More than a talk shop in Davos
20 January 2014
by Transcript Service (BusinessDay TV)
BUSINESS DAY TV: Our chart of the day: As Davos delegates gather to discuss, among other things, the rising tide of global inequality, it seems like only the elite can actually get through those talk-shop doors. CNN took a look at the cost of attending Davos: the average delegate spends about $40,000 attending — that’s flights of around $6,000, $9,000 in transfers, $3,000 on hotels and $2,000 on food … and then there is the staggering $20,000 to be spent on accreditation. Now Dr Martyn Davies, CEO of Frontier Advisory, joins us to take a closer look at what actually happens there and what is likely to be top of mind this year. Aren’t you glad that you’re saving yourself $40,000 by not going this year?
MARTYN DAVIES: One thing not mentioned was the after-party drinks bill — that also adds to that figure, I must tell you…
BDTV: Hopefully you can get someone else to pick that up for you, if you’re a scheming journalist of course, but what do you think will be some of the top themes? The Reshaping of the World: Consequences for Society, Politics and Business, is the official name of this year’s gathering. What does that mean to you?
MD: People probably often say that the WEF is merely a talk shop — well, yes it is, but there’s no other forum or organisation that has the convening power anywhere that there has been at the WEF to bring the people of power, of influence, of decision-making ability, together in one place in a very captive place that is Davos, a small mountain village literally, for four or five days — it is unprecedented, it really is. The themes that the WEF come up with, are always grand and all-encompassing and do they really mean anything? Probably not but nevertheless every year you see the incremental sort of movements. Is it a talk shop? Yes. Do you expect changes from it … it’s incredible networking in an intellectual wrapper, if that makes sense.
BDTV: Okay, having said that, seen in that context, income inequality does seem to be a talking point and certainly we expect to get a lot of discussion on that, although there is a certain sense of irony in that the world’s top leaders, who probably hold most of the wealth, are the ones gathered there, but how much of a threat do you actually think that is for economic progression at the moment — that widening level of inequality?
MD: There’s almost a paradox here. Inequality is actually lessening at a global level. At a local country level, it’s increasing. So if you look at the overall numbers, largely driven by the likes of China, the world is becoming a less unequal place at a country level but a more equal level at a global level and China just taunts us with figures. Is it a challenge? This is one of the key themes emerging in the past year or two and a key theme for Africa, and we’re seeing that people should not equate growth with development, and particularly development not with trickle-down equal economics — that’s not the case. So what is the role of the state? And this comes down to an ideological question — does the state itself seek to intervene in markets, to counter rising inequality at a national level, or does the state pursue what’s often been called neoliberal free-market agendas and let the market sort it out? When we start to look at what are the states or the government’s role about tackling inequality, especially in this country where it’s very roguishly polarised as well, it becomes politicised, but ultimately it’s an ideological question.
BDTV: That’s very interesting because there’s something called the Edelman Trust Barometer which is going to be presented at Davos and it shows … this is according to Reuters and Bloomberg … that trust in governments took a dive last year — Washington in particular thanks to the budgets showdown and the explosion of the (Edward) Snowden spy issue. And until the recently the PR head of this firm said that there had been a bout of enthusiasm for governments’ role in economies, that they would be the ones who could help us avert Armageddon after the financial crisis. But this seems to have changed…
MD: That is largely true but almost ironically, one would assume from where we come from, we in this room, our educational background and experience, that democratic transparent countries, governments, political process should result in higher trust. Why is it in recent years, when in response to these surveys, the governments that are receiving the highest responses in terms of “do you trust your government” are often nondemocratic Asian countries, China in particular … food for thought!
BDTV: Certainly. Now we have our own government delegation going … there are a couple of big guns, Pravin Gordhan, Trevor Manuel amongst others, and they are going to try and sell the NDP to the delegates convened there. Do you think that’s a good move?… What do you think is key for South Africa to try to do at the Davos gathering this year?
MD: There’s always typically about 35-40 South Africans, we try … it’s one of the few places where South Africans actually come together as a team. Back home we’re always arguing about something…. However, at Davos we all come together, we’re Team SA, we’re SA Incorporated and we certainly do speak with a common voice, we all have the same South African flag scarves, which is good for Brand SA, which does fantastic work around branding the delegation, which is great. Is the NDP sufficient to sell? It’s too tough to tell and it’s two tough sells for me this time around. First is the general emerging-markets drop-off in sentiment, very negative sentiment in recent months towards emerging markets, which we form squarely a part of, and a lot more focus on the US this time, the new Federal Reserve chairperson will be there, resurgent Europe to an extent, that’s the sort of major conversations. So we have to differentiate ourselves firstly as an emerging market, and secondly, from the South African perspective — and Davos takes no prisoners, it’s not about plans or intentions, it’s all about substance and performance, it really is…
BDTV: And we don’t really score well on either front.
MD: We’re a 2% economy — I always say 2%, no matter who you are (but) especially a developing country like ours where I believe one-third of our population is on less than $2 a day, is not good enough. There’s no reason why we should not be getting 4%-5% or even 6% even in these trying times, and that would make a statement at Davos, much more than “this is our plan and this is what we’re going to do”.
BDTV: Maybe they’ll get interrogated on that point … maybe we’ll chat with you after the pow-wow there to see what came out of it.
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