23/01/2014 Newsnight


Jeremy Paxman presents a Newsnight special from the World Economic Forum in Davos, and interviews Bank of England governor Mark Carney and Microsoft founder Bill Gates.

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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


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