What is Blockchain, and how is it going to change the way we transact with our customers? Why is it becoming increasingly important to take note of the Fourth Industrial Revolution? Exactly how is China opening itself to free trade and greater collaboration in the international community? What about the Trump administration’s impact on the world as we know it? And most importantly: How are all these changes and developments going to affect your business and your life? In conversation with CNBC Africa’s Bronwyn Nielsen, BizNews.com editor Alec Hogg shared his insights on many of these issues from his recent visit to Davos in Switzerland, where he attended the 2017 Annual Meeting of the World Economic Forum. It was the 13th time that he attended this prestigious event.
Thank you very much for joining us, this Facebook live broadcast is coming to you from the JSE Limited, the heart of business in Sandton, Johannesburg, South Africa. I’m joined by Alec Hogg, who is the editor of BizNews. I’m Bronwyn Nielsen, editor in chief of CNBC Africa and we are here to unpack the World Economic Forum Annual Meeting 2017, which took place at the end of January in Davos, Switzerland. (I’m already losing my voice) – Alec, let’s jump into this exclusive event – three-thousand delegates from all over the world, meet up in Davos, which on my first occasion, was quite an interesting venue because you are knee-deep in snow and you certainly can’t escape and I think that’s actually the whole purpose. You are a 13-time veteran of the World Economic Forum in Davos, now nobody can actually match that stat. I think everybody in this room knows Alec Hogg. If you don’t know him then you certainly haven’t been in the business circles in the South African environment because you are a renowned South African business journalist. However, he is now taking BizNews global and I don’t want to talk about your list of accolades and awards, everybody knows that. So, tell me about Davos 2017, and specifically, ‘Team South Africa.’
Yes, Bron, my very first time that I went there was in 1993. It was out of the blue and we got an invitation from Klaus Schwab, who’s the founder of this thing called the World Economic Forum and he decided on Davos because it was cheap, 46-years ago. Well, today the little town is not cheap at all. We can tell you that they generate about 80% of the revenue at a ski resort in the one week because those three thousand people that Bronwyn mentioned come primarily from business. They pay R500,000 for a ticket to get in. We don’t, we work…
But we do actually work. Maybe you don’t work but I do work.
Yes, Bronwyn works very hard there. I kind of flitter around and interview a few interesting people, so I have fun. Up until last year there were 2,600 people that used to go and for some reason, they jacked it up to 3,000 and you could feel that the place was a bit bigger than in the past. This group of people that come together are CEOs or Chairmen of major global companies and, of course, Heads of State, Nobel Prize Winners – it really is an accumulation of lots of brain power.
You haven’t mentioned Shakira or Matt Damon, Forest Whitaker…obviously, the movie stars don’t impress you or the pop stars.
Well, Shakira does but the way it all gets put together – they’ve got about 200 bright, young things from top universities in the world and they go out, during those in between the World Economic Forum events, where there are regional events. Bronwyn is very involved, CNBC Africa is the host broadcaster at the Africa Forum, which this year is going to Durban for the first time.
It’s going to be in Durban from the 3rd to the 5th May, and again that is, as you say, a regional event. We’ll have Heads of State from across the African Continent and then again, the business representatives from across Africa.
So, those 200 bright, young things go off. Go and see what the trends are around the world. They bring the trends together and put them on the agenda and the three-thousand heavy hitters come and learn because most of the time they’re teaching others. They absorb, over 5 days, go back home and you actually know pretty well, what’s going to happen in the world for the next year because if you watch what’s happening in Davos, the power nexus of the world, when they go home they then apply those different learnings and changes. I’ve noticed over the time I’ve been going there, I went in 1993 for the first time. I didn’t go for many years, and then went again I think in 2003, when I was invited back and I’ve been continuously going since. The trends are what’s important in Davos.
Let’s talk about the trend and specifically let’s start with ‘Team South Africa’ – they’re a couple of different themes that we’re going to cover during this session, certainly we’re going to talk about the change in global order. We’ll talk about the Fourth Industrial Revolution, about inclusive growth and, also about this new term ‘blockchain’ but I want to start with ‘Team South Africa.’ This was my 6th event and generally it has been led by President Jacob Zuma. What changed for ‘Team South Africa’ this time around was that we were led by South African Deputy President Cyril Ramaphosa.
