The Obvious Solutions to the Global Inflation Crisis
I hate to tell you this, but the cost of living crisis wasn’t caused by Brexit. It’s global. Annual consumer price inflation (CPI) stands at 7% in the UK, 8.5% in the US and 7.5% in the Eurozone. In India, it’s 7%; Russia 16.7%; Argentina 52.3%; and Turkey 61.1%. It didn’t start with the war in Ukraine either, although the grinding conflict is sending commodity prices to their sharpest rises since records began in 1970.
The immediate answers to the current labour shortage are obvious: offer better pay and working conditions, and ease up on the border controls.
Central banks are responding in the only way they can, by raising interest rates. But this is unlikely to do much except make struggling people even worse off. This is because the current inflation crisis isn’t due to too much demand, but to supply problems. These include runaway energy prices, labour shortages and supply chain failures resulting from the COVID-19 pandemic.
The good news is that there are solutions to all these problems that would not only alleviate the cost of living crisis but simultaneously help end both our environmental doom and our democratic deficit. They have only upsides for the vast majority of people. They have been modelled, tested and their details ironed out by scientists and policy wonks. The only question is why they haven’t been implemented yet.
Energy prices on crack
Gas and oil companies are posting record profits as millions are forced to choose between heating and eating. A rebound in demand for energy after the pandemic lockdowns, long winters in Europe and East Asia, and now the economic warfare accompanying Russia’s invasion of Ukraine have all contributed to energy prices that have overdosed on my husband’s Adderall.
The no-brainer way out of this is to speed up the transition to renewable energy. Even the most no-brained economists and politicians can see that, despite members of the fossil fuel death cult claiming otherwise. Reducing energy waste is another obvious and painless part of the equation, with many calling for government-funded home insulation programmes. A study from 2011 found that, just by redesigning passive systems in households, factories and transport, using existing technology, energy demand in those sectors could be reduced by 73%.
A step beyond these ‘eco-efficiency’ approaches – where we produce the same amount of stuff using less energy – is what is called ‘eco-sufficiency’. This entails bringing in caps and rationing of natural resources. This may sound a bit Chairman Mao, but it depends on how it’s done. The last thing we want is a situation of ‘eco-austerity’ where the majority of people have to endure resource poverty while the rich continue to muck around on private jets and plan trips to Mars.
To work well, any system of capping or rationing essential resources would have to be based in genuine democracy – both political and economic. Like it or not, these resources are finite, so we need fair and kind ways of deciding who gets what, beyond who has the money to pay for it.
Scientists calculate that by combining the latest in energy efficiency and sufficiency methods, the world can comfortably support a population of ten billion on energy consumption levels of the 1960s – that is, 40% of today’s global energy expenditure. I don’t know about you, but my parents are boomers and you can’t get them to shut up about how great life was in the ’60s.
Work is rubbish
Just as we all know that we need to get off fossil fuels, we all know that there is a crisis of work that needs to be reckoned with. Current labour shortages have several causes: labour markets not yet catching up with the post-lockdown economic rebound; more people being willing to leave crappy jobs or take early retirement; less migrant labour due to border restrictions (yes, with Brexit as well as COVID partly to blame in the UK); and demographic changes in some parts of the world, such as declines in working-age population growth.
With all three drivers of inflation – the energy, labour and supply chain crises – the solutions that are best for people are also inherently best for the planet.
Labour shortages might seem like the opposite problem to the mutterings we have been hearing for years about robots taking our jobs. But whether the problem is a shortage of workers or a shortage of work, both, at root, are caused by an inefficient economic system in which goods and services are not produced to meet actual needs but to make profit for corporations who control the resources we need to stay alive. We then have to work for those corporations to get money to access those resources.
This is bad for the environment, as the profit drive incentivises wasteful production and consumption. It is also a pointless waste of our precious time and energy. How many times have Jill Scott’s lyrics, ‘I don’t wanna go to work today / I’d rather stay home and play / video games’, whirred around your brain while drudging to work?
