【review】Venue II: Addressing the Challenge of Global Inequality Back CDF Newsletter List>

The Economic Summit of the China Development Forum 2018 was held on March 24. In the parallel session I on the morning of March 24, themed “Addressing the Challenge of Global Inequality,” experts discussed the importance of how to tackle global inequality as technological advancement. They said the public and private sectors have to join hands in tackling the issue proactively before it’s too late.

This session is hosted by Lu Mai, Vice Chairman and Secretary, CDRF.

The speakers are: Laurence D. Fink, CEO of BlackRock Inc; and Tim Cook, CEO of Apple Inc.

Fink said inequality is the result of a lack of education and personal behaviours, and exists in almost every country. It’s not only an issue of educating people to get jobs, but those who have jobs must also be addressed. The greater issue is that some people are not participating in a world where capital is playing an important role. If they do not invest, this will widen the gap between the haves and the have-nots.

So many men and women are saving for their future but those savings lie idle in their bank accounts, he said. This will not help them participate in their long-term financial planning unless such planning involves capital and equities as investment vehicles over a longer horizon. Fink admitted that there are growing fears from investors as people pull back due to political turmoil and global uncertainties.

He said corporates have a mandate to work with their employees who underinvest in the long run. Business and political leaders must work toward a common goal to offer financial inclusion to everyone.

He cited the instance of the U.S., where a large part of American savings is in social security which offers only bond-like growth. There are better instances in other governments such as Australia and Chile, where their social security systems invest in equities which will benefit people over the long term.

On the issue of CEOs pocketing high salaries, he said public companies must invest in the brightest, and great CEOs should be rewarded. But those under attack for higher salaries are mostly public companies rather than private ones, because the former are more transparent and are an easy target for attack. He urged companies to go public for greater transparency.

The executive, who has been in the industry for 42 years, said that globalization is one of the greatest human achievements. He doesn't believe trade wars are an answer to solve current U.S.-China tensions. Instead, dialogue and some adjustments in policies, either in the public or private space, will help solve the issue.

He said financial markets have spoken loudly by plunging sharply since the U.S. announced tariffs on China. “Two great countries have benefited from globalization. The world needs a strong U.S. and a strong China. … We don’t need a public fight to reduce differences,” he said, adding that finding commonality and rebuilding trust will pave the way for a better future for both economies.

Tim Cook said he supports a progressive income tax system to address inequality. “I always thought that the wealthy should pay more Do our part and help those unfortunate,” he said.Cook cited artificial intelligence as an example of technological development that can widen the rich-poor gap. He said AI can be used for devastation, or it can be put to good use for humanity, in cases such as helping eliminate diseases or prolong life. It could also create a better workweek for people to enjoy their leisure time.

AI can also automate certain jobs, posing a new challenge to society. Technology has been replacing jobs for decades. “When I was a young intern, spreadsheets were just becoming to be used. Before that in the accounting department, people brought a journal in to do their work,” he said.

People shouldn’t fight improving productivity, but instead predict which jobs might go away under the technological evolution, and prepare themselves to embrace the challenge.

“We think this issue relates to someone else but not us. But it relates to all of us,” he said. Apple has invested in younger generations around the world by teaching them how to code, for instance, as the company sees such skills will become paramount in years to come and the company wants to prepare them for an early integration into the future economy.

In terms of a potential China-U.S. trade war, Cook said corporates should always engage with governments where they are doing business.

“Countries that embrace openness, trade and diversity are countries that do exceptionally. My belief is that ‘one plus one equals three’,” he said. “The pie will be larger if we work together.”

He said if benefits are not balanced between two sides, those involved should focus on existing inequalities and why they exist, and put energy into resolving the differences.

(By Caixin reporter Jason Tan)

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China Development Forum (CDF) is the first annual high-level international conference held in China right after the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) each year. Under the mandate, "Engaging with the world for the common prosperity”, it serves as an important platform for Chinese government to carry out candid exchanges and discussions with leaders of global businesses and international organizations as well as foreign and Chinese scholars. Initiated in 2000, CDF has made remarkable contributions for the policy exchange and international collaborations between China and the world.

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