Well, you’ll recall that on the Friday before everybody goes the following week. Up to that point, Zuma was going and then there was a shift. What they did, the WEF people did, was they got Ramaphosa onto a lot of different platforms in Davos, so they exposed him very aggressively. He brought a completely new light to the South African delegation. Cyril, he is an intellectual, he reads a lot, he just gets the way people talk in, if you like, at the most powerful forum in the world. He holds his own and he delivers a presidential presence. It was great, I just loved it this year.
If I can add because with the Deputy President, CNBC Africa hosts the only Africa focussed debate in the Congress Centre and we broadcast that live to 48 countries across Africa. I had the pleasure of having Deputy President Cyril Ramaphosa on that panel with different presidents, and Aliko Dangote who, as you’ll know, is the richest man in Africa, was on that panel. Just to reiterate what you’re saying he really held his own and in fact, I was very proud to be South African.
It reminded me of 1993, we’re going back a long time, (before democracy), in 1993 the group of people who were there, and the reason we were invited incidentally, was because in 1992 de Klerk and Buthelezi met on a public platform for the first time, with Nelson Mandela, in Davos. Mandela went to Davos as a communist – “Let’s nationalise everything.” He came back believing in the free market. That’s the power of this place but what I recall about 1993 was Tito Mboweni, he wasn’t Mr Governor. Trevor Manuel was Trevor and not Mr Manuel, the Finance Minister and it was an informality. A collegiality I think you could say, of the South African delegation back then that we can do anything if we pull together, and I felt that again this year. In the interceding, apart from 2010, when the FIFA World Cup came to South Africa and there was a bit of an upliftment in the South African delegations. Apart from 2010, I haven’t seen this again.
I think that there’s just one more thing that I do want to add, having being part of the African delegation, and it’s not just a South African delegation. We have got representatives from Nigeria, from Rwanda, from Kenya and really, there is a brand Africa forming at the World Economic Forum, particularly in Davos. Generally, there was less interest in Africa, and that’s including South Africa. Simply because the global environment is so volatile at the moment, so we were really quite insignificant. It was quite sad that we had our act together but people weren’t too interested in hearing our story. That would be my sense. You may feel differently.
I agree. In the last 13 years that I’ve been consecutively going there, initially Africa was nowhere and then Africa was the belle of the ball, you couldn’t get in. You’d have a session say in a room like this with people queuing for literally 50m – 60m, outside the door, trying to get in – this new Africa story, Investment in Africa. We must never forget that Africa’s hard currency revenue is 60% generated by oil. We think we come from a country with no oil but with minerals, minerals are about 10% – 15%, so it’s really an oil story. When the oil price was rising up towards $100, or even $120 a barrel. Africa was incredibly cheap.
And the growth rates were amazing.
Yes, a lot of money in it.
I mean, economies were hitting 7%, 8%, or 9%
We had 8.5% in this country, back in 1981, after the gold price hit $850 an ounce in 1980, if you recall. So, you throw money at something, it doesn’t matter how badly it was managed, and we weren’t terribly well managed back then. You will grow, and that’s been the problem, so the opportunity was missed in many respects and Africa is now off the agenda, as you say. You could easily walk into any Africa related session, there were lots of empty seats.
So, the change in global order and I think let’s start with Trump. First of all, on CNBC Africa Global, we’ve coined Trumponomics because really, it’s volatile out there and he’s running the US, as we all know, on Twitter, which is interesting because there’s huge visibility. At least we can say a lot for transparency. What was interesting about the timing of the World Economic Forum this time around was that the inauguration of Trump was happening on the Friday and things started heating up Tuesday, Wednesday, and Thursday. I don’t know what your sense was but I think people were really nervous to get caught on the wrong side of Trump, ahead of the inauguration. I didn’t find many opinions being expressed about the President Elect at that time.
I think Bron, the feeling and we took the same view at BizNews, was give him the benefit of the doubt. We did the same with Zuma, exactly the same thing, and I can remember at the time some people who had a deeper understanding of it, being highly critical of the line that we took. With Trump it was the same thing. Many people that were better informed said, “Why are you giving this idiot the benefit of the doubt?” But that’s what you try to do, in the work that we do. Unfortunately, there’s no more doubt and there sure hasn’t been any benefit from Mr Trump so far. He blew it from almost day one, when he came out with an Executive Order. Now, remember it took Obama 6-years to do a single Executive Order. Trump did 18 in his first 10 days and the Executive Orders that he did were all related to campaign promises. Now, campaign promises often are done on a fly. Somebody in the audience asks a silly question, “How are you going to stop the Mexicans from coming in?” And he can sense the audience, and he said, “We’re going to build a wall.” Well, he’s going to build a wall, so he’s got this businessman approach towards governance and the business approach is ‘my word is my bond and if I tell you something, I’m going to do it, even if I’m going to lose money on it.’ That seems to be what Donald Trump has unfortunately, visited upon America.
