Process
Status Items Output None Questions None Claims None Highlights Done See section below
Highlights
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The current inflation crisis is in part the result of a series of very specific intersection between different world events. Global supply chains are still recovering from the impact of the pandemic on manufacturing, transport, and distribution networks. At the same time, severe weather events have wiped out crops, disrupting food production and driving up prices on some items. And the ongoing war in Ukraine — as well as and the economic sanctions imposed on Russia — have caused significant disruption in Russian gas exports and Ukrainian grain exports. However, there’s another, more important factor underlying inflation: profiteering. A wide range of companies have chosen to raise the price of their goods substantially above any underlying rise in costs. This can be seen in the fact that these companies’ profits have grown substantially above their growth in turnover, which suggests they have used external factors to conceal price gouging.
✏️ The events that led to not just inflation, but greedflation.
- global supply chains post pandemic
- severe weather events
- war in Ukraine
- profiteering 🔗 View Highlight
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Prior to the current crisis, wages in advanced countries had already been stagnant for some time. This is the result of two key developments. First, harsh, anti-union industrial relations regimes have weakened the power of workers and their unions, while removing restrictions on employers, considerably strengthening their bargaining power. Second, employers have taken the opportunity to pursue an increasingly aggressive approach to bargaining and wage-setting. This change in approach was also a response by employers to historically low profit growth.
✏️ The trend of low/stagnating wages 🔗 View Highlight
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The most obvious solution is a universal income supplement. Such a supplement has a number of advantages. For one, it could be adjusted more rapidly than wages. And by making it universal, it would ensure that people who don’t earn wages — like owner-operators or social security recipients — are not left behind. While this may seem politically impossible, recent precedents would suggest otherwise. In the fifteen years since the 2008 global financial crisis, federal governments led by both the Labor and Liberal Parties have made one-off cash payments economy-wide. Although these were aimed at boosting consumer spending in the short term, there’s no reason why they couldn’t also supplement wages on a regular basis. There’s also no reason to think such an income subsidy would detract from the push to increase welfare payments to the poverty line.
✏️ Making a case of universal income supplement. 🔗 View Highlight
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Measures that maintain purchasing power, while important, are also likely to drive up prices in some sectors of the economy because businesses will likely take advantage of an increased capacity to pay to engage in price gouging.
✏️ You can’t just give people money though, because the market will try to take advantage through price gouging. 🔗 View Highlight
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To ensure that we aren’t just boosting profits, we can follow the advice of Weber and her colleagues, who advocate capping price rises on key commodities, which would both restrict profiteering and help to stabilize inflation. Obvious candidates for price controls would include utilities bills — particularly power and gas — as well as fuel, transport, and food. In addition, governments should act to freeze both rents and mortgage payments.
✏️ To proactively combat any profiteering and price gouging, government has to impose price caps or freezes on key commodities, rents and mortgage payments. Basically, stop capitalism from forcing people to pay to survive life itself. A very basic and vital concept. 🔗 View Highlight
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Critics will echo former UK prime minister Theresa May’s comment that “there is no magic money tree” to argue that the federal budget — still recovering from the pandemic — cannot absorb additional social spending. This is wrong. As economists John Christensen and Nicholas Shaxson put it “there is a magic money tree … one version of which would be tax havens, multinational enterprises, and the mega rich.”
✏️ Critics argue that there is no money to do these kinds of crazy things. Guess what? there is money, in taxing the rich elite that have been hoarding all the money from people for decades. 🔗 View Highlight
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These cuts primarily benefit high income earners and if Labor cancels them, the move would retain an estimated extra $238 billion in government revenue over the next ten years.
✏️ An example of the money being usurped by the elite that would instead be beneficial for the masses. 🔗 View Highlight