british prime minister epitaph reads, "i am ready to meet my maker. whether my maker is prepared for the great ordeal of meeting me that's another matter. thank you for watching "state of the union" i'm michael smerconish. you can follow me on twitter if you can spell smerconish. fareed zakaria joins us now. welcome to all of you in the united states and around the world. i'm fareed zakaria coming to you from switzerland, the home this week of the world economic forum. we'll begin today's show with the death of a king. king abdullah of saudi arabia the custodian of the two holy mosques. saudi arabia has been an island of stability in the midst of the fire storms of the middle east. but it is also home to the most

puritan puritan puritanica version of islam. is it part of the problem or the solution? i will ask tony blair about that and much else. also the price of oil has fallen by more than half in the last six months. oil revenues make up 90% of the saudi government's income. will it weather this storm? i will talk to financial times martin wolf about saudi arabia and its addiction to oil money. then all eyes are on the european economy in 2015. will it descend into deflation? i'll talk with the finance minister of one of europe's fastest growing countries, george osborn councillor of the united kingdom. inequality was the talk of the

week from the u.s. congress to the congress here. what is the answer? i'll gunfire you my solutions and show you a place here in switzerland where the world's privileged traveled in order to begin to understand the lives of the underprivileged. but first here is my take. the conversation at davos is often dominated by economics and this year is no different. but the shock of the paris terror attacks lingers and discussion has often turned here this week to radical islam. the death of king abdullah has underscored those concerns because of saudi arabia's complicated relationship relationship with fundamentalist ideology. i posited solution does not lie in more american military interventions in the middle east. but what then is the answer? the problem is deep and structural as i wrote a few weeks after 9/11 in "newsweek"

in an essay titled "why they hate us." the arab world has been ruled for decades by repressive mostly secular dictatorship. that in turn spawned extreme, mostly religious, opposition movement. the more repressive the regime the more extreme the opposition. islam became the language of opposition because it was the one language that could not be shut down on censored. now the old arab order is crumbling, but it has only led to instability and opportunities for jihadi groups to thrive in the new badlands. this radical ideology has been gobblized fueled by saudi money, imams, intellectuals, it has on a life of its own. today radical islam is the default ideology of anger, discontent and violent opposition for a small number of

alienated young muslim men around the world. only muslims and particularly arabs can cure this cancer. that doesn't leave american and the west helpless. washington and allies can support muslim moderates, help societies modernize and help those that do into the world. but that's for the long haul. meanwhile, they must adopt a strategy that has four elements:intelligence, counter-terrorism, integration, and resilience. intelligence is obviously the first line of defense, but also attack. we have to know where jihadis and potential jihadis are and what they are planning. that means using sophisticated technology yes, to search through various kinds of communications. but it also and crucially means developing good relations with muslim communities. because only they can early on identify the potential

troublemakers. counter-terrorism is the natural follow-on to intelligence. when you know where the bad guys are, capture or kill them. it's easier said than done of course but the united states and other western nations have had considerable success with this tactic not only in war zones like afghanistan and pakistan but also in intercepting plots on their way to cities likes paris and london. we must always remember though counter-terrorism has its down sides. for instance while drone attacks auto look seamless from the skies, they inevitably produce civilian casualties. integration is third. it's something america does well and with which europe struggles. one of the chief reasons that america has not had as many problems as many predicted after 9/11 is that its muslim community is well integrated largely loyal, and believes in american values. finally, resilience. terrorism is an unusual tactic. it doesn't work if we are not

terrorized. bouncing back returning to normalcy these are all ways of ensuring that terrorism does not have its desired effect. we've not always managed to do this. in recent months we have massively overreacted to the isis execution videos, which is why they were produced in the first place. the paris attacks were barbaric as were those in ottawa sydney london madrid and ft. hood. but one way to gain perspective might be to keep in mind the numbers. according to the global terrorism database in the 12 years between september 12th 2001 and 2013 the number of americans who have died on u.s. soil due to terrorism is 42. meanwhile in one year alone, 2011 the cdc reports that

