There's some very interesting economic data coming out of Spain, where they've managed to get inflation much more under control than most of Europe (1.9%, compared to 6.1% in Germany, and 7.9% in the UK).
Spain is part of the Eurozone which means that they have no control over their interest rates, which are set by the European Central Bank, so it would be impossible for them to attempt the policy of repeated interest rate hikes the UK economic establishment are intent on.
Even if they wanted to, the Spanish government are prevented from trying the (economically insane) British strategy of deliberately provoking a recession, then using that as an excuse to drive down social security and workers' wages, hoping that further collapsing the living standards of millions of people will drive down economic demand and therefore lower prices.
So if their interest rates are the same as other European countries like Germany, how have Spain got their inflation rate to drop so dramatically in comparison?
The answer is market intervention.
They've imposed proper energy price caps, subsidised fuel, dramatically reduced public transportation costs (to the extent of making buses and metro services completely free in several regions), introduced price controls on staple foods, brought in excess profit taxes, and maintained rent controls to prevent landlords from using inflation as an excuse to gouge more unearned profits out of their tenants.
With the exact same currency and interest rate as Germany, this makes for a very interesting case study, which shows that direct market intervention is effective at reducing inflation.
So if market interventions work, why aren't the powers that be in the UK doing it?
The answer of course is that the entire UK establishment class is infested with hard-right Thatcherites who vehemently oppose market interventions, unless they're to protect the assets of the rich of course (bankers' bailouts, quantitative easing, energy market bailouts and subsidies, the £65 billion gilt market bailout ...).
Even when it's obvious that the most effective way to combat inflation is for government to intervene to bring down costs, they're choosing to hammer away at the austerity button again.
In 2008 the banks crashed the economy with their reckless gambling, and then the Tory government told us that it was necessary to smash public services, vandalise the social security system, and repress workers' wages in order to get the national debt down.
Thirteen years later the debt has tripled, meaning their austerity prescription absolutely failed to cure the problem they said it would.
Yet now they're intent on ignoring the case in favour of price controls to prescribe exactly the same austerity cuts and wage repression policies again, this time because hammering poor and ordinary people is supposedly going to cure inflation.
Whatever the economic crisis happens to be, the UK establishment class keep proposing policies that transfer wealth from the poor and ordinary to corporations and the mega-rich as the only solution.
And why wouldn't they?
The Bank of England got away with creating hundreds of £billions in Quantitative Easing which benefited only the richest people in society, and the Tories got away with imposing over a decade of economically illiterate austerity ruination and the longest period of stagnating wages since records began.
If they suffer absolutely no pushback for having used an economic crisis to promote policies that benefitted them and their very wealthy chums at the expense of everyone else, why on earth wouldn't they do it again?
Why would they implement effective policies like price controls, subsidised services, and excess profit taxes when they can push ineffective policies instead, which have the side-effect of dramatically enriching themselves and people like them?
inews.co.uk
news.sky.com
