23/01/2014 Newsnight

Good evening from Davos, if you throw a snowball here at the right

time of the day you can hit a plutocrat and one of the gorillas

protecting them. None of those who run the world are women. In this get

together the World Economic Forum thinks it sets the agenda about what

will happen to mere mortals in the 12 months ahead. We will hear from

the Governor of the Bank of England. Have you spoken to Ed Miliband since

you dissed his banking policy. Since the second part of the question

isn't true... You did! We will see figures about the state

of the world that give quite enough problems for its leaders to engage

with. We have a minor constellation of

famous, infamous figures to gnaw on that, to see whether or not anyone

in this non-environmentally friendly stance, an overheated conference

centre in an alpine ski resort, has had the chance to think of

solutions. We will ask Bill Gates, one of the

richest m in the world why the might of people in the developing world is

any concern of ours. I get so confused, it is like the

middle school. I was the chairman. Well now, the sheer weirdness of

this gathering takes some getting your head around, of course it is

good to talk, but to be here at all as a corporate partner you have to

be able to stump up about $70,000, and even as we speak many

organisations are spending hundreds of thousands more on

no-expense-spared parties across this town. The World Economic Forum

now invites charities and the like to take part. One of them, Oxfam,

came up with the astonishing fact that the total wealth of the poorest

3. 5 billion people in the world is equalled by the mere 85 of the

world's richest people. Believe it if you can. Events inside this

conference centre seem to have commandeered much of the world's

headlines. Who are these people and in whose interests do they speak in

# Picture a mountain top with snow From the outside it might be any

conference, a gathering of spark plug manufacturers, or laxative

makers! But among them are some of the most powerful and richest people

in the world. The people who determine what we earn, what we pay

for our mortgages and in some unfortunate places whether we live

or die. Most of those milling around aren't the directors of our destiny.

They are advisers and goers and guards -- gofferes and guards and

those who fancy where the action is. Hold it like a pair of binoculars...

Among them are a handful of ernest good folk trying to open the eyes of

the world to tragedy largely beneath the attention of the rich and

powerful. We put you on a street in Aleppo, everything you hear is the

same as a real event. Everything you are listening to is a documentary in

VR. It is essentially what it is like. Call it immersive journal I.

Others with -- Journalism. Others with ideas to transform economies.

What would I do if I was a new producer? So you mean an entire

human. Something useful? Let's see we want to print the ear of a new

producer. So you can start by printing a cell, scaffolding, then

you can have cells go through the scaffolding matrix and then

differentiate into an ear. But the central pitch of Davos is that by

bringing together billionares and Presidents, professors and

functionaries, the world can be made a better place. It is not an ignoble

aim nor a modest one. This is the world being carved up between big

businesses, Governments and NGOs, is it? Absolutely not, as you have

represented society as a whole, so if society is carving up society,

that is true! For all big names here deciding our future, one thing is

striking, they are not doing it in public. You still never get anywhere

near what is happening here, that is the big lie, that some how it all

takes place in the open, it doesn't. There is a lot of

behind-closed-doors meetings you or I don't go into. This isn't a

gathering of self-made and women, no less than the Queen of Belgium is

here. Britain is partly represented by an institution you can only join

by having the right parents. This gathering may be about many things,

it may even do some good somewhere, but it is not what you would call a

democracy. Now people have seen stuff about

Davos coming out of their televisions all day. But why are we

all here? With us now is Martin Sorrell, boss of the world's biggest

advertising agency, Za national curriculums Bedows, Economics Editor

of the Economist, and Felix Salmon, a disgruntled journalist from

Reuters. Let's look at who these people are, there is a lot of jolly

smug people as far as I can see looking outside and inside. You are

looking at me. I'm looking at the supposed movers and shakers, is that

fair comment? The cynicism in your introduction is reasonably well

placed. This is a gathering of plutocrats, a gathering of power

brokers and hangers on. They are very smug, there is a lot of power,

they know it. There is a lot of platitudes, what is the title this

year "reshaping the world". Lots of platitude, lots of discussion that

is platitude, but that said, there is a lot of useful stuff. You have a

lot of leaders in their field, from all over the world. Scientist,

academics, all manner of people. I learn a tonne here. Who would have

thought an Iranian President. So you have big-picture stuff and big

political moments. You also have an awful lot of people get together

doing smaller inYIFSH, I think a lot of stuff comes out of it. You are a

fan obviously? I have been doing it on and off, mostly on for 25 years.