32,351 americans died because of firearms in one year. the number who died in car and truck accidents in that same year was 33,783. so keep calm and carry on is more than a slogan to wear on a t-shirt. for more on this go to cnn.com/fareed and read my column this week in the "washington post." and let's get started. ♪ the death of king abdullah of saudi arabia while not unexpected has nonetheless sent shivers across the world. any leadership change in such a crucial country is apt to cause concern. will the new king change course on oil, syria, relations with the west? let's start with the political. to talk about that i ask tony blair, the former prime minister of the united kingdom to join

me. >> tony blair, pleasure to have you on. >> thanks, fareed. >> you knew king abdullah well. his reputation and certainlily his talk and the times i had an opportunity to talk to him were about reform and change. but if you look at how much has changed in saudi arabia it isn't that much. women still can't drive, there still is segregation by sexes, religious establishment is powerful and they still adhere to a very puritan cal version of islam. >> i think if you talk about relative to a country like usa or britain, that may be accurate. but if you look at it relative to where saudi was, where more young women in university than men, you have a situation where king abdullah was an author of the interfaith dialogue and actually would meet both jews and christians to talk about

interfaith issues. he was really the architect of the arab peace initiative back in 2002 which offered a two-state solution for the arab-israeli conflict. you know you take a country like saudi, probably one of the best run countries in the world. there was a real process of organization. i think he was a genuine reformer and modernizer. i hope that will continue. obviously there's a long way to go. i think the evolution for him, and actually saudi arabia, is infinitely preferable to revolution. >> ideology you believe is pernicious and spreading. in some ways the saudi version of islam that was globalized in the 1980s and '90s. is saudi arabia part of the

problem or part of the solution? >> i think today it's genuinely part of the solution in the sense it's important both because you've got the two early mosques there in saudi arabia and because in recent years, under the leadership of king abdullah its pursued an attempt to reach out across the faith divide and also taking a very strong position against extremism and post 9/11 which is the big shock to the kingdom. not only to us. they didn't really take on security measures but also looked carefully what was happening within their own society as well. so i think now as we speak saudi arabia is and has got to be indeed an ally in this fight. >> one thing i wonder did he confront religious establishment enough. saudi arabia you have this hard line religious establishment. the theory is that the regime that the royal family gets its

legitimacy by its alliance with these people and as a result doesn't object to their views of religion. do you think -- does that need to happen? does there need to be a head-on taking to task of the religious establishment in saudi arabia? >> i think this is a discussion i used to have with king abdullah. his attitude was, look this is in some ways a very conservative country. we're doing the change. let us do it at our own pace. you could always have a debate whether you could accelerate and go faster and so on. but what he was really trying to do i think, was create these vehicles of change in the country. so for example, saudi aramco is the oil company. not run like many oil companies around the world but a top well run company. the university he established, the king abdullah university of science and technology men and women treated equally and

treated equally. the term science and technology was chosen for a reason. i think his view would be he was moving as fast as he could. i think it was only '60s or '70s that the saudi television was successful. you can have that debate provided the direction continues in, you know along the path of modernization then i think it will be good for saudi arabia. we need saudi arabia to be successful. as you can see not just in terms of the oil price but saudi arabia's key country, two early mosques there, there are many ways the heart of islam. it's important for us and for them that they continue to make progress. >> but when you look at this phenomenon the paris attacks and what's happening in the middle east is the wave of radical islamist ideology waning? is it going down or is it going up? >> i'm afraid right now, i think

this islamist ideology is growing. i think it's global. i think there are many lessons in how we try to deal with it post 9/11. lessons from my time in office and lessons from now. but i think we've got to learn those lessons and apply them. we can apply them in alliance with the modernizing muslim countries, those who believe in an islam that is peaceful and reaches out to the rest of the world, we've got to ally ourselves with those. we've got to create the force capability to fight them where they need to be fought and the education systems that educate our young people to respect each other and respect difference not view it as a reason for violence or sectarianism. i think that's the task. it's a huge task. it's the single biggest security issue that we face. i think there's an urgency about it frankly. there are thousands of these

people now being trained in terrorist camps along north africa and middle east and we can't afford to have that happen. we know what happened when afghanistan became a training ground for terror. we're at rick of several afghanistans at the moment. >> tony blair, pleasure to have you on. >> thank you. >> that was tony blair on the political implications of the death of saudi king abdullah. in a moment we will look at the economic implications. will saudi change course on oil? we will ask. i am totally blind. and sometimes i struggle to sleep at night, and stay awake during the day. this is called non-24, a circadian rhythm disorder that affects up to 70 percent of people who are totally blind. talk to your doctor about your symptoms

