 For the next hour on BBC World News, we're live from Davos in Switzerland for a special BBC World debate. And we're talking about a subject much on the minds of those here. Inequality. After the financial crisis of 2008, many people hoped a more equal world would emerge that we might see a fresh start, reform of the banks and narrowing of the gap between rich and poor. But it hasn't quite gone to that plan. The richest 1% in the world not only have lots of power, but are said to still own nearly half the world's wealth. So, today we're asking, a richer world but for whom? I'm joined by our panellists, two leading policymakers, Christine Lagarde from the International Monetary Fund and Mark Carney, Governor of the Bank of England. We're also joined by two chief executives of companies with branches all around the globe, Sir Martin Sorrell and Klaus Kleinfeldt. And also Robert Schiller, economics Nobel Prize winner and from Oxfam International, Winnie Biennima. But first, the latest news from David Eads in London. Two-minute news summary, then we're back. OK. I can't hear David Eads. You're just going to say Q. But it is David Eads, I'm hoping. David, thank you. Well, welcome back to Davos. I'm Evan Davis. We're live for the next hour to ask whether we're all in it together at a crucial time for the world economy. Do the rich deserve their riches? Would any kind of reform improve things? And technology? Is it entrenching economic power or dispersing it? Lots to talk about. Joining me here at the annual meeting of the World Economic Forum in Davos. First, two policymakers who are both publicly accountable. Christine Lagarde, who's managing director of the International Monetary Fund. Mark Carney, Governor of the Bank of England. Other panellists include Martin Sorrell, who's Chief Executive of the Global Advertising Group, WPP. Winnie Bienyema, Executive Director at Oxfam International. Klaus Kleinfeldt, the Chief Executive of Alcoa, a global company in metals, technology, engineering and manufacturing. And Robert Schiller, who's Professor of Economics at Yale University and a Nobel Prize co-lorate in economics. Ladies and gentlemen, let's welcome our panel. Well, you can tell we have a large audience here with us of business, political and civil society leaders. We'll be taking comments as we talk from Twitter. So tweet your thoughts, whether you're in the room or out there, use the hashtag BBC World Debate. Now first, let's just get out of Davos because we went onto the streets of India, Spain, Brazil and the UK to ask people out there what they feel about the gap between rich and poor. Here's what they told us. I live well in my country, but I realise that there is a lot of inequality and they will have to improve the opportunity to all. There's some people scraping at one end trying to just make a living and no more. And other people that have enough money to go and buy paintings at half a million pounds, it's not fair. We all can see that rich are going to be more rich and poor are getting more poor. It is very frustrating. Obviously, we share the same planet, we share the same city, the same country, so equality should come with the kind of mentality, the kind of tradition, the kind of culture you're sharing, not with what area you put up in or what car you own. Inequality is raising because of two things, unemployment basically, a huge amount of people unemployed and the ones who have the opportunity to get employed, they have ridiculously low wages. I think it's mainly the government, but I think it's also businesses too, rather than kind of not looking into this old boys' club of all the kind of elite people have all the opportunities. It's like actually opening it out to a much wider field. Also, the banks have not been transparent. Probably the law regulations were not helping and governments definitely, and they've stolen a lot from the people. Look at all these candles that we can hear about. If only this money could be referred to, actual education, infrastructure, even transportation is a problem because kids can get to school, they can get to work. I think the government could levy the taxes a little bit better. The rich should be taxed a bit more and a bit of that should go to help the poor people who need it. Well, some public views there, raising many issues we'll get to in the next hour. And I think showing this is truly a world debate. Well, let's get a response first from two important policymakers. I think it's fair to say neither has a background that makes them cheerleaders for a revolution, but both have expressed some concerns with the direction the world has been taking. Christine Lagarde, let me start with you, because the International Monetary Fund used to be thought of as a giant force for conservatism. And then last year, a bombshell, it published a report, a working paper, that said lower net inequality, that is more equality, is robustly correlated with faster and more durable growth, that you get more growth in a more equal society. It's a big change, right? Yes, it is a big change, and I'll never forget the skepticism that I met when two years ago, after having given a speech here, where I raised the issue of inequality and climate change. Some of my economists and quite a few of my board members around the table said, this is not mainstream, you know. This is not core business for the IMF. And I have to say that now it is mainstream. And I was very pleased to see that many of the IMF economists actually embraced the project and produced several pieces of analytical research. And if I may, I would like to just mention three points that they made. Number one, what you just said, that is excessive inequality is not conducive to sustainable growth, strong correlation. Number two, they're finding that distribution per se matters. In other words, if you increase the income share of the poorest, you get a multiplying effect that you do not get if you increase the income share of the richest. So it is good for the economy. It is good for growth. There is a multiplying effect that you find in that dimension. Third factor, redistribution policies are not counterproductive for growth. And that was not