A very impressive man was outgoing US Vice President, Joe Biden. Tell us a bit, you attended that session.
I did. I was very impressed with Biden last year, he did the closing address, I think, last year in Davos and he was extremely presidential. You sat there looking at this guy and he calls himself, I think, Average Joe Biden because he’s like the normal guy in the street and he really does come across that way, and you wondered now was Biden not in the presidential race? I suppose, at the time, I didn’t pay enough attention but he looked like a wonderful candidate and usually the Vice President of the United States is a candidate. The feedback that I got was that there were personal issues and he decided not to do it but had he become the US president. Well, things would be a little different I guess.
So while the US was absent and they were waiting for the inauguration and, of course, you did have some representation and we’ve just discussed the outgoing vice president, President Xi of China, swooped in and basically, got all the attention.
He did. He was the star of the show. However, the WEF guys tell me, 250 hangers-on. Now, you know how tight that place is for accommodation. President Xi, 1.3 billion people, I guess, 250 guys follow the president around. What should we be worrying about these blue light brigades and whatever. Can you imagine his blue light brigade, but he was most definitely…? He stood up there. He got a standing ovation from the Davos faithful because he, like Davos, is standing for global cooperation. I mean, the irony of it – here you have the leader of the Communist Party, the last real successful communist in the world, who is standing up for free trade and free enterprise. Then you get the bastion of free enterprise, who’s standing for protectionism. It really is the other way around and the interesting point on this.
I had a fascinating exposure to the CEO of a company called Eurasia. Now, Eurasia is one of those deep consultancies who go behind the scenes and get to know people. Then they get paid a lot of money to tell businesspeople and others what’s actually going on in the world. He was saying, Ian Bremmer was saying a week before, this was last week in Cape Town. The week before he was with Jason Kushner. Jason Kushner is Trump’s son in-law, he is suggested by people, together with that guy from Breitbart, that he actually runs the country. Kushner was telling Ian Bremmer, Trump’s view of the world and I found this fascinating.
Conservatives you will find often read history and particularly in the United States they are well read. These are not dumb people – these are intelligent people but it’s the interpretation of history that starts going a little bit awry. His interpretation is that of the Trump Administration’s interpretation (according to Kushner), is that every time in history where you had a leading power that is on the decline, in other words the United States, and an ascending power that’s on the ascension, in other words China – there is always a massive confrontation between the two. In 12 of the last 14 times that this happened in history, over 200 years I guess, that has happened. So, the thinking in the White House is let’s hit them while they’re still weak.
Reality – how do we hit them while they’re weak? Well, of course through a Trade War. What is a Trade War? Very simple, you just jack up the prices on imports from that country. Now, we’ve seen this been triggered in two ways already. On day one of Trump’s new position, the day he moved into the White House, he had an Executive Order to tear-up the TPT (Trans Pacific Treaty). This is his friends, or people who distrusted China, like Vietnam, who are now thrown into the Chinese camp, Australia, Japan, China of course, itself – all the Pacific countries who’d sat together for many years, to craft this agreement, which Trump tore up on day one. The implications of that kind of a decision are significant.
The other thing, getting back to Davos…
I’m glad you’re getting back to Davos or else you’re going to get caught up in the White House.
Anthony Scaramucci was the only representative from the Trump administration in Davos this year, so he was very popular. His major contribution to all the discussions – “We will win a Trade War against China.” Extraordinary times we’re going into.
Extraordinary times, and then of course, Brexit and Theresa May. Now, you’re a Theresa May fan.
You are now based in the United Kingdom, so talk to us.
Theresa May is a very different voice to the party who used to run the UK. She’s the daughter of a priest. Well, not a priest because it isn’t a Catholic church but a vicar. So, she comes from almost like a Maggie Thatcher kind of person. Very middle of the road but very bright and she’s achieved an enormous amount. She has no children, so she’s dedicated her life, and her husband, who was a President to the Oxford Union. They’ve dedicated their lives to politics. You need to read her speeches, she’s very articulate, a very deep thinking person who believes that there is almost a middle-way. She has the advantage of running a country with a very old democracy.
