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QUEST MEANS BUSINESS
Trump Warns German Companies on Trade; WEF Founder Defends Davos Delegates; Oxfam: Inequality Gap Growing Wider; Leaders in Davos Weigh-In on Where They See Uncertainty; KPMG Tracks Top Trends at Davos;
Aired January 16, 2017 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] RICHARD QUEST, CNN ANCHOR: No trading on Wall Street. The U.S. markets are closed for Martin Luther King Day. It is Monday. It is the
16th of January. Tonight, Donald Trump again versus Germany. To the President-elect takes on German automakers. Workers versus elites. The
head of WEF tells me this place is still relevant. And billionaires versus the world. The richest eight men own more than 50 percent of the rest of
I'm Richard Quest, live at the World Economic Forum with my new friend this year, where we mean business.
Good evening from Davos. Tonight, Germany has issued a scathing response to Donald Trump, after the President-elect hit out at Germany's automakers
and the country's government. It all marks an extraordinary escalation in Trump's rhetoric against carmakers that produced vehicles in Mexico.
(BEGIN VIDEO CLIP)
DONALD TRUMP, U.S. PRESIDENT ELECT: If you look at the U.K., I mean, if look at the European Union, it's Germany. It's basically a vehicle for
How many Chevrolets do you see in Germany? Maybe none? OK. Not too many. How many -- you know how many -- you don't see anything over there. It's a
one-way street. It's got to be a two-way street. I want it to be fair, but it's got to be a two-way street.
(END VIDEO CLIP)
QUEST: Now, the threat that is there, of course, is of a 35 percent border tax that would be on German cars built in Mexico, but sold in the United
States. He's quite clear about this. Those German cars, whether it's BMW or Daimler, that are manufactured outside of the U.S. for specific
importation into the U.S. would attract this 35 percent border tax.
And then he decided to make some comments about the German Chancellor, Angela Merkel, saying she'd made a catastrophic mistake on refugees. He
said it was her biggest mistake.
Now, Germany's economy minister has already responded. On the question of cars, he said automakers should build better cars. That's a reference to
the fact that there aren't any U.S. cars -- U.S.-made cars in Germany. And he warned that tariffs would hurt the U.S. automakers, too. BMW, which is
in the process of building a new factory in Mexico, says it is not backing down from building that plant. And it makes the point that that plant is
designed to supply other parts of the world, besides the United States.
CNN's Claire Sebastian is with us and following developments from New York. All right, Claire. He has bashed General Motors. He has bashed Fiat.
He's bashed Ford. He has bashed Toyota, and of course, now, the German- made carmakers, as well.
CLAIRE SEBASTIAN, CNNMONEY CORRESPONDENT: Well, absolutely, Richard. He's threatening them all with the same thing. The question, of course, is what
are the legal powers at his disposal to impose that 35 percent tariff on incoming goods from Mexico? Of course, aside from the fact that he would
have to withdraw from NAFTA, he has a number of tools that will be ready for him once he take office.
Now, among them, this 100-year-old law, the 1917 trading with the enemy act. Now, he would have to argue that the U.S. is in a time of war, but
experts tell me that could be as simple as simply saying that the U.S. special forces are in Syria. And that could give him sweeping powers over
international commerce in the United States. Now, if he doesn't choose to go down that route, there is another law, 1977, the international emergency
economic powers act. Here he would have to argue unusual and extraordinary threats to the United States. That's a national emergency of sorts. But
that could, he could just argue that the U.S. is losing jobs to China and Mexico. And here again, the potential for unlimited tariffs.
Now, these are very, very powerful laws. Indeed, just some of the laws that he has. There's another instrument over here, perhaps the bluntest of
them all. The 1974 Trade Act, Section 122. That was originally designed to help presidents deal with a balance of payments crisis. And here, he
could impose tariffs of up a to 15 percent and not quite the 35 percent that he has threatened for 150 days. That's all of these instruments,
Richard, would be without Congressional approval.
[16:05:00] And of course, we know that he can do this and this is legal under U.S. law. Of course, the unknown in all of this is what the WTO
would say about it. Many experts have told me that this would be in violation. And we know that countries like Mexico have threatened to
QUEST: Claire Sebastian in New York. Gene Sperling served as a national economic adviser to President Obama's and Clinton and very grateful, sir,
that you've made a mad dash once you got into Davos to be with us this evening. Look, the issue that we are seeing with these sorts of comments
tonight, how worrying do you find them? Bearing in mind that you come from the opposite political party, but how worried are you when you hear these
sorts of comments?
GENE SPERLING, FMR. DIRECTOR, NATIONAL ECONOMIC COUNCIL: Well, you know, I support the focus on trying to encourage more manufacturing in the United
States. I led President Obama's manufacturing effort. And we encouraged insourcing. And we think that it is totally appropriate to get tough on
trading partners that are breaking the rules. China, I think, has broken many of the rules in manufacturing. And there may be ways that you can
strengthen NAFTA to encourage more manufacturing here.