conventional wisdom. It was generally accepted to the contrary that redistribution policy was not necessarily good for growth. So on these three fronts, they're saying, inequality is not good for growth. Inequality, in my view, is not good for women because that's a particular inequality that I'm especially concerned about, the gender inequality. Just give us what's underlying that. What is the reason why very unequal societies can damage their own economic prospects? Well, you see the correlation between sustainable growth on the one hand and high and increasing inequality. But why? Well, it's a factor of this multiplying effect that I have mentioned. It's a factor of people not being integrated into society. And it's a factor, as one of the persons on your little film said, jobs, employment are critical points to really improve upon. We'll get plenty of time to follow up all of this. Mark Carney, Governor of the Bank of England. Now, you warned in a speech last year. It's a pretty interesting line, actually. Just as any revolution eats its children, unchecked market fundamentalism can devour the social capital essential for the long-term dynamism of capitalism itself. Just elaborate on that. Well, I think one of the things that's happened is that we went through a period in the run-up to the crisis where belief in market and market solutions extended to most aspects of not just economic and financial policy, but many aspects of public policy. So the marketization, if you will, of social policy, public policy. What was lost, and there was a lot of good in that, but what was lost in that was the importance of social capital. And this is something, this is not new. We need to recall the importance of social capital. Adam Smith to Hayek, to others, understood the importance of a shared set of beliefs and a sense of trust and shared value in the system. We'd undervalued that. It was massed for a period of time. I know you're going to talk about globalization and technology later, but globalization and technology magnify market distributions. And that was massed for a period of time through some good financial innovation but also some misguided financial innovation, which allowed consumption to continue to grow, even though income didn't grow in pace. Robert Schiller drew attention to most of this. And the point being that in the words of one of my colleagues at the Bank of England, it was a policy of let them eat credit for a period that massed these differences. So we're in a situation where we've had to start to reinvest in that social capital to maintain the dynamism of capitalism but to rebuild the trust in the system and reorient towards a longer-term perspective. And hopefully we'll come to some of the measures. OK, well, that's a very important statement of the kind of shift in the intellectual climate over the last few years. Well, we're dividing this debate into three sections. I'll introduce them as we go along. But to start off, I want us to talk about the rich, that 1% that own maybe half of global wealth or even more importantly, that 0.1% who've done so well in recent decade. And for this first section, I want us to ask, what are the rich ever done for us? Ask yourself, do you think they put more into society or take more out? Are they producers or predators? Obviously, your view on this will determine your view of inequality to some extent. Here, first of all, are two voices from business. Capitalism better than any other system enables people, as Lincoln put it, to improve their lot in life. People don't mind that the late Steve Jobs got rich or that Bill Gates has tens of billions of dollars. What people want is the opportunity, as Lincoln put it, to improve their lot in life. They have the opportunity to move ahead. Free markets are allowed to operate with sound money, sensible low taxes, sensible regulation. People do move up. I think it's very important in all the debate about inequality that we do not demonize the wealth creators, do not criticize them relentlessly as fat cats or as the plutocrats, because I think that a society that demonizes capitalism and wealth creation is doomed to a lack of investment and a leakage of talent and will suffer the economic consequences of such an attitude. So, two pro-rich views there. And two propositions underlie the views we've just heard. First, that the rich, that they do good to the world. And second, that they need to be rewarded for that. Or they may not do that good. Let's focus on those ideas, essentially, whether the rich give us value or not. Winnie, B&M, I want to come to you on this. Do you essentially see that 0.1% and Oxfam have made quite a lot about their wealth? Do you see them as producers or predators? Of course they are producers of wealth. But the issue is about political capture, that extreme wealth takes over the process of public decision-making. The rules of the market and the rules that govern society become skewed in favor of the extremely wealthy. And that's why you get unchecked and controllable rise of inequality. Let me give you an example. In the United States alone, the financial lobbyists spent $400 million in 2013 lobbying, influencing political and economic decision-making. They spent $571 million in campaign contributions in the 2012 election. Here in the EU, $150 million spent in lobbying the European governments and the European Union. This is about shaping the rules of the market in their favor. In an ideal situation, we would have all people shaping the way the economy is governed and society is governed. That is the problem. That extreme wealth results in political capture and then from there on, public decision-making is in the interest of the wealthy. So wealth entrenched wealth, even if there's no merit to it. So Martin, sorry. I just want to get a little bit more balance into the debate. I don't know whether Steve Orbs is balanced or not, but we have that. Luke has more balance. So I make no apology for having started the company 30 years ago with two people and having 179,000 people in 111 countries and investing in human capital each year to the tune of at least $12 billion a year. So I make no apology for that whatsoever. The