It was very different in the old days, making we sound very old, it

was slightly more personal, it is more impersonal now, there are 2,500

people here, there are 300 Government people. This is the

largest contingent of Government leaders that we have had at Davos. I

think as a talking shop, which is I think what you were getting round

to, as a piece of communication it is extremely valuable. It gets more

valuable every year. If you look at the agenda it is truly remarkable

what they cover. And you are absolutely right, for example, today

I was involved in an inYIFSH in the consumers goods industries which is

in terms of sustainability is extremely valuable, and I think

extremely important. There is no value in just intoneconsumers goods

industries which is in terms of sustainability is extremely

valuable, and I think extremely important. There is no value in just

intoning This is doing, multinationals will engage

millennials in sustainability... What is that? Younger people in

sustainability. The chances of them engaging them in anything is zero. I

would agree. Would you agree there is virtue in some people meeting and

talking? The real value was Martin in his party where he invites Larry

Summers and Ronaldo to play together, that is where people get

to know each other and hang out. There was a strong purpose, this is

the year of the Brazilian World Cup, having the World Cup's leading

scorer here was a pivitol moment for many, like you, not so much Larry

Summer, but Ronaldo. It is all part of it. The Brazilian World Cup and

the Olympics are emblematic events for Brazil and Latin America in the

context of worldwide development. Douma is coming here tomorrow, I

would be interested to hear what she says about the World Cup, which

there is some controversy about, as you know, and about the Olympics,

where the infrastructure investment is not being put in place. Don't you

get the feeling there is a lot of people on transmit and very few on

receive here? I think that is probably true. There is a lot of

people on transmit. Even if you have a few people on receive, there is a

lot of journalists here on receive I hope, rather than transmit. I think

that you get something out of that. Even if you have a very high noise

to signal ratio, there is something that comes out of it. People like

you wouldn't pay for doing this if you didn't get something out of it

righ What do you get out of it? We are instructed to think about the

big issues, forget about the financial crisis, and I think that's

a mistake. To focus on the youth unemployment, inequality,

healthcare, climate change. To start thinking about those big issues

rather than worry about the financial crisis or the Middle East

or whatever. That is a mistake, there is still the grey swans going

on in the world that may cause problems. I will give you one good

example of an insight we got here. This was the suggestion that there

might be a military conflict over the islands between China and Japan.

And that was something I think most people had dismissed, but both the

Chinese, or rep presentatives of the Chinese have said it is --

representatives of the Chinese have said it is a military option, and

the Japanese Prime Minister did not rule it out as an option. And you

have a number of extremely worried people as a result of this. The

parallels are made to previous situations. The World Economic Forum

has actually this year has become the World Political forum, we have

had the Japanese President making wave, the Chinese, the Ukrainian,

the Syrian, I think all the Central Bank governors and finance ministers

who have historically been the centre of this event have been

sidelined. I don't think it has bun centre any more, it is too big for

that. To try to say there is one big Davos team is also a mistake, if you

do try to do that it becomes platitudeness. I think there is a

lot of things going on with different people in different

industries, whether it is the water people or the new technology people,

they are all doing useful stuff, talking to each other. And crossing

over. We meet the media people, they meeting with the technology people.

