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The global recession has put all our problems into perspective. Before the recession, we faced problems with high rates of unemployment, poverty and general lack of funds, but now the problem is much worse. The problem has come to the forefront of everyone’s discussions, but what exactly are the problems and how can we fix the market problems sooner rather than later.
The problem surrounding rising prices has been one that has been around for decades and will be one that is around for years to come. Prices are on the increase but the wages to support the prices are not rising at the required rate. The simple fact of this problem is more and more people are being forced to live below the poverty line. In one recent study, it was shown that over 60% of people lived below the poverty line in India, and this figure is increasing around the world on a daily basis.
This problem (like many) has to go to the government. While prices for some products will continue to rise, it never really gets brought to the forefront of government discussions until the problem is almost irreversible. For example, before the recession, petrol prices in the United Kingdom stood at around £1.29 per litre, the government then said that prices did not need to be this high during the recession; therefore, this brought the prices down to around 89p per litre. Now with people seemingly thinking that we are on the route to recovery, the prices have continued to rise over the last year from 89p to £1.19. It seems that until the government places some sort of cap on big businesses profiteering, we will always be under the same pressures.
Due to global inflation, people have been outsourcing their work to people in other countries. This is taking away jobs from seemingly ″richer″ western countries. It seems that if this continues to be the case the jobs will simply not be available in the western countries and unemployment rates (which are already high) will continue to rise, due to lack of work. This problem does not nearly help the recession and in fact, makes it much worse for western countries.
It seems like we are in a catch 22 to a certain extent. We cannot afford to pay higher prices for work, so we outsource this work, however, by doing this we are instantly cutting off jobs to places where prices are on the increase. By doing this the prices are forcing people to live below the poverty line. It is time big businesses took some responsibility for the matter as well as the governments.
The scarcity of natural resources such as gold, oil, and lumber are currently leading to all sorts of problems. Unfortunately, due to the lack of the above commodities, everyday prices are on the increase, which is causing further problems. The problem stems from the big businesses because there will always be people that continue to pay an inflated rate for ″luxuries″ such as oil. This means that companies will continue to raise their prices. We only need to look at the petrol price situation in almost every country to understand how the rise in prices an issue is already.
Commodities markets have been around since the dawn of time, even if it was not to the extent that it is currently. Everybody can now buy and sell oil, gold, and other various commodities at a click of a button. It has got to such an extent that many believe when the price of oil is at its highest is when the world is in its best financial situation, simply because that is how much people can afford to pay for oil. This is not the case, oil prices increase, but people continue to buy oil for energy sources, this does not particularly mean they can afford what they are buying because in most cases people are buying their commodities on credit. This is leading to uncontrollable personal debt, a problem that originally caused the recession. It seems that we are going the right way to fall straight back into an even harsher recession if the problem is not dealt with now.
Unfortunately, there is no quick fix; the answer does not lie with capping prices, even though this may help to some extent, while prices are on the increase all prices have to rise otherwise some industries will be left behind. It seems that we need to become smarter about how we extract our natural resources. At the moment we spend billions of dollars a year on extracting natural resources and this adds to the price of all our commodities. We need to be working smarter and not harder, which calls for callous research to help the underlying problem.
If you want to find out about the poverty in the third world countries, check out our article on this topic: How does poverty affect the third world countries?
[Photo from Unsplash]