Often in our country here, in South Africa, we forget we’re a very young democracy and we’ve got to learn things. Now, what she’s doing and what she told people in Davos was that, “We have this relationship with America that goes back to the 1st and 2nd World Wars, but actually we side with China. We side with anti-protectionism, with mercantilism, with free trade.” So, the world is breaking up into these two blocks – the US and those that…
But now remember she actually came into the Davos environment with many people negative about Brexit.
So, she had to navigate that and you say she’s anti-protectionist and that doesn’t really marry-up with the Brexit route, although she didn’t choose. She’s just got to execute it.
She was very quiet on Brexit. She’s now inherited what she’s inherited and being in an old democracy. The will of the people, is the will of the people. There was a mandate, the referendum is over and Brexit is going ahead. What people outside of the UK don’t really often get about Brexit is because the way the media has positioned this, it’s all been done on an anti-immigration ticket because of UKIP and Nigel Farage’s crazy antics. We all watch him because he’s quite funny. I mean people do watch funny people on YouTube but it’s more a question here that the UK had almost two groups. You had the ‘crazies’ the loony right, but there’s a very strong free market led by the likes of Daniel Hannan, who if you want to go and look on YouTube, go and watch this guy, its sovereignty.
I was interviewing a chap called Dan Brocklebank from Orbis, the UK operation of Allan Gray, and he said the last 8 major decisions taken by the UK courts were overturned by the European courts. So, what happens to your sovereignty if your courts can’t make laws anymore. The way that Britain wants to go forward into the future is to make itself attractive for foreign investment but the EU says, “Those are the tax rates that you can offer to business,” and so on and so forth. So, it’s the sovereignty, the free market, the mercantilism grouping on the one hand who voted to get out of the EU. The other hand you had the crazies, and then the British people… Do not ever underestimate democracy and the understanding, particularly of an electorate like that. Highly educated, very with it, with current affairs and relationships. They also, primarily went against it, so Brexit – don’t think Brexit is a bad thing. I’m actually very much siding towards the Brexit future for Britain because if you take a Fourth Industrial Revolution society what do you need? You need education, you need enterprising society, and you need to have the ability to make your land or country attractive for skilled labour or for skilled people to come to it. Brexit gives Britain that opportunity. Within the EU – it didn’t happen.
So, let’s move on now. We’re 30 minutes into this discussion and we’re going to open up to the audience for questions but before we get there, and this is a sense, on timing we’ve still got to talk about the Fourth Industrial Revolution, inclusive growth and blockchain because blockchain – I don’t know whether you’re encountering it left, right, and centre. I’m sure everybody wants to hear about that buzzword. So, actually, I’m going to turn things on its head and I’m going to go to blockchain right now. Please, take us through, from a layperson’s stance, what is blockchain and is it something like Y2K, that we can actually just ignore? Or is it as big as the internet?
Well, you might recall. I started Moneyweb in 1997, it was early days of the internet in South Africa. The internet started in 1992, so 1996 is 4-years into the internet and I hadn’t even, certainly here, I hadn’t really known what this internet, inter-web was but I did see that there was some kind of potential. By 1997 we’d started Moneyweb and in 1999 we listed it on the Stock Market. Two years later, at a forward PE of over 100. What that means is the profits we were going to make the next year – we had investors just wanting desperately to get our shares at 100 times this year’s profits. That was what the internet was.
Blockchain today, according to the guys in California and a few of the people that I engaged with, is where the internet was in 1996. So, it’s right on the cusp. I had quite a lot of discussions with a guy called Jeff Schumacher. He is an investor in blockchain in particular, with a large venture capital fund in California. He was invited by the World Economic Forum to talk to people about blockchain. He said, “This year we’re on the agenda,” which is quite a big thing because it’s the start of it. Next year he claims, “We will dominate the agenda.”
What is blockchain? Blockchain gives you identity. Every person and every asset is identifiable online. Now, that doesn’t sound so clever until you start thinking what it means that Bron, you and I, you might have one share in Naspers and I want to buy that share in Naspers and you want to sell it. Well, if it’s easily identifiable we can transact without having to go through anything else. In other words, no Stock Exchange, no Strate, no other structures. That at the moment it intermediates so much of what happens, starting in the financial world. The implication for banks is massive. The implications for things like estate agents, for anything that is intermediary between an asset and an individual because the problem we have at the moment is how can I trust you actually have that Naspers share? How can I trust the guy who wants to buy my house is actually going to pay for it? Well, on Blockchain it’s all there, all the information is there. Your credit record is there. Your asset base is there and that is revolutionising and will revolutionise the world.
It’s upon us. It’s not something for tomorrow.
