On a recent day trip, I happened to bump into a few people chatting. “How are we going to get through the winter? one of them asked. Millions of people are asking this question, and not all of them are poor.
The debate over what a new prime minister might do has centered on whether or not to increase the support already given. There is another alternative that could easily prevent further increases in inflation. This is an energy price freeze.
If the huge hike in energy prices in October and January is an “unexploded time bomb,” then it should be stopped. Stopping price increases would be some means of curbing inflation, as energy price hikes are estimated to account for nearly half of the expected 13 percent inflation rate.
When market mechanisms threaten to starve people and/or leave them living in unheated houses during the winter, then we cannot allow that to happen. While there are factors that could not have been foreseen, such as the impact of the war in Ukraine on the energy market, there are fundamental problems with the market itself, which is rigged to support energy companies’ profits and dividends. Wholesale prices are determined not only by the ebb and flow of supply and demand, but also by speculation in futures markets. Just as the great crash of 2007-08 was in large part the result of mortgage securitization, the global economy in many areas is dominated by a parasitic practice of making money from financial instruments at the expense of those who buy commodities or services.
Do I hear the cry of heresy? Intervene in the sacred market mechanisms? In fact, the mysterious workings of the law of supply and demand do not really exist as they should in 21st century capitalism. Large parts of the economy are controlled by private monopolies or near-monopolies. Many investments do not aim to produce commodities, but rather to make money by betting on futures and other derivatives. This is one of the factors behind rising energy prices and not just supply and demand.
The privatization of public utilities in the 1980s had devastating consequences. Instead of providing the projected private investment to improve utilities and the services they provide, tens of billions of pounds have been paid out in dividends, service has deteriorated and companies have piled on debt to pay for their acquisitions. For example, the water industry is polluting our rivers and seas while large-scale phasing out of this precious resource without which life is impossible continues. According to the Times, private companies have squeezed £72 billion out of the industry. Water should not be a commodity to be profited from, especially in the context of the climate crisis.
Ultimately, these utilities, owned by private monopolies, should be in the public sector so that surpluses are invested in infrastructure rather than lining shareholders’ pockets and migrating to tax havens.
At the moment, the urgency of the situation in the energy markets requires immediate action by the government to freeze prices and prevent the social catastrophe that we are facing as a result of the expected tripling of prices. Tax cuts will not help those who do not pay taxes and depend on such frugal services. They are not enough to make a living without a stressful and tiring constant struggle.
The increases in October and January must be stopped by government measures. Let the companies pay the price, not the millions of people who don’t have the resources to pay outrageously inflated prices.
Martin Wick
Welcome Avenue
park north
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