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World economic forum warns growing gap between rich and poor a key economic risk

THE gap between rich and poor which helped propel the Brexit vote and Donald Trump’s presidential victory is likely to be the biggest driver in global affairs over the next 10 years, according to the World Economic Forum (WEF).

In its 12th annual Global Risks Report published ahead of its annual summit in the Swiss ski resort of Davis next week, the WEF surveyed 750 risk experts and found that rising income and wealth disparity would play a major part in world developments.

As an example of this growing inequality, the WEF highlighted the massive increases in CEO pay at a time when many people in advanced economies have struggled to make ends meet following the global financial crisis.

EXPLORE MORE: US intelligence agencies warn of dark, difficult future

This points to the need for reviving economic growth, the report stated.

But the growing mood of anti-establishment populism suggests we may have passed the stage where this alone would remedy fractures in society: reforming market capitalism must also be added to the agenda.

The combination of economic inequality and political polarisation threatens to amplify global risks, fraying the social solidarity on which the legitimacy of our economic and political systems rests, it added.

Other key drivers identified in the survey of the global risk landscape related to climate change, rising cyber dependency and an aging population.

WEF experts viewed with particular concern the weak recovery from the global economic crisis a decade ago that has left more people unemployed or underemployed.

Noting the electoral surprises of 2016 and emergence into the mainstream of parties stressing national sovereignty and traditional values across Europe and beyond, survey respondents also ranked increasing polarisation and intensifying national sentiment among the top five risks to the global economy.

MORE: The gap between the rich and poor in Australia revealed

As well as getting growth higher, the WEF identified several areas that need to be addressed urgently: the need for long-term thinking in capitalism; a recognition of the importance of identity and inclusiveness in political communities; mitigating the risks and exploiting the opportunities of new technologies such as driverless cars; and strengthening global co-operation.

The report also pointed to rapid changes in social attitudes that meant many voters were feeling left behind in their own countries, undermining social and political cohesion.

Years of building pressure in many parts of the world, at least since the global financial crisis, crystallised into dramatic political results during 2016 as public disaffection with the status quo gained traction, the report said, pointing to Britains vote to leave the European Union and the election of political outsider Donald Trump as US president.

It added that a failure to address the underlying causes of the populist tide poses a threat to mainstream politicians and raises the risk that the globalisation trend will go into reverse.

Some people question whether the West has reached a tipping point and might now embark on a period of deglobalisation, it said.

Although anti-establishment politics have tended to blame globalisation for the loss of traditional jobs, the WEF said rapidly changing technologies have had more of an impact on labour markets.

It is no coincidence that challenges to social cohesion and policymakers legitimacy are coinciding with a highly disruptive phase of technological change, the WEF said.

WEF founder and executive chairman Klaus Schwab told AFP earlier this week he hoped this years gathering could brainstorm about how to address the root causes of the widespread anxiety seen in the world today and answer the question why the people are angry, and why they are not satisfied.

The 2017 report, the 12th annual report, is based on an assessment of 30 global risks by 750 experts from a variety of backgrounds, including business, academia and non-governmental organizations.

Youve changed australia from weetbix vb and holdens to muesli craft beer and bmws

IF YOU judge our national identity by how some of our famous brands are going, Australia is having an identity crisis.

Remember when Aussies Kids were Weet-Bix kids? Me too.

Now Weet-Bix is getting thumped by muesli, according to Google Trends data. The blue line in the graph below shows the share of Google searches that mention Weet-Bix.

In 2007 people were only slightly more interested in Muesli than Weet-Bix. But now Muesli is about five times more popular. Even poached eggs seem to be streaking ahead.

Is it game over for the kind of breakfast that comes in a box? Are Aussies too snooty for that now?

Google search data is obviously not the same as sales. I wanted to know if weve really stopped buying Weet-Bix, so I went digging.

Sanitarium, the company that makes Weet-Bix, keeps their finances private. So I emailed Sanitarium and asked about sales. The response looked bad for the most milk-absorbent breakfast cereal known to mankind.

The Sanitarium spokespersons reply email said this: Weet-Bix is currently in almost half of Australian homes and still growing, particularly with the recent launch of Weet-Bix GO.