Well, it’s like the internet in 1996. In fact, when I learnt about the internet in 1995 I was working at Absa. At the time one of Absa’s big clients was IBM. Alwyn Burger went to IBM’s head office. He came back and said to me, “Gee, Alec, you’ll be interested in this. Come and look at this thing, this internet thing.” I just called it the inter-web because I didn’t really understand it and that was where I understood. So, someone like me who’d understood it but it took me two years to start Moneyweb or start a publishing company online. Then it just took off.
If you recall, Mark Shuttleworth made $700m – he was trying to flog the business that he’d started here, in South Africa, for $30m and no one in South Africa had really got it, so a company called VeriSign bought it but the share prices were going like this on NASDAQ. That he smartly said, “Well don’t pay me the $30m, give me shares.” I think it was 2.2m VeriSign shares. By the time he got to selling those shares it was worth $700m. That is what happened in the NASDAQ bubble. Who knows if there’s going to be a blockchain bubble but the one thing we need to do, if we could go back to 1996, we would have learnt about the internet. We are in 1996 – as per blockchain.
So don’t ignore blockchain and make sure that you understand the application or the potential application for your businesses. Are there any questions at this point from the audience, before we move on from blockchain? I don’t want to go back to the politics because we could stay there all day.
Q – How big an effect did Russia have on the American elections? Can you quantify it?
So, the question for our audience, how big effect did Russia have on the American elections? Let’s just go back to… I want to try and move from politics but do you have an answer there?
At the moment, it’s outside my circle of competence but what I can tell you was that the whole North Korean hacking is of major importance around the world, and not just North Korean hacking. If you remember before North Korea, it was China’s hacking, so we have China hacking, North Korea hacking, Russians hacking – internet security or cyber security is a big story.
A huge thing.
It’s something that we are very naïve about in South Africa and we haven’t really got hurt yet but it’s something that we need to pay a lot of attention to because if Governments can get hacked – you can imagine what they could do to little businesses, let alone big businesses.
Q – Has anyone quantified it?
It’s in process – it’s all in process at the moment, so Trump appointed a security secretary and then he had to get rid of him.
I think everything about Trump, right now, is unprecedented, so we are going to be living in a very volatile environment.
But what I can say is, Bronwyn will get an interview much quicker than I will.
I’m not sure how exactly to take that. I think we’ll move on very swiftly. There was another theme… Sorry let me open up to more, further questions in the room. Just another theme that we do want to touch on and we haven’t alluded to is climate change, it was very big at the World Economic Forum. In fact, President Xi weighed in on this discussion. Just a couple of stats out there is that 4-thousand people on a daily basis, die of air pollution in China, so there’s a big move by the World Economic Forum and I was involved in a lot of these carbon credit markets being established, etcetera, those kinds of debates but there’s a huge, global attempt to limit the earth warming another 2 degrees Celsius because what it does mean is that London will be under water. Florida will be under water – you won’t believe the displacement. Bangladesh, 40 – 50 million people will be displaced, so think about the refugee crisis that we’re experiencing and what that means if you’ve got 40 – 50 million people being displaced, simply because of climate change. Anyway, that was one of my hobby horses at the World Economic Forum. Your question, sir.
Q – Hi, my question is quite simple and it relates to job creation in general. We all know that it is paramount to our safe future. In the past there has been a very definite emphasis on agriculture and tourism, to create what they termed ‘the million jobs by 2020’ and I’d like to know from you, being involved with the Africa desk. Whether the emphasis has now changed.
So, let me just give a very brief comment on that. Agriculture has been at the forefront of many discussions, particularly in the World Economic Forum, Africa as it comes about in May. I’m a farmer’s daughter, so I understand supply-chain quite intimately from an agricultural perspective. There’s a lot of talk about agriculture and the fact that this is the lifeblood of the African Continent, not just South Africa but I don’t see that actually being commercialised. There is a spinoff of the World Economic Forum called Grow Africa. That’s how important this conversation is and that is a global forum as well. It’s focussed specifically on agriculture and they are now targeting execution in the supply-chain. So, hopefully, we’ll be able to feedback from that forum. It takes a lot of working to get stakeholders together, across the agricultural supply-chain and presidents in Africa have to take this seriously because we have 60% of the world’s uncultivated arable land. We can be the breadbasket of the world. The world needs to be fed. It is low-hanging fruit but is it translating? I haven’t seen it yet and I’ve been involved in a lot of those conversations.
Right, inclusive growth because I think that follows on from job creation. This is a theme that not only South Africa or Africa is battling with. It is the whole world.
