Wednesday, January 11, 2017

World Economic Forum says capitalism needs urgent reform

Reforming the very nature of capitalism itself will be needed to combat the growing attractiveness of populist movements around the world, the World Economic Forum said Wednesday

By Pan Pylas, Associated Press | Associated Press – 2 hours 44 minutes ago
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  • ricky l 0 seconds ago
    This is a good piece of article. 
  • "Capitalism indeed needs urgent reform" - otherwise the whole mankind will revolt in every Country and every Society. "
  • Disruptive technologies - has also kill jobs" - leading to massive job loss to technologies, automation, robotics. 
  • Thus there is an urgent needs to :- 
  • (1) Create jobs 
  • (2) Allocation of economic resources to every human to sustain their daily living 
  • (3) Better collaboration of every Countries Economies - to share wealth, prosperity - in order to ensure World Peace.

  • World Economic Forum says capitalism needs urgent reform

    Reforming the very nature of capitalism itself will be needed to combat the growing attractiveness of populist movements around the world, the World Economic Forum said Wednesday

    By Pan Pylas, Associated Press | Associated Press – 2 hours 44 minutes ago

    LONDON (AP) -- Reforming the very nature of capitalism will be needed to combat the growing appeal of populist political movements around the world, the World Economic Forum said Wednesday.
    Getting higher growth levels, it added, is necessary but insufficient to heal the fractures in society that were evident in the election of Donald Trump as U.S. president and Britain's vote to leave the European Union.
    In a wide-ranging report from the organizer of the annual gathering of political and business leaders in the Swiss resort of Davos, the WEF identified "rising income and wealth disparity" as potentially the biggest driver in global affairs over the next ten years.
    As an example of this growing inequality, the WEF highlighted the massive increases in CEO pay at a time when many people in advanced economies have struggled to make ends meet following the global financial crisis.
    "This points to the need for reviving economic growth, but the growing mood of anti-establishment populism suggests we may have passed the stage where this alone would remedy fractures in society: reforming market capitalism must also be added to the agenda," it said in its latest Global Risks Report.
    "The combination of economic inequality and political polarization threatens to amplify global risks, fraying the social solidarity on which the legitimacy of our economic and political systems rests," it added.
    That's some conclusion from an organization that's sought to play a central role in the globalization process of the past couple of decades and that is closely identified with some of the world's richest people.
    As well as getting growth higher, the WEF identified four areas that need to be addressed urgently: the need for long-term thinking in capitalism; a recognition of the importance of identity and inclusiveness in political communities; mitigating the risks and exploiting the opportunities of new technologies such as driverless cars; and strengthening global cooperation.
    It added that a failure to address the underlying sources of the populist tide poses a threat to mainstream politicians and raises the risk that the globalization trend will go into reverse.
    "Some people question whether the West has reached a tipping point and might now embark on a period of de-globalization," it said.
    Although anti-establishment politics have tended to blame globalization for the loss of traditional jobs, the WEF said rapidly changing technologies have had more of an impact on labor markets.
    "It is no coincidence that challenges to social cohesion and policymakers' legitimacy are coinciding with a highly disruptive phase of technological change," the WEF said.
    Other key drivers identified in the survey of global risks related to climate change, rising cyber dependency and an aging population.
    The 2017 report, the 12th annual report, is based on an assessment of 30 global risks by 750 experts from a variety of backgrounds, including business, academia and non-governmental organizations.
    @YahooSG on Twitter