I went to the health thing this morning, I got this as a result. I'm

much health year. We are all wearing things! We will be back with with

you in a moment or two. Of the various advanced economies, plunged

into misfortune by the folly of bankers, Britain seems to be

recovering better than some, at least according to the International

Monetary Fund. Acknowledging there is still a long way to go though. In

his only broadcast interview in Davos I spoke earlier to the

governor of the the Bank of England, Mark Carney.

Mark Carney, when Central Bankers like you get together here or

elsewhere, and you think about the state of the world economy, do you

think thank heavens that is all behind us? No, not at all. You know

where we are, some, its worst of the crisis is behind us, but the

aftermath of the crisis is very much with us. In a number of our

economies, including the UK, the financial system isn't fully

repaired, it is not functioning as well as it could or shut. -- should.

We have debt overhangs holding back recoveries for Governments. We have

a great deal of uncertainty out there amongst households,

individuals and businesses that are preventing particularly investment.

So we think those factor, those three factors are going to persist

for some time and that helps effect, or that does effect how we set

policy. We in Britain had four or five very tough years, so we're just

getting to the point where the level of economic activity in Britain is

the same it was in 2008 before the crisis. That is some what

unprecedented period of time in order to come back. But there is

momentum in that economy. The one fly in the ointment is the Bank of

England's economic forecasting isn't it? Well, if... It is not good? If

our forecast is going to be wrong it is better to be wrong in the

direction it was. This is, let's be clear, good news is good news here,

we have got unemployment coming down faster, these are private sector

jobs, they are high-quality jobs. This is two years ahead of when you

said it would happen? It is two years ahead of a, of the most likely

scenario we saw at the time. If I can put this into the context of the

recovery, it is quite important to the sustainability of the recovery

is one of the big questions for the UK more than any other major

advanced economy is what will happen to productivity in the economy. When

is that going to start to pick up. And what has happened in the early

stages of the recovery is there has been very little productivity

growth. That is the bad news. The good news is there is this

employment growth. We need both ultimately to have this sustainable

recovery. We are almost at the point now where you had thought it might

be appropriate to look at interest rate levels? We made an easy call

when I came in, and which is to say it would not be appropriate to even

begin to think about, even begin to think about raising interest rates,

until we saw the economy really growing, jobs really growing,

incomes really growing. Now we used one figure in order to capture that

idea. Was that a mistake? No, not at all. We are now almost at t the

unemployment figure? Would you rather be at it two years from now

or now. I go back, good news is good news. We have got inflation on

target, we have got unemployment coming down, we have got the economy

picking up at a rate, finally, that is above its trend, finally starting

to close the gap of where it should be relative to where it was. So this

is good news and we made it very clear to businesses, and to

households across the country, that we're going to take stock once we

get to 7%, once the economy gets to 7% unemployment rate and consider

the appropriate stands on the monetary policy. We don't see a need

to change the monetary policy, we said that thissies. I will enforce

-- this week. I will enforce it and say when monetary policy changes,

and given the head winds very much affecting Britain, we would expect

any adjustment to be very grabbed actual. The important thing is to

set monetary policy in a way, in a fashion that's going to ensure that

this economy is really and sustainably growing. So it will be

re-examined when we get to 7%? We have an inflation report, I know you

are an avid reader, it is coming out in February! We will do the

examination there, we are close enough to do the co-operation people

want to know. Would you imagine that interest rates might rise? There is

no immediate need to increase interest rates. If I may give a

little more colour to that. Is what we have seen is the unemployment

rate come down, we have also seen a lot more Britains Britons want to

work, we have seen they want to work longer hours than previously, that

is partly because of where wages are going. There are indications of more

slack in that labour market. The figure you have chosen of 7% is your