The immediate answers to the current labour shortage are obvious: offer better pay and working conditions, and ease up on the border controls. And the deeper solution is the same: sever the link between work and income. Our access to the resources we need to stay alive does not need to depend on us working for wages. The idea that our income would not be a reward for our hard work might sound scandalous, but this is already the case. Do you really think that a cobalt miner in Congo works less hard than Elon Musk?
People need stuff. How we create that stuff and how we access it can be done in myriad other ways than by doing random jobs to get money to pay for it. Universal basic income and universal basic services are both popular ways to partially decouple the income or stuff we get from the work we do.
Another obvious solution to the crisis of work (whether that be labour shortages, robots or other problems, such as wage inequality or the environmental burden of many kinds of work) is to reduce the total amount of work that is done and to spread it more evenly. Decommodifying the production of many goods and services – taking them out of the for-profit sector and putting them in the hands of public sectors or communities – could help achieve this. Removing the profit motive would mean that a lot of wasteful “bullshit jobs” could be eliminated. No more private equity CEOs, bailiffs or PR agents (and, ahem, possibly fewer hack journalists).
Relax, I’m not advocating a centralised planned economy à la Stalin, but a decentralised democratic one. The necessary work that remains could be allocated more evenly so that we don’t get big imbalances between those with not enough work and those with too much. And we would all be left with a lot more time to play video games.
Supply chains suck
The pandemic led to global shutdowns in production, and the post-lockdown spike in demand has seen major bottlenecks in supply chains as businesses struggle to catch up. This has led to shortages of everything from microchips to shoes to furniture to, most worryingly, food. The food crisis has been exacerbated by the effects of climate breakdown, with droughts, floods and wildfires disrupting production.
The war in Ukraine has turbocharged all this, with Russia and Ukraine together accounting for about a quarter of the global trade in grains. Food prices are now at record highs – higher even than during the global food crisis of 2008, which pushed 155 million people into extreme poverty. In the immediate term, many are calling for price controls to stop people going hungry.
But a longer-term solution is so obvious that even the head of the World Trade Organization, guardian of global markets, said that countries should be “changing our dietary tastes” to eat more homegrown products. Until now, the idea of producing essentials on a more local scale has been sacrilege to mainstream economists and policymakers. But it has been on the agenda of Indigenous communities and global justice activists for decades.
Let’s not forget that the pandemic itself was partly caused by unfettered global markets. They led to rampant deforestation and habitat destruction, bringing humans increasingly into contact with other species. They also produced the kind of manic globetrotting (globe-galumphing?) that meant that what started in Wuhan could quickly spread to every region of the world.
‘Food sovereignty’ movements are gaining popularity, arguing that instead of producing for export markets, those who produce the world’s food should actually be able to eat it. The same can be said for items other than food. Shouldn’t those who mine lithium be able to drive electric cars?
This goes for energy production and storage too, taking us back to the energy crisis. Replacing fossil-fuelled systems with renewable ones can’t be done on a like-for-like basis. Renewables are more suited to decentralised, distributed systems, which means that clean energy can be held more effectively in the hands of local communities rather than giant global energy corporations. With all three drivers of inflation – the energy, labour and supply chain crises – the solutions that are best for people are also inherently best for the planet.
The answers to the global inflation crisis are blindingly obvious and have been frantically waving at us from over the road for years. We have it in our power to create systems of production and work that offer everybody a nice life while averting environmental apocalypse. What’s not to like?
The question we need to ask ourselves is: why haven’t we already implemented them, when even some of the most stubborn bureaucrats have acknowledged their necessity? Economics isn’t about maths, numbers or sensible white men in suits. It’s about power. (And white men in suits.) As Syed, an Uber driver, recently said to me on this subject: “They are greedy, we are needy.” We need to ask, who has been benefiting from an economic system that delivers multiple cost-of-living crises, war, climate catastrophe, hunger and disease? Who is standing in the way of a better future?
And most important of all: what are we going to do about it?
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