    Globalisation 'easy scapegoat' for global angst: WEF chief

    Marie-Noëlle BLESSIG
    AFP News






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    Founder and Executive Chairman of the World Economic Forum Klaus Schwab said rapid shifts in technology, economies and social structures have fuelled "a certain anxiety"
    The man behind the annual Davos forum that for decades has been singing the praises of global trade insists that globalisation is only one factor in dramatic shifts provoking angst and anger.
    Klaus Schwab, the 78-year-old founder and executive chairman of the World Economic Forum, told AFP in an interview this week he understood that rapid changes in our societies were provoking anxiety, but stressed that globalised trade was not the sole culprit.
    "It's not just a backlash against globalisation," he said, adding that "what we are witnessing is a time of enormous change."
    Rapid shifts in technology, economies and social structures have fuelled "a certain anxiety of the people, (who) are looking for an identity in this new world," he said.
    This year's Davos meetings take place next week, and Schwab's comments come after a wave of anti-establishment populism over the past year which saw Britain vote to leave the European Union and maverick billionaire businessman Donald Trump elected as US president.
    Other populists have also been gaining ground in many Western democracies, largely by stoking fears about globalisation, immigration and refugee flows.
    Schwab said the world appeared to be in "emotional turmoil" but said the turbulence was rooted in a range of factors, including deep concerns over how new technologies are threatening jobs.
    Globalisation, he insisted, is simply "a very easy scapegoat."
    - A more fragile world -
    But while globalisation is easy to blame, there are no good alternatives to it, he suggested, warning of the dangers of growing isolationism.
    A more isolationist world would be "different from today's world," he said, including a likely return of borders and border controls in Europe "with all the inconvenience for business but also for people that borders represent."
    "But what I'm much more concerned with is the fact that countries become much more egotistical under the pressure of the national electorate," he said.
    An isolationist world would be one that is no longer "based on shared values, but a world which will be characterised by interests," he warned, saying that if global cooperation happened at all it would be based on shared interest alone.
    "But a global cooperation which is based just on sharing interests will be very unstable because values remain the same, but interests move over time," he said.
    "We will be in a much more fragile world," he said.
    WEF, which for the past 47 years has been organising the Davos forum of political and business elites, pointed out this week that Schwab had been sounding the alarm on this issue for decades.
    The organisation pointed to an opinion piece in the New York Times that he co-authored in 1996, in which he warned that the "mounting backlash against (globalisation's) effects ... is threatening a very disruptive impact on economic activity and social stability in many countries."
    Schwab said Davos is the perfect place to begin addressing the problem, with its strong focus on "the need for responsive and responsible leaders."
    "Responsive means that if you are a good leader, you have to listen to the people who have entrusted you with leadership," he said.
    "But in the end, it's not enough just to listen. You have to solve the issues. You have to address... the root causes."
    "Why the people are angry, and why they are not satisfied. That's responsibility which needs courage and which needs decision-making and which needs action orientation," Schwab said.
    But Davos is not just about political leaders, he said, insisting that the forum offered a unique platform for cooperation across politics, business, civil society and experts.
    "The big issues in the world cannot be solved by governments alone or by businesses alone," Schwab said.
    "I think in a world which is disintegrating and which is polarising, you need a clue, and you need a mechanism for interaction, you need a mechanism for dialogue," he said.