choice, could it be defined and be 6%, 6. 5 perks 6. 6.9%? There is a

broad range of things that we could do. I wouldn't jump to that

conclusion though. First off it is a decision of the entire monetary

policy committee. And secondly, what we are trying to get across, and

what has, people understand, it is really about overall conditions in

the labour market, overall amount of slack in companies. That's what

affects it. So we wouldn't want to distract from that focus which is

really properly developed in the market and in amongst business

people by unnecessarily focussing too much on just one indicator. It

has a nice clarity to it doesn't it? It has. I will remind, if I may,

that when we put this in place we were just coming off the cusp, the

of a triple-dip scare for a recession. There was tremendous

uncertainty about the stance of monetary policy, there was a split

MPC committee. And business had been facing a lot of uncertainty and

households. We were looking to provide collaterality. I think we

are in a different place now. Sound to me as if you feel like a man

rather on the hook of his own making which he wishes he didn't have. I

will repeat myself, inflation is back on target, 300,000 jobs,

private sector created in the last quarter measured. One of the

strongest growing economies in the advanced world, the recovery has

taken hold, and the question is converting it into a sustainable and

balanced recovery. Do you worry about a housing bubble? We worry

about the momentum picking up in the housing market, that without

question. What we have done, what we did in November is we took some

initial steps to address that momentum. We took our foot off the

accelerator. We are not hitting the brake on the housing market, because

transactions are about three-quarters of what they were

before the crisis, the long-term average. Mortgage approvals are

about the same level, prices have bounced off recent lows, there is

much more to the housing market, as you are well aware, than just what

is happening in London and the south-east, we have to make national

policy. Can I raise very briefly three other points with you. Have

you spoken to Ed Miliband since you dissed his banking policy? Well,

since the second part of that question isn't true. You did! It

would be impossible for me. You said capping bankers' bonuses in the way

he was proposing wasn't helpful. You further had queries about his ideas

of cutting banks down to market share? Two things, we have

responsibility for financial stability at the Bank of England.

When we look at the banker bonus issue we look at it from the

perspective of financial stability. It is worse for financial stability

to pay a banker all in cash today than to hold a bunch of that money

back and put it in shares and other things and have the ability, and for

that money only to show up well down the road, when the risk that banker

has taken shows up, or the misconduct he has performed shows

up, and have the ability to claw that back. Could Ed Miliband's

banking policy possibly work? Well, there is range of objectives, I

think what the leader of the opposition said, subsequent loo nigh

comments about different aspects of the issues that he subsequently said

in his speech, was that he was going to refer to the relevant

authorities. Which are not the Bank of England, it is the competition

market authority. So they would make that decision if it were to come to

that. Let me invite you to stick your hand into another hornet's

nest. Could the independent Scotland retain the pound? There are issues

with respect to currency unions. We have seen them in Europe. It is one

of the factors that affects the outlook for the UK economy, it has

affected over the last five years and affects us going forward. The

challenges of having a currency union without certain institutional

structures. I'm actually going to speak this issue in Scotland next

week and I'm certainly going to meet with the First Minister prior to

doing so. Would you look forward to managing a currency of which

Scotland was a part? I'm a public servant and I and my colleagues

would implement whatever remit we were given. One other question, I

wonder when you look at the called krypto-currencies, like Bitcoin and

the like. Do you ever think that the life expectancy of someone in your

position, not you obviously personally, but the life of national

bank governors is distinctly limited? No, I don't actually for

this reason, certainly it is interesting what is happening in

this regard. But the experience of what I would call free banking, the

experience in the 19th century in the US and Canada, where banks

themselves could issue their own notes was that you had much higher

rates of failure, because almost inevitably, not in every case, the

incentive to issue more notes in order to keep things going is there.

