Labour Official Tells Davos, ‘There’s an Anger Building Out There’By
U.K. Labour’s finance spokesman proposes higher wages, taxes
‘There’s an anger building’ due to inequality: McDonnell
Follow our full coverage of Davos 2018 here.
John McDonnell came to the World Economic Forum in Davos with an uncomfortable message for the global elite.
“I just warn the Davos establishment: There’s an anger building out there that you need to recognize and deal with,” McDonnell, the U.K. opposition Labour Party’s spokesman on finance, said in a panel discussion at the forum.
For all the back-patting about the return of global growth, he said there’s an “avalanche of discontent” out there among the masses. But in the Swiss resort, “there’s almost a sense of euphoria, it is extraordinary, and I think there’s a sense of complacency.”
McDonnell’s warning carries weight because he would be chancellor of the exchequer if Labour came to power -- something investors are preparing for.
Before Britain’s election last year, the idea that Labour was the government-in-waiting seemed far fetched but the party unexpectedly gained seats in the vote, depriving Prime Minister Theresa May of her majority as she attempts to negotiate Britain’s exit from the European Union.
Most delegates in Davos have adopted an upbeat tone this week -- reflected in the optimism of top bankers at JPMorgan Chase & Co. and Deutsche Bank AG who told Bloomberg they see a continuation in a global boom in dealmaking. McDonnell instead focused on a report by the development charity Oxfam that pointed to growing inequality.
“Out there, beyond the Davos compound, many people -- we saw it in the Oxfam report -- feel the markets have been rigged against them, not for them,” McDonnell said. “When they’re told we’re coming out of that recession, growth is returning and they don’t feel they’re participating in the benefits of that growth, that’s when people become really alienated and angry.”
With the support of the far left fringes of Labour, both McDonnell and Labour Leader Jeremy Corbyn have firmed up their grip over the party, appointing allies to the party’s National Executive Committee in recent months after fending of an attempted coup by moderate lawmakers in 2016. That’s enabling them to promote a platform for government that includes taking private utilities and contracts under public control, and raising taxes.
Ordinary people have worked hard to survive recession, while paying their taxes he said, and evidence from the Panama papers about the corporations and super-rich using offshore vehicles to avoid paying taxes have only exacerbated their resentment, McDonnell said.
McDonnell then laid out a recipe for regaining the trust of the masses, including:
- Paying workers a “real living wage” and allowing them to share in the profits of the companies they work for
- Recognizing trade unions and appointing workers to company boards
- A new “Hippocratic oath” for accountancy firms to tackle tax avoidance rather than encourage it
- The rich and those in power should publish their income tax returns
- A “Robin Hood” tax on financial transactions that would be used to fund public services and international development programs
“There has to be a radical new agenda where people share in the growth, share in the wealth, share in the benefits as the economic cycle turns,” McDonnell said. “I think there’s an avalanche out there of discontent and resentment and alienation if we don’t address these issues.”