Sep 28

Global Observations From My Travels

An Article By Ian Kilbride.

Travel provides a broader perspective and allows the time to reflect on the big global issues. At the time of writing, we are three quarters the way through this tumultuous year, so I wanted to reflect on the big global issues of the day – the factors and forces that are driving the global agenda and those I have witnessed first-hand on my current travels.

The first and most obvious ubiquitous factor, at least on the global economy, is inflation. While there are encouraging signs that this corrosive force is being wrestled under control in most major economies, the long-term lag effects have yet to play out fully. The persistent high oil price, OPEC restrictions and the inflationary effect of the Russian invasion of Ukraine on energy and food prices have still to be flushed from the system. But it is the impact of inflation on every day lives that is the most noticeable factor when travelling.

While the economists can demonstrate that core inflation is coming under control, food and fuel inflation remain painfully and persistently high. No wonder economics is called the ‘dismal science’. Witnessing long queues at food banks on the streets of advanced economies is sobering. Working people, young and old are simply struggling to make ends meet due to the twin whammy of super high energy costs (and this is during the northern summer!) and the unaffordability of a basic basket of goods.

This links to a more structural impact of inflation and that is on wages and salaries. Employers in the northern advanced economies have been accustomed to no or low single digit real inflation for decades and have adjusted salaries accordingly. The double-digit inflation experienced by some advanced economies has left wages and salaries out of kilter, thus propelling the upsurge of wage demands, strike action and in some cases, civil unrest on the streets. This is not the 1970s, but what is significant is that unlike say the miners and farmers strikes of the 1970s, today we are witnessing highly skilled professionals such as doctors, teachers and nurses embarking on strike action simply to catch-up with the inflationary costs of living.

Complicating this, particularly in the public sector, is the debt traps many advanced economies find themselves in, particularly as a consequence of the economic support and stimulus packages provided during the Covid-19 lockdown periods. Public debt levels have never been higher in modern times and this, combined with high inflation and thus higher interest rates accruing to debt, has left many governments with very little ‘wiggle room’ to meet public sector wage demands, provide the necessary basic services expected by taxpayers and still deliver credible budgets. When I say, advanced economies I am referencing Europe and the US in particular, but China’s debt levels are also at an all-time high and presenting Beijing with significant fiscal and monetary challenges.

The second area my travels have made me more attuned to is the issue of illegal migration. This is a tough one for all concerned. On the one hand, civilised countries are defined by their treatment of the poor, needy and indeed refugees. Given the impact of conflict in Africa, war in Eastern Europe and yes, climate change, there are simply more people than ever wishing to escape their domestic circumstances. This is entirely legitimate and who amongst does not have an immigrant heritage a few generations back? The problem I have witnessed on my travels is that most illegal migrants appear to be economic migrants seeking a better life and are being exploited by criminal syndicate people smugglers. Europe and the US are struggling to deal with the many hundreds of thousands of illegal migrants crossing national borders, with the unintended consequence that legal migrants are being sidelined and refugees are being lost in the wash. Without a change in policy, legislation and practice it is difficult to see how advanced economies are going to be able to deal with the crisis of bad regimes exporting their unwanted to Europe and the US.

The third big issue I have noted is the growing impact of climate change. There are still flat earth deniers out there who claim that a rise in global temperature is a ‘normal’ historical pattern and that the anthropogenic (human made) impact of climate change is either false or overdone. The authoritative scientific evidence would suggest otherwise. My own travel observations leave me with the impression that climate change is not only here, but is in evidence all around us and is set to intensify. Without acknowledging the reality of climate change, it is hard to explain the frequency of terrifying wildfires and floods I have witnessed on my travels. There are also the more subtle changes in agricultural patterns I have just seen. How else can you explain the superb wine and sparkling wine now being produced by British vineyards?

Besides the human impact of climate change on the quality of human life (and here I think of the impact on the younger generation of today and future generations), my travels have made me acutely aware of just how ill-prepared advanced economies are for the looming crisis. There is still time to keep the increase in global warming to below 1,5c and I witnessed some encouraging developments in renewable energy, but unless climate change mitigation and adaptation are prioritised, particularly among the major global polluters, we are facing an unprecedented future storm.