Do you remember ever playing Connect Four? I always found it pretty satisfying to connect up a line of four discs – it was a little “A-ha!” moment. I’m a sore loser though. As a kid, I’d get angry if I saw my opponent’s discs suddenly fall into a neat line of four. So it was this morning I realised four things have neatly lined up against us regular people. And I found I’m still a sore loser.
(1) From a boardroom in Pittsburgh, Heinz (read: a bunch of largely old men) decided to close 5 factories around the world (including 1 in Australia), and axe up to 1,000 jobs globally. The iconic (now Heinz owned) Golden Circle plant in Queensland was not immune to the losses either. How did the Gods of Wall St respond? They looked fondly upon Heinz chopping of its right arm and offering it up to them as a sacrifice, the share price rose 44 cents a share. It makes me wish Golden Circle was still part of a farmers co-operative.
(2) Then I read global food prices are set to soar. Why? Part of the reason for the increased price is a drought. But part of the reason is a massive increase in commodities speculation (see Griftopia by Matt Taibbi for a really clear and concise explanation about how this all works). You see over the last ten years, “investment” in commodities such as foodstuffs has increased 40 times to US$451 billion. That is US $451 000 000 000. That’s a lot of money – if you earned US$50 000 per year it would take you 9 020 000 years to earn that much. I used the term “investment” loosely before. What I really meant was that Big Capital is parking more of its money in the basic necessities of life in the bet that prices will go up and they make a tidy profit. If the bet is right, then you and I and everybody else pays a lot more for the things we need to go on living. If the bet is wrong, then there’s another massive economic downturn and a lot of us lose our jobs, making it a lot harder to pay for the things we need to go on living. Heads Wall St wins, tails we lose.
(3) In other news, small business lending has slumped in Britain. I think the situation is different in Australia for now (if anyone has any views on that please feel free to share them below). Nonetheless, we keep getting told we live in a global economy and Britain (or more accurately London) is a significant base for global capital. Really though, why put more money into productive enterprise? Investing in people and places is so passe. It’s also hard. People care about stuff, and places flood. Instead, it’s a lot more lucrative to flog off factories and park the money into commodities.
(4) Who benefits? Dodgy old white men like this guy. The bankers get more bonuses and shares from which to purchase gold flecked champagne.
Join the discs and what do you get? Less money going into processing food which produces food people need to eat, and more going into the food so that it’s harder for people to afford to eat. Prices kill. As Nobel prize winning economist Amartya Sen has shown, famines have very little to do with total supply. Instead, they occur when ordinary people do not have the capability to obtain food. This often occurs when people do not have the money to purchase the food they need to live.
It feels like we’re living through a sort of Soylent Green Capitalism. It feeds off its own rotting carcass, and attacks our very access to the necessities of life. So who loses?
It’s time to start again. It’s time to play again. Connect Four anybody?