  • Davos elites struggle for answers as Trump era dawns

    • Posted 15 Jan 2017 15:05
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    • Updated 16 Jan 2017 06:10
    A Davos logo is seen before the annual meeting of the World Economic Forum (WEF) in Davos, Switzerland January 15, 2017. REUTERS/Ruben Sprich
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    DAVOS, Switzerland - The global economy is in better shape than it's been in years. Stock markets are booming, oil prices are on the rise again and the risks of a rapid economic slowdown in China, a major source of concern a year ago, have eased.
    And yet, as political leaders, CEOs and top bankers make their annual trek up the Swiss Alps to the World Economic Forum in Davos, the mood is anything but celebratory.
    Beneath the veneer of optimism over the economic outlook lurks acute anxiety about an increasingly toxic political climate and a deep sense of uncertainty surrounding the U.S. presidency of Donald Trump, who will be inaugurated on the final day of the forum.
    Last year, the consensus here was that Trump had no chance of being elected. His victory, less than half a year after Britain voted to leave the European Union, was a slap at the principles that elites in Davos have long held dear, from globalization and free trade to multilateralism.
    Trump is the poster child for a new strain of populism that is spreading across the developed world and threatening the post-war liberal democratic order. With elections looming in the Netherlands, France, Germany, and possibly Italy, this year, the nervousness among Davos attendees is palpable.
    "Regardless of how you view Trump and his positions, his election has led to a deep, deep sense of uncertainty and that will cast a long shadow over Davos," said Jean-Marie Guehenno, CEO of International Crisis Group, a conflict resolution think-tank.
    Moises Naim of the Carnegie Endowment for International Peace was even more blunt: "There is a consensus that something huge is going on, global and in many respects unprecedented. But we don't know what the causes are, nor how to deal with it."
    The titles of the discussion panels at the WEF, which runs from Jan. 17-20, evoke the unsettling new landscape. Among them are "Squeezed and Angry: How to Fix the Middle Class Crisis", "Politics of Fear or Rebellion of the Forgotten?", "Tolerance at the Tipping Point?" and "The Post-EU Era".
    The list of leaders attending this year is also telling. The star attraction will be Xi Jinping, the first Chinese president ever to attend Davos. His presence is being seen as a sign of Beijing's growing weight in the world at a time when Trump is promising a more insular, "America first" approach and Europe is pre-occupied with its own troubles, from Brexit to terrorism.
    British Prime Minister Theresa May, who has the thorny task of taking her country out of the EU, will also be there. But Germany's Angela Merkel, a Davos regular whose reputation for steady, principled leadership would have fit well with the WEF's main theme of "Responsive and Responsible Leadership", will not.
    'REJOICING IN THE ELEVATORS'
    Perhaps the central question in Davos, a four-day affair of panel discussions, lunches and cocktail parties that delve into subjects as diverse as terrorism, artificial intelligence and wellness, is whether leaders can agree on the root causes of public anger and begin to articulate a response.
    A WEF report on global risks released before Davos highlighted "diminishing public trust in institutions" and noted that rebuilding faith in the political process and leaders would be a "difficult task".
    Guy Standing, the author of several books on the new "precariat", a class of people who lack job security and reliable earnings, believes more people are coming around to the idea that free-market capitalism needs to be overhauled, including those that have benefited most from it.
    "The mainstream corporate types don't want Trump and far-right authoritarians," said Standing, who has been invited to Davos for the first time. "They want a sustainable global economy in which they can do business. More and more of them are sensible enough to realize that they have overreached."
    But Ian Bremmer, president of U.S.-based political risk consultancy Eurasia Group, is not so sure.
    He recounted a recent trip to Goldman Sachs headquarters in New York where he saw bankers "rejoicing in the elevators" at the surge in stock markets and the prospect of tax cuts and deregulation under Trump. Both Goldman CEO Lloyd Blankfein and his JP Morgan counterpart Jamie Dimon will be in Davos.
    "If you want to find people who are going to rally together and say capitalism is fundamentally broken, Davos is not the place to go," Bremmer said.
    PACE OF CHANGE
    Suma Chakrabarti, president of the European Bank for Reconstruction and Development (EBRD), believes a "modern version of globalization" is possible but acknowledges it will take time to emerge.
    "It is going to be a long haul in persuading a lot of people that there is a different approach. But you don't have to throw the baby out with the bath water," he told Reuters.
    Still, some attendees worry that the pace of technological change and the integrated, complex nature of the global economy have made it more difficult for leaders to shape and control events, let alone reconfigure the global system.
    The global financial crisis of 2008/9 and the migrant crisis of 2015/16 exposed the impotence of politicians, deepening public disillusion and pushing people towards populists who offered simple explanations and solutions.
    The problem, says Ian Goldin, an expert on globalization and development at the University of Oxford, is that on many of the most important issues, from climate change to financial regulation, only multilateral cooperation can deliver results. And this is precisely what the populists reject.
    "The state of global politics is worse than it's been in a long time," said Goldin. "At a time when we need more coordination to tackle issues like climate change and other systemic risks, we are getting more and more insular."
    (Additional reporting by Ben Hirschler; Editing by Pravin Char)
    - Reuters

  • The Latest: Davos organizers urge shift in economic policy

    Associated Press – 1 hour 27 minutes ago
    DAVOS, Switzerland (AP) — The Latest on the World Economic Forum's annual meeting in the Swiss ski resort of Davos (all times local):
    1:30 p.m.
    The World Economic Forum, which organizes the annual gathering of the global political and business elites in the Swiss ski resort of Davos, says the focus on economic growth, which has guided policymaking for decades, is no longer fit for purpose.
    In a report published Monday, the WEF proposed a shift in policymaking to "respond more effectively to the insecurity and inequality accompanying technological change and globalization."
    The WEF's main recommendation is that governments make improving living standards one of their key goals.
    It says most countries are "missing important opportunities to raise economic growth and reduce inequality at the same time," adding that measurements such as life expectancy, productivity and poverty rates should be priorities.
    Under a new ranking system that incorporates so-called "inclusive development," the WEF rated Norway top, followed by Luxembourg and Switzerland.
    The issue of inequalities both within countries and across the world is a key focus of this year's WEF, which officially opens Tuesday.

  • Market capitalism should benefit the many, not just the few. Can 2017 be the year we finally make it happen?

