Part 2: Profits and Poverty

IT used to be that the chieftains of capitalism would confidently preach that the ‘trickle- down effect’ was the best way to keep everyone happy: enable investors to make more money so they can spend more and employ more, their wealth — that way — trickling-down to the poor.

But history has shown and taught the exact opposite: the richer the rich get, the poorer the poor also get, resulting in the widening of the wealth gap to the current state where the world’s richest one percent are wealthier than 95 per cent of the remaining 99 per cent.

Indeed, Profit and Poverty live side-by-side, the former feeding on the latter while both grow together, but disproportionately and in diametrically opposite directions.
For example: Food, energy and house rent prices are at their highest and continue to climb everywhere while driving more people out of their breadline – so, more British citizens have had to rely on food donations and soup kitchens this year, while BP (British Petroleum) registered over US $14 billion in the first six months.

More proof: The minimum net worth of the world’s top one per cent is roughly US $11.1 million, meaning any person anywhere would need to earn an average of US $823,763 per year to join the ‘Top One Percent’ club.
Noting that the major oil companies earned over US $100 billion thus far this year, UN Secretary-General Antonio Guterres last week accused oil and gas companies of making “excessive” profits from the energy crisis sparked by the war in Ukraine, calling it “immoral” and urging governments to tax the companies’ earnings.

With the rise in oil and gas prices and the enormous profits reported by BP, ExxonMobil, Chevron and Shell in the second quarter, the UN chief said, between now and the end of this year, 345 million people will be “acutely food insecure” or “at a high risk of food insecurity” in 82 countries, an increase of 47 million due to the impact of the war in Ukraine.

Guterres also warned that “many developing countries are drowning in debt, without access to finance, and struggling to recover from the COVID-19 pandemic and could go over the brink.”
“We are already seeing the warning signs of a wave of economic, social and political upheaval that would leave no country untouched,” he said.

Guterres’ language left no room for misinterpretation as he silently condemned the effects of the capitalist system that drives Free Enterprise, making the rich richer and the poor poorer.
Yet the richest are paying top-dollar fees to lawyers and finance experts to search for and find legal ways for their companies not to pay taxes on their profits.

And the richest companies continue to show, everywhere, that in their world, the race is always for the swiftest – and not necessarily those that endure the most.
Even the Free Enterprise system has so changed that it’s less-free now than ever: where family-owned companies used to remain in family hands over generations, today any competitor can challenge and even takeover a family brand through the market manipulation, or by engaging anti-monopoly law and mechanisms.

Market manipulation needs versus supplies to influence prices, as with the price rises that followed the Supply Chain crisis that preceded the Ukraine war, shipping prices and other costs being passed-on to consumers down the line, in ways that either drain their pockets or make the products unaffordable.

Same with the ongoing wheat crisis that started with the supply chain problem and worsened after Ukraine’s sanctions and transport blockages: the scores of millions of tonnes waiting to be shipped out (and just starting from Ukraine and Russia) will undoubtedly lead to phenomenal price rises on the free market that will continue to freely raise wheat product prices out of the range and reach of the poor and poorest.
Here again, is also used to be said that ‘When the middle class does well, so does everyone else…’ but the reality of three past decades has been that middle classes are being made poorer by the same prices increases that have already locked-out the poor.

The simple reality is that the world’s longest-surviving economic system is no longer seen as a perfect model, as it’s now yielding more crises than profits in most cases, as traditionally-safe investments become more problematic and success depends in many ways on creation of artificial demands or commodity gluts, as in the case of the ‘military industrial complex’ that President Eisenhower warned about so many decades ago.

It’s not for nothing that big powers always seem willing to fan wars because the weapons producers always have permanent lobbyists (in and out of governments) paid to fan the flames of war to create the need for weapons – and in many cases, the same companies and complexes supply to both or all of the warring parties.

Take the current boiling crises in Ukraine and around Taiwan: the weapons manufacturers are fishing deep for contracts to supply the billions of dollars’ worth of arms approved and to be supplied through the military assistance programs by NATO allies, especially the USA, which has altogether topped US $100 Billion; and likewise, the multinational arms manufacturers to profit from arming Taiwan against China and boosting the defenses of neighboring Western military allies are busy fanning similar flames and narratives supporting confrontation.

Profits and Poverty have always existed side-by-side and in the current prevailing economic system, nothing like Poverty Eradication is possible, which is why the goals had to be reduced to “Poverty Alleviation’ and ‘Poverty Reduction’ – where possible and sustainable.

Poverty and Profits continue to coexist everywhere on Planet Earth today, only at different levels in different places, depending on different and common factors, with more people existing on the periphery of persistent poverty today than ever before –and the richest nations also facing inflation and recession like never before.