other thing I want to say is this. Over the last 40 or 50 years, we have seen significant improvements in the number of people that have been taken out of poverty, in the number of people that have been put into the middle class, and people use that phrase and I find it somewhat objectionable how it is used and the definitions, whether you look at the World Bank or you look at others, whatever the definitions are, certainly billions of people in emerging markets, what we call fast growth in markets, are in that class and have come into that class. Genia coefficients have improved significantly since 1960. These are the measures of inequality. Since 2000, they've gone backwards marginally, but they have significantly improved. And finally, it's not well publicised, even by organisations such as Oxfam, for whom we work, right? But in the Lancet, for example, in the last 30 days it would be very interesting to talk about the number of diseases and reduction in diseases and reduction in the years of lives lost, which has been very significant, again in the last 40 or 50 years. So we have made improvements. The question is, have we made sufficient improvements? There are two things I just want to say finally. One is the World Economic Forum, which Sam's done some very interesting work on what needs to be done in terms of categories to improve equality. By the way, Christine, it is not proven that equality, the reverse of what you said is true, that equality drives sustainable growth, e.g. Venezuela. The second thing is, in terms of employment in the private sector, we are in a low growth trap. Companies are not increasing employment. We've talked about this before, Mark. There's a slow growth economy. There's too much focus on cost, not enough focus on expansion and growth. I take that. There's $7 trillion to win his point. Sitting on balance sheets and investing. Winnie, quick reply to Martin. Yes. No, honestly, since the financial crisis, we're seeing rising inequality. The gap between the rich and the poor is widening very fast. Last year, we issued a report, Oxfam issued a report that said that 85 richest people in the world own as much wealth as the bottom 50%. This year, the figure has come down to 80%. The rate of growing inequality is high. Winnie, that's because the bottom, the bottom, very large number of people own nothing at all. People who even have a tiny bit of wealth have more than the bottom 27. That's human capital. That's another thing. We know the reasons. We know that many wealthy companies and individuals are not paying their fair share of taxes. There's a global tax system that's leaking. We need to fix that. I want to go back to our two chief executives here, because Winnie made a very important point, and we've had it on Facebook too, Ian Charlton from Australia. The rich make the rules. He says they pay less tax. So we need to get rid of them. It's a sentiment plenty of people have. I don't know the class I'm in. One of the interesting areas... I wish we did. One of the interesting areas where inequality that has driven some inequality in developed countries has been growing chief executive salary. Now, isn't this an area where the rich make the rules and then pay themselves a lot? So, Klaus, I want to ask you a very specific question. You've got a great job, right? Would you do that job for half as much? I don't know. I never intended to in my life to become a CEO. I mean, my life got me there and apparently people thought I'm good at that. But can I actually go back? Because I got some numbers here. No, because I think it's important that we are not throwing out the baby with a bathtub. Because I think we are kind of tempted to debate it in the current context. In terms of inequality, I think we have to analyze the data and the facts. And I looked it up for this debate. What Martin just said, the global emergence of poverty. I mean, people living in poverty, the share of the world population living in poverty. 1820, 94% have been living in poverty. 1950, 72%. 2011, which is the last number I could get hold of. 14.5%, right? 14.5% were dollars purchasing power parity. In 1820, 2% of the world's population were in that category. In 1950, 23%. In 2010, 54%. I do want to just talk about a recent phenomenon. And I think we have to be careful to analyze it as a recent phenomenon. And I think we have to stratify it with a time frame of a recency and think what happened there. And I think this is this wealth creation that we have been generating through basic industrialization and globalization. And the second thing is, it's very different. We have to be careful that the debate is not focused just on the West, but also on the rest. Because I think we're seeing very different phenomena. Also, when you talk about measures, what's happening in the Western world and what's happening in the rest of the world? I would answer, pay for performance. Come back to the CEO question. Pay for performance. Robert Schiller. I do want to bring Robert Schiller in this case. Nobel Prize winning economist. Comment on what you've heard so far, the proposition. The inequality problem has been around for millennia. And there have been efforts to deal with it. Tithing is in both the Muslim and Christian religions. There's a lot of history to this. It's a complicated problem. I'm hearing it different sides here. I'm saying, the rich can dominate and they can be obnoxious sometimes in defending their interests. On the other hand, we have to give incentives to... And you are, Klaus, are exactly right. The capitalist... You're not the first person to make this observation. It's known all over the world. That's why a lot of formerly communist countries are embracing market solutions. And I assume you agree. And basically... So it's a subtle problem that we have of trying to create rules and institutions that... And I bet you do it for half the money, by the way. See, this is the point. I think you do it. I wouldn't necessarily place that back. Come back. Come back to China. China is state-directed capitalism. The Chinese, ironically, paradoxically, have chosen a system each in 1985 to stimulate the growth in the middle class through state-directed