So, this effort to do this in a way where you're being tough on enforcing our trade laws makes sense. But I think the danger that President-elect
Donald Trump's going to see is that when you just go to random attacks on everyone, you could start to encourage the retaliation in the trade that
could end up hurting American workers, American producers, American consumers in ways that will be negative for our economy and will take away
what the rule of law that we need to be encouraging globally.
QUEST: Do you believe that it's a legitimate use of tariffs, as he is suggesting, to -- I was going to say, promote, others would say, bully,
manufacturers not to send jobs abroad, only to import, reimport the goods?
SPERLING: I believe that we need to live by the global rule of law by trade. And I think we need to be tough and you shall be willing to
consider doing extraordinary things when people are breaking the rules. But simply to just slap on tariffs that will lead to retaliation, where
they do not exist within the existing rules that the United States has agreed to for many years in the World Trade Organization, that just invites
retaliation. That means it's just every country for themselves.
QUEST: He doesn't care, though, does he? He believes that this strength will eventually pay dividend, because the jobs won't go, but the goods will
-- the jobs will remain in the U.S.
SPERLING: I think that, again, I support a certain amount of this encouragement, but I think this kind of random suggesting that you would
just slap 35, 45 percent tariffs on, that would raise costs, and also, he's at times unsophisticated about how the supply chain works. Sometimes a
U.S. manufacturer gets a part that is cheap from somewhere else, but it makes them and their workers more competitive.
I think Donald Trump is going to learn a lot more about how this supply chain works and realize if you're not careful, if you're too random, if
you're too off the cuff, too tweeting, you're going to do things that are going to backfire, not just against the global economy, but against
American workers and American consumers and American manufacturers.
QUEST: Sir, the scale of uncertainty at the moment. All these things out there, you may want to add one yourself, but all of these things, that is
very certain, this is highly uncertain. Choose your color.
SPERLING: This is the right question that you are asking, because people are very bullish on what they think will be more stimulus, more demand with
Trump, but what they're not recognizing is how incredible much uncertainty and volatility he is bringing into the global economy and the U.S. economy.
And I think that will have potentially more negative impacts than people have priced in so far.
QUEST: Thank you very much. Good to see you, sir.
SPERLING: Thank you.
QUEST: Have a good Davos.
Now, if Trump's rhetoric on trade puts him at odds with top business leaders. Richard Lesser is the chief executive of the Boston Consulting
Group and a member of Trump's strategic forum on economic issues. He joined me up here during the day and told me he doesn't need to agree with
the president on everything in order to serve.
RICH LESSER, CEO, BOSTON CONSULTING GROUP: Our responsibility is to bring ideas for the president, as individuals. We're not expected nor is it our
role to come up with a consensus set of recommendations. It's to bring ideas as individual business leaders on what can move the needle to bring
good jobs into the country, to help strengthen the economy to help build for the years ahead.
QUEST: Are you going to find it uncomfortable, since clearly, you did not support many of the policies that the president finally won on?
LESSER: I believe we all have a responsibility to contribute ideas to try to make a difference. And I actually think there's a lot of opportunity
right now to do things that President-elect Trump talked about in the campaign that are really good for all Americans.
[16:10:00] Strengthen the competitiveness of the company, improving manufacturing, bringing opportunities for jobs, strengthening workforce
development. I think these are opportunities that he's spoken to that are the right things to do. And bringing ideas to help make that happen I
think is a responsibility.
QUEST: There is no question that those people who have traditionally come to Davos, like yourself. Got a bloody nose from a populist revolt that
gave decisions or gave results that you weren't expecting. Would you agree?
LESSER: Yes. I think there's a rise of populism and nationalism that leadership, whether it's in government, in business and society, I think,
missed the depth of frustration that people were feeling and how it would manifest itself at the polls, at least certainly in the U.S. and the U.K.
QUEST: Do the elites here -- and I probably would include myself in that sense -- do those people, do the Davos delegates get it? And are they
capable of reforming their thoughts?
LESSER: They get it a lot more than a year ago, that's a given. Whether we get it totally? I think, you know, it's hard, unless you're in someone
else's shoes to really experience the lives and how they're feeling about things. I do think that we'll make progress on those elements this year,
but I think it's going to take a few years. These are not small issues. They didn't come about in one year and they won't get resolved in one year.
QUEST: Choose your pen, a red or a green for the scale of uncertainty.
LESSER: Red means more uncertainty?
LESSER: Certainly, we're more uncertain.
QUEST: So, these are the issues. Add another one if you see one you haven't mentioned, otherwise, pop your cross on the scale of uncertainty.
LESSER: I would add taxes and regulation as certainly ones that is going to --
QUEST: Please write it in, sir.
QUEST: Now, taking that whole lot, on the scale of uncertainty, put your cross. Where are we?
