Rich corporations "must share wealth" to avoid unrest

DAVOS, Switzerland Thu Jan 27, 2011 2:05pm EST

1 of 3. McKinsey & Company Worldwide Managing Director Dominic Barton, Alcoa Chairman and Chief Executive Officer Klaus Kleinfeld, JP Morgan Chase Chief Executive Officer Jamie Dimon, Publicis Groupe Chairman and Chief Executive Officer Maurice Levy and Metro Group Chief Executive Officer Eckhard Cordes (L-R) take part in a panel discussion titled 'The Next Shock: Are We Better Prepared?' at the World Economic Forum (WEF) in Davos, January 27, 2011.

Credit: Reuters/Vincent Kessler

DAVOS, Switzerland (Reuters) - Poverty and unemployment reared their heads at the World Economic Forum on Thursday, with speakers urging the elite audience to bridge a growing gap between booming multinationals and the jobless poor.

Greek Prime Minister George Papandreou, who also chairs the Socialist International group of center-left parties, said the global crisis had led to an "unsustainable" race to the bottom in labor standards and social protection in developed nations.

"Politically, I believe we are at a turning point where... there are signs in Europe of more nationalism, more racism, anti-Muslim, anti-Semitism, fundamentalisms of all types," he said. "We need to look to a different model."

Maurice Levy, chairman and chief executive of French advertising giant Publicis, said there was "a huge suspicion about CEOs, bankers, corporations."

"People do not understand that these large corporations are doing extremely well, while their lives have not improved and without the support of the people, there is no way we will be able to grow," he told a panel discussion.

"We have been led by greed. We have been led by only the bottom line, the profit and we have sacrificed the workers in order to please the stockholders."

The increasing division between fast-growing emerging market economies and stagnating, jobless nations in the developed world has been a theme at the talks in Davos this year, which some corporations pay tens of thousands of dollars to attend.

Corporate chieftains have preferred to focus on their optimism that roaring growth in countries such as China and India will outweigh flat or declining sales in Europe or Japan, allowing them to keep growing profits.

But some speakers suggested this was short-sighted.

Former U.S. President Bill Clinton said tackling income inequalities was essential to future growth and needed to be part of the core of doing business in the 21st century.

U.S. economist Nouriel Roubini predicted a backlash against budget cuts in Europe if there was no rapid return to economic growth.

"People are willing to do austerity, willing to do sacrifices and reform as long as there's light at the end of the tunnel," he said.

With unrest in Tunisia and Egypt a major talking point in Davos, Mthuli Ncube, the Tunis-based Chief Economist for the African Development Bank, predicted more trouble ahead if the fruits of growth were not shared more evenly:

"If you are not even creating jobs, not even sharing the economic growth that is coming through, then there will be push-back," he said. "It's one thing to get good growth going. It is another to share that."

Eckhard Cordes, chief executive of German discount retailer Metro, said the only answer for Europe's armies of unemployed young people was to improve their level of education and take higher-skilled jobs.

"We've got no choice in countries like Germany," he said. "What we have to do to at least keep the wealth we have today is to invest in education, train people, educate them."

Klaus Kleinfeld, chairman and CEO of U.S. aluminum giant Alcoa, offered a different solution.

"Elderly people you don't outsource, these people stay in the country," he said in Davos. "You can look at healthcare as a job engine."

(Additional reporting by Paul Taylor, Ben Hirschler, editing by Maria Golovnina)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (5)
quatra wrote:
“Unrest” is what governments are afraid of. Organizations like the World Bank, the FMI, The Fed, the so-called “National Banks”, They’re all about to be abolished, like it or not. They’re the scourge and filth of the earth.

Jan 27, 2011 9:15pm EST  --  Report as abuse
MrEz wrote:
Not so much sharing the wealth. Nobody with dignity wants anything you have earned. Its a mind frame of living for the creation of values be it a product or service not for the sake of sacking the populace for all the booty you can pirate away. Financial tyrants we have become scheming day and night for one more penny we can pull from the pockets of one another. Masters of marketing but mediocre manufacturing. The mere obsession for wealth and the never ending promotion of it has torn us apart as people pitting us against one another. We spend are days lookin over our shoulders in fear of who is out to get us. As the wealth amounts the false sense of security creates a safe haven in are minds that drive us to further our greed without worry of reprecusions. Every industry that made us great we have corrupted like a pack of wild wolves ravaging one sector after another. Until we are running out of people and opporunities to pillage. What is left behind is a heap of rage from the victums not one but of millions who were duped into handing you thier trust. Once duped twice duped no it wasnt enough. We couldnt stop. We built an industry on fraudulent promises. We built empires of falsehoods that served only a few but milked the many. We should all earn our fortunes and there are no exceptions. Exporting our greed into other nations barely able to stand on thier own two feet by purchasing politicians that assure our corporations cooperation keeping in place policies that guarantee poverty and dependencies on the paultry pay these people recieve. We walk away with the diamonds and leave behind a sesspool. We call it democracy. Its not democracy. Its a pollutant that is swallowing us alive. The human race is teetering on a turning point. It might be wise to slow down a little and look around the corner before we dive off the edge of the earth.

Jan 28, 2011 2:40am EST  --  Report as abuse
Ralphooo wrote:
Maybe large corporations will eventually start to create jobs, not out of compassion (that will surely never happen), but purely out of self-interest.

Jan 28, 2011 3:14am EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.