Whether those notes are electronic or physical, there is a need to have

an independent eptity, this is what we have learned over centuries, an

independent eptity with a clear remit, a clear objective, like a 2%

inflation target, as the Bank of England does, that is accountable to

people and part of that accountability is meeting you. Do

you have any Bitcoins yourself? I do not. Would you like some! I can't

invest any money so...! Investing in my children, Jeremy! Well now, what

do you reckon we should make of the unemployment target and the

inflation, and the interest rate level? I you gave Mark Carney a hard

time there. I think the coming down of the and the UK doesn't need a

rate hike any time soon. But laying out a threshold not a trigger is

going to be problematic now we are close to it. It is true that it is

one figure that was a sort of proxy for broader slack, as economists say

in the labour market, now they have the problem of how are they going to

convince you that they won't raise rates very fast, when we are close

to the rate now. It is interesting because the same kind of thing is

happening in the US, for different reasons but the same kind of thing

is happening. There was a threshold set, we are getting very close to

it, the Central Bank don't want to raise rights wraiths any time soon.

They shouldn't. But giving clarity in that environment, and maintaining

credibility is going to be tricky, and you saw Mark Carney squirm a

little bit. There has been very little discussion about tapering or

the impact of tapering, a bit but not a lot. I think we saw the

markets get very nervous when tapering was even mentioned. They

got nervous last year and there was a lot of discussion and when they

did it it was no long sore sure. We priced in, we had the taper tantrum

last year, it is over and done with, we have screamed and cried like the

red Queen in Alice in Wonderland. It will come again, one of the things

we are all focussed on is unemployment and youth unemployment.

We talk about 6. 5-7% and youth unemployment employment is double

that rate, 12-14%. What is interesting is the foreguide yarns

you start to -- foreguidance, you start to look at it, years earlier

we were all focussed on full employment and the inflation was the

threat. The inflation rate is back to target, and the economy is just

getting up to where it was before the crisis. There is not any sign of

overheating in the vaguest sense in the economy, there is no wage

pressure. So the risk I think is still that central banks act too

fast and too quickly and do too much. This recovery is not secure? I

don't think it is secure. It is a gentle recovery. Everything that was

said in the interview about there being too much debt, too much debt.