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saudi arabia as the country with the world's biggest proven reserves of crude oil, according to opec. since then the united states has

passed saudi as the top oil producer. to add insult to injury the price of oil has now collapsed, fallen in half in the last six months. now saudi arabia is enmeshed in a transition at the very pinnacle of power. what will it mean for the price of oil, for the world economy and for saudi arabia? i asked martin wolf to join me chief economics commentator for the financial times. martin wolf pleasure to have you on. >> great pleasure as always. >> first question how central does saudi arabia remains in the world of oil? because at this point, the u.s. has surpassed it in production. opec production is not even as great as nonopec production yet saudi arabia does seem to play something of a central role. >> it is the producer. it remains the biggest exporter. and of course it has enormous reserves and it's the cheapest producer. ultimately because of the sheer

scale of its production it's also the swing producer. >> which means it can turn it on or off at will. >> in the past it has been able to reduce output if necessary, or increase output very substantially in a way nobody else has been able to do. it has the flexibility. so if you want a producer to balance supply and demand in the world, it's the only one. >> now, the price of oil has fallen by half more than half in three or four months. what is -- how long can it stay this low? what does history tell us? >> history tells us it can remain this low for a long time. there have been several price falls in the past dramatically so in '86 in the late '90s. in both cases prices remained low or went lower for a long time after five years or even more. if you look at the forces that seem to be driving prices down now, unless something dramatic happens on the supply side war,

unpredictable war, who knows, as has happened for example, in the '70s. twice it was war. some huge recovery in china, something like that one has to say it looks as though there's going to be a glut for quite a while. so quite a few years in this sort of ballpark but, of course volatile. >> the last time you saw a drop like this as you said was 1986. what happened was soviet union collapsed because it was a large oil producer. it had relied on those revenues to finance the soviet empire. what happens to -- let's start with saudi arabia. saudi arabia the reports are that needs oil at $80, $85 to balance its backs, to not run a deficit. so what happens now? >> first of all, in the late '90s, do you remember $10 oil? it doesn't always break empires down. saudi arabia as i understand it should be good with the reserves it has for quite a few years. it has reserves i think, of

$800 million. so it ought to be able to keep going. and of course it can cut spending. remember it supports its people generously. they don't have anywhere else to turn. as long as the regime is stable and they have done it in the past in tough times, they can cut back on their generous spending on the population. so i would expect this is ultimately a political judgment that if the regime is stable enough they can survive at this price level more satisfactorily than most other large producers that have reasonable substantial populations in a relatively robust condition compared with russia or nigeria. >> in saudi arabia oil revenues as i understand it make up 90% of government revenue. so even if they have reserves this is a big hit to the purse. >> yes. their ability to fund all over the world reduced. i would regard that as

unambiguously good. the consequences of that have been diabolical. foreign policy may be diminished. clearly ones if this were to continue for five six, seven, eight years, they would have to cut sharply. the saudis have another possible choice which is for them a very complicated one. at what page they start cutting product, it might raise oil prices but bear proportional part of the losses. it would depend on how they think that would affect other country's output and what they think the response of the price would be for a reduction. they would have to suppose for it to be good for them that a modest reduction in output would bring back prices very sharply. they might not think that's the case. they have that option. they could actually decide not just a cut in spending on the people they could decide to cut production of oil and try and get prices back up. so far they have clearly been not willing to do so. i believe they can survive, what

