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High prices, shrinking wages & juicy profits

Published May 10, 2008 7:18 AM

The working class everywhere is taking a huge pay cut. It comes in the form of high prices for necessities, especially food and fuel, and is affecting workers, the unemployed, seniors and anyone else who has to pay for living expenses—from Albuquerque, N.M., to Nairobi, Kenya, to Jakarta, Indonesia.

In the United States, the prices of wheat and soybeans have doubled in the last year while corn and milk have gone up by about 25 percent. Meat and eggs, both dependent on grain for feed, have followed suit.

But a comparison with last year doesn’t tell the whole story, because 2007 was itself a year of big inflation in food prices.

The steep rise in gasoline prices is also tearing a huge hole in many workers’ budgets, since U.S. public transportation is woefully inadequate, even though the population is very spread out and people often live far from where they work, shop and go to school. And then there’s the rising cost of heating oil.

It all adds up to big problems for the working class, especially those already living near the edge. And it comes at a time when workers’ real wages and incomes are continuing the long slide downward that started over 30 years ago.

You don’t have to read an article to know this. You’re living it already. But you may want to know why this is happening, and what can be done about it.

The first thing to know is that rising prices are not inevitable. Countries with planned—i.e., socialist—economies have kept prices remarkably stable, beginning with the Soviet Union, continuing with People’s China, until it opened up to the world capitalist market, and still in Cuba and the Democratic People’s Republic of Korea today. This is because prices there have been set not by a capitalist market but by the government—and food prices have always been set deliberately low so that no one goes hungry.

All the socialist revolutions have occurred in the less-developed countries—that’s where mass struggle has been the greatest and the capitalist class the weakest—yet they achieved an end to hunger despite starting from a very low productive base. However, their underdevelopment left them vulnerable to intense military and economic pressure from the imperialist countries.

What’s so striking—really amazing—about a country like the U.S. is that hunger is growing here amid great abundance. Workers’ wages have been going down even though productivity continues to advance, and the assets of individual wealthy people are now measured in billions and even hundreds of billions of dollars. Homelessness is rising as the inventory of unsold, brand-new, single-family homes remains at around half a million, despite a 13 percent decline in the median price for these homes over the last year.

Look around any supermarket. There’s no shortage of meats, grain, fresh fruits and vegetables or dairy products. And the workers who do the sowing, picking, processing, slaughtering and transporting of these foodstuffs aren’t making any more money than before—whether they work in the U.S. or in South America.

So where is the extra money you are paying at the cash register going?

The excuse given for the high prices is that oil now costs a lot more than it used to. And that’s true. In fact, the price of oil on the futures market just hit $120 a barrel. But don’t blame the oil-producing countries. They are only one small part of the process by which petroleum products reach the market. The major players are the giant transnational oil monopolies. And, at a time of economic downturn, their profits are still in the fabulous range.

Take Exxon Mobil. It reported profits of nearly $11 billion in the first quarter of this year—a 17-percent increase over the same period last year. Now that’s nice. Wouldn’t you like to get a 17-percent raise? But evidently that didn’t satisfy Wall Street investors, who were expecting more and sent the company’s stock down on the news. They had been hoping for at least $11.7 billion, which the company earned in the last quarter of 2007.

But what about agribusiness, which is directly bringing us high prices? The biggest U.S. agricultural company, Cargill, reported in mid-April that its profit of $1.03 billion in the first quarter was an increase of 86 percent from that of a year ago.

Archer Daniels Midland, another grain monopoly that is benefiting from the growing ethanol market, said its earnings rose to $517 million in the quarter ending March 31—a 42-percent jump over last year.

One-fourth of the corn grown in the U.S. is now being used to produce ethanol. This diversion of land away from food crops is contributing to the spike in world food prices. Adding ethanol to gas was supposed to overcome shortages and keep fuel prices down. Obviously, it hasn’t.

The lesson should be clear: the capitalist market doesn’t solve the workers’ problems. In fact, it causes them. A “tax holiday” on gas over the summer, as some candidates are proposing, is a teeny-tiny band-aid over a gaping problem and would leave the state budgets in even worse shape.

Let’s face it. We need a revolution to get rid of the corporate parasites and reorganize society to meet people’s needs. In a time of awesome global climate change, expanding imperialist wars, and now a serious recession or depression in the works, nothing less will do.

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