1. Time to time people get laid-off. There is nothing unusual about it as products or services companies produce depends on supply and demand curve. Recently lots of people lost their jobs in the oil field as oil prices continue to drop and are below 30 dollar a barrel now.
2. Media is telling you that oil prices have dropped because some genius people have invented new ways to extract oil known as shale oil production. But oil prices have also dropped because all countries who produce oil continue to dig same or more amount even though the demand for oil has dropped. Moreover Iran can also produce more oil now and sell in international markets.
3. The demand for oil has dropped greatly as previously countries whose economies were growing at a strong pace by producing manufacturing goods to supply to the west and other parts of world are experiencing decline is their economic growth. China primarily.
4. This reduction in economic growth rate of countries that produce manufactured goods have affected the growth rates of countries that supply them oil and raw materials like Venezuela, Nigeria, South Africa etc.
5. So these manufacturing based economies are producing less goods now because people in the developed world don't have the same purchasing power once they used to had. It is the middle class of developed world that consumes most of the manufactured goods that production centers of the globalized world we live in produce. Basically these production centers are countries where production costs like labor, energy, taxes etc. are cheap and big enterprises can save lot of money.
6. Since middle class in developed industrialized world is getting poor and consumes less manufactured products and services now, middle class in 2nd newly industrialized world also gets poorer as they will produce less manufactured goods and services and so will people from countries who produce oil and raw materials to keep the manufacturing cycles running.
7. Thats because middle class in developed world is facing recession and governments in 1st world are paying less to their middle class employees in public sector and they are also forced to pay more and more taxes that are needed to run the country. This is known as austerity.
8. In 1930's we also had a great recession. But Franklin D. Roosevelt (who was most famous American President and served for 4 terms) decided to take money from rich people and built a security net or welfare structure. Otherwise America might had had a social revolution then just like Russia had under Lenin in 1917. Roosevelt did that because America had a strong left wing then. America don't have strong labor unions now as less than 5% people in private sector join one.
9. Roosevelt even proposed 100% top tax once. Which means that all the money that rich people make above a certain amount will be taken from them by government and will be spent on poor who are jobless or need healthcare or education. This is also what we can call communism. The public sector provided recorded jobs to recorded number of people and country made recorded progress.
10. Roosevelt took 94% tax from rich people. He also took 1.5 dollars from enterprise for every 1 dollar he took from individuals. Now a days American Presidents only takes around 38% tax from rich people and 25 cents from enterprises for every 1 dollar from individuals. And even that 38% is largely compromised as rich people and enterprises hire clever accountants and lawyers who help them get away with most of it.
11. Same is true when it comes to countries. In London Agreement 1953 rich governments waved off half the debt of war struck Germany and made the rest easy to pay. But now banks are bigger than countries. For example Greece is forced to austerity because it is important to pay back loans her government took from banks no matter how many people loses jobs. Unemployment in Greece before Syriza came in power was above 25%. It is even more now.
12. American President has lot of power so in theory he can fix all this by making rich people pay more taxes. But to become an American president is a marketing contest and it requires lot of money which these rich people give for the campaign. This is part of term called lobbying and such people are called lobbyists who push the agenda of enterprises they represent during the law making.
13. In developed world governments are chosen by one person one vote rule but these big enterprises run on one share one vote rule. So rich have more power than poor in firms and they make decisions that can make them richer and maximize their profits even if it involves cutting jobs by outsource production to poor countries with cheap labor and polluting oceans to transport the goods back.
14. In globalized world we live in most business affairs are managed by big enterprises and they make decisions to increase their profit, not to serve the community. These enterprises have representation everywhere from media to academia and they influence and manipulate information from evening tabloids to most prestigious journals. They shape general public's opinion and indirectly control our thinking and spending patterns.
15. In old days working class people organized together and made labor and trade unions. This made sure that enterprises can't make greedy decisions that affects workers livelihood. Moreover states created big public sectors and nationalized and monopolized key services like post office, telephony etc. and employed people to work in them. State also passed laws that made it possible for public sector to compete and retain a large work force. For example now a days anyone can open postal services and can do better and cheaper than state owned post office with much lesser employees and make post office go bankrupt eventually causing thousands to lose job. Such rules governments used to set are called regulations.
16. Remember 1% richest people have more wealth than 99% poorest. There are more corporations in top 100 economies than countries. A mere 147 corporations which form a super entity control 40% of the world’s wealth. These 147 super-connected companies have same elite that constitute 1% of the top 1% global population.
Part-2 Coming Soon
By T M Sheikh
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