i see of the regime the resources they have for many many years. they can probably outlast everybody else in this game. >> martin wolf pleasure to have you on. >> pleasure. up next, inequality was a top buzzword again this week. the president talked about it in washington. other world leaders and ceos were discussing it here at davos, but can we do more than talk about it? coming up next. ♪ turn around ♪ ♪ every now and then i get a little bit hungry ♪ ♪ and there's nothing good around ♪ ♪ turn around, barry ♪ ♪ i finally found the right snack ♪ [ female announcer ] fiber one. if you have moderate to severe rheumatoid arthritis like me and you're talking to your rheumatologist about a biologic... this is humira. this is humira helping to relieve my pain and protect my joints from further damage. this is humira giving me new perspective. doctors have been prescribing humira for ten years. humira works for many adults. it targets and helps to block a specific source of inflammation that contributes to ra symptoms.

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>> now for a walk in the world segment. over the last few years the subject of inequality has gained greater and greater attention with best selling speeches and remarks by everyone from the pope to mitt romney. this week it featured prominently in president obama's state of the union address. >> will we accept an economy where only a few of us do spectacularly well or will we commit ourselves to an economy that generates income and chances for everyone who makes the effort. >> but the report that stunned me came also this week from oxfam which showed us that the problem has gotten dramatically worse in just the last four years. in 2010 oxfam said wealthie people in the world with $1.3 trillion while the poorest half of the world $2.6 trillion. in 2014 the 80 richest had $1.9

trillion up 47% while the poorest half had just $1.8 trillion a decrease of 29%. oxfam showed in 2010 wealthiest 1% of the population enjoyed 44% of the world's wealth while the remaining 99% of the world's population had only 56% of the pie. by 2014 the richest 1% had 48% of global wealth leaving the rest with 42%. if that trend continues, the top 1% would own half the world's wealth in 2016 and 6% of global wealth in 2020 leaving the rest with just 46%. the world over 80 billionaires in 2014 had about the same amount of wealth as the poorest 3.5 billion people oxfam said. in the united states income inequality is especially bad

thanks in part to what david leonard of the "new york times" calls the great wage slowdown of the 21st century. he notes that wages and incomes have been going virtually nowhere in the u.s. for the last 15 years, pointing out that the typical american household makes no more than the typical household did in the final years of the 20th century. we haven't seen anything like that since perhaps the great depression leonard says. so what to do? there are no easy solutions. some of the causes of the problem, like machines replacing humans in the workforce are 21st century facts of life. it's worth noting the policies of central banks, low interest rates and quantitative easing might be necessary to avoid deflation but they have the predictable effect of sending the assets of the wealthy, stocks and real estate soaring while doing relatively little to boost wages. but it's interesting to note

income inequality varies widely among rich countries. a report this month from the center for american progress compared middle class in nations around the world. the bottom 90% of earners in canada for example, averaged over 1% annual income growth in the 2000s. in australia 2.5%. in the u.s. their average annual income declined by 1% over that time. so it seems like something can be done about income inequality. how about taxing the super rich. that's one possibility, though the top 20% already pay 69% of federal taxes in america according to the cbo. the key is to make major investments to help push people up the economic ladder. that's something that other countries in northern europe and canada for example, are doing much better than the united states. president obama's state of the union proposal such as free community college and improved access to child care are on the

right track. he has at other times proposed expanded preschool, nutritional assistance and other early interventions. all are effective in helping get people out of poverty. if we don't act now, and the gap keeps widening soon someone will start suggesting some very radical solutions. next on gps, the chancellor of exchequer george osborn finance minister of the uk on the fears over euro worries about terror and ever closer relationship between his country and the united states. mayo? corn dogs? you are so outta here! aah! [ female announcer ] the complete balanced nutrition of great-tasting ensure. 24 vitamins and minerals antioxidants and 9 grams of protein. [ bottle ] ensure®. nutrition in charge™.