capitalism. So let me just bring Mark Kearney. I mean, you work for Goldman Sachs and we're handsomely paid there, I'm sure. What is... Do we pay? Is there a feature of the world that means that we're more keen to cut costs for people at the bottom of the spectrum than people at the top of the spectrum? There are technological dynamics, which we'll get to, I think, later on, that are keeping lower skilled wages flatter than they would otherwise be. Okay, so I think we should recognize that. Let me have a couple of points. First, this point about reduction in poverty, absolutely essential, hugely important, but that is a global... That is a process of globalization and its convergence across countries. That's good news. In virtually every country, including those countries that are growing, those big emerging markets, inequality is increasing and increasing quite dramatically. So this issue is an issue. It's as much an issue in China as it is in the UK, for example. And in terms of these questions around the structure of wages and where opportunity is found to reduce costs, the returns to skills are magnified in a globalized economy. Steve Jobs' brilliance is applied globally, as opposed to locally. And that changes the returns and those who work within the skilled jobs there. And so we recognize those dynamics. We should just recognize those dynamics. There's nothing wrong with those dynamics. But then the question comes and the common theme of your interviews on the street is about equality of opportunity or opportunity for all when one man put it. And so it's how this structure and as the system evolves do you maintain that equality of opportunity? Christine Winnie made a stronger point though which she was saying that the rich set the rules implying that they are somehow over rewarding themselves by setting the rules for what they had delivered. Now do you believe that or not? You have different forces here. And I think the answer will depend on whether you're in a democratic environment where people have a voice, have a vote and where it is counterbalanced by this excessive power of conviction that is not in the ballot box but in the wallet. So all these has to be looked at on a per democracy or per other regime basis. That's one. Second I confirm what I said Martin. I didn't say that equality is conducive to growth. I said excessive inequality is not good for sustainable growth. That's what our research indicates. But I think we should also look at what can be done about it because there has been a worsening of the situation particularly since the financial crisis. We have to look at why that is. We're going to do that in a minute. If I can just say why that is you have had a massive increase of wealth caused by an increase of the asset prices under the current circumstances. So I think we have to distinguish between the income disparity, the wealth disparity and for each of those two we need to think about what can be done about it in order to reduce the excessive inequality that hamper growth, that hamper jobs and that prevent women from accessing the economy. Just to finish this section, Winnie, I want to ask you the question of the Steve Jobs question. If all that 0.1% were kind of Steve Jobs characters, well Steve Jobs was more than the top 1%, if they were all Steve Jobs type people, would you feel any problem with global inequality and that bus load of people who own as much as half the world? When we put out these statistics we are trying to show a trend. We are not trying to say that this 1% or 0.1% are the bad guys to focus on. This is not about who flew in here on a private jet and who did not. What we are talking about is that the very wealthy all over the world can buy for themselves longer healthier, happier lives while poor people at the bottom are trapped and their children are trapped in poverty for generations. If you take the level of inequality as it exists now in the United States, for example a child born in a poor family will become a poor adult. So the American dream is just that, a dream. It's not true because of the level of extreme inequality. So what we are talking about here is that there are solutions and we want to focus on those solutions the things that have worked that reduce economic inequality. We are going to do that now. What we have seen so far is that it's quite hard to trap people into binary position on the value of the rich. But I do just want to do a show of hands in this audience which could probably not be less typical of the world outside. I do want to just get the sort of the mood of the meeting. Let's just do a little show of hands of whether you think that the top 0.1% contributors to the world they are kind of, if you like, the Steve Jobs types or whether they are net extractors. They are very clever people who invent spurious financial products and take out very high salaries. How many of you here would say they are net contributors? How many of you would say they are net extractors of value? I would say that was about nine, eight to one in favour of the contributors. So the mood of this meeting that they are net contributors. Well, let's move on. Everyone has been saying we need to talk about what we do about it. And as we've heard, for all the gloom about inequality, global capitalism has been doing something right. It has been lifting people out of poverty. According to the World Bank, the proportion of the world living below $1.25 a day has gone from 36% back in 1990 to 15% today. So you might ask, do we need to reform that system? Well, we asked one, Laureates of the Nobel Peace Prize, Muhammad Yunus. He's the man credited with inventing microcredit. Why we should care about reform. Nothing has changed before the 2008 crisis and after the 2008 crisis. We only took time to get back to the same old thing that we left behind in 2008. So we are back in pre-2008. Institution didn't change. Policies didn't change. Nothing has changed. That's a sad thing because we thought this financial crisis will teach us a lesson that we have to redo things. We didn't redo things. We are talking about banking system, financial system is very much biased towards rich people. So as a