Local Warning Signs of the Cliff Edge

[JoeLeg]

Jaywalker, not sure if you're responding to me or someone else, but let me say this.

The fact that Brexit hasn't occurred yet really is important in this context, because if we're purely discussing food prices then it's important to remember that we're still at the mercy of the same issues as everyone else. The only exception to this is the drastic fluctuation in the pound since the referendum, and that's a seperate issue. Sterling might slowly recover over time, or it might not, who knows? But long term effects of us leaving the EU are unknown right now because it hasn't happened.

The points you make - pressure on wages, will immigration change and so on - are very real concerns but not part of the current discussion; they may well be relevant in two or more years time of course, and let's not forget the concerns of farmers in the UK who are dependant on subsidies (as are the consumers who then buy their artificially low-prices food which in no way reflects the actual cost of production to the farmer), and who are worried that the government, despite what they say, will not in the long term help them survive post-exit.

But right now, today, the issues surrounding the price of food have far more to do with the fact that food inflation is irresistible. There's too many of us, on a global scale the food is too unequally distributed, there's waaaay too much food waste and a lot of people in the first world just don't want to pay much for food. It's been rising in price inexorably since the year 2000, which was when the cost of food in relation to people's wage was at its cheapest. And it will rise further. The fact that this is a global issue should some demonstrate that Brexit (currently) has very little to do with it.

Now of course that may change, depending on what deal we get. But the issues are so complex (and partisan) that I suspect it will be impossible to unpick the coming Gordian knot of competing concerns between consumers, suppliers and producers/farmers.

I for one am very worried.

[JohnL]

jaywalker Wrote:

-------------------------------------------------------

> The significant Brexit effect will be if the May

> government fulfills its promises over immigration.

> You would then see wage pressures of 1970s

> proportions - or is this too "nonsense"?

IDS has a cunning plan I'm afraid and it involves free work.

[????]

The EU CAP actually means we are overpaying for our food already - a proper free market* in food would see a reduction in food prices, especially staples.

*I understand that this is easier said than done

[JoeLeg]

I would love for you to be right, but I'm afraid I'm extremely sceptical that food prices will ever come back down meaningfully.

There is simply now where near enough truthful discussion about how much it costs farmers in this country to operate. Costs of production are lower elsewhere, but why would they charge us less than we've already been paying. We're dependant on imports for food - they know that.

I will be very happy to be proven wrong, and make humble pie with cheaper ingredients.

[JohnL]

JoeLeg Wrote:

-------------------------------------------------------

> I would love for you to be right, but I'm afraid

> I'm extremely sceptical that food prices will ever

> come back down meaningfully.

>

> There is simply now where near enough truthful

> discussion about how much it costs farmers in this

> country to operate. Costs of production are lower

> elsewhere, but why would they charge us less than

> we've already been paying. We're dependant on

> imports for food - they know that.

>

> I will be very happy to be proven wrong, and make

> humble pie with cheaper ingredients.

Even in a free market, some farmers (maybe a lot) would

go out of business, so reducing supply and increasing

prices (unless we just buy from abroad - which we do a lot

anyway)

[jaywalker]

The problem is that inflation in the past has been triggered by exogenous shocks (and Brexit is nothing if not a shock!).

So I agree that the inflation from the initial fall in sterling is a one-off. The trouble is that this feeds into positive feedback loops. The destruction of the labour market through severe restrictions on immigration greatly amplifies one of those (rather like the Tories' attack on Trade Unions in earlier inflationary episodes I fear).

Then there are the further falls in sterling to come ... (did you track the pound today? dear God).

And the abolition of farm subsidies ... (do we really think these are going to be 'made up'?)

And to some extent independently, the increase in energy bills, tv subscriptions, insurance tax, you name it.

[????]

Bizarre linking attacks on unions with fuelling inflation - Wilsons failed 5% wage policy of the 70s to try and curb inflation was continually thwarted by unions, when they had the power -frankly rubbish economics there jay. The Tories attack on trade unions was arguably a factor in the reduction of 70s hyper- inflation rather than the other way round.

[jaywalker]

???? Wrote:

-------------------------------------------------------

> Bizarre linking attacks on unions with fuelling

> inflation - Wilsons failed 5% wage policy of the

> 70s to try and curb inflation was continually

> thwarted by unions, when they had the power

> -frankly rubbish economics there jay. The Tories

> attack on trade unions was arguably a factor in

> the reduction of 70s hyper- inflation rather than

> the other way round.

????, I guess you are not really doing anything more in your posts than mooing. Perhaps in the post-truth world this is all we can do now.

Thatcher subscribed to Monetarism, the key doctrine of which is that inflation is nothing whatsoever to do with unions. "Inflation is always and everywhere a monetary phenomenon" (Friedman): contrary to this, the Heath government attacked unions for "causing" the inflation that came directly from the monetary loosening of the Barber (Chanceller under Heath) boom - at least according to Thatcher.

Please do tell me where I am wrong here :-). I am of course completely economically illiterate ...

[????]

Heath's attack on the unions was a spectacular failure - the hyper inflation of the 70s was accelerated by the failure of Wilson's Income Policy - which failed because of the unions.

[JohnL]

???? Wrote:

-------------------------------------------------------

> Heath's attack on the unions was a spectacular

> failure - the hyper inflation of the 70s was

> accelerated by the failure of Wilson's Income

> Policy - which failed because of the unions.

But inflation subsided in other countries too

(Germany still has workers on the board etc.)

Oil was a factor then,

http://www.macrotrends.net/1369/crude-oil-price-history-chart

(I think that is already adjusted for inflation)