LESSER: More uncertain.
QUEST: More uncertain.
LESSER: And uncertainty isn't always bad.
QUEST: Uncertainty isn't always bad. This is the scale of uncertainty that we are following this year. These are the sort of issues that people
might have in their minds, Donald Trump, obviously, European Union, Brexit, trade, Russia. We've only had, as you saw, taxes and regulation. All our
guests will be able to add their own. But the crucial thing is, how uncertain do they view the economic future, the global trading system in
the future? Most people now started to move towards this side. Rana Foroohar, one of our economic analysts was quite clear where she
believed it should go.
QUEST: Choose your pen, red or green?
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Red for urgency.
QUEST: The scale of uncertainty, where are you, bearing in mind all these things?
FOROOHAR: OK, China, debt crisis, Brexit, no idea how that's going to play. Populism rising, almost everywhere in the world. Growth, you know,
Trump's saying 4 percent. Demographics down, productivity down, I don't think so. Russia, second-rate power, but great hackers. Probably working
on the French elections as we speak. I'm going here, 9.5, something like that.
QUEST: So, it's going to be fascinating to see where everybody goes on the scale of uncertainty. Around the world, there is anger at multi-national
corporations. Anger at politicians who betrayed their promises and anger at global elites with billions in the bank. Many of them are on their way
up the mountain. After the break, I put the WEF founder, Klaus Schwab. I asked him the fact at the balance to stay relevant in a times of raising
pop populism. It is QUEST MEANS BUSINESS and we are live in Davos.
[16:15:00] (COMMERCIAL BREAK)
QUEST: Do not be fooled. It looks beautiful and perhaps it is, but it's also perishing cold. The feel temperature is minus 19 this evening here in
Davos, where it's a quarter past 10:00 at night.
"Responsive and responsible leadership" is the official theme of this year's Davos. Normally, the theme makes absolutely no sense whatsoever,
and everybody ignores it. This time, it seems to have a scintilla of relevance to the big issues. Because to those outside of this Swiss
resort, and that's probably the rest of the planet, such a theme can mean very little. Especially when you ask them what worries them. Here are
some views about what's really wrong with the state of the world.
UNIDENTIFIED FEMALE: There is a failure. There is a general failure in the fact that there's no employment for everybody and there is no
UNIDENTIFIED MALE: They've seeing enough and they don't see the real world is and don't react quick enough to what are the real problems out here on
UNIDENTIFIED MALE: I don't think the world leaders really impact my life. I think that's overblown.
UNIDENTIFIED FEMALE: Our lives are totally different. We're the peasants and they're the privileged.
UNIDENTIFIED FEMALE, ROMFORD ENGLAND: I feel that the politicians are in their own little bubble, their own little world. There's us, the working
class, and then you've got them.
UNIDENTIFIED FEMALE, ROMFORD ENGLAND: They discuss our lives. They set rules that are unrealistic and they don't have to live by them. They're
never going to be without money in their pocket.
UNIDENTIFIED MALE, ROMFORD ENGLAND: They're almost legalized crooks politicians. They are allowed to get away with really whatever they want
UNIDENTIFIED FEMALE, ROMFORD ENGLAND: Who can really go against the big companies? I doubt even the government would.
UNIDENTIFIED MALE, BERLIN, GERMANY: I will say only this, today to lead people.
UNIDENTIFIED MALE, BERLIN, GERMANY: To inspire. To follow them.
UNIDENTIFIED MALE, ROME, ITALY: We need more power for the people, because the middle class is being controlled by these people. So, we need freedom.
UNIDENTIFIED MALE: The global solution actually is a mess. They think more of economical side and they don't think about maybe the future of the
UNIDENTIFIED FEMALE, SILOAM SPRINGS, ARKANSAS: I don't put my hope in leaders of the world. That's not where my hope lies. My hope actually is
in Jesus Christ.
UNIDENTIFIED FEMALE, SILOAM SPRINGS, ARKANSAS: Honestly, I don't look for government for change anymore. I think it's really just about people, you
know, within your small community.
UNIDENTIFIED MALE, KENOSHA, WISCONSIN: I've lived here my whole life. Yes, I haven't lived very far. I'm not very worldly. Do the global
leaders, do they affect me? Do they impact my life? Are they representing me properly? I don't think they represent me in any way, but that's not,
that's not a bad thing. It's just my daily life goes on with or without them.
UNIDENTIFIED MALE, KENOSHA, WISCONSIN: The recession was a result of global policies. And I was hit hard by the recession. So, yes, I believe
the impact of global policies affects small business people like myself.
UNIDENTIFIED MALE, KENOSHA, WISCONSIN: Do these meetings improve the state of the world? I think in their minds, it does, but not in my mind. I
really don't think that there is little or no impact on me. And it's kind of a shame that it would have an me. That they can go meet in Lake Geneva,
Switzerland and effect an average Joe in Kenosha, Wisconsin. I don't want them to affect me.
