It is necessary for national governments to put in place safety measures so that vulnerable sections can be protected from the ill-effects of a downturn in economic activity
When Charles Dickens wrote the following lines for his epic creation, A Tale of Two Cities, he obviously gave expression to the state of society as it existed in that period: “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity...”. If the same author were to write similar lines today, it is likely that he would drop the words “best of times”, given the extent of uncertainty and the lack of “feel good” that we see before us.
Perhaps every generation feels some helplessness at what they perceive as the decline in standards, opportunities — and most importantly, hope — in comparison with yesteryear. Yet, today, the confusion that defines global affairs and the state of the world seems more compelling in mapping the human condition as, say, in comparison with what existed just a few years ago. The global economy has reached unprecedented levels, which should normally have resulted in the elimination of poverty, hunger and malnutrition, and a reduction in inequalities but the growing difference between the richest members of society and those at the bottom rung has never been sharper than it is today.
Oxfam International highlights five shocking facts about extreme global inequality and mentions means by which it could even up this growing distortion, even though these appear largely impractical in today’s world. The first recommendation provided by Oxfam is to have world leaders tax the rich fairly and invest in vital public services that lift people out of poverty. It also states the fact that the wealth of the world’s billionaires increased $ 900 billion in the last year, which is $2.5 billion a day. As a result, 26 people own the same wealth as the 3.8 billion people, who make up the poorest half of humanity.
According to Oxfam, in some countries, the poorest 10 per cent are paying a higher proportion of their income in tax than the richest 10 per cent. Even in some of the most prosperous cities in the world, there are alarming disparities across societies. For instance, the richest parts of São Paulo, Brazil, have a life expectancy of 79 years; while in the poorest areas of the city, it is only 54 years.
Overall, disparities are growing in almost every part of the world, and this leaves a large number of poor people extremely vulnerable to the adverse effects of economic recession, natural calamities and growing impacts of climate change, against which, it appears, the poor have neither the means, the infrastructure nor the skills to be able to adapt the risks associated with these impacts. The effects of economic recession always fall disproportionately on the poor of the world and the most vulnerable sections of society, including the elderly and the most dispossessed.
There is globally every reason to consider the possibility of recession occurring in 2019 or possibly by 2020 and, hence, efforts need to be made in advance for policies to protect these vulnerable sections of people everywhere. A recession is generally not easy to predict but several analysts and observers of current economic trends are expressing doubts on whether the growth achieved in the past seven or eight years would actually continue. If we look at the overall global and regional developments, the on-going trade wars between the US and China are clearly introducing a major area of uncertainty between the two countries, which would have profound effects on other economies across the globe. While the US economy appears to be doing well, there are signs of a slight downturn, which can become stronger with adverse monetary policies, which may be put in place in the next few months.
China’s economic growth has been phenomenal and has added a substantial amount of goods and services not only for domestic consumption but for export to other nations as well. However, there are signs of a clear decline in China’s economic growth, which could have adverse effects on the economies of other countries as well.
In the case of Europe, the confusion about Brexit leaves that continent in a state of uncertainty, which is in fact compounded by efforts on the part of some national Governments trying to defy overall EU policies, which were accepted by the members of the Union.
At the same time, there are, of course, hotspots across the world, which continue to see conflict that not only has direct local relevance but global implications as well. There is little that the world has been able to do to end conflicts such as in Syria, Eastern Ukraine and even Yemen, which continue to defy any rational basis for prolonging them. In our own neighbourhood, unacceptability and threats of terrorist violence remain alive, despite efforts by the international community to curb the universal dangers of providing sanctuary and encouragement to terrorists.
If on top of these troubled conditions, the world is to see another recession in the next nine to 18 months, it would leave several societies much worse off. Dealing with the situation would require a dialogue to be pursued among the major powers, who can influence overall global economic policy, but there is in evidence today much greater emphasis on bilateral negotiations and agreements, which could be counterproductive and harmful to the global economy.
At the same time, it is necessary for national Governments to put in place proper safety measures by which the most vulnerable sections of society could be protected from the serious ill effects of a downturn in economic activity. It is important for national Governments and those responsible for global policies to ensure that the lives of the underprivileged are protected and kept secure against the possibility of a recession which would add a further burden to their lives, who are impacted already by climate change and natural disasters of various forms.
Unfortunately, the most influential leaders in the world today lack the ability to assert moral leadership and qualify as global leaders with vision. The vacuum needs to be filled with leaders at the grassroots level, who are able to articulate the priorities that underline a safe and secure future for the most vulnerable people on planet Earth. The world today can create conditions for the best of times to follow.
(The writer is former chairman, Intergovernmental Panel on Climate Change, 2002-15
