Davos Summit round-up
Alighting from private jets in Zurich, the business and political elite gathered again this year to improve the state of the world at the World Economic Forum’s Davos Summit. (Click here for the top ten quotes of Davos 2013.) The gathering is considered by some as “the factory in which conventional wisdom is manufactured,” where global issues, risks and solutions are discussed by the luminaries wealthy enough to attend. One such issue that featured prominently last year—income inequality—was again high on the agenda in 2013.
The annual WEF Global Risk Report spurred this prominence by pronouncing that “severe income disparity” is the most likely global risk facing our world for the second year running, more likely than major systemic financial failure, water supply crises or failure of climate change adaptation. The results of the survey also suggested that not only is severe income disparity highly likely, it also has a high potential for impact, more than mismanagement of population aging, chronic labour market imbalances or terrorism. These findings could have serious policy consequences, if they turn out to be true.
But while extreme levels of income inequality—think gated communities and ghettoes—are a risk to social cohesion, combating it should not be the sole focus of policy. Rather, focussing on addressing factors that cause long-term poverty like persistent income deprivation, poor education, and lack of social mobility are more likely to prove effective in helping those most in need, as Treasury Analyst Ben Gleisner presented in an IGPS Inequality Policy Forum back in 2010.
In other words, growth matters too.