QUEST: The views of, I was going to say, ordinary people, but the views of voters and employees around the world. I put all of this to the founding
father of the World's Economic Forum, a global get-together of elites, when there's rising populism, today, is almost an embarrassment.
[16:20:00] Klaus Schwab says delegates here must address the root causes of disapproval. The sort of decisions which prompted Trump's election and the
KLAUS SCHWAB, EXECUTIVE CHAIRMAN, WORLD ECONOMIC FORUM: Yes, we have those results, which we may accept or regret. But what is important now, to take
the conclusions and to make sure that we are aware of what's happening. And here, it's not only globalization, it's not only the angle, it's
particularly also the technological progress, which creates this anxiety of people.
QUEST: Globalization has become a dirty word. Notwithstanding the hundreds of millions of people that have been lifted out of property in the
developed world. Are you concerned that Trump is going to reverse the trend of globalization?
SCHWAB: I think it's in nobody's interests to establish against walls around nation states, going back. We are living in a world that is
interdependent, which is interconnected. And we are in a global community of destiny. And we have to take our global responsibility seriously.
QUEST: The press release announcing the forum talks about the number of CEOs that will be here, the number of government leaders, 3,000 people will
be here, hundreds of CEOs. And yet the argument goes, and you've heard it many times, that these are the people that perhaps helped caused the
problem and certainly didn't see the populism arising.
SCHWAB: Yes, but I could say it's the same of the media.
QUEST: Oh, I'll take my share of the blame, yes. But they won't take their share of the blame.
SCHWAB: No, everybody has to be blamed. And what we should not do now is to start the blaming game. What we have to do is to address the root
causes. Why do we have this anxiety? We have to work together in a constructive way now.
QUEST: There are those who say that Davos, and I mean by Davos, the entire panoply of meetings and cocktail parties and you're familiar with this
argument. You've heard it for the last 30 years, but that it has become almost an embarrassment, because it's bringing elites.
SCHWAB: That's a very superficial view. If you look at the people who are coming here, saying are investing time, our businesspeople are money, they
come here to work. Because otherwise, their presence wouldn't be justified.
QUEST: Klaus Schwab, defending some might say, WEF and the way of doing business here.
Talking of business. The pound has rebounded after tumbling to its lowest level since October. It all happens on the eve of Prime Minister Theresa
May's big Brexit speech, where she's going to be talking about a global Britain. And the early previews of the speech have certainly raised fears
of a hard Brexit. Because, obviously, she's basically saying there are certain red lines that cannot be crossed in terms of the negotiation.
That's being interpreted as a harder Brexit than might be.
Richard Solomons is the chief executive of IHG Intercontinental Hotels. Good to see you.
RICHARD SOLOMONS, CEO, INTERCONTINENTAL HOTELS GROUP: Hi, Richard, good to see you.
QUEST: So, the issue that we are seeing at the moment, you saw the pound is down again. And this uncertainty of currency at the moment, how
damaging is it for people like yourselves?
SOLOMONS: Depends where it goes. Actually, for us right now with costs in sterling, and most of our revenues and dollars, it's been quite beneficial
in terms of reported amounts. But uncertainty is not helpful and currency movements don't help.
QUEST: What's the biggest issue that you have at the moment? You're expanding in China very fast. All hotel groups are. And you've got
certain difficulties in other parts of the world. What for you is the biggest difficulty?
SOLOMONS: The biggest issue out there affecting trading is low oil prices in the U.S. and the Middle East. Terrorism doesn't help in pockets. Other
than that, actually, the travel business is pretty healthy. People are traveling more and more, and that's continuing.
QUEST: Except you've then got this question of Brexit or Donald Trump, when he takes over. If you had to choose, of the two of uncertainty a
phrase on business minds, which would it be do you think at the moment?
SOLOMONS: I think uncertainty in the U.S. is much bigger. We're in a global business, we're in a hundred countries, 5,000 hotels, 60 percent of
our business is U.S., second biggest market is greater China. So, I think uncertainty in the U.S. is for us, and for many people, one of the bigger
issues than Brexit.
QUEST: So as taking your answer just then, if there does become -- and I don't like the phrase trade war. We will use it anyway. If there's a
trade war between China and the United States, or at least the rise of protectionism, that hits you, does it?
[16:25:00] SOLOMONS: Probably not, actually. Because we're actually primarily a domestic business. We are a brand owner. We don't own the
real estate around the world. Other people do. And so, for us, I think we're being primarily domestic. I think we're not indifferent to it,
because that could affect global growth, but it's not a major issue for IHG. It's one of our strengths, actually.
Elites of the world unite until you get a result. How -- what do you make of this perceived battle now between elites and the rest?
