Interregnum, Part 4: Stuff
The inflated post-pandemic prices people love to hate are not going away. They are a sign humanity is being forced to live within its means — not its monetary means, but its planetary and social means. They are a feature of the Interregnum humanity must live through now that the global economic and geopolitical structures of the era of neoliberal US unilateralism have collapsed — with no widely accepted alternative to replace them.
Higher prices, especially for basic goods and services, are being described as “stubborn inflation.” That inflation is seen as bad by virtually everyone. It is being fought by central banks worldwide, led by the US Federal Reserve Board, supposedly using high interest rates and tight money as their weapons of choice. But monetary policy wasn’t the cause, and it won’t provide a solution.
The higher prices are better seen as a promising indication that we are starting to adjust human activities and values to be fairer to each other and less rapacious towards the Earth and its non-human inhabitants. The experience is painful, especially for those without much money. But it can be manageable with higher bottom-end wages in line with a shift in values towards what some call equity and others call sharing. A shift that also takes Americans, especially, away from wasteful consumption and heedless greed.
Cheap Stuff
Cheap stuff of all sorts, from electricity to throw-away cloths, has been a formative feature of the American economy for the last four decades. This cheap stuff was the bribe, the mood enhancer given to American “consumers” by Big Everything to compensate for the loss of good-paying jobs that US corporations — with strong government backing — moved to places with lower wages and less regulation.
From Japan in the 1960s and early ’70s, through South Korea and the other “tiger economies,” to China this century, Asian countries have adopted a rapid-development model that favors GDP growth from low-priced exports — many of them to the US — over near-term consumer benefits for their own recently urbanized people, who are too tired and confused to fight low salaries and dangerous pollution. US-based companies quickly shifted their factories to these locations, as well, or like Apple, outsourced manufacturing to other companies in these countries.
The US kept its own tariffs relatively low, its borders wide open to imports, and the dollar strong on foreign-exchange markets, while largely turning a blind eye to state aid these countries provided to their corporations. Washington’s position in trade negotiations was designed to protect the profits of globalized US corporations — with a heavy focus on “intellectual property rights” that benefitted pharmaceutical, tech, financial companies and their ilk — and put a low priority on protecting American jobs.
That was as true of Clinton and Obama as it was of Raegan and the Bushes. The claim was that laid-off factory workers could move into higher-paid service-sector jobs. It rarely worked that way. But the strategy did provide lots of cheap stuff for Americans as they slipped down the pay scale, into what turned out to be lower-paying work, much of which had previously been done at home by women off payrolls. It looked like economic growth and rising household income, but wasn’t really.
One of the marks of this global economic progression was low wages virtually everywhere. Another was high profits for globalized manufacturers and retailers that could troll the world for the cheapest labor and mushiest pollution controls. A third was an ever-widening skim off the top of those corporate profits by an ever-more-powerful financial sector. All of it was facilitated by the US government, which increasingly used the financial system along with its massively expensive military machine as enforcers of its unilateral socio-economic dominance.
Side effects included ever-greater inequity in earnings that mirrored the inequity between wages and corporate profits, and ever-greater inequity in wealth as the financial sector wielded power over manufacturing — Wall Street over Main Street, in American parlance — and the stock exchange and complex financial machinations took over from corporate profits as the preferred pathway to really big riches.
Broken Stuff
That globalized, neoliberal, US-dominated economic system is now definitively broken. China didn’t break it. Nor did Russia or the Global South. Washington broke it, first with Donald Trump wielding the club of tariffs and import bans, while promising factory jobs to low-earning US service-sector workers. Besides better pay, an unspoken but well understood notion was that these would be macho jobs, not humiliating women’s work of the sort American men had increasingly been pushed into.
Joe Biden has followed in Trump’s trade-policy footsteps, supposedly wielding a more selective sword in place of Trump’s blunt club. But the intent is much the same: to wallop China so that it doesn’t replace the US at the top of the economic heap, and to bring factory jobs back to the US — in Biden’s case with labor unions in tow.