    A businessman walks in Tokyo's business district, Japan January 20, 2016.
    Image: REUTERS/Toru Hanai
    Written by
    John EvansGeneral Secretary, General Secretary of the Trade Union Advisory Committee
    Published
    Friday 6 January 2017
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    Key moments from Davos 2017
    ·                                 Key facts about Davos 2017January 10, 2017 16:37
    Reforming market capitalism in the wake of the Lehman Brothers crisis is still unfinished business. The financial crisis of 2008 morphed into an economic recession, a social crisis, a debt crisis and 2016 was the year where it clearly became a political crisis. Markets are not delivering inclusive growth in the industrialized economies.
    A significant share of households in industrialized countries have experienced flat or falling real incomes for a decade or longer with serious intergenerational effects. Jobs and gender gaps are not shrinking; neither is the level of youth unemployment nor the share of young people not in education, employment or training (NEETs). These factors have combined to raise the prospect of “secular stagnation”. They have also contributed to a popular backlash against governments, institutions and the very functioning of economic systems.
    The Brexit vote, the US election results and the tenor of ongoing election campaigns in Europe reveal a major crisis of trust. These trends are reflected differently across regions, age-groups, gender, and are not universally evident in all countries. They are triggered by different issues: slow growth and stagnant median wages, rising inequality, persistent unemployment, the implications of increased migration, insecurity posed by globalization and technological change. The common feature is that significant segments of populations feel that, whereas others have gained despite an economic slowdown, they have lost out and feel more insecure about their future. The claim that “elites are out of touch” has struck a chord.
    The question should not be so much “can” but “how” to reform.
    The lack of economic dynamism weighs heavily on employment performance. Unemployment rates in several, mainly European, OECD member states are unacceptably high. Meanwhile, there is a vast labour force potential to be tapped in those economies and regions where official unemployment rates have come down but training and active labour market policies are not sufficiently working.

    Breaking out of secular stagnation

    The OECD and the IMF have now recommended that in order to escape from the low growth trap, a coordinated fiscal expansion that boosts public investment is necessary. This reflects a growing consensus that monetary policy is overburdened and cannot provide by itself the demand stimulus needed. Given the exceptionally low interest rates, the latest Outlook recognised that fiscal policy makers have room for manoeuvre to lift growth.
    These warnings need to be heeded – governments’ must shift from austerity that has dominated policy thinking since 2010. Fiscal room does exist to:
    • Increase public investment in infrastructure, by the equivalent of 2% of GDP, focusing on job creation, improvements in productivity, reducing the gender and youth employment gaps and transitioning to a low-carbon economy by creating green jobs;
    • Increase investment in quality public education, and skills development through long-term strategies involving social partners at firm and sector level to provide life-long work-based learning;
    • Develop an action plan to ensure decent jobs in the digital economy and for the next wave of digitalisation;
    • Follow up the Paris climate change agreement commitment to a “Just Transition” with national action through dialogue with social partners on industrial transformation and support for the creation of a “Just Transition Fund” for workers and communities.

    Reducing income inequality

    In the industrialised economies over three decades the share of labour in national income has declined by on average 10 percentage points of GDP. Income inequality increased within the wage share in 22 out of 25 OECD countries with comparable statistics. Since 2008, market income inequality increased in three years as much as in the previous 10. Latest OECD work on top incomes and taxation shows that in all countries the “very top of the income distribution” have benefitted most.
    The trend has been most extreme in the United States where the bottom 60% of the population did not see any increase in their living standards over the past 25 years, whereas the top 1% increased its share in the total income from 13% in 1990 to 18% in 2014. In the short term, inequality is stifling the recovery. In the medium term, it is fuelling public mistrust as to whether benefits of growth are shared and creates the conditions for rising populism across economies. In the longer term, inequality will result in rising skills gaps, which will not help an inclusive transition to a digitalized, globalized economy.
    The claim that “to distribute more, we first need to increase economic efficiency” and just push ahead with trade and investment liberalisation and labour market “flexibility” is unconvincing. In the US, productivity rose by 60% over the past two decades but real median wages only increased by 6%. If (real) wage growth continues to lag behind productivity, as has been the case in the majority of OECD countries, this will push down the share of labour in GDP. The US has one of the most “flexible” labour markets in the OECD. The result is worker insecurity.
    Stronger wage dynamics, through robust collective bargaining and well set minimum wages, have to be a central element of an “inclusive growth” policy agenda. They would yield a multiple dividend. First, stronger wage growth will inject additional demand in the economy, contributing to strengthening the recovery. Second, stronger wage dynamics will help central banks in re-establishing their credibility and commitment to price stability. If wage dynamics continue to stagnate at extremely low values of 1 to 1.5%, core inflation and inflation expectations will continue to be undershot.
    Narrowing the problems of rising income inequality and falling wage shares to megatrends such as automation obscures the fact that certain policy choices and austerity in particular played a decisive role, including by weakening the bargaining power of workers and trade unions. IMF research finds that almost half of the increase of the share of the top 10% incomes is caused by a decline in union density, with technological change or globalization playing a more limited role. As union membership declines, inequality rises. When union membership is higher, the top 10% incomes are under control (IMF).
    Furthermore, social dialogue and collective bargaining can accompany technological change in a coordinated manner and offset negative effects on the distribution of income and potential job losses.
    Governments have to develop strategies to raise middle and lower incomes to boost demand and purchasing power. This should be done by strengthening labour market institutions, notably collective bargaining and minimum wages in order to reduce income inequality, and halt the increase in precarious, informal or irregular work that is crowding out regular labour.
    A reform agenda must:
    • Strengthen the coverage of collective bargaining;
    • Establish well-set minimum wages in the light of national contexts;
    • Ensure access to quality education and training through adequate and appropriate infrastructures and tools, in particular during times of crisis, and encourage employer investment and the active participation of both social partners;
    • Restore progressivity in the tax system, including taxation of top income, and ensure effective taxation of multinational corporations.
    • Pull together resources and coordinate to address rising migration flows and devise strategies for a fair transition for societies
    • Apply policy frameworks, regulations and standards to distribute benefits from digitalisation and the “next industrial revolution” in a broader sense. It is essential to ensure that workers, irrespective of whether they work on online platforms, their work location, sectors and contracts, are entitled to equal treatment in terms of working conditions as well as social protection coverage and will be provided with appropriate training and activation schemes at the right time.