result of the way human being has been interpreted in the economic theory, economic structure that we built around us became a sucking machine. All it does suck juice from the bottom and transport is in the top. So that's unacceptable and it will get worse. It will not get better. It will become a big big crisis. The whole society will explode at one time seeing what has happened. All the wealth of a nation, any nation will be in the hands of a few people and other people will be just lying there trying to struggle for make ends meet. That's not something we have learned from 2008. So now we have to go back and redesign the system. There's no better way than doing that. Views of Muhammad Yunus there. We actually had a tweet from Eric Prennan. He says you can debate the numbers all you want. People perceive the world as being unequal so not solving it will spark social unrest. So what do we want to do about it? Let's have a think about reform and whether it will achieve much. This is a chance to talk about tax and similar issues. Take us away. How radical would you be, Bob Schiller? I have four books about this. I view these as complicated problems. First of all who are we? Muhammad Yunus referred to we are. There's a fundamental thing called civil society and it has developed it's not when you're right about unequal power but we still and I'm not sure we all understand how it works but even the rich can be framed out of pursuing it too much. Ultimately we do campaign law. Somehow these things happen. They're not perfect but we move ahead. But now do you want me to talk about my particular proposal? I think it is so complicated and there's such a long history. I think we should be generally happy that inequality is not worse but I think you're right Winnie. Oxfam you're doing a good thing to draw attention to these problems. How radical would you be in reforming the current global economic system? Clearly there's some perception that it's not working for everybody. I think of myself as a radical but not in the communist side. I believe that it's a problem of economics. It's a problem of risk management. It's a problem of incentivization and it's a political problem. So what I like to think of is going toward the concepts of the financial and economic theory and based on also our knowledge of human psychology and human instincts about fairness. People have very strong emotion. We have to design institutions. Give us an example of something you would do. Two general categories that I talk about in my book. But they don't solve all the problems. One thing is improving private insurance. We have disability insurance. That helps. I want to give a appreciation of what insurance people do. Disability insurance is a huge factor of reducing inequality. We can improve disability insurance by making it cover livelihood risk of a much broader nature. Winnie give us your manifesto. I just want to hear some ideas and then we'll put them to our other. Global tax reform. Oxfam estimates that there's 18 trillion dollars stashed out somewhere in tax havens that's not being taxed. That's money that could be plowed back in the economy to create jobs and to give opportunity to poor people to lift themselves from poverty. So fixing the tax systems to reduce tax dodging and to tax aggressively. That's one. We also know that giving a minimum wage lifts, reduces inequality significantly. Brazil did it. It increased the minimum wage by 50% between 1995 and 2011. That considerably reduced inequality and lifted people out of poverty. Those are two solutions. Let's put both those to our chief executives and I think a bit of what's missing in the current debate is the drivers. We're always referring to times after 2008 as though nothing else has happened. In my view, what's missing in the debate is there is a gigantic new factor and that's technology and the way technology changes the world in a speed that we haven't seen before. It does good things for class we're going to talk about. I just want the tax. I leave it to the expert. You moved to a complete island. Your poll just proved that turkeys don't vote for Christmas. Second point. Cheap money has driven the asset appreciation since Lehmann in 2008. Central bank policy has driven another dose of it yesterday. What happened? Our share price went up 3%. Did things change fundamentally? Do you think it's a structural reform in Europe? No. The third point is when I left university many, many years ago what was the fundamental tenant of economic policy? It was full employment. There was a thing called the Phillips Curve which said what's the level of inflation at full employment? Today it's the complete reverse. Six point plan. Quick, quick, quick. Human capital, i.e. education. Employment and labour compensation. Entrepreneurship and investment. Corruption and concentration of rents. Social transfers. Equalisation of taxation. Basic services and infrastructure. Both hard and soft. You've done the job that Jonathan from Jamaica asked you to do. He wants to hear from the rich themselves how they would make it better for the poor. You've given us a lot to chew on. You mentioned monetary policy driving it. I did want to ask Mark you were a central bank governor. Firstly, for a comment on what happened yesterday at the European Central Bank does the whole issue about quantitative easing has that actually been playing part some role in this? Particularly the distribution of wealth? Well, first thing welcome the steps that the ECB took yesterday absolutely necessary to preserve the prospects of medium term prosperity in Europe. But as Martin indicates that this doesn't deliver medium term prosperity. It creates the conditions for it. Secondly, some necessary conditions. Secondly, all monetary policy has distributional consequences. We lower interest rates. It helps debtors at the expense of savers. Questions of distribution are rightly the province of elected governments. They're societal questions. They're not questions for central banks. Third point if I may. What's absolutely crucial is that we have inflation in the right spot. Inflation, need I remind you. The poor use cash. They can't hedge themselves. They don't