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my next guest george osborne, finance minister of the united kingdom. as such he oversees the kingdom's economy and every year carries the red briefcase with the budget in it from downing street to parliament. we talked about the number one issue on everyone's minds at davos, fear of deepening crisis in europe perhaps a downward spiral of inflation. we also discussed terror attacks in france and why it is his boss, conservative david cameron is so similar to the liberal u.s. president barack obama. george osborne, thank you for joining me. the great worry about the global economy right now is europe. the imf is pointing it out. really everyone is worried that

europe is on the verge of some kind of a deflationary spiral. how serious do you think it is? >> there's no doubt stagnation in the eurozone is one of the biggest problems in the global economy for the moment alone for the citizens of europe. and we need to have a multi-pronged approach to this. we need to make sure europe and central bank is supporting the economy. it's important they have the political space to do that which they have not been given in the past. that is not enough. you need structural reforms to make economies competitive again, make them a place where jobs are created. i think those two things with the falling oil price will potentially lift the eurozone economy off the rocks. >> when you talk about political constraints on the central bank these political constraints are being imposed by germany. do you think germany is not exercising wise leadership on the continent? >> look first of all, the german economy is a real source

of strength for europe. to suggest that europe's problems are german frankly i don't think is fair to the germans. i think they have been a really powerful motor for european growth. what i would say -- again, i don't want to point things at one country, yes, the fiscal responsibility. but alongside it active monetary policy. give the central bank the tools it needs to do the job. >> what did you make when you heard reports on fox news in america that were parts of britain that were no-go zones, sharia law imposed and prayer rugs in hotel rooms. >> you invited me to engage in a bit of network rivalry. i didn't actually see the original remarks. but i think to be fair the commentator then corrected

himself. we have a challenge in our country like many many western countries have of integration and making sure that all communities feel part of a shared future. we have a big job to do to combat poisonous islamic extremism. and that's part of the solution to the security challenge we face. >> what did you learn? what do you think britain has learned since the london bombings? they had some similarity with the local ones in the london case people seemed remarkably integrated and then got radicalized. >> it led to a lot of soul searching in the uk and i think it led to the understanding that the idea of having everyone liver in separate communities was a mistake, the term used was british multi-culturalism.

we needed a different approach where people were brought into collective british values. so as a result of those tragic deaths in london i think we've got a much more active policy of combatting this islamistic extremism. i think we need to go further, reach out to our colleges and universities, you know. we shouldn't coltolerate the intolerance you find in some communities. that said it has to go alongside a strong security response. not enough community relations, have you to make hur you're catching the bad guys. if necessary, intercepting their conversations to prevent them carrying out murderous attacks. >> what did you make of president obama's state of the union, really the proposals which are the center of the speech to combat rising

equality. he's proposing community college education, education reform tacking the rich taxing financial firms. it seems like a british story. >> barack obama is a democrat and david cameron is a conservative. interesting enough when they met the other week in washington they found common cause both in pointing out that the u.s. and uk economies have pulled ahead of many other western economies. britain had the fastest growing of any major economies last year and that the solution to some of these challenges of inequality and lack of opportunity are lay in fair systems, minimum wage and the like but also education reform. so yes there was a common view as i think the president put it. we must be doing something right if we've got both job creating economies. but there's a lot more to do and a huge challenge to stay competitive in the world.

i don't think there's any reason why britain can't be the most prosperous major economy in the world and the coming generation. we've got great universities four of the top six in the world are located in the uk. we've got the lowest most competitive taxes of the g-20. we're investing massively in our infrastructure and huge amount of investment more chinese investment into the uk than actually france germany and italy put together. so we've got the right ingredients. we've just got to deliver on that. i'm an optimist about the future. lots of risks out there but there are rewards for strong leadership clear economic plans, open economies and reformed education systems. >> george osborne, always a pleasure. >> thank you. >> that was george osborne, the chancellor of the exchequer of great britain. next on gps, we'll return to saudi arabia in the wake of the death of king abdullah. this time a focus on saudi culture.

how do you make a movie in a country that barely has movie theaters? how do women work in a country where they are not even allowed to drive? i'll talk to al mansur director of first film submitted for oscar nomination. that would be my daughter -- hi dad. she's a dietitian. and back when i wasn't eating right, she got me drinking boost. it's got a great taste and it helps give me the nutrition i was missing. helping me stay more like me. [ female announcer ] boost complete nutritional drink has 26 essential vitamins and minerals, including calcium and vitamin d to support strong bones and 10 grams of protein to help maintain muscle. all with a delicious taste. grandpa! [ female announcer ] stay strong, stay active with boost. can this decadent, fruit topped pastry... ...with indulgent streusel crumble, be from... fiber one. fiber one streusel.

