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Hot topic for the 1 percent at Davos: Inequality

A man begs on a street in Shanghai.
Peter Parks | AFP | Getty Images
A man begs on a street in Shanghai.

Rising economic inequality is casting a shadow over the World Economic Forum, a conference dominated by the proverbial 1 percent.

Oxfam, in a report timed to the start of the Davos conference, estimated that the combined wealth of the world's richest 1 percent could overtake that of the remaining 99 percent by 2016.

"Inequality is rising, and rising fast," Winnie Byanyima, executive director of Oxfam International, told CNBC on Tuesday. "This is dangerous. It is bad for democracy and for stable societies and it is bad for (economic) growth. The poor hurt."

Read More 'The poor hurt' as inequality rises 'fast': Oxfam

Inequality was a major topic on Wednesday, the first formal day of the WEF.

"We have a big problem in the United States," David Rubenstein, co-founder of private equity heavyweight Carlyle Group, said during a panel discussion on economic growth.

"If our GDP growth is 3.5 percent, that sounds great—corporate profits are terrific, stock prices are high—but what about the people left behind?" asked Rubenstein, himself a billionaire.

Former Clinton Treasury Secretary Larry Summers told CNBC on Wednesday that middle-class incomes have not kept pace with the economic recovery.

Growth needs to be equally distributed, Summers said, "so we have a 'race to the top' rather than 'race to the bottom' when it comes to questions like taxation and regulation."

The blame for inequality, according to billionaire hedge fund manager Paul Singer, is with central banks.

Singer repeated his longstanding contention that economic stimulus programs like quantitative easing have artificially inflated asset prices, which have disproportionately benefited the relatively small amount of those who can afford to invest.

"The mispricing that exists in world financial markets … is exacerbating inequality and at the very time that investors are doing well to very well," Singer said on a panel.

"The inequality is a function, actually, of government policy, and social unrest is a function of the inequality and the seeming growing distortion," he added.

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Singer's comments provoked some disagreement.

New York University economist Nouriel Roubini, speaking on the same panel, said QE was necessary given the circumstances following the financial crisis of 2008 and losses of jobs, and income for lower income levels would have been worse.

"More of benefits have gone to the wealthy, but … think about the alternative. We would have had another recession in the U.S.," Roubini said in rebuke to Singer's point.

Sushil Wadhwani, a partner at hedge fund firm Caxton Associates in London, added that QE could have had less of an effect on inequality had it been structured differently.

He said QE, which usually entails central banks buying bonds, could have been used to finance fiscal expenditures, such as infrastructure spending, or even mailing vouchers to all citizens.

"That has a different effect on inequality," Wadhwani said.

Read MorePaulSinger: Minimum wage hike would 'destroy' jobs

Education an answer

One solution put forward was education.

"The middle class has to increase its wealth and we have to get better jobs, and it's going to have to be done, among other ways, through education," Blackstone Group head Stephen Schwarzman said on CNBC.

"We all have different views as to what level is the most important for education," the billionaire private equity boss added. "I think you have to start at the beginning, and you also can take enormous steps that can take people of very low income and get them to perform at very high levels."

Read MoreSchwarzman: Middle class must grow through education