Cost of living crisis. Why is no one asking the obvious question?


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  • #87555 Reply
    SA

    Everyone is talking about the cost of living crisis, pontificating about its cause, rising fuel prices, the Ukraine war, the green agenda and so on. And commentators ranging from extreme right wing politicians to social democrats and even some self proclaimed socialists also have their pet solution to the problem, usually mainly agonizing on the devastating effects this has on the poor and on child poverty, the difficulty in choosing to eat or to heat, and so on. But when it comes to solutions there are an awful lot of suggestions mainly centred on how governments should reduce VAT and taxes on fuel as the main tool for tackling this problem.

    This chart tracking the rise of fuel prices shows a sudden exponential rise, starting approximately two years ago but with an accelated trend over the last year, even predating the Ukraine war. It is said that this rise is due to increased demand following the recovery from Covid and that was accelerated by the sanctions on Russia.

    Trading in many commodities, including fuel, in the globalist capitalist system is through spot-trading mainly which gives rise to some very basic problems. Traders are interested in making profits but not related intrinsically to the value or nature of the commodity. Nor are traders interested in the source or in the refinancing or the developement of resources or of hardships. This is a class of economic parasites who have no value to society whatsoever. But these are the people who get rich from these crises. No doubt energy-producing companies also make lots of profits from rising energy costs but at least they produce the fuel and reinvest to a certain extent in future energy production.

    So why is no one interested in addressing this question. Surely the answer to something so basic is to tackle this excessive profiteering and ‘regulate’ or limit or cut out these parasites?

    #87558 Reply
    SA

    A recent Guardian article “Economics made simple: 10 experts on where the cost of living crisis came from, and where it’s heading”, is interesting in relation to the question I posed. The ten “experts” reveal how inexact a ‘science’ economics is and how different points of view can skew the answers depending on which angle you choose to look at. But two of these experts come closest to the heart of the problem.

    Mariana Mazzucato, Professor at University College London is a socialist-leaning economist and she writes:

    “The UK economy is plagued by lagging productivity, stagnant wages and low economic growth, all of which are now compounded by the cost of living crisis. It is energy prices and corporate profits, not wages, that are driving the current inflationary pressures: corporate profits in the UK have increased by 34% since the onset of the Covid-19 pandemic, 90% of those increases made by the top 25 multinationals.”

    But this is not what you hear in the mainstream media and in what the contenders to be our next PM say. They all say that inflation is an evil which has to be combatted by restricting wages for the workers whilst reducing taxes for the rich.

    The other expert is John McDonnell MP, former shadow chancellor.

    “There are 14.5 million people in poverty in Britain, including 4.3 million children. Two-thirds of those children are in a household where someone is in work. If you are in work, even if your company is booming, you have little say over whether you will benefit from its profits. If your landlord increases your rent or threatens eviction, or if your mortgage company fails to pass on interest rate cuts, you are largely powerless.”

    “Since the late 1970s, neoliberalism has dominated government policymaking in Britain. This is a school of economic thought that sees markets as the optimum means to organise an economy. Its adherents believe that if you cut taxes for the rich and corporations, wealth will automatically “trickle down” from the top. But we’ve seen over the course of the past decades that this is not the case. The profits of big business and executive pay have soared, while the proceeds of that wealth have not been shared, because trade union rights have been undermined, producing low wage, insecure employment.”

    So it is really very simple. The Tories and other western economies have presided on a neoliberal capitalism that is extremely simplistic: reward the rich at the expense of the poor and rely on trickle-down to keep things going. THis is clearly a failed system that is unsustainable, and yet our press does not point out this simple fact. THe pigs with snouts in the trough are the same pigs that run the trough.

    #87576 Reply
    SA

    I confess that I made a mistake here. Fuel prices and energy prices surely can be regulated by governments if they choose to do so. Macron’s response, whether it was his own idea, or whether he was forced to adopt this posture by by the necessity of including some socialists in the governing coalition, was to completely nationalize EDF, which provides 70% of electricity in France (and incidentally also provides 10.74% of UK electricity) by buying out all shares for the state which is now 100% state owned, and capping electricity price rise to 4%. This is explained in this article.