have access to any form of insurance. Hurts them more than anyone else. And deflation, which is one of the bigger risks at the moment globally will hurt those who are indebted. Those who became indebted in the run up to the crisis. Those who didn't see their wages increase in the run up to the crisis. That will make the weight of those debts that much worse. I think that the government or the ECB in order to deliver one of the necessary conditions ultimately so that governments, society, civil society as a whole can address these broader issues. Okay. We have a window of opportunity. The price of oil has gone down significantly and probably for a period of time. Now is the time to actually remove the world over, the subsidies to use of energy. If you include the sort of damage caused to the environment as a result of extensive use of energy. You remove those subsidies, two trillion, you put one trillion on job creation. That is, you reduce the social charges on job creation so you accelerate that. And you put one trillion on education. And you particularly focus on women. Two trillions available, you split them in half. And you can also consider as well as the subsidy removal is financial inclusion. Critical to make sure that people actually have the benefit of financial inclusion and a lot of corruption actually can disappear by the same token. Before we move on, I just want to say a couple of words on financial reform because I don't think it's a fair characterization to say nothing has changed since 2008. We're working to re-center finance as a servant of the real economy. It's rightful role. Financial institutions may have spent a lot of money lobbying. They wasted a lot of money lobbying. Capital requirements for financial institutions for banks have increased ten times since the financial crisis. We have worked to put in place mechanisms to end too big to fail. Perceptions matter. One of the big issues is the fairness of the system as Oxfam rightly draws into this in their report, but the subsidy there has come down and it's a subsidy. This implicit subsidy from us two banks come down from about $130 billion in the UK sterling to about $30 billion today. We're looking to eliminate it by changing things. The other aspects that have to change though is the effectiveness of markets, the fairness of markets, allusions to the scandals I think in your initial element and there's some reality there and part of the way we get at that is a way for performance which is performance in all senses of the word, not short term returns but whether there's excessive risk taking and very importantly whether conduct is appropriate. So we're putting in place new structures for pay so that pay can be taken back from those who took excessive risk or certainly who contributed to any of these types of scandals and that's essential to get fairness back in the system to build trust. As Bob Schiller said, it's not all the answer but it's part of the answer. Well I'm encouraged because we've had a lot of ideas. We've had financial reform talked about. We've had a very specific idea about insurance which would help those at the bottom end. We've had Martin Sorrell's six point plan. Rick Sammons. Can I come back on taxation? I want to come up. You see this 50% at the bottom that we talk about that has the same wealth as 80 at the top. Who are they? 90% of them are people in Africa, in Latin America, in some Asian countries. They are from poor developing countries. And who is the 1%? 70% of the 1% are rich people in the northern countries. Now if you look at these developing countries they are also the same countries that are exporting many of them. And we know that a hundred billion dollars is lost to these countries every year through tax dodging and unhealthy tax competition. So unless we fix the global tax rules so that these countries can collect what is due to them they're not going to be able to lift their people out of poverty. So we need to fix the global tax. Christine DeGarde, you might have a role in that, coordinating things potentially. Go on, what do you think of that? We actually do and we provide a lot of the developing countries with technical assistance in order to reform their tax regime, in order to improve their collection of revenues and in order to be more transparent about the relationship that they have with the purchases of those commodities because there is leakage there is base erosion there is profit optimization going on detrimental to the low income countries that are providing those commodities but it's not, I would agree with Professor Schiller it's complicated it has to be done, it has to be improved but it's a complicated matter and there are no sort of black and white solution, it has to be really done properly. But to Winnie's point through to 2030 the rise in the middle class in the BRICS despite some of the current difficulties, short term difficulties I believe, that some of those BRICS have the forecasts are that the middle classes and poverty level middle classes will rise, poverty levels will fall and general wealth will fall the problem will be not so much in those fast growth markets and you saw it a little bit in your film clips the problem will be in western Europe in France and Italy and Spain because that's where the unemployment, particularly youth unemployment is so high and ironically that's not going to be the issue by 2030 I think Martin and Winnie are both doing good things in different spheres, you are helping produce wealth, you are helping deal with a fundamental human problem that if I don't see for poor people I blank them out if you walking down the street anyone here I assume walking down the street found a starving child you would help I know there are people like that to help but you don't see them so what Oxfam does is it brings that to our attention and I think it's a force for the good Yes, one out of nine people in the world today will go to bed hungry tonight that's not right, it shouldn't happen one billion people still live on less than a dollar a day that shouldn't be we can't just keep saying that there's a growing middle class there's one billion people in a world full of riches