    A progressive trade and investment agenda

    Faced with economic stagnation and slowed growth in world trade, some have called for faster trade and investment liberalization. This is missing the point - causality does not run from weaker global trade (or rising trade barriers) to weaker growth but the other way around. The central problem in the current context is not increased protectionism or inadequate trade and investment liberalization but weak aggregate demand in the global economy.
    Ignoring the link between weak demand and weaker trade runs the risk of falling again into the trap of a “competitiveness” narrative. Economies trying to “export themselves out of the crisis” by depressing the labour share end up deepening the lack of demand for the world as a whole.
    What is needed is a trade and investment agenda enforcing respect for labour standards and under which foreign investors respect domestic legal systems and international standards. The corporate accountability agenda covering responsible business conduct, decent work in global supply chains and effective corporate governance must ensure that business models encourage long term and patient investment and a fair distribution of corporate wealth between stakeholders.
    Policy must go beyond the notion of “compensating the losers”. It should ensure that economies and markets are structured so as to produce more fair outcomes in the first place. Workers need to benefit from job protection and, in the event of unemployment, from a robust social security net and active labour market policies. Investment in skills and training systems to equip workers with the tools they need to profit from change, worker participation and social dialogue need to be enhanced to achieve balanced internal flexibility.
    The trade and investment agenda must focus on:
    • Ensuring job protection, in particular advance notification, to provide workers with an “early warning signal”. Robust unemployment benefits to provide time for good job/skill matches. Work-based learning and training schemes to ensure life-long upskilling;
    • Committing to enforceable provisions on labour rights and investors’ responsibilities in agreements, and ensure fair, open and transparent dispute settlement measures offering access to all constituencies and covering the rights of all stakeholders;
    • Enacting domestic legislation that makes it mandatory for companies to conduct human rights due diligence in global supply chains and work with the ILO to identify ways to promote all aspects of the decent work agenda based on the June 2016 outcomes of the ILC discussion on global supply chains;
    • Enforcing instruments such as the OECD Guidelines for Multinational Enterprises by strengthening the National Contact Points (NCPs).
    Above all 2017 must show that policies and politics can reform market capitalism to make economies work for the advancement of both social justice and economic efficiency.

    Have you read?



  • Shaping the Future ofEconomic Growth and Social Inclusion

    Video linkWatch the overview

    How can the world strengthen growth and equality at the same time? 
    Rising income inequality is the cause of economic and social ills ranging from low consumption to social and political unrest. Yet little in the way of concrete policy guidance has emerged to channel economic growth into improved living standards.
    After one of the worst financial and economic crises in history, business leaders and policy-makers are looking to reform approaches and growth models. But what is the most effective way to embrace long-term competitiveness while strengthening the contribution of growth to broad-based progress in living standards?
    The World Economic Forum System Initiative on Shaping the Future of Economic Growth and Social Inclusion aims to accelerate public-private collaboration towards more competitive and inclusive economies.



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