High prices! For everything! UK / USA / EU countries heading for recession! So scream the newspapers and most of the media. Yet there are 3 aspects of all of this paranoia that really frustrate me – even beyond the fact that it strikes me that the media is partly to blame for stoking fears of a downturn. Anyway, I digress. The 3 half-truths:
(1) Rise is oil prices is due to demand from India and China
So the argument goes those countries are growing strongly, and their demand for oil is equally rocketing up. As supply is relatively tight, so the price of oil per barrel rockets. According to this excellent table by Snowflake (hat tip: Paulie) 33.9% of the growth in the daily number of barrels oil is due to China and India, while the statistics also highlight a number of other additional interesting developments – how Europe (especially Germany) has managed to economise, while the USA, Saudi Arabia, Singapore and others have not. So while India and China are one cause, developed countries not reducing their dependence on oil is a further cause – so don’t just point the finger at 2 countries.
(2) Rise in food prices is due to demand for biofuels
Undoubtedly some of the rise in global food prices is due to some fields being turned over to the production of biofuels, especially in the USA. Some of the price increases are also due to the price of oil – see (1) above. But the issue that politicians and the media always fail to look at is what people are actually using the grain for that is harvested in the world. More and more of it – at a rate even faster than the increase in biofuels – is being used to feed animals, rather than to feed humans directly. Have a read of this by George Monbiot. So, as well as looking at biofuels, the world needs to urgently look at the amount of meat consumed and how the animals reared are fed. So become vegetarian, rather than ranting about biofuels.
(3) Everything is more expensive today than it was in the past
Seems everywhere people are having a gripe about decreasing spending power, in part as a result of the issues highlighted in (1) and (2) above. But is it true? Belgian research shows that it takes an average worker 34 minutes to earn enough money to buy 1kg of butter in April 2008, versus 1 hour and 2 minutes in 1983 and similar trends are shown for most products – even 40 litres of petrol takes an average worker less time to earn than it did in 1983. Have a read of the article in French here. So while things might not be as easy as they were 2 years ago, they are still far from hard in Europe.
So there you are folks. Don’t get down about all the downturn stuff, as it’s not as bad as you might think, and some of the ‘facts’ on which everyday argument is based are far from the complete picture.