Gates unmasks the real face of Davos

The global elites meeting at the World Economic Forum must not get away with pretending they have the interests of the world's majority at heart says Nick Dearden
January 2014


Bill Gates is worried – too many people are talking about raising the minimum wage. Appropriately, the world’s richest man spoke on the eve of the World Economic Summit in Davos. Gates is a great symbol of the Davos summit, an annual away day for global capitalism, at which the world’s 1% mouth concerns about poverty and climate change, while working on policies which fuel inequality.

Despite a fair bit of evidence that a reasonable minimum wage doesn’t cost jobs, Gates is picking up on a regular Davos theme. In 2012, Tidjane Thiam, chief executive of Prudential, called the minimum wage a ‘machine to destroy jobs’.

Last year Gates increased his wealth by $15.8bn and has now once again become the world’s richest man, worth about $78.5bn. He’s not alone – as a whole the world’s millionaires got 11% richer last year. For the rest of us, the decades-long trend of stagnating income continues. In some countries – Greece, Spain and Britain – median household income fell sharply.

The policies dreamt up by those who meet in Davos are a direct cause of these historically unprecedented rates of inequality. Last week, even the financial press was taken aback at the concentration of corporate wealth. Just six companies – including Apple, Microsoft and Google–are sitting on more than a quarter of the $1.5tn reserves held by US non-financial corporations.

Amongst other reasons, a big factor is tax avoidance, enabled by the financial liberalisation regime put into place over 30 years by the likes of those who attend Davos. According to the Financial Times: ‘some 94 per cent of Microsoft’s $81bn is now outside the US.’

So Gates doesn’t want a higher minimum wage denting the amount of wealth his company is able to avoid taxes on.

The really incredible thing about the Davos set is the way they are able, without irony, to expound all the good they are doing in the world. We barely question the illegitimacy of the enormous power that these corporate leaders hold over the world.

This week Gates is portrayed as a dreamy idealist, explaining to Davos seminars how ‘there will be almost no poor countries left in 20 years time’. Presumably this will happen with a lot of charity, but without minimum wages. Certainly Gates’ money will have significantly shaped the form which that ‘development’ will take, not least through the Bill and Melinda Gates Foundation. Forget democratic national projects, the world’s richest many will decide what sort of food you will eat and which corporation will supply your medical needs.

In an article in the Observer at the weekend, the head of the World Economic Forum, Robert Greenhill, said that mental and physical health were a priority of this year’s summit. Good business depends on good mental and physical health.

Yet some of the participants at Davos are directly responsible for the crisis and austerity measures which have been responsible for mental health problems spiral across Europe. In Greece, suicides rose 37% from 2009 to 2011. The Red Cross published a shocking report on Europe, characterising the continent as one of mass unemployment, suicides, social exclusion, deep poverty, crime, racism and collective despair. We should remember that none of this was an accident.

Charities like Oxfam which talked about inequality did some essential work to frame the global context in which Davos takes place. But we need to do more than put these issues on their agenda. The corporate elite represented at Davos cannot be allowed to meet in luxury and pretend they have the answers to the world’s problems. They are the world’s problems. Gates has helped us unmask the true interests of the corporate elite.

Nick DeardenNick Dearden is the director of UK campaigning organisation Global Justice Now. He was previously the director of Jubilee Debt Campaign


Trump, Mair and the gods that failed

It’s no use apportioning blame, we need meaningful critical reflection. The old formulae are no longer sufficient, writes Paul O'Connell

From the archives: Naomi Klein - why it’s time to show our face

Naomi Klein tells Mat Little how she put into words what so many were feeling – and why it’s time the new movement showed a public face and built coalitions with others on the left (published in issue 79, January 2001)

Poet 25 January 2014, 19.48

When many more of the working people come to realize just how this system works for the wealthy to internalize their profits while externalizing their losses (corporate socialism), maybe we can dent the profits. This could happeb if we the people would create ways to be more self-sufficient in our communities. We could empty the banks and stores. It seems that money is the one language that capitalists comprehend. We need to deny them. Preace

Will Podmore 27 January 2014, 11.47

We certainly “need to do more than put these issues on their agenda”.
We should have our own agenda – and fighting the employer for better pay should be right up at the top.

Stuart 28 January 2014, 12.44

Look into bitcoin … decentralized trading …

Will Podmore 29 January 2014, 16.08

Stuart, Implying that using bitcoin will improve matters is the same fallacy committed by those who said a new currency (the euro, anyone?) would improve matters.
Poet urges us to dent the profits – good. Let’s get on with fighting for better pay then!

Eugene 3 February 2014, 17.48

It’s important to put the comments in some context here – increasing minimum wage is just one of the tools that can be used to increase inequality and help the lower and middle classes. A concern Gates might have is that increasing minimum wage by itself could hurt a lot of struggling micro, small and medium businesses who also have to abide by these rules.

Remember these small business are struggling and employ 60-80% of employees in most countries. Although McDonalds get all the press, these small businesses are the backbones of most economies, the owners of which are mostly ‘regular folks’ and if the minimum wage increases by itself may jeopardize these businesses and those jobs while big companies like McDonalds may actually be able to absorb it.

Gate’s wealth comes primarily via Microsoft. With a starting base salary of over $90k USD, the minimum wage has no impact at all on Microsoft nor on Gate’s worth. You may be right that raising the minim wage is a good a thing for inequality, but attacking Gate’s argument against it based on the fact that he’s ultra-rich is short-sighted and clearly Ad hominem.

Will Podmore 4 February 2014, 16.24

Eugene writes, “increasing minimum wage is just one of the tools that can be used to increase inequality and help the lower and middle classes.” How does increasing the minimum wage increase inequality?
It could be argued that the minimum wage is a way to defang trade unions, but I don’t think Mr Gates wants to strengthen our trade unions.
The minimum wage is not there to provide a safety net. In fact, the minimum wage helps to lower wage rates across the board: it becomes a maximum, with many employers paying even less.
We should be calling for an end to state intervention in wages, not for more of it. Many workers have to have their low wages topped up by benefits, but the real subsidy goes to the small employer, with whom Eugene seems to be sympathising overmuch.

Brian 7 February 2014, 16.07

I agree with Will. Increasing the minimum wage achieves little towards making anyone richer. In a relatively free market, prices, profits, rents, interest rates all adjust accordingly to counteract and nullify any state intervention to “fix” the market. But I’m not happy with negotiated wage increases either, partly for the same reason. If the extra wages threatened profits (as if!), then business owners would need to increase prices or squeeze a different cost (e.g. suppliers; or avoid paying even more taxes) to compensate. If a company needs to pay 15% return to shareholders to attract the investment it needs, then it can’t suddenly pay 10%, otherwise its shareholders would put their capital elsewhere to earn the 15%.
So there are no straight market solutions to poverty.
The simple answer is for communities and workers to own and control all enterprise. How do we do that? Only invest in, and only buy goods and services from genuine community and employee owned social enterprises and co-operatives, and favour the high performing, well-operated, well engaged social enterprises so that they are able to compete against capitalist business and progressively replace it.

nad 25 March 2014, 14.11

these type of events, problems, and comments have been going on since early greek civilisation. the only solution to income inequality is the application of non-crony capitalism. nothing else works. read your world economic history, hayek, friedman, etc. raising minimum wage is no solution for anything except maybe helping the recipient to afford netflix and more cigarettes. in america, the solution is moving away from progressiveism and the democratic party and letting the free market operate. perfect, honest? no but much better than all the rest. i refer you to a youtube video of milton friedman arguing with the wise phil donahue.

Comments are now closed on this article.

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