SOLOMONS: I think it's very unfortunate, but I think in many ways, it's understandable. We put out a report a couple of years ago, one of our
trends report, I'm sure we shared with you. Well, we talked about trust capital. And I think it may be a bit of a cliche, but trust is at the
heart of the society we live in. You trust government, you trust business, you trust the people you interact with. And I think at the moment, trust
QUEST: Can it be rebuilt quickly do you think, or will it take a long slog?
SOLOMONS: I don't think quickly, but I think it's certainly doable.
QUEST: The scale of uncertainty. Sir, choose your pen, choose your color?
SOLOMONS: What does it mean, I'll go red?
QUEST: These are the uncertain issue, maybe others that you would like to add to it, feel free.
SOLOMONS: Yes, I think the one I would add, Richard, is foreign exchange, because it's so volatile. In a hundred countries, it has a big impact.
QUEST: On the scale of uncertainty, at the moment as you look out into 2017, where would you be on the scale of uncertainty?
SOLOMONS: I would be very high up. I think most people haven't a clue, so I would go there. What I would say, though, I think for our company at
IHG, given the nature of our business, the number of countries we're in, that actually an uncertain world is not as bad as it could be.
QUEST: Good to see you, sir. Thank you for braving the cold.
SOLOMONS: Thank you very much.
QUEST: Thank you very much indeed.
Now, the number of chief executives looking to the U.K. and U.S. for growth has doubled, according to six years ago, it comes as the annual CEO survey
from PWC is published. At a time when there's uncertainty as we've certainly been talking about, uncertainty everywhere around Brexit and
Trump and all these other issues. Well, PwC's chairman, Bob Moritz, explained the apparent contradiction.
BOB MORITZ, CHAIRMAN, PWC INTERNATIONAL: The survey results are counterintuitive to the world at large when you look at the uncertainties
that people are talking about. It comes back to the CEO's confidence that they can execute better with the mind-set of, I can get the detailed growth
I'm looking at in terms of the consumers that I'm interacting with, with the confidence of the product I'm providing and the market share I can
grab, as we can look ahead.
QUEST: Yet, there are so many unknowns that are causing investment decisions to be delayed.
MORITZ: Absolutely. But what's happening is the confidence of the CEOs is actually saying, I've got to think differently about what I want to think
about when I make those investment decisions. I might slow down a little bit, but those that are most confident, Richard, are making the decisions
QUEST: Is that confidence deep-based or just paper thin?
MORITZ: I think today the confidence is based upon the resiliency they've had over the last couple of years, but those issues that are top of mind
right now are big topics that we've not seen before.
QUEST: All right. So, I was surprised to see confidence rising amongst U.S., as a result of, subsequent to Donald Trump's election.
MORITZ: I think there's two things that are actually surprising. One is the confidence in the U.K. with Brexit. The second is the confidence in
the U.S. with the election. And both of those are for the companies within those countries. And for that matter, the confidence of other CEOs wanting
to invest in those countries.
QUEST: Do you think those CEOs are fooling themselves about the risks ahead, or in the being as aware of the risks as they should be.
MORITZ: I think they're aware of the risks in terms of what they should be thinking about. The question is, can they pivot when risks come to life?
Because right now, it's all uncertain. Now we've got to be more agile and able to adopt quicker and faster than ever before.
QUEST: Well, if you take for example, Trump or Brexit, which is the bigger risk?
MORITZ: I think Brexit is the bigger risk. When you look at the implications on Brexit, to the worldwide order of the EU and then compare
it to where the U.S. right now, the U.S. still has a great consumer base, great innovation, rule of law, and confidence of the world in the U.S.
QUEST: Except if tariffs come along. If tariffs come along, that will be tit for tat before you can say Merry Christmas.
MORITZ: And the reality is we know you can't actually close the borders of the U.S., otherwise those companies are out of business. So, now the
question is, how do you actually create the right trade agreements? How do you get the interaction with the world in a way that makes sense for the
newly elected officials?
QUEST: That was the global elites descend on Davos, Washington is preparing the inauguration of Donald Trump. I'll be joined by Uniglobal's
union, Phillip Jennings, who says Donald Trump is draining the swamp only to make way for the yachts.
[16:30:00] (COMMERCIAL BREAK)
QUEST: Hello. I'm Richard Quest. Of course, there's more QUEST MEANS BUSINESS in a moment.
When Oxfam says, the gap is getting wider between the richest and the world's poorest. And the chairman of KPMG will be here to talk about the
top-trending term at Davos. It begins with the letter "T." Before all of that, this is CNN, and on this network, the news will always come first.
America's top diplomats criticizing Donald Trump for what he called stepping into the politics of other countries in a very direct manner.
John Kerry called the President-elect's latest remarks inappropriate. Mr. Trump recently told two European newspapers that Germany's refugee policies
were a catastrophic mistake and that NATO is obsolete.
At least five people have been killed at a shooting at a nightclub in Mexico, 15 other people were wounded in the attack at a music festival near
Cancun, which is popular with foreigners. Two Canadians, an Italian, and a Colombian were among the dead. It's unclear who was behind the shooting.