    The other major explanation for the recent escalation of oil and gas prices has been the Russia Ukraine war. When mentioned it is stated that of course it is the fault of Putin and Gazprom. But the root cause of the rises and shortages seems to be western sanctions on Russia rather than the other way round. The sanctions seem to be causing much more disruption to Europe than to Russia. This is explained in an analysis by b in the Moon of Alabama, based on a questions and answers session between Putin and the media which is worth reading. So it turns out that most of the problem of reduced gas supply to Europe and Germany The “German government has blocked the certification of the NordStream II pipeline which is technically 100% ready to work at full capacity.”; the Polish government’s actions: “Poland imposed sanctions on Yamal-Europe, which supplied 33 billion cubic metres of gas. They used to take 34, I think, 33–34 million cubic metres a day from us. They shut it down completely. But then we saw that they turned on the Yamal-Europe pipeline in reverse mode, and they started taking about 32 million a day from Germany.”, and “the Ukraine suddenly announced that it was going to close one of the two routes on its territory. Allegedly because the gas pumping station is not under its control but on the territory of the Lugansk People’s Republic. But it found itself under the control of the Lugansk People’s Republic several months before, and they closed it just recently without any grounds. Everything was functioning normally there, no one interfered.”

    So it is actions by the west that are leading to fuel shortages and contributing to the rising fuel costs and cost of living crisis. At least our politicians should be honest with us and tell us that this voluntary self sacrifice in order to beat Russia, is a necessary action and not hide behind artificial excuses. It may then be up to the population to decide whether this action is in their interest as we are told.

    Another uncommented on action is the amount of ‘aid’ passed on to the Ukraine from UK, US and other NATO members, amounting to billions of taxpayers money. These amounts seem to just be passed on without scrutiny, without votes, without discussions in parliament (although fat lot of use these discussions would be given the overwhelming parliamentary warmongering support). But again, should we as taxpayers not be given an option to complain as to how our money, instead of supporting the needy and the NHS and other services, instead be squandered to increase the profits of the armament industry.

    #87612 Reply
    SA

    Could it be that the vast money being transferred to the arms industry is a factor in the the vast increase in cost of living and oil and gas and food being used as a camouflage? Of course this is an area that is not allowed to be discussed in public, out of bounds. Just a thought.

    #87613 Reply
    Clark

    Collapse has begun.

    Marx predicted that capitalism would collapse due to discontent in the workforce but he reckoned without technology and the bonanza of fossil fuels. Such factors have enabled the standards of living of the majority to continue rising, albeit slowly, unevenly and sporadically, despite massive growth of inequality and concentration of wealth.

    But the system is predicated upon perpetual economic growth to pay interest. In effect, it pays for current construction of infrastructure by borrowing money from an imagined future, assumed to be more prosperous than the present. But this is merely a widely shared illusion sustained by three centuries of increasing prosperity. Capitalism claims the credit for that increase in prosperity, but monumental scientific advances spawning technological progress supported by ever-increasing extraction of resources seem far more essential.

    The system grew until it filled the world and is now hitting its physical limits. Depleted resources become ever harder to extract. There is less and less forest to turn into profit-making furniture and farmland. There are less and less hunter-gatherers and subsistence agrarians to turn into profit-making slaves, waged or otherwise. Even the atmosphere and oceans are degrading merely through absorbing the system’s various effluents.

    If there were some effective governance remaining in the world, the torrent of expert warnings would have been heeded, a plan made and transition begun. But under capitalism, expertise is just another resource to be exploited. Expertise is heeded if it makes profit, and otherwise ignored, dismissed as ‘opinion’ and ‘controversy’.

    #87614 Reply
    Dawg

    Attempts to stave off the collapse have also begun. If a resentful workforce represents an existential danger, then you just have to keep the workforce happy by bringing them into the system. One proposed solution is known as Inclusive Capitalism.

    “What is Inclusive Capitalism?

    Inclusive capitalism is fundamentally about creating long-term value for all stakeholders – businesses, investors, employees, customers, governments, and communities – guided by an approach that provides:

    • Equality of opportunity – for all people to pursue prosperity and quality of life, irrespective of socio-economic background, gender, ethnicity, religion, or age.
    • Equitable outcomes – for those who have the same opportunities and seize them in the same way.
    • Fairness across generations – so that one generation does not realize near-term benefits that incur long-term costs that overburden future generations.
    • Fairness in society – to those whose circumstances prevent them from full economic participation.”

    This is more than CSR* 2.0: it’s responsible, sustainable, cuddly capitalism. It has the backing of CEOs of major corporations and has even received the blessing of the Pope – as seen in the following promotional video:

    Video: The Council for Inclusive Capitalism, with the VaticanYouTube, 6m 0s

    (OK, Pope Frankie might not actually have magic powers, but he’s still got a lot of clout.)