Well, it’s being highlighted by people like Oxfam with the figures that they like to throw out on the difference between the rich and the poor. And the rich are getting richer and the poor are getting poorer. Now, where do you lay the blame? The blame that people like Oxfam are saying is that the rich shouldn’t have this intergenerational wealth, so there should be more estate duties. Warren Buffett, by the way, also agrees with that approach. Whereas perhaps another way of looking at it is that those people who’ve got super rich like that have actually given the world some incredible things, Facebook. Buffett and the investments he’s made have been incredible, he’s a self-made man. Of course Bill Gates, were it not for the Gates Foundation we would still have polio in Africa. Only the Gates Foundation has eliminated it, so it’s a debate that’s going on.
There’s a very interesting debate that’s going on right now about the myths. Humanity has been given myths over many ages. For instance, different racial groups have different intellectual capabilities, which is total bullshit, because the biologists have proved that we are all exactly the same. We just happen to have maybe lighter or darker skin because of our existence that might have been in the past. So, now those who would like to perpetrate this view are talking about ‘well then it’s culture’ which is also nonsense because if you put two people into a room and allow them to engage with each other they will find common ground. There’s interesting stuff happening in the world. The world is changing – people are changing. People are not believing the myths anymore. They’re not believing the garbage that’s been thrown at them by politicians and others who are seeking power. Businesses who are seeking and wanting you to believe their story, so that you give them the money that they can live better. The myths are coming under enormous scrutiny and that’s why the world is changing.
EU (European Union), started off, getting back to Brexit – as a free trade area, well and good. But the bureaucrats in Brussels wanted to be a United States of Europe, that’s what they’re after. And that had been sold to the Greeks, the Italians, the French, and the British upfront they would never have bought into it. So now the British are pulling out – the Five Star Movement in Italy, have you been following there? There’s a guy who’s a comedian, a stand-up comedian, who’s now likely to be the next president of Italy. Why? Because he said to the Italian people, “We’ve been sold a lie over here.” Marine Le Pen in France, the Netherlands – there’s this massive kickback because people will go with a Trump rather than the status quo and those are the issues that the world is now having to deal with because a Trump is not necessarily better than the status quo.
Better, it’s just different and its populism that is coming to the fore and the French election, I think, is going to be a pivotal point. Obviously, Italy but if Marine Le Pen comes in, by all accounts – it may not easy for her to execute, as we were discussing earlier, but she has said it to pull France out of the European Union as well. So, you’re basically going to see the whole institution falling apart.
That’s the ticket.
Let’s just see if there are any questions from our Facebook audience… not at this stage. Do we have any additional…? Yes?
Q – Can you say though that if Le Pen did get in that that in itself would end the EU then and there?
Not at all. Le Pen does not have at her power the ability to pull France out of the EU but what she can do is make the EU even more ungovernable and that’s really the strategy. She doesn’t have the ability to call a referendum to leave the EU because it’s part of the EU constitution. Remember, they were one of the first people who started, they started the Euro, etcetera. What she can do though is make it impossible for the EU to function and that’s the strategy of hers. In fact, she’s only number 2 now in the likelihood. She could win the first round but the second round is…
Are the pollsters telling you that?
Who knows what the pollsters are…
I’m making a fastidious joke there because then it would just go the other way.
You know Donald Trump was 50:1 hey, two years ago he was 50:1. I remember, when there was a horse called Power King, was it, who won the July at 25:1. Donald Trump was a better bet than Power King at 25:1, at that stage.
Q – Donald Trump his promise is to create more jobs, so let’s assume they leave China or that region and do go back and open up the factories. Forgetting the fact that you want those factories to be automated how on earth would they sell their product globally, with the cost of manufacturing in America?
It’s a rhetorical question. I think we all just ask that. Donald Trump is making lots of noises. He’s making lots of promises. He’s making lots of policies that the American System, because of its checks and balances, will block. It’s not a system like in South Africa, where you have a leader in a political party, who actually, because of the structure… We put a president there because we thought they were all going to be Nelson Mandela. So, we’ve got a problem, we’ve got to fix that thing. In the US they don’t have that problem. They’ve got 100’s of years of democracy. They have checks and balances in the system, and you’re already seeing it come back, so don’t get too alarmed. He cannot change the world on his own. He can make lots of trouble but there is still a system where people can block it and they are. Remember, with the immigrants? He had an Executive Order – ‘well sorry, if you come from one of these seven countries, you can’t come in.’ How idiotic is that? You have students, you have executives, you have taxpaying Americans and he says, here’s an Executive Order and the first judge said, “I won’t,” and he fires her and the next judge says, “Sorry, you can’t fire me as well.” And they stopped it and blocked it, so Trump is going to try lots of things, as he’s already shown us but it doesn’t mean with an old democracy like that, that those checks and balances won’t kick in and they are kicking in. Don’t be too depressed.
