21/06/2022
We are all going through a lot of turmoil right now. We are coming out of nearly two and a half years of being locked down and restricted because of the global pandemic and now we must deal with increases in the cost of living due to inflation which is affecting so many.
This has been caused partly by the invasion of Ukraine by Russia which has created an enormous price hike in the cost of energy in terms of oil and gas production, primarily because the world previously came to rely on Russia as a major provider of both commodities.
11% of the world’s oil was produced by Russia before the war began in February earlier this year and it was the third largest exporter.
In terms of natural gas, Russia was the world’s second largest producer with over 24% of the world’s supply coming from them alone. No wonder that the price of energy has increased so much since February as countries have looked to move to other suppliers.
On top of that, companies which suffered during lockdown have increased their prices as the world opens up and people are beginning to spend again. However, this is coming to a grinding halt as many of the world’s population now find themselves with less in their pockets.
For so many, the financial struggle is real and it is becoming impossible to make ends meet. Incomes for ordinary people have stagnated while prices are increasing at breakneck speed. Whilst most economists forecast that the rate of inflation will come back down, it is already causing unbearable pain to some of the poorest in every nation.
The irony of the situation is not lost on decent folk when the richest people on the planet seem to have made billions from the effects of the pandemic and it feels that they are also exploiting the energy crisis to line their own pockets. Corporate profits have been soaring.
While the richest 10% of adults in the world own 85% of global household wealth, the bottom half collectively owns barely 1%. Even more strikingly, the average person in the top 10% owns nearly 3,000 times the wealth of the average person in the bottom 10%.
During my lifetime, the division between rich and poor has become wider and greater. The expression that money goes to money has never been truer than now and those who are poor find it almost impossible to create wealth whatever they do.
This situation is exacerbated insofar as low-income countries’ share of global wealth has changed little from 1995 to 2022, their total remaining below 1% of the world’s wealth, despite having around 8% of the world’s population.
Worse still, over one-third of low-income countries saw declining wealth per head. Countries with declining wealth tend also to degrade their base of renewable natural assets. For low-income countries, appropriately managing renewable natural capital, which accounts for a quarter of their wealth, is crucial.
“How does this affect us?” Well, the planet is suffering as the richer nations use so much in the way of these renewable natural assets produced by poorer nations. It often seems that the wealthy have little concern for the destiny of so called third world countries.
There is little doubt that the rich are getting richer at the expense of the poor globally. Moreover, it is no wonder that the planet is suffering from increasing climate change if the most powerful have the resources to be able to continually turn their back on the poorest people in the world.
There is scant regard to those poorer nations which are suffering from worsening flooding or soaring temperatures or where the rain forests are being destroyed around the world to feed the needs of an increasing world population.
Energy companies are making big profits during the current energy crisis in the same way that health companies made record profits during the pandemic. As the financial crisis deepens, no doubt bankers and financial institutions will find ways to exploit the situation to line their pockets.
The biggest problem is how corporations are structured with shareholders and investors being prioritised over their customers, i.e. ordinary people. Many of us seem to believe that the stock markets represent the economy of a nation, but these markets only represent the wealth of investors, and this is arguably completely at odds with the needs of their customers.
Perhaps now is the time for billionaires to take responsibility for the actions of their peers and share some of their wealth to reduce poverty around the world.
This would certainly help to alleviate some of the challenges faced by poorer nations which in turn just could reduce some of their problems at home. Otherwise, a series of wealth taxes may need to be introduced soon.