Today is the first day of the World Economic Forum (WEF) in Davos (Jan 22-25). Many surveys and analysis will be presented at the Forum and side events outlining the problems and solutions the world and nations face. Here are some points of view that you will NOT likely hear coming out of WEF.
Severe Income Disparity
In a marketing coup, Oxfam publicized a staggering fact two days before the conference began: the net worth of the 85 wealthiest people in the world is equal to that of the 3.5-billion poorest worldwide. And the wealth of the richest 1 per cent of the world’s population roughly equals that of everyone else (the 99 per cent). On Twitter this generated 18,000 tweets on January 19 — which was more than both of WEF’s primary hashtags combined — #wef14 and #Davos.
“Severe income disparity” is one of the most significant global risks identified by the World Economic Forum in 2014. But delegates spend $40,000+ to attend the Forum — and there is the incessant buzz of helicopters ferrying delegates to Davos at $10,000 a trip. As Marshall McLuhan said the medium is the message. Oxfam’s approach highlights the depth of inequality — and it really makes me wonder: How much is enough?
With some exceptions like J.K. Rowling, Bill Gates and Warren Buffet who have given significant portions of their wealth to charities and foundations to address global problems, Oxfam’s critique is profound.
If we continue with business as usual and do not immediately and aggressively act to address climate change, within 15 years the fate of the planet will be sealed with irreversible climate change. This is the conclusion of a yet-to-be released United Nations study. To be fair to WEF, climate change is the only risk in the top five that is both most likely and will have the greatest potential impact. But again I don’t think the depth and severity of the challenge that humanity faces is appreciated by delegates.
Lord Stern, in his landmark Stern Report for the U.K. Government on the Economics of Climate Change, warned that if governments do not aggressively address climate change it will cost up to 20 per cent of global GDP; 40 per cent of remaining species will be extinct by 2050; and rising ocean levels will create 200-million climate refugees as low lying coastal areas are flooded.
Thankfully he did have good news: if governments act immediately, pre-emptively addressing climate change will only cost 2 per cent of global GDP and avoid the catastrophic impacts of climate change and will create millions of new energy efficiency jobs as buildings and homes are retrofit.
Resources & Priorities
With the list of challenges that the world faces, there is a tendency 1) to despair and 2) to feel that the problems are unsolvable. In part these feelings are driven by thinking that there are enough resources to address all the issues.
But world military expenditure now stands at $1.7 trillion a year — yes, that is trillion with a T. And according to the IMF global fossil fuel subsidies (oil, gas and coal) combined with electricity subsidies total a staggering $1.9 trillion a year. (As an aside, why are governments worldwide subsidizing the most profitable industry in the world and driving climate change?) Combined, this $3.6 trillion a year equals 5 per cent of global GDP.
What could the world do with $3.6 trillion a year, or roughly $10 billion a day? What chronic problems could be solved?
Solving the climate change crisis will only cost 2 per cent of global GDP according to Nick Stern — in other words 40 per cent of the annual military budgets and fossil fuel subsidies!
The world could meet basic human needs for everyone on earth with $80 billion — equal to stopping military spending and fossil fuel subsidies for just for just eight days, according to UNICEF in 2000.
Oxfam estimates that to ensure that every child could go to school, it would take an additional $6 billion — just over one day of global fossil fuel subsidies and military spending.
Providing reproductive health care for all women in developing countries: cost $12 billion (just over one day)
Providing safe drinking water and sanitation for all people in developing nations: $9 billion (one day)
Providing basic health and nutrition needs universally in the developing world $13 billion (just 1.3 days)
Sources for these last three sets of figures: UN Development Programme (UNDP), Human Development Report 1998 (New York: Oxford University Press, 1998), pages 30-37.
So the world has all the resources, technologies and strategies to solve all these problems, what is lacking is the political will, and so far from my experience in Davos I don’t see a necessary critical mass of understanding or commitment to the fundamental changes that are required.
My first WEF blog last year likened the Forum to first class passengers on the Titanic complaining about Champagne sales as the ship was sinking.
I look forward to your comments and feedback! Please tweet this blog and post it on Facebook and LinkedIn. Last year’s blog was the #1 news story on Twitter for two days running for the hashtag #wef — so any of the delegates on Twitter saw the critique.
This week Jim Harris is at the World Economic Forum in Davos, Switzerland. You can follow him on Twitter at @JimHarris for regular updates.