Nobody is advocating massive rate heights because we hit some arbitary

target. Look at what the recovery in the UK is based on, it is consumer

spending from rising house prices and the housing bubble we can talk

about. Investment is flat on its back. Investment is on flat rate

across the board, corporated sitting on trillions, they are not making

investments banks. The biggest risk for our business this year is

failure by business to invest in brand or capital investment. Do you

feel confident in your business? Do I feel confident in it. Not in your

particular business, does your business, as a whole, feel secure in

the state of the, the pace of recovery? I think there was a

quantum shift in corporate opinion and behaviour post Lehmans, post

September 2008, people talked about people but it was corporate. Our

sweet spot has become less powerful, I think that is the problem. In

order to get to numbers they cut costs, they then invest in top line

growth and part of the reason is GDP growth is still below trend. The

sort of GDP growth we see on a worldwide basis is less than

pre-2008, it is like Mark Carney saying the UK economy is just

getting back. People are very cautious. What I worried about is

not focussing on the top line. You mentioned one of the things talked

about here, youth unemployment, which has the capacity to throw all

calculation off at some point. This is a phenomenon right across the

world. Are there other things that could really throw off any kind of

calculation or assumptions made about the future? Technology. All

the improvements, most of the improvements in technology are

capital intense, if not labour-intensive. 3 -D printing, and

the management processes and lack of need there of. This will have a very

significant impact on unemployment, and youth unemployment, it is

something I think that is the critical issue, the critical

long-term issue. Inequality stems from that. Young people f they miss

out on a job for the first five years of their career, their

lifetime earnings are drastically reduced. I think we radically

oversimplified, if you look back over the last 30 year, we had a

digital revolution, on going and gathering pace. The consequence is a

big shift way from workers towards capital, strength of capital,

strength of profit and firms. You have seen a big rise in income and

equality within workers, you have seen the returns going

overwhelmingly to people who are skilled. Then you had the financial

crisis on top of. That you had the huge recession and huge downturn, we

are recovering from that. But the big secular trend is still there and

intensified. We had the problem of the Chinese labour force entering

the global market, flooding the world with cheap labour, now the

Chinese labour force is being replaced with robots which means all

of those Chinese workers will want higher-skilled jobs. If they

compete, which they will in a global world with our youth, our youth is

going to find it really, really hard. We haven't even touched upon

the political anxieties. Go on? What is really interesting about the

debate you had with the governor is what does it mean politically. It

looks to me as though the Conservatives are, as we go into

2015 going to be in a stronger position than others thought. And

the coaliti will be in a stronger position. You have Ed Miliband

taking the party to the left, chastising business, you saw stuff

in the papers this morning about the reaction from business to that. I

think it is really interesting politically. The other factor, of

course, is the referendum, if Cameron winds, well coalition wins

we will have a referendum. If Ed Miliband wins we won't. It is the

devil and the deep blue sea. This is as nothing compared to some of the

international political problems that could upset all calculation?

The big one being Syria, or China-Japan. There is any number of

potential massive war configuration that is could happen overnight. And

Davos has not been a good predictor of the black spots! As I mentioned

earlier, the World Economic Forum isn't modest in its scope, but then

there is no shortage of things to worry about.

Now this gathering is supposed to be about dealing with global issues, so

here in defiance of the institutional prejudice against

those who don't have the Y-sex chromosome, we have the Ugandan

Finance Minister. The lady who worked her way up from a sweatshop

to become one of the richest women in China, and Ella, my Turkish is

pretty bad, she's the most read female author in Turkey. Do you

feel, let me start with you, it is striking how few women there are

represented at a senior level here isn't it? In the forum. Yes, I have

noticed that. Why? That is what I was going to ask you what is the

answer? It is puzzling because taking Uganda for instance, there is

no legal barriers for women coming up in business or in Government. For

instance we have a requirement that in every constituency has a woman

MP. That is a third of the MPs in parliament are women to begin with.

I don't know. What's your view? You know I would say just the opposite,

I have been coming here for the last almost ten years, I have noticed

this recent two years that women's participation has hugely increased.

Is that your impression too, you have been before haven't you? That

is not my impression, of course it is true in the sense that in the

audience, among the listeners there are many women and there are

beautiful conversations, but when we look at the numbers and statistics,

85% of the participants at Davos are male, 15% are female. There is a

big, big gap. Unfortunately this year it has even fallen under the

statistics of two years ago. Now you weren't able to see all that some of

those amazing statistics that were just running through, but one of the

most striking things is that the difference in what's changed in

Africa compared to the difference to what has changed in China, now why

is this? Why has China forged ahead so much and Africa not forged ahead

in anything like the same level in the last ten years. What's your view

of that? I think in Africa our Governments went through about two

decades of finding their feet, so to speak. We went through coups,

military dictatorships, but in the 1990s we got our act together,

governance, fiscal discipline, focussing on the priorities. And it

has happened to coincide with a time when China was coming up. I think

what's now, our natural resource bases offer a lot of interest to

many people. Africa is now on the cusp. But we have a big deficit and

we need to keep concentrated. We have an infrastructure deficit. We

have a human productivity deficit, we need to take our advantages and

define them. Is there something about Chinese society that makes it

naturally able to progress faster? Well you have a relatively simple

and one-party ruling politics which makes decisions easy. You also have,

in China, previous to the recent 30 years of reforms a very suppressed

social system. So that the recent reforms have unleashed all the

energy. And plus the huge population, very disciplined, hard

working work force. Now when you get a successful

transformation taking place, as is happening, to some degree in Turkey,

it sets off all sorts of social tensions doesn't it? Turkey is a

very interesting case, and a very complicated case, if I may say so.