If youre paying attention youll notice that dodges the question. The number of homes Weet-Bix is in is not quite the same as sales.

And they seem to be counting something called Weet-Bix Go, which is a sort of biscuit you are supposed to eat without milk. (Theres a few varieties of this new biscuit, including apple and cinnamon, which has almost seven times as much sugar in it as traditional Weet-Bix.)

The launch of new varieties is a pretty big clue to how things are going for traditional Weet-Bix. If your core product is going bananas you dont need to invent a million alternatives.

If Weet-Bix sales are in decline, its not alone. Industry data from January this year shows the whole cereal category has fallen 3.5 per cent in just 12 months.

Whatever the reason, its sad to see something like the traditional Weet-Bix get put in the shade. Its been part of our national identity.

But our national identity crisis goes beyond breakfast.


VB sales have been struggling. The brand that launched perhaps the most iconic Australian ad ever (You can get it any old how) is no longer the automatic choice for a hard-earned thirst. Its market share fell from 30 per cent to 12 per cent between 2004 and 2013.

Beer consumption has fallen for many years and is at 70 year lows. Were drinking craft beer these days, when were drinking beer at all.

Little Creatures, James Squire, and a raft of imported brands are picking off Aussie drinkers who would once have scarcely considered something other than a tinnie of vic.


Aussies often seem to want a brand other people dont have. That has already caused trouble for some iconic clothing companies.

Surfwear brand Quiksilver (founded near Bells Beach in Victoria) went into bankruptcy in the US last week. Billabong (founded on the Gold Coast) is also suffering from consumer fatigue. Its share price is $0.66, down from over $18 in 2007.


Where the change in taste for an Aussie icon is really hitting the economy though, is in the garage.

So far this year Australians have bought 17 per cent fewer Fords and 9 per cent fewer Holdens.

But weve shelled out for 20 per cent more Mercedes and 14 per cent more BMWs. The fastest growing car brand in the whole country is actually Lamborghini, up over 700 per cent.

Thats part of the reason why Holden is shutting its plant in Adelaide, and why Ford is shutting its Melbourne factory.

Its the end of an era.

These brands once meant Australia. Now they look set to go the way of Akubra hats, Fosters Lager and the Stump Jump Plow. We will still know theyre Australian icons. But in a museum way, not in a use them everyday way.

The reasons for changing icons is complex. Partly, were richer and we want nicer things. Partly our society is more diverse. And as Australia grows bigger and more crowded, fewer and fewer of us live outside of cities and towns. We just dont need Akubras like we once did.


But its not all doom and gloom for Aussie icons. Some are surviving well.

RM Williams the Bush outfitter is going gangbusters in terms of Google search interest. This is a brand with some old school Aussie heritage. Reginald Murray Williams was a swagman born 200km north of Adelaide. The company he started now has revenue of $128 million and plans to increase that to $500 million by 2019. New PM Malcolm Turnbull has even been spotted wearing them.

Qantas is growing too. Its brands carried 4.4 million passengers in the first part of this year up from 2.9 million in the same time span 10 years ago.

And if youve burned your mouth on a pie recently, it was probably an Aussie icon. FourN Twenty pies are the biggest pie brand in the country, and sales are up. Patties Foods made an extra 5 per cent in pie sales last year.

How did these icons survive? The answer turns out to be obvious.

RM Williams is pitching itself to city folks with a new range of bags and boots.

FourN Twenty is selling Slams which are on-the-go snackable pies.

And Qantas is flying bigger planes with better entertainment and fancier airport lounges.

In other words, these brands are changing as we change. Thats how you stay as an icon. Not by being the same exact product, but by staying useful.

So maybe I was too harsh on Weet-Bix at the start. Maybe changing is the only way to stay relevant. The sugary Weet-Bix biscuit might seem foreign and strange to me. But to a new generation of kids, it could be part of a longstanding Aussie tradition.

Maybe the only people having an identity crisis are the ones who think an identity has to be the same for ever.

Jason Murphy is an economist. He publishes the blog Thomas The Think Engine. Follow him on Twitter @jasemurphy.