The wife of Omar Mateen, the shooter at the Orlando, Florida, pulse nightclub, has been arrested. The FBI says it's in connection with their
investigation into the mass shooting. Charges against Noor you are Salman include obstruction of justice and aiding and abetting Mateen's material
support to ISIS.
There's a strange sense here in Davos that we've all shown up at the wrong party at the wrong time. While in Washington, two dozen Democrat lawmakers
say they're going to boycott the inauguration of Donald Trump. Some of them say it's in response to Russia's alleged election meddling, in other
words, he's not the rightful president.
Others believe it's because of Trump's rebuke of the civil rights icon, John Lewis, over the weekend, a member of Congress. And the day after
Trump swearing in, more than 200,000 people are expected to descend on the U.S. Capital for a woman's protest march, where abortion rights will be
very much on the agenda. Phillip Jennings is the head of UNI Global Union. Now, you say, sir, you say that Trump risks being the betrayer in chief.
What do you mean by that?
[16:35:00] PHILLIP JENNINGS: GENERAL SECRETARY, UNI GLOBAL UNION: What I mean is, he's made promises to the working people of America, he's going to
set things right. On the evidence that we've seen, so far, on his cabinet appointment, plutocrats and billionaires, number one. Number two, his
suggestion for the Secretary of Labor is a union basher. Exploited his own workforce. Has infringed labor laws left, right, and center. And on this
basis, how is he going to deliver? He's building people up and stripping - -
QUEST: OK, just a minute --
JENNINGS: -- 26 million people are going to have their healthcare taken away. Two million of the dreamers are about to find themselves deported
out of the country. He said a level of expectations that he cannot meet. And the people that he's surrounded with are not going to deliver the
workers' paradise he's been talking about.
QUEST: All right. So, you are already judging that he's unable to create those jobs or to keep those jobs in the U.S. that you would wish.
JENNINGS: I doubt his jobs plan, because what is the jobs plan, so far? He's heckled. He's promised thing on the infrastructure side. He's made a
few phone calls to businesses. Where the unions are already in place. Where the unions have been fighting in those businesses for union jobs.
Cheap trick. We need a proper industrial strategy, which we need to.
QUEST: So, when he gets, when he gets, for example, Carrier to keep -- I know small jobs, 700 jobs. Or when he gets Ford to change their ideas on
building a plant in Mexico, and investing instead in Michigan, this may just be the start.
JENNINGS: Each of the companies you've just referred have a union in place who have been arguing and putting the case to keep those jobs --
QUEST: And failing.
JENNINGS: Not failing at all. You talk to the Ford management, they'll tell you that the working relationship they have with their union has
helped convince them to keep those jobs there. He is taking credit for something that he has not delivered. The other thing he's promised to do
is to make America great again. I'm saying to him, make America's wages great again. We are flatlining in wages in the United States of America.
No wage increase for the last 40 years for the bulk of the people.
QUEST: Wages are going up now. The first --
JENNINGS: Creeping. Creeping, because Barack Obama made an initiative to increase the minimum wage and this man, Puzder, has said, he's going to
drop it. Therefore, I want to see American wages being great again. And I want to see --
QUEST: We've got time to get you to do these. Which color do you want?
JENNINGS: I'll have a red one.
QUEST: Those are the issues. You can add another issue if you really want to. Put yourself on the cross.
JENNINGS: I would put --
JENNINGS: Now, the uncertainty is jobs. There's a massive uncertainty about jobs, because the economy not delivering jobs, unemployment is going
to grow. And I can't tell you in terms of uncertainty in the political world, the geopolitical world, it's there.
QUEST: Thank you, sir.
JENNINGS: Thank you. All the best to you.
QUEST: Phillip Jennings, joining me.
Now, I need to bring some news to your attention. News coming into CNN. The suspected gunman who attacked an Istanbul nightclub on New Year's Eve
has been arrested. That's according to local media. Thirty-nine people were killed in the attack, another 69 were wounded. ISIS claimed
responsibility for the attack on Twitter. Now, CNN has not been able to verify that claim. Ian Lee joins me now on the line. Ian Lee in Istanbul.
What do we know about the circumstances of this arrest, Ian?
IAN LEE, CNN CORRESPONDENT (via telephone): Well, Richard, right now, it really is just breaking, learning about the fact that this man was
arrested. In fact, in Istanbul. And there has been a nationwide manhunt, Turkish officials think they were committing hundreds of security
personnel, scouring the country for this person. They have made dozens of arrests. Just recently, a few days ago, they arrested two Chinese
nationals, they said that contributed to this attack, possibly they gave them some vital information that led to this suspect, this man who
authorities still haven't named, to be arrested tonight in Istanbul.
QUEST: Ian, come back to us when we have more details. And obviously, we'll come to you as soon as we do have those details. We'll continue with
our business and WEF agenda as we wait for more.
