The rich, worried about inequality?

Davos sign

The UK is certainly not alone in debating whether the widening gap between the super-haves and the have-littles is an altogether good thing.

It is one of the big talking points here at the World Economic Forum, for an obvious reason.

Widening inequalities were widely seen as the necessary price of growing global prosperity during the boom years.

But since the great crash of 2007/8, when most countries in the developed West went from slump to stagnation, it is not clear what advantage is being conferred on the vast majority of people by a tiny elite of high earners seemingly becoming ever richer.

The governor of the Bank of England, Mervyn King, caught the mood yesterday when he pointed to the perceived unfairness that it was the well-heeled bankers who caused the mess we're in, but it's those on average and below-average incomes who are paying the price.

Even relatively mainstream economists are questioning the consensus of the past 30 odd years which said that the only way to grow the cake for all is to incentivise the great wealth creators by allowing them to have more and more of that cake (what you might call the Thatcher/Blair consensus).

Which is why the 2011 bonus for Stephen Hester, RBS's chief executive, is such a lightning rod for discontent in the UK, even though he was actually running a commercial property company, British Land, when the bankers' risk-taking party was at its frenzied peak (and see my post of last night for more on this).

As for the World Economic Forum itself, one of its pre-Davos reports identifies growing income inequalities as a threat to economic and social stability.

Statement of the bloomin' obvious?

Maybe. But it's a shift: only last year a plea made in Davos by the head of JP Morgan, Jamie Dimon, for an end to banker bashing was widely applauded by his peers; today, as the Occupy Wall Street and Occupy the City campaigns have resonated with both left and right on the political spectrum, few bankers would make a public appeal for love and understanding.

That said, will there be more than platitudes uttered here about how important it is for capitalists to be seen to be caring and working in the general interest?

Some, like Davos regular Bill Gates, lead by example, by giving away their vast fortunes in the cause of poverty alleviation - and as it happens he today has written his annual letter, in which he calls on well-heeled citizens and governments of wealthier nations not to use these tougher economic times as an excuse to squeeze the financial help for poorer nations struggling to become self-sufficient.

What could snuff out this apparent new spirit of solidarity between plutocrats and protesters? Well a strong sustainable global economic recovery would probably see business leaders revert to the argument that if they get rich, the world is also enriched.

Fat chance of that, you might think.

But interestingly, for all the apparent despair about prospects manifested in PwC's annual global survey of chief executives, I find the bosses I encounter surprisingly optimistic. They've moved from a "glass-half-empty" despondency just before Christmas to something a bit more positive (and see my post of Monday for why).

There are signs of thaw from this bleak economic winter, especially in the US, and even in northern Europe. But the risks remain that the unsustainable debts of southern Europe could bring the global economy to its knees.

So there is certainly an element of wishful thinking in the rosier view of the boss class.

Which is why I am sticking a microphone in the mooches of billionaires and chief execs, in an exploration for tomorrow's Today Programme of whether there is a genuine recognition by business leaders that intensifying inequalities are a matter of fundamental concern - or whether they are simply saying what they think people want to hear.

Robert Peston Article written by Robert Peston Robert Peston Economics editor

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  • rate this

    Comment number 384.

    Private Profits
    Public losses
    Serfdom, not 'crony capitalism' you oh so noble Red flag wavers

    Maybe we should have listened to the Austrian Economists who predicted every boom and bust in the last 30 years.

  • rate this

    Comment number 383.

    When are people going to ask for a REAL responsibility from their governments? Inequality is simply everywhere you turn around in this country starting from attack on benefits to protection of unjust bonuses,. footballers wages to the low pay of nurses, cleaners, carers, from inherited Lords to insulated parts of society, from BIG corporations paying pittance of a tax to unfair tax on poor etc.

  • rate this

    Comment number 382.

    Will any thing change because the way things are going it look like it can only get worse.
    People were I live are really stressed out worrying about the future this government is targeting the lower classes as I think its an easy touch but soon this government will have to start picking on the rich to help fight the deficit.

  • rate this

    Comment number 381.

    I have no problem with people becoming wealthy through their own ideas, hardwork and risks although even they should ensure that those who support them get a decent return for effort.

    I do have problem with people who use our money to get rich whilst we get little return whilst suffering the highest risk.

  • rate this

    Comment number 380.

    In theory, income should be related to one's need to afford food, clothes and a roof over one's head or one's provision of that for others, through creating businesses or philanthropy. The income gap is out of control. Historically this has always led to some kind of social revolution. Everyone knows we need to re-structure - the problem is how. Someone needs to create a new social blueprint.


Comments 5 of 384



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