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kingdom of saudi arabia

announced the death of its king. the succession could bring about big change. we've talked about the political and economic realities of saudi arabia earlier in the show but we also wanted to take a look at that nation's culture. as i'm sure you're aware, it's oscar season again, but some critics are still smarting over a snub from last year's oscars. left off the list of foreign language nominees was saudi arabia's first ever submission to the academy awards. indeed the first feature film made in saudi, a film called "wadjda." it's a delightful film about a little saudi girl about a girl who wants to win a bike and enters a competition in the hopes she'll win enough money to do so. spoiler alert, she wins. but then she has even bigger problems in a world where girls and bicycles aren't supposed to mix. the film is also a winner garnering awards from around the world. even more ground breaking than the film perhaps, is the film's

director haifaa al-mansour a woman working in an ultraconservative country where women need a male relative's permission to work where, of course women are not allowed to drive. i sat down with miss al-mansour to talk about her film her experience making it and her country, a place which, by the way, has no movie theaters in which one could watch the film. haifaa a pleasure to have you on. why has saudi arabia remained so conservative? i'm struck when i travel around even the arab world, there's much more modernization taking place in other places. why is it so conservative? >> absolutely it's very conservative. i think we are very tribal. we grew up being conservative. there are a lot of liberal voices that call for change, prince waleed for example, very much empowering women. it is exciting we see change in saudi arabia. i come from a very small town.

i see the change happening in my family. people around me are very conservative and now they are moving away from those ideologies and enjoying a different perspective of the world. >> and yet you have this blogger who has been sentenced to 1,000 lashes. when people see that in the west they can't understand it. >> that is very unfortunate. i think in his case he angered a lot of people and a lot of people complained. i don't want to be in that position. it's very nice the king is reviewing the sentence and hopefully no more lashes in saudi arabia. i think we need to stop and reflect on the laws that we have to be in this age. we're entering modern globalization and saudi is such an important country in the world. it's very important to modernize. >> one of the areas which hasn't changed much is the segregation of men and women almost everywhere. when you directed your film i remember you saying that you had

to direct it from sitting in a truck using a walkie-talkie telling the cameramen what to do because you could not be out there actually with the cameramen describing -- let alone giving directions to men, you couldn't even be seen with men. >> yes, absolutely. it's very difficult, especially for a director because you need the space and the actors so you witness their performance firsthand. saudi is changing even in that. people themselves are conservative and they don't want their women to work in the mixed environment, but it's changing. there are a lot of women i'm very proud of taking the challenge and standing up for themselves and they want to make a change and it's really nice to's that. >> you're married to a californian. how did that go down in your small town with your conservative relatives? >> yes, i come -- he's a very nice guy.

yeah it's difficult for them to accept outside of your tribe, let alone a californian but he won everybody in my family so that's good. >> you seem very patient and understanding of a system that must cause you at times to just get very angry? >> absolutely. when you go to an all men restaurant and you're not allowed as a woman, you feel ank richlt -- angry. it's important to relax. it's not about confrontation, it's about dialect. it's about moving forward and making changes. sometimes it's more daunting to go with the system and make the margins a little bit wider but i think it is more effective in a place like saudi arabia where it's very conservative and people shun from change. you need to make them respect you and you need to show respect to that culture. so you move away from confrontation and fighting and complaining. >> what's your next movie? >> my next movie hopefully will be about mary shelly.

