Friday, 24 April 2015

The UK Economy. Part three: the race to the bottom

Thatcherism and the meteoric rise and total takeover of the free market has resulted in much larger and wider-reaching changes to the economy as a whole than even they could have dreamed.

Free to grow as big as they can by whatever means possible: huge companies have become so powerful they have changed almost everything. Suppliers have no power and are routinely shafted by the big retailers until they can barely afford to exist. Consumers think they have power, and occasionally they do, but they are manipulated and conned by the retailers into spending more and getting less. If you boil down retail to it's basics, it is basically someone selling something that someone else has produced. The producer, in my opinion, should hold the power: they have the skills and the expertise to produce what people want and they should be able to make money out of it. But in most cases, this is just not the case any longer, unless they too are vast and can shaft their own suppliers in the way the retailers shaft them.

Milk is now cheaper than water. Farmers producing all kinds of food are being driven out of business by the supermarkets' never-ending race to be the cheapest and because the supermarkets have all but killed the high-street bakers, butchers, greengrocers etc, if they're not selling to supermarkets, they're not selling to anyone. Quality is suffering and the environment and animal welfare is bottom of the agenda. Slavery is back with workers being paid for far fewer hours than they've worked and being subjected to chemicals which cause lung and skin diseases. All to put cheap produce on UK shelves.

It's ironic that some of the biggest players are now the victims of what they themselves have created. Tesco have announced a £6.4bn loss. They led the way in the big four supermarkets' land-grabbing, high-street-closing, town-takeovers and at their peak, were able to force all suppliers and consumers to make bigger and bigger profits for their shareholders. But once austerity hit the UK after the financial crash, and with the economy flatlining and bills rising, people saw their rising shopping bills and wanted cheaper: after all, that's what Tesco and the other supermarkets had taught them to seek. Step into the fray Aldi and Lidl. What is behind their cheaper prices, I'm not sure: I suspect in some cases, produce is lower quality but their overheads are also smaller (although interestingly, they pay their staff higher wages than their bigger rivals) as they haven't gobbled up prime land and don't have the huge stores whose shelves must always be full. In response, the big guns have lowered their prices. In some cases, this is not entirely true: look more closely and you'll see that many of the products which have been reduced in price have also reduced in size/weight. In other cases, the producers have been shafted even further.

Britain has become so used to everything getting cheaper and cheaper and being able to buy more, newer, more frequently, that they've become anaesthetised to the consequences: mass deaths in Bangladeshi factories; children being forced to work producing our clothes and technology; animals being kept in terrible conditions for ever cheaper meat; all sorts of unknown additives making our poor-quality food taste better and last longer; piles of last year's unwanted goods being shipped to West Africa where it's not illegal to produce toxic fumes by burning plastics and metals. And there are other consequences of cheaper and cheaper and cheaper, such as low wages. The profits still being made (even Tesco's losses have only been very recent and have followed year after year of massive profits) should be reflected in the staff wages, but they're not. The state has to top up low pay with in-work benefits just so that people can afford to live.

The free market almost ended manufacturing in the UK, with cheaper labour from abroad being used instead. It has made ghost towns of our high streets. It has massively increased inequality. It crashed our economy; it leeches off the state; it holds back environmental and animal welfare issues.

It is bad for society and bad for the planet and we need to reign it in. NOW.

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