    Universal Basic Income fits with the agenda, as a kind of socialist safety net which allows for entrepreneurial incentives. You will own nothing and be happy, unless you really want to own something and be happier. Happy punters = no rebellion. Which means the rich can keep on getting richer, while the workforce gets busy with inventing new stuff to own (blockchains and NFTs, anyone?).

    It all sounds a bit Utopian, and of course it has prompted mutterings in dark corners of the web about the dawn of the New World Order, the Great Reset, reptilian banking cartels, and so on. (Maybe the great leaders do want to farm us for our meat or something, but I doubt it.)

    What do you think? Is Inclusive Capitalism merely an illusion to appease the masses while robbing them blind, or is it a credible way to sustain technological revolutions without the inherent risk of political revolutions?

    * CSR = Corporate Social Responsibility

    #87624 Reply
    SA

    Sorry Dawg but Pope Francis, Lady Lynne Foster de Rothschild and Roger Ferguson forming an organisation to popularise democracy? Really? I thought Thatcher had the same idea and see where it led us. This is diversionary tactics, see how benevolent we are? We want the poor to share in our successful capitalism.

    All the spiel about CSR is propaganda whitewash. When the big corporations were discovered to be the biggest polluters and vehicles for transfer of funds from taxpayers and the poor to make the wealthy even more wealthy, they invented CSR as a very good whitewash. There is an interesting series on BBC on how Exxon and Koch and other big oil companies spent millions on financing climate denial https://www.bbc.com/mediacentre/2022/big-oil-vs-the-world . Even BP pretended to invest in green energy in the 2000s but never got anywhere.

    There are basic tenets in capitalism: growth and profit, and wealth generation only in so much that it generates more growth and profit. There are things that capitalism will never answer: health for all, end to poverty, equality and halting of the catastrophe of climate change.

    #87630 Reply
    Clark

    “Attempts to stave off the collapse have also begun.”

    Too little, too late; we’re in the energy trap now:

    Do The Math: The Energy Trap (18 Oct 2011)

    “…once we enter a decline phase in fossil fuel availability — first in petroleum — our growth-based economic system will struggle to cope with a contraction of its very lifeblood. Fuel prices will skyrocket, some individuals and exporting nations will react by hoarding, and energy scarcity will quickly become the new norm. The invisible hand of the market will slap us silly demanding a new energy infrastructure based on non-fossil solutions. But here’s the rub. The construction of that shiny new infrastructure requires not just money, but…energy. And that’s the very commodity in short supply. Will we really be willing to sacrifice additional energy in the short term — effectively steepening the decline — for a long-term energy plan? It’s a trap!”

    And it’s not just energy either; many of the resources required to harness and utilise energy are in short supply too. There is no way that the bulk of the human population can achieve US or even EU levels of energy and resource consumption.

    Which makes “equality of opportunity” merely a euphemism for gross inequality.

    I’m not “anti-capitalist”. I regard capitalism as an emergent phenomenon, an inevitable consequence of the emergence of money, so being anti-capitalist would be like being anti-defecation or something. Capitalism can indeed force companies to compete, raising quality and restraining prices. But a “capitalist government” makes about as much sense as a chocolate teapot; capitalism will occur without any help from governments. The point of governments is precisely to harness and regulate emergent phenomena, not to pander to them. This was understood during the “post WWII consensus”; even Conservatives agreed that capitalism needed to be controlled and regulated, that basic infrastructure should be in public ownership, and that the richest people and corporations should pay the highest rates of tax. Now, the opposite holds true.

    #87633 Reply
    Mark Sharkey

    Even at this late stage, if the people in power came clean and started to plan for restricting energy use while developing alternatives, it might still be possible to ensure a reasonable future for all. But, when I go for a walk, I hear small planes buzzing overhead and sports cars droning endlessly round the nearby racing track. Both activities squandering a valuable non-renewable resource. In fact, it is more than valuable, it is critical to our existence. Without oil, farming stops, haulage of every type of commodity stops, water stops.
    The problem is that people in key positions all seem to be psychopaths, basically greedy and out for themselves. As my granny would have said: self first, self second, any left self again.
    Putin is no better, in a recent speech he went on about the importance of growth, which is what has got us to where we are now.

    #87657 Reply
    Clark

    “…people in key positions all seem to be psychopaths, basically greedy and out for themselves.”

    …which is so unlikely to happen by coincidence, especially in defiance of democracy, that it must be structural.