Q – How much did they chat at Davos about the whole robotics side of the future because from my perspective we have all this unemployment throughout the world and if you look at robotics, it’s also very real. For me, it’s a huge danger and I don’t see how we will ever solve the unemployment crisis anywhere in the world with the rise of robotics the way it’s going.
So, just a comment from my side. Robotics are huge. Artificial intelligence is a huge theme. Where Africa used to be on the global stage – those AI sessions packed to the brim with people trying to understand. Just a very small anecdote, before I had over to Alec. In the forum, so you have all the preliminary sessions in all the rooms they had an AI psychiatrist that you could put headphones on and it could actually assess your state of mind and understand why you weren’t in a relationship, etcetera. It really is a very different environment when it comes to AI.
About three years ago, again, this is where Davos’ real strength is, is it actually picks up the trends. About three years ago there’s a guy called Andy McAfee and Erik Brynjolfsson, they wrote a book, which they called ‘The Second Industrial Age’ and that was picked up by the Davos team and I got very lucky, Thomas Freedman, who wrote ‘The World is Flat’ – I was around, so I got invited to a breakfast with these guys. That’s three years ago.
Oh, you’re so humble.
No, you get lucky. You know what it’s like there, Bron. You get on the right mailing list – I’m on the right mailing list and this breakfast, of course you remember breakfast. Let me tell you about Davos’ breakfasts. Minus 22 degrees and you’ve got to walk for 20 minutes, so it’s not always a big advantage but this was incredible because here you had these two ground breakers and they were telling us then about how things were going to change. Davos has increasingly put that onto the agenda, more and more and as Bronwyn said, this year everybody gets it and there’s standing room only for the thought leaders of the world. Now, you take it into the environment of the rest of us and it’s now becoming more and more understood, in most parts of the world.
I actually got a book that year from Brynjolfsson, and gave it to Rob Davies, our Minister of Trade and Industry, who read it and actually emailed me afterwards to say he had read it. So, that’s good, so it doesn’t mean that we aren’t aware of these things. We just have maybe different ways of approaching these issues.
And to the jobs element and whether robotics will displace the jobs that you so desperately need across the world. The huge emphasis is obviously, science, technology, engineering, and maths (the stem skills) and that is where we’re lacking from a South African perspective and certainly from an African perspective. But they talk about jobs or skills augmenting the technology, so that you’re not displacing one with another but you learn to work with that technology. That’s how that reversing – that very difficult discussion, as to whether we will lose jobs because of robotics.
But see it in context. For 18 of the last 20 Centuries, human beings were self-employed. It’s only since the Industrial Revolution that we’ve decided that somebody knows better than we know, about ourselves. I’m an entrepreneur, I’ve been self-employed pretty much my whole career. I can’t understand how people can go to work every day and get somebody they hate to tell them to do something, that they know is wrong. Continuously you get this situation, because of the hierarchical structure and I think many people here are entrepreneurs as well. The Fourth Industrial Age is actually forcing us back into that reality.
There’s a wonderful book that I would like to recommend, if you haven’t read it. It’s called ‘Sapiens’ by Yuval Noah Harari. Read that book it will uncover, it will take away… It certainly lifted the scales from my eyes, on so many of the myths that we grow up with that we believe are true. But when you interrogate them you discover that Pretoria doesn’t know better than we know about our own lives. The markets don’t always know better. Mr Market we know he’s this manic depressive and he pushes things one way and pushes it the other way but the myth we’ve been thrown by society, says Harari, is that the markets know better and Governments and the State knows better. So, just hand over to the State, they’ll look after you. Hand over to the markets, they’ll look after you. When in fact, all it is, is abdicating your normal right. Now, human beings in this age, in the Fourth Industrial Revolution, will go back to that normal situation, like 18 of the last 20 Centuries. The biggest economy on earth is China, by far.
Alec, we’re running out of time. We’ve got one more question here, on Facebook live.