that are hungry and living desperate lives But Winnie what do those figures mean to you about the very large reduction in the proportion of the world living in poverty do you recognise that that is a system that needs to be preserved and just nudged or do you see it's a system that needs to be overthrown? I'm not ideological, I'm not against capitalism or even against communism I'm just looking for solutions that will give everyone in the world a decent life and we know there are solutions we know there are solutions in fair taxation and spending if that can happen, if we can have a global system of rules that enable that that will help us if we can plow resources into education and health we know that works that is a virtual income to the poor it lifts people out of poverty you said you're not an expert on tax how big a part does tax play in the business decisions that you make, if we put taxes up on your company would it damage the output, the employment all the things we might like Coa just celebrated this 125th anniversary last year in many of the businesses when we invest we stay there for the next 100 years I mean we make decisions today that impact communities over a very very long term tax policy usually is very very volatile, if I make a decision and base it purely on tax policy I would not do a good job but we have to be honest and say it does influence it very significantly so to win this point, to get change you have to have coordinated policy it can't be a race to the bottom I mean for example in the UK one of the reasons that the UK economy has been so effective and efficient and George has done such a good job as CFO of the UK economy the tax rate is internationally highly competitive I think that's the point, it has to be competitive and I think we're talking about in a flat world in a flat world what you really have to do is you have to have a tax policy where you have a level playing field you know as well as I did in class that in America the US companies complain that their tax rates are too high and that is true let me say this, for the companies here that I come to tell to give them uncomfortable messages are putting 50 million dollars every year here in Europe to lobby what are they lobbying about? it's mainly about taxation it's so that they can get away with little taxation so let them stop lobbying why must they keep lobbying? let them put the money in medicine we do need to move on we've got so much to talk about different ideas, not from the debate on equality is thought about the fact that we don't hear very much about what one might do about it we've had plenty to go and chew on. I want us to move on to a brief final section here to talk about whether our system is inexperably driving us to more inequality or potentially less through technology so here's the basic question is the internet and all that goes with it is that a force for redistribution or for allowing the haves to have yet more Tim Berners-Lee who's the inventor of the World Wide Web for a view and he warned that a large chunk of the world's population is being left behind to a certain extent the original vision of the web was that it should be something where individuals, citizens, consumers participate the web seems on the face of it to be a tremendous equalising measure and it's often hailed as being something which breaks down national boundaries allows anybody to connect so let's think about that for a moment first of all when we think about anybody can connect, well actually a minority of people around 40% of people in the world use the web at all so for the other 60% in fact every time the power of the web increases every time it's possible to do more things online then actually those 60% are left further behind so to a certain extent while the web is still only available to 40% of people in the world it is increasing the gap between the haves and the have nots Tim Berners-Lee there well the web obviously has some beneficial effects in reducing concentrations of wealth and power it increases competition it improves education and the transmission of information but it might give more help to those who have the best access and of course it does threaten jobs and disruption often to those already struggling so good effects Klaus Kleinfeld I'm interested in your take on whether technology and the way it impacts your company whether that is if you like diffusing economic power or whether that's concentrating on it and the answer is it does both I mean in a way technology has really made the world very flat it's a digitization of things right I mean Mark Andreessen said software is eating the world and we see that everywhere I mean I've also pulled up some data here on also on the rest of the world I mean if you look at mobile cellular subscription I mean from 2005 1.2 billion of people in the rest of the world has exit now it's 5.1 billion people and when you look at what happens when farmers get their hands around simply a cell phone that has access to market information I mean the average income increases Sri Lanka 23% India 19, Uganda 15, Peru 13 so that's great when you go to the developed world you see another phenomenon you see for instance you look at the job of a call center which can be done as we all know anywhere in the world I mean the cost of that is in the U.S. it's $81,000 a year and in India it's $43,000 a year so guess what's gonna happen right so it's clear it's gonna test both effects I think we're living at a time of panic about artificial intelligence not just the internet think of it more broadly and I think we're panicked by new things that are scaring us about our jobs in the future Siri came out in 2011 it's about four years ago with a cell phone that answers your questions I now have one I turned it off in my pocket but I could say okay Google what should we do about inequality and a voice would come out of my pocket that would join into this conversation it wouldn't be as brice as yours though Robin but the point is that people are scared and they are right to be scared we don't know where this is going artificial intelligence is coming and it will replace your job or at least bring you into it's not only