    This seems relevant:

    https://newint.org/features/2021/08/09/money-ultimate-decolonizer-fjf

    #87660 Reply
    SA

    Thanks Clark for the link which is interesting. The first part I agree with fully, the analysis of why the global south and the developing world is kept from even looking after its own citizens by pursuing rise in GDP as a prerequisite to increasing prosperity and the export driven economic growth rather than self sufficiency. But I do not agree that it is at all simple for developing countries to start printing their own money and build up self sufficiency. Even countries like Iran and Russia have struggled to cope with western sanctions despite having much depth in terms of both agriculture and industry and self defense.
    There is a glaring omission also of other tools of coercion of developing countries. The west has been very adept at removing any leaders that have tried to accomplish some growth and autonomy from Mossagagh to Allende, Nasser, Nkrumah and many others by assassination, regime change and involvement in local and proxy wars. Regime change for those who will defy the capitalist system awaits any such leaders. The second method widely practiced is to befriend powerful and corrupt rulers who will do the west’s bidding. Examples are too many to start naming.

    One of the possible resolutions to this problem rests on the current war in Ukraine and western confrontation with China. If this successfully leads to a truly multipolar world, both politically and economically, then that can be achieved. Some sources claim that the Russian and Chinese approach to development in Africa and other places is based on mutual benefit and not on extraction. I don’t know whether that is true but at least if there is competition it can only improve choice.

    Lastly, may I point out the sponsor of this article.

    “This article is part of the Food Justice files, which is funded by the European Journalism Centre through the European Development Journalism Grants programme, a fund supported by the Bill & Melinda Gates Foundation.”

    #87663 Reply
    Clark

    SA, indeed; violence is the foundation upon which all inequality stands.

    What was so special in 2003 that brought so many millions all over the world out onto the streets to oppose the war on Iraq? We need those millions now, to do more than merely march in protest; we need millions in civil resistance, refusing to cooperate with this genocidal system, making change unstoppable.

    #87668 Reply
    SA

    What was so special about 2003 that brought out millions into the streets? The propaganda was not so complete. There were many proper journalists and even a few politicians who were willing to stand up to the propaganda and some even sacrificed their careers and posts to stand by the truth. Stop the war was active and politicians of the calibre of Tony Benn stood up against this war of aggression. None of this is the case now. The Independent is owned by an oligarch, and the Guardian is now one of the main organs of propaganda in a very unashamed way. The true left has been distracted and silenced by the vicious attack on Corbyn, and Stop the War has been seriously neutralised. The majority are marginalised and fragmented with no leadership and no unity.

    #87671 Reply
    Clark

    “The propaganda was not so complete.”

    Indeed. This seems relevant:

    “This is why few know that the Defense Department and the CIA have had a controlling hand in such varied projects as Apollo 13, the Jurassic Park and James Bond franchises, the Marvel movies, Godzilla, Transformers, Meet the Parents and I Am Legend. Or how the military regularly gets involved in baking and quiz shows.”

    https://www.jonathan-cook.net/2022-08-04/pentagon-dictates-hollywood-storylines/

    #87672 Reply
    Clark

    Trust in news media is at an all time low, but that is not enough in itself. Knowing that one is being mislead is not the same as knowing what can be trusted, and from personal conversations, I know that people are hungry for genuine understanding.

    We need some new model of media, a decisive upgrade in verifiability.

    #87673 Reply
    Clark

    Another way of looking at it is that the hardening of propaganda is a sign of desperation. Maybe I’m straining for any positive interpretation, but hardening of propaganda together with falling trust in news media does seem unsustainable; something has to give eventually.

    #87676 Reply
    SA

    “We need some new model of media, a decisive upgrade in verifiability.”

    The problem is that is exactly ‘verifiability’ is now exactly the tool used by the official fact checkers to keep everyone from straying plus increasing clear censorship in some cases.

    “Another way of looking at it is that the hardening of propaganda is a sign of desperation.”

    I wish I was as optimistic as you. The noose is tightening with little signs of resistance. There are many distractions to prevent the people from becoming a unified threat.

    #87679 Reply
    Clark

    But what is the motivation for tightening the noose? The western commercial and military empire is more powerful than ever before, the richest are richer than ever before in both relative and absolute metrics.

    Democratic systems (or at least seemingly democratic systems) are more internally robust than authoritarian ones, so tightening the propaganda noose is a risk, and the danger is observable in falling trust in media. That risk must be a response to some threat.

    The Times - Millions Warned of Power Cuts (30 May 2022)

    #87680 Reply
    Clark

    So despite people suddenly paying several times as much for electricity, supply looks likely to become unreliable. Despite rising food prices, gaps appear on supermarket shelves. By its nature, trust cannot be enforced.

    The Overload, Talking Heads, 6 min 5 sec, YouTube.

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