Whatever You Do, Don’t Say Recession
On his podcast this month, Joe Rogan, accompanied by his guest Chris Williamson (neither of whom, it goes without saying, are qualified economists or experts of anything other than spewing nonsense — Williamson is a self-professed “podcaster, Youtuber, and club promoter”), claimed that “The Biden Administration Redefined Recession.” A change on the Wikipedia entry for recession sparked Williamson to claim that the US is in a recession, but that the Biden administration is censoring the use of the word, and has even, 1984-style, changed its definition — Williamson states: “The reason that you attach a sequence of letters to something is to represent what that thing is. You don’t change reality by changing what those words actually mean. But if you can’t control the economy you might as well control the language.” Or as Rogan incongruously puts it, “Well that’s gaslighting.”
By the classical definition (two consecutive quarters of negative GDP growth), America would be in a recession — Rogan and Williamson argue that this Wikipedia change has occurred at the behest of Biden so that the term recession can’t be used against them in the upcoming midterms, and though its true that recession is a weaponized term during election time, (a) they did not change the definition of recession and (b) the reason we aren’t hearing the Biden administration declare the US economy to be in a recession is for a different and more important reason. Recessions in the US are officially declared by the National Bureau of Economic Research (NBER), who use a combination of different variables to determine whether a recession has occurred (e.g. GDP contraction, but also unemployment, inflation, etc.) Before Biden and even the 2008 financial crisis, in 2003 the NBER clarified that their “procedure differed from the two quarter rule in a number of ways”. You mightn't like it, and it certainly has its problems, but it has been the same under Bush, Obama, Trump, and Biden — it is not some Orwellian manipulation of language and reality performed by sleepy Joe.
But let’s say hypothetically the US, or any other country, is actually in a recession — the leaders still wouldn’t say so until its glaringly obvious. Why? Confidence. The market is based on confidence and ‘pack mentality’ — sometimes businesses just do well because investors rush to whatever figurehead they have confidence in (e.g. Warren Buffett). Leaders are therefore apprehensive about declaring recessions out of the fear that the market will react to the label like a deer in the head lights, because that term does not instil confidence. Human beings respond to things you say — that’s just a fact. Hence you see Chairman of the Federal Reserve Jerome Powell declaring on TV that he “does not think the US is currently in a recession” — you can trigger a recession by declaring a recession, its a self-fulfilling prophecy.
In the aftermath of COVID-19, many nations are experiencing a recession or its preceding symptoms, primary amongst them: inflation. Inflation is the increase in prices and the fall in the purchasing value of money. Inflation rates, across the world, have skyrocketed— hence we are hearing stories about crazy price hikes in food, electricity, gas, fuel, etc. The UK, for example, is expected to reach an inflation rate of 11% by the end of the year (i.e. things will cost 11% more than they cost this time last year). Why are inflation rates so high? Mainly because of the rising price of energy due to the Russian invasion of Ukraine (specifically causing an increase in the price of gas, which in the UK has doubled since May), as well as overall supply chain issues in the aftermath of the Covid pandemic, not to mention the UK’s self-inflicted handicap in the form of Brexit — which has only increased the prices of imported goods. In other words, inflation is high because of a supply and demand issue. There’s a lot of demand for things we need to survive… such as food, gas, fuel, electricity…but simply a breakdown of distribution.
So the simple way to resolve this issue then would be to increase supply right? That is the common sense approach, but instead our leaders seem to be trying to reduce demand. How? Killing people by starving or freezing them to death — oh sorry I mean “letting a bunch of people die” — and also creating a more desperate workforce. Let me explain. The Bank of England on their official website has really said the quiet bit out loud. Answering the question “Why is inflation so high?”, the Bank of England states “Businesses are charging more for their products because of the higher costs they face. There are more job vacancies than there are people to fill them, as fewer people are seeking work following the pandemic. That means that employers are having to offer higher wages to attract job applicants. And prices for many services have gone up.” Imagine arguing that workers, the people who produce any value in the society we currently live in, receiving higher wages is a bad thing and the cause for all our woes. It isn’t. The issue is not workers being paid higher wages, nor expecting to be paid more, the issue is corporate greed over public need. Why the Bank of England and banks across the world are increasing interest rates as a way to tackle inflation rates is very simple — if interest rates are increased, it’ll be more expensive to borrow money, so less people will start or invest in businesses, therefore there will be less jobs created, which means the labour market becomes more competitive with fewer vacancies, the workforce becomes more desperate and will accept lower paid work, thus having less spending power and not being able to afford basic necessities, leading to a decrease in demand because some people die from that and as wages are depressed, more people can’t afford the inflated prices, leading to corporations lowering their prices back down so people can afford it so they can keep their profit margins high, thus ending inflation. This is why you have the Bank of America stating in a leaked memo that they hope conditions for American workers will worsen, or as they put it in their sanitized economic language, “By the end of next year, we hope the ratio of job openings to unemployed is down to the more normal highs of the last business cycle,” and that they wanted to “help push up the unemployment rate.” They hope workers will lose leverage in the labour market.
