I’m on a bit of a roll at the moment. The more I think about big business, the more annoyed I seem to get. So, here’s the next thing that’s been playing in my mind for a little while now.
It occurs to me that there are two private sectors. One that drives the economy and made up of 5.7 million SME’s and one that costs the economy, made up of the less than 9,000 large companies. For example, the two biggest of the large companies are BP and Shell by turnover currently. Companies that by their nature destroy the environment while they pay lip-service to performative attempts at creating renewable energy. Two companies that have also done financially well out of the US/Iran war which is also destroying the environment as wars have a nasty tendency to do. Obviously the other beneficiaries of the war are those companies in the armaments industry and the manufacturers of drones. And this war. It has achieved what, exactly? Definitely not the regime change the Iranian population have been demonstrating and dying for. Yes, in so many ways these companies and their business costs the economy in the long run.
What it has achieved is rocket high oil prices. Record high oil prices in fact. Which has fed down to the petrol stations of every country. In a global cost of living crisis, higher oil prices was the last thing we needed. And the higher costs of oil feeds through to every aspect of the economy: food, clothing, heating (not that that is an issue in the heatwave Europe is currently experiencing, but it will be)…most industries rely on oil in some way, shape or form for what they do. And we still haven’t felt the full effects of this feeding into our economy yet. So there’s more joy to come in the cost of living. Which will mean inflation increases, and the economic merry-go-round starts again.
What I wonder is…how often do the companies who particularly benefit from rising prices and inflation reduce their prices when the rate of inflation reduces and the cost of materials go down? If inflation goes from 10% to, say, 2% do prices echo this drop? Or do companies think a 5% maximum decrease is sufficient? Does anyone track this? Because it’s the cumulative impact of these incremental increases. If fuel is £1.50 a litre with the increase in prices, when they go back down again does the cost of fuel go back down to, say, £1.30 a litre? Or hover around £1.40 with the assumption that people are so grateful for that reduction they won’t notice that the prices haven’t gone back to where they were or even close? Though the cost of the oil etc. has reduced significantly? Then the likes of BP and Shell get to keep the record profits they post during the oil price crisis.
Are we being given a ‘new normal’ of slightly reduced prices which could be reduced much further down but someone in these large organisations has realised that they have a way of making more profit without the expense of growing audience share or innovating the product. Which means that year, the shareholders’ dividend is good and their job is safe for another year. Meanwhile, more and more people who are working full-time and all the hours God sends are still being pushed into poverty. Or small business people are tearing their hair out trying to figure out how they can make it all work and stack up. But that isn’t the large corporation bean counter’s problem. They’ve kept their job and their vast salary. That’s all that bothers them.
In the industry I currently work in, industrial packaging, prices are increasing to an eye-watering level. By 35%. I wonder if they will reduce as much now the war is, apparently, over. I will bet money they do not because there will be some other excuse as to why they only come down by, say, 20 or 25%. All of which is passed on to the consumer. Now, £0.05 on a box doesn’t sound much. But when 1,000 are routinely purchased, that means the company has to find an additional £50. They may purchase 1,000 a week which means £200 a month. £2,400 a year and that’s just for the box. That’s without the price rises for all the other component parts of what they make. Say the new hospital bed (yes, we supply packaging to companies making hospital beds) costs an additional £1,000 in total to make. What does that do to the NHS? And who pays for the NHS? Either the institution has to make cuts elsewhere or our taxes go up. Yet, within three months those additional costs could reduce by 98% if we are going from a 10% increase to 2%. How much is the manufacturer of the bed going to reduce their prices by. £980? What do you think?
So, what is the solution? Well, one thing is to not accept this ‘new normal’. To ask the questions about why the prices aren’t correspondingly dropping to the levels of, say, inflation reducing. And to churn through the mealy-mouthed explanations such as ‘oh, the lag in price changes is only now feeding through’. It’s amazing how some industries put their prices up immediately and yet there is a lag in price changes when it comes to reducing them again. With the hope, I am sure, that we will move on and forget that the prices should have dropped further. We don’t need to be blinded by economics. As a collective, there will be those amongst us who can rebut these arguments.
I know, how can we all come together and push back against this when we are all so disparate. We are all so divided. There are those who believe that big business can do no wrong, and those who believe they are the scourge of the earth with every other opinion in between. But the simple truth is, we have got to get past these relatively petty divisions. It is surely only by coming together, registering that while big business might be a necessary evil in some instances they cannot ride roughshod over us. They cannot treat us like rubbish, they cannot keep on lobbying politicians to get their own way which is usually to the detriment of the ordinary person, and they cannot focus more on shareholders than on their customers. Us. And our politicians need to grow a backbone and stand up to them on our behalf. After all, we vote them in to do just that. Or we need different politicians.
Like I said in my blog yesterday, the individual piranha doesn’t pose much of a threat but a shoal of them? Death by a thousand cuts. If we aren’t happy with the way things are, with the economy, with the way we are treated then we have to do something. And we have to do something as a collective. That’s the only way we can make the difference.
Let’s be that shoal.
Louisa Simpson 