It is not like any other country in the Middle East. It is not a

typically authoritarian country or democracy either, it is somewhere

inbetween. It is difficult to analyse the country. We have had a

strong economy, especially in the last decade, but afterwards, what

followed was especially along with political unrest, because I think

politics affects everything. I don't think there is enough emphasis on

these things. We're always talking about emerging markets, how you know

Mexico, Nigeria, Turkey, independent nearings are the new e-- Indonesian,

are the new emerging markets but we don't focus on the political

circumstances. It seems to be accepted here that inequality in the

world is a danger. Do you see it that way, if so how is it a danger.

Surely it has always existed? Inequality has always existed but

now with the pace of progress and globalisation and technology, you

know in the global media. People now see and here things they never used

to see or hear about. In the most remote villages they can see big

cars, leather jackets, people going on space shuttles to the moon, and

they say why can't I have that. The aspirational aspects of life I think

are now much more immediate in our children's generation and in the one

after them. But I'm not sure I think that we should concentrate now on

the inequality and forget about forging ahead. Because you need to

grow the pie before you can share it out. It is this place that's talking

about the dangers of inequality. Yeah. It is, and looking at it from

my perspective, from in the African perspective, I say that growth, for

instance, in Uganda, we have got an index whereby our poverty level has

dropped from 24% to 20%, but there was an inequality. You can't say you

are going to hold everybody back in order to make sure that there is no

inequality. You have to let people go ahead and get the people able to

go ahead to go ahead and come back and pick up the others. I will

explore it a few moments from now. Earlier I caught up with Bill Gates,

the founder of Microsoft, he made money beyond the dreams of of a var

Ritz, and decided a -- avarice and decided to spend the money helping

others. I wanted to know what he thought about foreign aid and the

gap between rich and poor. When you hear the statistic from

Oxfam that the poorest half of the world's population own about as much

as the 85 richest people in the world, including you, does that make

you feel uncomfortable? What makes me uncomfortable is that children

die, that people don't get a good education, they don't get enough

nutrition. That is what I have devoted my life to working on. So

all of that money that's in my hands is actually going against those

problems. But you don't deny the gap between rich and poor seems to have

got worse? No, the gap between rich and poor is not worse, thank

goodness. Less children are dying, people a living longer, people are

more literate. If you geoback far enough everybody was poor. You just

want everybody to be the same, 200 years ago life was very short. A

third of all children died before the age of five. That was an age of

strong equality. Do you think enough is being spent on international aid?

I would like to see that increased. Particularly the programmes where

you are buying Malaria bed nets and preventing deaths there. You are

buying vitamin A, you are buying AIDS drugs, you are inventing n

seeds, giving them out, educating farmers how to use those things. We

have seen phenomenal benefits in the aid programmes we are partnered in.

You are a notable philanthropist, why is it British tax-payers or

anywhere else in Europe and the world should they spend money on

poorer people in poor countries? You have to decide do the lives in

Africa have any value or not? Do we as we see them starving, not having

enough nutrition, not having access to vaccines, having diseases that

more money is spent on solving baldness than spend on a disease

that kills a million children. Does that bother us or not. Are we

willing to take, in the case of the UK, less than 2% of all Government

spending and have it go towards the very poorest, which in fact is very

generous. You could completely alter the picture of the world if you went

for a genuine redisputive method in taxation? You mean like North Korea?