Economists in these banks think of human beings as assets, capital stock, a resource — but in reality, we are the human beings who their policies negatively effect! Jerome Powell literally stated his goal with the Federal Reserve is “to get wages down” — these people don’t blame the proxy war between Russia and Ukraine and the sanctions that come with that, they blame you, the worker, for supposedly making too much money, and for knowing your worth. These people refuse to even consider solutions that would decrease corporate profits (hence in the last energy price scare, former Chancellor of the Exchequer, now Tory leadership candidate, Rishi Sunak did not implement a windfall tax on corporations who have seen record profits in the past two years), and thus if corporations aren’t taking a hit in any capacity, somebody’s got to pay, and that somebody is the workers — that’s you! They’ll starve you or freeze you out of unemployment into jobs that pay ridiculously low wages and offer inhumane conditions. The solution has got to be relevant to the problem, which is that prices are high — the solution to that, according to the banks, is not increasing supply, but starving the population until they can’t afford food anymore.
And who is raising the prices? Well that’d be corporations like Shell, who paid £0 in tax on their UK oil and gas production in 2021, instead receiving £100 million of taxpayer money from the UK government, or BT Group who made profits of £1,300,000,000 in 2020–21! Corporate consolidation makes it very easy for them to do this through “price leadership” — the legal way of saying “price fixing” which is of course super illegal. Inelastic goods — by which I mean goods that can have their prices raised without effecting demand — like food or gas, should be regulated. And, in most countries, there are such laws to prevent this type of price gouging during localised natural disasters. But when you have an international natural disaster like a pandemic, which tanks the global economy, it isn’t considered price gouging, its just the free market working as intended, performing the mythologised ability of self-correction and so corporations can just keep upping the price, aware that the demand for the things we need to live is never gonna decrease. In our dogmatic capitalist system, the value of something is not necessarily defined by how much labour value was put into it, value is assigned by what you are willing to pay for a particular product — its made up, but if people are desperate enough (demand is high), you can increase it without even increasing supply, hence we have arrived at this kind of inflation. Why, during a time of massive supply chain failure, were corporations reporting record profits? Because they raised prices higher than to just account for the additional production and transportation costs…they set prices higher to make money. You’re being punished by massive corporations for the crime of not guzzling enough oil during the pandemic — its to make up for all their lost earnings because in their opinion governments didn’t give them enough money, enough subsidies, enough tax breaks. So who gets punished? You. When public services like water, healthcare, energy etc. become privatised, governments just become a funnel to take your money in the form of taxes and give it directly to corporations.
Only way to stop this overreliance on massive corporations for our literal survival is to nationalise them. It really ought to go without saying but corporations are not loyal to their consumers, they aren’t loyal to the workers, to the people, to you or me. They are only loyal to one group: their shareholders. Big corporations aren’t going to cut into their profit margins by increasing supply. Supply chain issues caused by sanctions and COVID should have been resolved by now via getting domestic supply up. In America, oil and gas companies have over 9,000 permits to drill on federal land that aren’t being used. Why? Building new rigs and drilling new wells reduces returns next quarter — why are we expecting big corporations to willingly lower their own profit margins? Because capitalism makes you think that’s okay, and that the workers striking to improve their standard of living are the bad guys. The more disposable workers are the easier it is to depress wages and bully you, the only way to protect yourself in a capitalist economy is through unions, collectivising — but big corporations don’t want you to do that, because then they can’t shank you into dust to keep their profits high. So they villainise union leaders like Mick Lynch and Eddie Dempsey of the RMT through their media influence. They fear labour leverage because that cuts into profit margins — its class war. High wages are not the issue, its high profits.