The system that Trump and Biden broke was a bad one. It was bad for most people, for the climate, for the planet generally. Breaking it is in many ways a positive step. But the versions of factory nostalgia Trump and Biden have each adopted as the cover story is a false portrayal both of how and why factory jobs fled the US in the first place, and of what Americans should expect as the old, so-called post-industrial system fractures.
Old-style factory jobs are not coming back in large numbers. The US shed over 7 million jobs in manufacturing between the peak in 1978 and the low point after the 2008 recession. They shed those jobs in line with US international trade and investment policies, not because of some Chinese Communist Party plot. And whatever happens in China, robotics and AI will see to it that even such factories as do get built in the US will employ only a tiny percentage of the number that were lost.
Full-Cost Stuff
Also, the cheap stuff that was the consolation prize for losing those factory jobs will get a lot more expensive. So far, the Trump and Biden administrations have not slapped tariffs on the clothing, electrical and electronic devices, and other basic goods that the Chinese historically made so cheaply and well. They are aiming for the Clean Energy and the next-generation electronics that will shape the post-carbon era, in the process guaranteeing that US energy and electronics will be relatively expensive.
In the meantime, the biggest, most persistent price increases in the US over the last three years have been in basic necessities: food, clothing, housing, energy, and insurance. The links from these commodities to a collapsing global economic system aren’t always clear-cut, but they do exist. And while those links are complex and go in many directions, it’s often possible to pick out the equivalent of tap roots, developments that have had a deep impact and guarantee prices will remain elevated.
Also, the impacts are frequently exacerbated by the climate crisis.
Take food. Trade disruptions have been a huge factor in pushing up prices Americans pay not just for imported food, but also for the home-grown variety. Globalized agribusiness chains dependent on oil, natural gas and petroleum-based fertilizers are a critical feature of the dying system. Many of these supply chains were disrupted by the pandemic in 2020. Others have been definitively broken since Russia’s 2022 invasion of Ukraine and the US and EU sanctions on Russia that followed.
Both Russia and Ukraine were major exporters of wheat, other grains, and cooking oils. In addition, Russia supplied copious amounts of fertilizers, crude oil and natural gas, and refined oil products such as diesel and gasoline. Under the global system, it doesn’t matter who bought the Russian and Ukrainian stuff. Less supply pushes up prices everywhere, including the domestic US market that had never depended heavily on Russia.
Climate change has also played a role in food inflation, reducing crop yields by floods and droughts. As have diseases such as swine fever and avian flu spreading among massive numbers of animals raised in crowded conditions, and use of as much as 40% of US corn for making ethanol to replace gasoline. Big Ag is one of the big bits of globalized capitalism that is failing. Smaller-scale, more localized food production can replace it, but without the poisons, pollution, and subsidies that went with the old model, food will cost more — as striking farmers worldwide have been loudly telling their governments.
Rising housing costs also have a strong tap root in the collapsing global system: The widening inequity in incomes and wealth virtually worldwide. Covid motivated those on the winning side of that gap to buy second, third, or even fourth homes. This ownership has outlived the pandemic. The spare houses or apartments — many of which sit empty most of the time — push everyone else looking for a place to live another step down the increasingly crowded housing ladder.
The link between soaring prices for insurance and climate change is even more starkly evident. And even less amendable to being fixed in a way that brings down prices.
Less Stuff
Which brings us back to degrowth. The higher prices that will be a feature of life in the Interregnum hopefully mean that economies will become more egalitarian and there will be less wasteful “discretionary consumption.” If everything isn’t made where its production is most efficient and its cost lowest, there will be less stuff in total. If everybody is to have the bare necessities, the folks at the top of the heap will have to do with less. Degrowth will hopefully develop almost of its own accord.
Less stuff means fewer emissions and less poisonous pollution. That, in turn, will hopefully mean more species will survive on land and in the sea. Maybe one of those species will even be humans.
Interregnum, Part 1: Collapse https://medium.com/@sarahmiller_22747/interregnum-part-1-collapse-1e6331c6cf0b
Interregnum, Part 2: Inaction https://medium.com/@sarahmiller_22747/interregnum-part-2-inaction-cf892658b896
Interregnum, Part 3: Hope https://medium.com/@sarahmiller_22747/interregnum-part-3-hope-a17dfb8249db