it is my first english speaking and my first attempt to be in hollywood. we have dakota fanning attached. i'm excited to work with her. i'm excited not to be in the van anymore. >> you won't be in a van. you'll work with the actors. >> actually i'll be on the ground. i'm very excited about it and excited about the story. she grew up in england. she grew up in a very similar environment in saudi. as a woman, sometimes very conservative and people expect you to act and say and be in a certain way. when i read her story it was amazing how she owned her own voice and how she created this book that is an amazing legacy. it is very like cool. >> best of luck. >> thank you. thank you, fareed for having me. >> pleasure. >> next on gps, we'll visit a place where the world's wealthiest walk a mile or meter in their neighbor's shoes. ♪ ♪ but to get from the old way to the new

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the swiss national bank sent shock waves throughout economic marks last week when it abandoned the franc to the euro. rose dramatically at one point by more than 30%. meanwhile the united states dollar continues to rise against the euro. it currently takes about $1.15 to buy a euro. that is similar to the exchange rate at the euro's introduction 16 years ago.

it brings me to my question. at the dollar's strongest exchange rate since the introduction of the euro how many dollars did it take to buy a euro? $0.75, $0.83, $1.05 or $1.13? stay tuned and we'll tell you the correct answer. this week's book of the week the perfect antidote to davos. arianna huffington's tryhrive, creating a life of well-being wisdom and wonderful. it's a wonderful, wise and supremely practical guide to living a fuller richer and more meaningful life. she tells stories, offers suggestion and acknowledges her own mistakes in a way that makes it so much easier for all of us to make the effort. one of her suggestion is to unplug from technology which you can do after you order this book online. now for the last look. you never know who you'll run

into at the world economic forum from presidents to policymakers ceos to singers. this week we bumped into gene spurling the former director of the national economic council of the white house in an unlikely place. we found him in the slums of davos. a slum is not what you'd expect to find in the land of ski chalets and private planes. let me explain. a nonprofit organization crossroads foundation set up a slum simulation not far from where the forum is held. participants can experience to a certain degree what it is like to live on $2 a day or less something more than 2 billion people around the world do every day. men and women clad in suits are told they need to make bags out of newspapers to earn their living. they must sell their bags to make enough for food water, and rent. when they don't earn enough participants resort to other means of supplementing their income like selling the clothes

off their back. they face additional obstacles like health emergencies, sanitation problems and having to pay school fees. some get on their knees and plead, some resort to loan sharks or worse. spurling a participant bartered with massage and hugs which are code for prostitution. the simulation doesn't trivialize aspects of living in abject poverty. >> you'll do anything to protect your children. that means anything. you'll sell anything. you'll prostitute yourself. you feel that pressure in that simulation and it really does give you the sense of what i think this is about, struggle for survival. >> it aims in part to help policymakers and business leaders understand the impact of their decisions. spurling who told us about his work in education in work in developing countries, experienced the difficult decision of choosing to feed his family instead of sending his

children to school. >> i think it just reestablished one thing i think many of us believe on the policy side there needs to be a complete focus on education being free. not just free in the means of no tuition but in terms of transportation cost books. if it's not totally free it puts extremely poor parents in too difficult a situation. >> perhaps more policymakers could benefit from this kind of simulation. walking a mile or meter in someone else's shoes. of course if they are anything like gene spurling they will soon find they have sold their shoes to feed their family. >> the correct answer to the gps challenge question was b. according to the european central bank in october of 2000 the exchange rate was $0.83 to the euro. that would have been a great time for americans to take a european vacation. but it is also looking pretty affordable right now. that is of course if you're going to the country that uses the euro.

if you come to the beautiful country of switzerland, of course just be prepared for a tourist the price of chocolate at the moment is outrageous. thanks to all of you for being part of my program this week. from davos, i will see you next week. xxx xxx good morning. a lot ahead. brand-new box office totals for "american sniper." hollywood has never seen anything like this. it is astonishing. is patriotism pushing aside inconvenient facts. also a little later, she is back or is she? sarah palin says quote, she's seriously interested in a white house run in 2016. aren't we all being fooled here? how seriously shoot media take her. an impassioned plea from the parents of two of the victims from the aurora, colorado movie shooting.