No, by democratic consent? Well yeah. You could do that? You could,

we have many democracies they have all have different taxation

policies, the Nordic countries have certain taxation policies and the UK

has different ones, I'm nott an expert on any -- I'm not an expert,

except in the US. Would you want the levels to change? I have been a big

opponent of the estate tax. I believe that income on capital we

could tax that a bit higher. When you saw the results of the Senate

investigation into Microsoft's tax affairs, and the allegation that

about $4 million of taxes a day wasn't being paid because of the way

that Microsoft managed their fares, what did you think? I think that's

about as incorrect a characterisation of anything I have

ever heard. It was the allegation that was made? No, no, it is simply

hog wash. Which aspect is hog wash? The idea that Microsoft didn't pay

its taxes. It is not that Microsoft didn't pay taxes, it is that they

could have paid more taxes? Voluntarily? Yes, by choosing to

organise their affairs differently rather than running them through

Puerto Rico? Your numbers are completely wrong. Let me put it

another way, as statement of principle are you in favour of

people saying as much tax as possible? I think that if your

Government should pass the tax laws that they need in order to collect

the revenue they want to collect, I don't think you know saying that

people should volunteer to pay taxes is likely to raise that much. It can

be tried. But you know, the rules are set, I paid more taxes than any

individual ever and gladly, so I should pay more. I have paid over $6

billion in taxes. How do you persuade people it is their

political or moral duty to pay tax, in order that there can be some sort

of redistribution? You make sure that they follow the law and pay

their tax, if you don't you put them in jail. It seems to work! Bill

Gates thank you very much. What do you make of his approach? I don't

know, I mean it is very interesting to say that, in China we are on the

different side of it, because you know we're in an economy that's

trying to boost consumption versus just boosting investment. Part of it

is how do you get people to spend money. They need to have more cash

in their hands. By doing so the Government needs to lower the income

tax, not raise the income tax. This question though of aid, Bill Gates

has been a generous man, particularly to countries in Africa.

And yet you get to this point that gets to there where he refuses to

take a moral position about whether people should pay more tax in order

to give more in aid. He sees it as a political decision or personal

decision. What do you think? Looking at it from the point of view of an

African Finance Minister, yes the Government has a duty to tax and as

a redistribution of wealth. But we must make sure that since the taxes

in our countries are so precious, we must make sure they go into

sustainability, they go into the areas where the private sector can't

do. For instance in Uganda we are concentrating on narrowing the

infrastructure gap, roads and power, we are concentrating on the human

productivity, health and education. For the rest, making sure that the

macro environment is such that the private sector can forge ahead. And

trying to spend the tax revenues with governance and accountability.

You see if you give accountability, if people can see where their tax

money is going and what it is doing, they are not, they are not adverse

to paying taxes. What's your take on this, on the question of how you

persuade people it's worth paying taxes to narrow the gap between rich

and poor? Find it very important that this year in Davos the main

subject is inequality. There is so much inequality all over the world.

It is such a pressing matter, you know. Not only among countries when

you look at the list of countries and their level, within every

country as well. We see big huge regional differences and this has

big social implications and political implications. And I think

more and more people are recognising that all the rest adds up and comes

back to the economy again. It is a circle, you cannot separate these

facts from one another any more. What is happening in the political

world is affecting what is happening in the economic world. What is

happening in the social, the class gap is affecting the financial

situation. Everything is interconnected. I don't want to be

apot hintic, we are sitting -- apocalyptic, we are sitting here in

2014, and with a world war or catastrophe that nobody saw coming.

Are we talking about these stakes when it comes to inequality and

chnology change and the rest? There is a lot of hope and there is a lot

of reasons to be pessimistic as well. They are two completely

opposite trends working at full forced to. On the one hand the world

is more globalised, people are more and more seeing themselves as world

citizens and feel themselves connected and are looking for moral

values that bind us together. But on the other hand, I think there is

enough of the extremist ideology, ultra nationalism, these are also on

the rise. We have to recognise these two opposite forces working at the

same time today. I grew up in socialist China, I

remember the days when we used to wear the same clothes. Allocated the

same housing, nobody paid tax, everyone is being given exactly the

same salary. That is one extreme scenario. Where China is so much of

it is unleashing the energy and allowing the ditcheses between human

beings, now if you take back extremism, I'm interested to hear

when you said "you mean North Korea", that is pretty much back to

where China was in the 1970s. Thank you very much, that is it from

Davos, back in London tomorrow, good night. Hello there, a real west/east

split to start the day on Friday. Clearer skies but dry fog in East

Anglia. Wet and windy weather pushing in from the west. As it

bumps into the warm air on Scotland snow and freezing