It's been four years since WEF labeled inequality as a major threat to instability. Now, Oxfam has issued its most damning report yet, saying the
problem is getting worse. This is how they showed it. Eight men now control as much as the poorest 50 percent of humanity, 3.6 billion people.
[16:40:00] The eight are Bill Gates, Amancio Ortega, Warren Buffett, Carlos Slim, Jeff Bezos, Mark Zuckerberg, Larry Ellison, and Michael Bloomberg.
Are shown. Their combined worth is nearly half a trillion dollars. Winnie Byanyima is here. She's the executive director of Oxfam International.
Good to see you.
WINNIE BYANYIMA, EXECUTIVE DIRECTOR, OXFAM INTERNATIONAL: Good to see you, Richard.
QUEST: Lovely to have you with us.
BYANYIMA: Thank you very much.
QUEST: When you -- last year you put it in terms of the top 1 percent owned as much as the 70 or 80 percent. This year, you've been much more --
you've named and shamed, to some extent. You're not criticizing the eight, you're really criticizing the system here.
BYANYIMA: No, actually the eight just symbolize a broken economy. That we're not exposing them or anything, but we're just showing the scale of
the problem. That eight people, who can sit around the table, now own as much wealth as the bottom half of humanity. It doesn't make economic
sense. It doesn't make moral sense. It's immoral that so much wealth is concentrated in the hands of a few people and one in nine people go to bed
hungry every night.
QUEST: Does Oxfam find itself in a bit of difficulty at the moment, bearing in mind this anti-globalization movement, which has created Trump
and Brexit? Because at the same time, globalization has taken so many people out of poverty in the developing world, as you well know.
BYANYIMA: Actually, we are saying right now that look at what is happening, look at the political shock waves. It is really people who feel
excluded, the majority feeling that politics, political systems, and economic systems aren't working for them. It's a warning. It's a loud cry
from the majority of people, calling for a common-sense approach to economic management, to make economies work for them.
QUEST: But they are calling for changes that arguably could help the poorest, that could hurt the poorest in the world, because if globalization
goes into reverse, then you're not going to get the expansion of wealth. Some would say.
BYANYIMA: Not really. In fact, what we need is for governments to take charge and manage economies sensibly. It isn't globalization, per se. It
is the old rules in the economy that work against ordinary people. Take, for example, tax dodging. Globalization does not imply that companies
should use tax havens. We are allowed to use tax havens, not to pay their fair share of taxes. Governments should curb tax dodging, should stop this
race to the bottom on corporate tax. These can weaken, have a globalization that works for the majority.
QUEST: Paid time.
BYANYIMA: Pay workers a living wage.
QUEST: Come over here and do -- which color would you like? A red or a green?
BYANYIMA: I'll take a red.
QUEST: Go on. These are the issues we've been talking about so far. Which one, come over here and join me. You can add your own, if you would
like, or you can just put yourself on the scale of uncertainty. How uncertain do you think the world is this year?
BYANYIMA: A lot of uncertainty, certainly about jobs and about populism, which is really a response to the anger, public anger of people excluded in
QUEST: And your cross?
BYANYIMA: My cross is here.
QUEST: Wonderful to see you. Thank you very much, indeed.
BYANYIMA: Good to see you.
QUEST: Have a good Davos.
BYANYIMA: Thank you. Thanks, Richard. Bye-bye.
QUEST: Now, as we continue tonight with the scale of uncertainty, the most spoken about man at Davos isn't even here. I'll discuss the President-
elect with the chairman of KPMG. It is QUEST MEANS BUSINESS. The scale of uncertainty is looking very uncertain.
[16:45:00] (COMMERCIAL BREAK)
QUEST: The IMF is nudging its U.S. growth forecast a smidgen higher in response to the Trump presidency, and the prospect to have greater
stimulus. I asked the IMF chief economist what policy he would most like to see from the new administration.
(BEGIN VIDEO CLIP)
MAURICE OBSTFELD, CHIEF ECONOMIST, IMF: We really need policies, including structural policies and tax policies that will raise potential output and
potential growth. Not the least of these is trade policies. And for trade policies to be supported politically, we need countries to really revisit
their policy frameworks and think about how the benefits of trade can be spread more broadly among their citizenry.
(END VIDEO CLIP)
QUEST: There's no getting away from one very simple fact. Talk of Donald Trump and the new administration in Washington, it's going to dominate
Davos. Now, KPMG has been tracking key topics at WEF, and as John Veihmeyer explains, the chairman who is with me. Talk of Trump is just
about dwarfing any other issue. John's with me now. Good evening, sir.
JOHN VEIHMEYER, CHAIRMAN, KPMG INTERNATIONAL: Hello, Richard, thanks for having me.
QUEST: Thank you for braving the cold.
VEIHMEYER: It is a little chilly here, but you're worth it.
