the one hand the world
:47:20. > :47:23.is more globalised, people are more and more seeing themselves as world
:47:24. > :47:27.citizens and feel themselves connected and are looking for moral
:47:28. > :47:35.values that bind us together. But on the other hand, I think there is
:47:36. > :47:38.enough of the extremist ideology, ultra nationalism, these are also on
:47:39. > :47:43.the rise. We have to recognise these two opposite forces working at the
:47:44. > :47:47.same time today. I grew up in socialist China, I
:47:48. > :47:54.remember the days when we used to wear the same clothes. Allocated the
:47:55. > :48:01.same housing, nobody paid tax, everyone is being given exactly the
:48:02. > :48:07.same salary. That is one extreme scenario. Where China is so much of
:48:08. > :48:12.it is unleashing the energy and allowing the ditcheses between human
:48:13. > :48:20.beings, now if you take back extremism, I'm interested to hear
:48:21. > :48:23.when you said "you mean North Korea", that is pretty much back to
:48:24. > :48:26.where China was in the 1970s. Thank you very much, that is it from
:48:27. > :49:03.Davos, back in London tomorrow, good night. Hello there, a real west/east
:49:04. > :49:07.split to start the day on Friday. Clearer skies but dry fog in East
:49:08. > :49:12.Anglia. Wet and windy weather pushing in from the west. As it
:49:13. > :49:13.bumps into the warm air on Scotland snow and freezing