|Ed Miliband, leader of the British Labour Party, addressed the pre-party conference cameras in uncustomary casual attire, shelving his favourite suit, dazzlingly shiny tie and white shirt, you know, the one with the fat turned-over cuffs.
He sought to assure the nation that his one man mission is to relieve the financial pressure on the hardworking “squeezed middle” – fighting their corner against the profiteering railway companies and the moneygrabbing energy companies.
|The little snippet of BBC TV News 24 that I saw cut to the correspondent raising doubts about whether this cost-of-living protection strategy would have any impact on the wider economy – whether measures to control transport fares and energy bills would create economic growth.
What does this little word “growth” mean to the BBC TV reporter, I asked myself. Does he think it means increasing employment, increasing incomes ? And how could employment be increased ? By increasing the “consumption” of goods, energy, water, transportation and knowledge economy services ? And how can this “aggregate demand” consumption be increased, if unemployment remains high and incomes remain stagnant ?
Allowing the utility and transportation companies to raise their prices allows them to remain profitable and build their businesses, presumably creating employment as well as giving a return to investors – those who have their savings in pension funds – where the fund managers invest in energy and transport. Why not allow energy and transport prices to rise ? People can learn to spend more on these valuable services, surely ? Pensioners will have their funds protected, and energy and transport businesses will stay profitable, paying tax into the state.
Obviously, some people who are unemployed, or who no longer work full-time because they now have part-time jobs will find rising energy and transport costs a burden, but they’ll just have to adapt and make do – because it’s important to protect business profits. These are hard times, after all. Business leaders desperately need those hotlines to Government Ministers.
Capitalism has hit a brick wall. After extracting the value of the relatively cheaper labour in Asia. After exploiting the mineral resources of Africa at knock-down prices. After the supermarkets and food majors having farmed the soil away. Every single system is suffering entropy.
After having creamed the “base of the pyramid”, giving expensive mortgages to low-paid workers. After having put everyone in debt by credit.
Ignore for the minute that these public services of energy and transport are being provided by private companies. There is much evidence that this arrangement is inefficient and drains public funds into unhealthy economic spending.
What if the prices of transport and energy are affected by fundamental change in the cost of things ? Speculation in technology and manufacturing stocks and shares retreated as globalisation took hold, and moved into property; but the property bubble has now burst, because of the unstable house of cards in financial services.
So, where can roving capital turn to to get rewards, returns on investment ? The international oil and gas markets have seen trading prices rise quite sharply since around 2002. In parallel with increasing energy costs, most mineral commodities and intensively produced food have been climbing. Yet, this is not added value that is being seen, or even the results of intensive speculation. Share prices in agribusiness, metals and energy have been rocketing skywards, but new wealth has not been created, neither have new assets been established.
In agriculture, climate change-related stress, such as unusual temperature variations and water stress have placed fundamental new costs on production. In energy, there is a tight squeeze in the production of good quality crude oil and gas, and companies are venturing into deeper, marine fields, and more energy-intensive lower quality fossil fuels.
Minerals analysis shows that there are looming limits for several key metals, and prices have risen so high, that the very infrastructure of countries is at risk from metal theft. The people stealing the lead from church roofs, the copper from central heating systems, and the cables from railways are part of a burgeoning underclass, impoverished by the continued concentration of wealth in the hands of the metal markets.
It seems that the wealthy are continuing to do well, and the wealthy business class are shredding the implicit social contract that they have – to do good to society and environment – part of corporate responsibility.
To call them “evil corporations”, or “greedy fat cats”, ascribing emotional values and intent doesn’t help.
As the economy contracts under recessive forces, and unemployment and social marginalisation continues, business leaders cannot be expected to take up the slack. They are going to hedge their bets, and ring fence their operations, to stay afloat. As the cost of raw materials and energy rises, and they can no longer shave employment fixed costs, they will need to make staff redundant.
The net result is a larger number of people with less means, facing higher domestic energy bills and transport costs.
If Ed Miliband wants a future Labour Government to protect the weak and bolster the position of the poor, perhaps the only way to keep the prices of social goods affordable – things such as energy, transport, water, telecommunications, food – is to nationalise their production.
Society needs to be ordered so that none are in want or need. Ed Miliband issued this Tweet : “The way Britain is run lets people down and holds our country back – but powerful interests seem to do what they want.” One Twitter user @DarkestAngeL31, replied “And when is @Ed_Miliband going to stop talking about the ‘squeezed middle’ and start talking about the crushed bottom?”