artificial I mean it's 3D printing robotics we see in the Alcoa manufacturing process we don't know to Robert's point and we don't know in our industry too how much how many jobs are created or not one point I hesitate to disagree with Tim Berners-Lee but take Egypt for example which we were discussing last night 44% internet penetration 115% penetration on mobile the difference is the smartphone China 475 million smartphones the difference is the smartphone Xiaomi $45 billion of value after four years these things are changing forever Grameen Bank built on those telephone women that rented out phones mobile technology is fundamentally changing way and altering supply chains and legacy businesses in a very threatening way okay we've got a tweet making the point the robotics lead to capital intensive production and then unemployment and tech thus drives inequality Winnie are you as pessimistic about technology as that no I'm not want the potential of technology to give a good life to everyone lift people from poverty is enormous we work in many countries around the world using technology to help poor people find solutions one of the proudest project one of the projects I'm proud of is a project that gives young people post crisis coming out of war in northern Uganda opportunity to access global markets through the internet doing some outsourcing work for companies in America that's great but we have to understand that today people are dying from Ebola there's no vaccine for Ebola malaria still killing millions of people it could be treated and why because there's an over reliance on intellectual property for research and development in technology if we can put research and technology more as a public good and have investments by governments for the development of technologies that can empower people then we are on track but when it's driven by private interests and intellectual property rights it doesn't lift people from poverty I think you've been a little more pessimistic than I was expecting about technology if I'm honest let's get the mood of the hall here let me just ask a very simple binary question new technology is it going to create jobs over the next 20 years or is it going to destroy jobs over the next 20 years how many of you think it will create jobs and how many think it will destroy jobs I would say that was about three quarters one quarter three quarters we haven't time for the don't know Martin three quarters think it will create will create jobs okay let me go back to my because we are tight we are now sort of wrapping up first of all Mark Carney are you pessimistic on technology because of course technology in the past has tended to create as many jobs as it destroys no I'm an optimist on technology I'm not a secular stagnationist if you will in that sense of the word but the disruption element is very large here and there will be a period of adjustment and so picking 20 years is actually quite helpful if your question was in the next five it would be much more difficult make a couple of points on technology first we should recognize actually some of the biggest the firms that take most advantage of international tax rules are technology companies the amount of tax that's actually paid by technology companies is very small relative to the returns so that IP and so a sense of responsibility for the system I would point to that two final points on technology first is that as Robert Schiller alludes to artificial intelligence it's not even just the intelligence it's actually the algorithmic power of the ability for technology to displace very what we see as cognitive jobs today but actually everything I did at Goldman Sachs actually can be replaced by technology which tells you something which is why I had to leave and there's some who think everything I do today would be better replaced by technology but the point being that in that disruption a series of white collar middle class jobs people have to improve their skills to move to the higher creativity jobs a lot of them in the interim this is the job polarization point compete they're over skilled for the jobs they compete and that helps keep wages down so the issue becomes how do you have education how do you have lifelong learning how do you have training for a world where we're actually creating the mass creativity those are the types of jobs we'll ultimately need but it's going to take a while to get from here to there we've just got 90 seconds left if you like wrap up the whole debate with you Christine Lagarde it feels like there's been a big shift in the intellectual climate in the last five or ten years we talked about that at the beginning do you think there's a political will to grab some of the issues that we've talked about perhaps think about do some of the policies that we discussed you know if I can move the IMF in the direction of looking at inequality as main stream and core business if the Republican party in the United States is now looking at inequality as an issue as was reported in the New York time this morning then certainly there is a shift and we have to take advantage of that shift in order to make sure that what is excessive becomes sensible reasonable and conducive to good creation of market value to good creation of jobs and to a bit more fairness around the world 20 seconds were you excited by President Obama's State of the Union message on Monday? If you can implement half of it yes and the tax stuff the tax stuff half of it we've had a very interesting debate sometimes these issues are always far more complicated than the public would like them to be but we do now need to bring a close to our debate today of course the conversation can continue you might want to follow up some of the points you've heard you can continue the conversation online in homes and in workplaces around the world but let me say a very heartfelt thank you to all of you who have contributed your thoughts and questions there are some more tweets I could have read thank you to our global audience around the world on television radio and online and of course above all thanks to our panel here but that is all from the world debate in Davos from me Evan Davis goodbye