Rich getting richer as the cuts & inflation kick the rest
If you want to know what’s happening in the economy, you can do worse than looking at which businesses are succeeding and failing. And so two stories leep out from the pages of this weekend’s Financial Times.
The first, on the front page, spells out the perfect storm hitting most British people. Retailers, we are told, are being hit by a combination of depressed spending and rising costs. As the piece goes on to explain, public spending cuts are finally hitting, as various changes are rolled out. Their impacts in the last couple of weeks have been, according to a spokesperson from Dixon’s, ‘chilling’. People are shopping less – demand, says one expert at Deloitte, is the lowest he’s seen it in his 30 year career. People are suffering, and they are buying less. Shops will surely shut, more people will surely lose their jobs. The government’s strategy is supposed to be driven by growth in the private sector providing work for those losing jobs in the public sector. But as the Tories always seem to forget, workers and consumers are not different people – take away my job, and I will spend less. Companies will lose money. Jobs will go. What we are likely to see is not ‘taking up slack’ but even more facing the sack.
At the same time, commodity prices are going through the roof. As I wrote about earlier this year, 2011 was always going to be a year of inflation. Climatic chaos has trashed food crops around the world, and oil prices are going through the roof. The failure to rein in the billions of speculative dollars thundering around the planet is exaggerating these trends. And then we had the Arab Spring – magnificent uprisings showing how much our politicians had allowed our economy to be built on the false stability of dictatorships, torture, and brutal oppression. Oil prices are going up even further. This pushes up the prices of food and cotton – both industries increasingly reliant on petrochemicals. As prices go up, wages in the UK are remaining stagnant. Those of us who have kept our jobs are, in real terms, getting poorer.
And one thing that is interesting about the story is that, while the trend applies to almost all shops, the piece focusses on Marks & Spenser. It isn’t solely the poor being assaulted by cuts and the failure to rein in speculators – the middle classes too are feeling the squeeze. This may not be surprising, but it is notable.
However, that’s not the whole picture. Because if speculation is helping drive the food and fuel price inflation that most of us are suffering from, then someone must be doing the speculating – someone must be benefiting.
And so I come to the second story in the FT – this one, buried on the bottom corner of page 4. The magnificent Edinburgh building that was once Donaldson’s college in Edinburgh is up for sale – being converted into luxury flats. In a building Queen Victoria described as more impressive than some of her palaces, we are talking proper luxury. Now think about this quote from Peter Allen of Savills – the estate agency managing the sale:
“A new type of purchaser is emerging from across the globe for these trophy properties”.
Says it all, doesn’t it?
Last year, the thousand wealthiest people in this country got about a third richer. What we are witnessing is not so much an age of austerity as the biggest transfer of wealth from ordinary people to the mega-rich that we’ve seen since the Enclosure Acts, as bankers kill our economy and, like vultures, get rich on its corpse.
It is a lie that the state has no money left. But next time a Tory tells me that lie, I think I’ll reply with a simple question: “Who got it all?”.