QUEST: I would blush if it wasn't so cold. So, what are you seeing in terms of trending subjects?
VEIHMEYER: Trump is clearly dominating the conversation, but I think once you scratch beneath that, it's really, these topics of trade,
globalization, and frankly, trust, that I think are dominating.
QUEST: Right. If you take trade, globalization and trust, Trump promises to upend all three of them in some shape or form. And that's a major
VEIHMEYER: You know, I think you've got to be careful. He hasn't taken office yet. And we've got to, I think, give a chance for this to work.
Trump was elected and ran on a policy of accelerating growth, and getting growth going. And I think he recognizes and his team clearly recognizes
that trade is important to growth. I don't think this is anti-trade, it's smart trade. And we'll have to wait and see how some of this manifests
itself, but I've got great confidence, Wilbur Ross, some of the other team members that are on the Trump team, I think, are pragmatic, practical, and
they're going to be people that we can work with.
QUEST: But you'd agree, we are about to embark, some would say, unchartered territory, unchartered waters. I might suggest a more neutral
view, a great experiment. Would you accept that?
VEIHMEYER: I think this is -- there are tremendous uncertainties that have been unleashed, based on a lot of the promises that have been made and
issues around tax reform, regulatory reform, trade reform.
QUEST: If you take these issues. Let's take, for example, Brexit, which of course, is still some years away. But that is certainly also disturbing
many of your clients, isn't it? And the prospect of what's going to happen there?
VEIHMEYER: I think there's tremendous uncertainty across the playing field. Geopolitical is huge. Frankly, Brexit and the impact of Brexit was
immediate, but fairly short-lived. I think the real impact of Brexit will be a year and a half from now, when we really know what kind of exit this
is going to entail.
QUEST: You talked about uncertainty at least three times in our discussion here. Choose a color of pen that you would like to write on the chart?
VEIHMEYER: I'm from Notre Dame. I'll write green.
QUEST: You're the first green. All right, so you can either add to the list or accept this list of the issues of uncertainty. Where were you?
[16:50:00] That's very certain. This is uncertain. The scale of uncertainty in the global economy for this year and beyond?
VEIHMEYER: There's tremendous uncertainty across a lot of playing fields. I'm probably in this range, but I agree with all of those. There's one not
on here, though, which is, I think, also a big risk today.
QUEST: Go ahead. Write it in.
VEIHMEYER: That is cyber and data protection. Which when we surveyed, 1,300 CEOs around the world, cyber was the number one risk that they talked
QUEST: You're right to put it on the chart. Thank you, sir. Nice to see you.
Now the list gets bigger. Everybody's on this side of the chart. There's a big sale on in Davos. The shops that usually offer coffee, kitchenware,
or clothing are now selling themselves.
QUEST: Davos is unique. If you take a walk along the promenade at the top, you will see something that you'll never see anywhere else. All the
shops literally change for a week.
QUEST (on camera): The promenade in Davos, the main street that runs through this picturesque Swiss ski resort. Where each year for one week
only, all those shops selling lingerie, kitchenware, and household goods, those shops become talking shops.
(voice-over): For 51 weeks of the year, number 93 promenade is a hair salon. Then suddenly it becomes hub culture pavilion, a pop-up meeting
STAN STALNAKER, HUB CULTURE: This under here is actually sinks and chairs, where they do the hair washing, and we cover it every year and it becomes
part of the cafe.
QUEST: Hub culture has grown on to the roof.
STALNAKER: We built this in like six days.
Friday that was a wine shop with some sheep skins and furniture.
QUEST (on camera): Now, does this even exist for the rest of the year?
STALNAKER: That's a field. The whole of the year, that is a field.
QUEST (voice-over): Change is everywhere. Schuler Bucher, household goods becomes Salesforce Cloud Commuting. While this apartment block is for STUD
by Tata, the Indian consultancy firm.
(on camera): So, the wine shop has become an insurance company with a gimmick of covering cars and to make the gimmick complete, because in
Davos, you always need to have something different to stand out, need a hat to stay warm, they will give you a free bubble hat.
[16:55:00] (voice-over): Newcomers are always arriving. Facebook has taken over this field and put up this pop-up.
Not everyone cashes in on WEF. The Swiss alps fantasy souvenir shop has received many extravagant offers to move out during Davos. But the owner,
Monica, always says no. She told me, it's a matter of principle.
(on camera): The power of money is everything in Davos. This is the cafe klatch. Used to be my favorite place to come and have a cup of coffee.
Now, even cafe klatch has sold out and rented itself so become Russia House 17. WEF has struck again. Whatever next?
QUEST: Indeed, everywhere, a Profitable Moment after the break.
QUEST: Tonight's Profitable Moment. This year's Davos is going to be different. It's going to be fascinating to see how the elites navigate the
change. Isn't it, sir. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in Davos. Whatever you're up to in the hours ahead, I hope
it's profitable. We will see you tomorrow.