Q – Alec, I think my question relates to the previous one looking into the future and where jobs are going. You mentioned maths, engineering, and science. What are the things that we should be doing as a country or what are the other countries gearing themselves up for, to ensure that the impact of the 2-billion jobs that they’re talk about that’s going to become redundant that you’re actually on the receiving side, as you say working alongside it and preparing yourself to actually benefit from it? I think often when things change everybody thinks it’s doom and gloom but if you actually have the foresight and buy into the change and you accept it. There’s a lot that you could probably do, as a country, to prepare yourself.
Yes, it’s not doom and gloom and the country can’t prepare you. Each of us are incredibly good at something. That’s the way human beings are made. Now, if you could apply your passion into that you will be productive because you will be able to make a greater contribution and that’s really where this new world is going to. The world that we know is no longer fit for purpose. The rules’ based society is under threat, which is sad because a rules’ based society does work. Drive on the right-hand side of the road and not on the pavements – it never got through to the taxi drivers but you know what I’m getting to and that part of it, the structure, the outline has always worked well. Where it starts going off the rails is when you have a system, a hierarchical system, where the guy who puts the money up, who might have inherited it from somebody else gets to tell other people who understand what’s going on in that business, what they should be doing and those are signs of changes that are happening.
Alec, talking about a changing world. I want to bring in Facebook questions.
Q – We’ve got a question from Christiaan from Durban High, asking whether we’re not looking at or moving towards a decentralised global village, where people are looking to take back power from failing governments. Therefore, grasping at straws, like Trump?
Christiaan is spot on and it started all over the place but a very, good example is Argentina, which was the first country in the world that had an online party, an online political party, and a political party that said, “Let’s all vote online.” Again, getting back to the thesis of Harari’s, which goes back to when we were in caves. He says, “For most of our existence as human beings we’ve relied on our family, our extended family, and our community. It’s only the last 200 years that the State has become more powerful.” And it hasn’t worked, so if something doesn’t work – it takes you a long time but you finally do move back to it. Disruptive change was the ticket on which Donald Trump came to power. It was the same ticket that Barack Obama came to power in, if you remember. He said, “Yes we can. Yes, we can what? Yes, we can change.” Well, Obama didn’t change things, so this time around the electorate said ‘this guy can’t be much worse, let’s give him a go.’ Unfortunately, he’s more disruptive than common sense but eventually that, exactly what Christiaan is saying, is the way many people in the world, who think about these things are now acting.
Depths and breadths of questions along just hands that I’ve missed? Are you all happy? There’s another question, sir, the final question for this session.
Q – I think the biggest time bomb in South Africa will be us ignoring, we’re side-stepping, violence and criminal activities. Talking about Facebook – that’s been discussed and what does the World Forum think about because it’s really happening on ground level in South Africa, farm murders and all of that type of stuff?
So, I don’t think the World Economic Forum touched on South African’s situation, from a crime perspective and from a violence perspective. But it goes back to that broader theme of inclusive growth. If you have unequal societies, you will have crime. I don’t know if you want to add.
Well, you’ll be…
Actually, maybe there are examples of unequal societies where there isn’t crime and you can take us forward.
You’ll be intrigued to know that the head of Transparency International is a South African, Cobus de Swardt. He’s been CEO there for 10 years. Transparency International, for those of you that don’t know, is actually the corruption monitor for the world and Cobus was saying that the kickback now, against Transparency International, has never been worse. In other words the corruption people around the world, we’ll talk about South Africa in a minute, but the corruption people around the world are getting more aggressive. Russia, start there if you want. If you want to read something about what’s going on there then read Bill Browder and exactly how the Emperor of Russia is running that place. What happens to the leader of the opposition, gets gunned down in broad daylight. Interesting stuff is happening in certain parts of the world. Corruption in South Africa is threatening to become endemic.
I took your question differently. I was looking at the crime and the violence aspect and that’s my comment around an unequal society. If you’ve got 27% unemployment in a country, as we do in South Africa in the formal sector – people need to feed their families, so there’s two sides of the coin. We could get into a debate about this but the violence element I think that that does come from people not having enough, so it comes back to that redistribution and how we solve a very complex equation in South Africa.
Thank you so much for your time. What did Suzanne call you – International Man of Mystery?
That was Austin Powers.
Ladies and gentlemen thank you so much for your time and to our Facebook live audience – thank you so much for joining us for this session on Davos Retrospective, coming to you from the JSE in the heart of Sandton, Johannesburg, South Africa. Thank you.
- This event organised and hosted by BrightRock, provider of the first-ever life insurance that changes as your life changes. The opinions expressed by Alec, Bronwyn and members of the audience do not necessarily reflect the views of BrightRock.