The government's law requiring anyone pinged by the NHS app to self-isolate is bringing pingdemonium to the economy and society. But, it is totally unnecessary. Of course, all those of us who do not have smart phones are relieved of the problem, as are those who never downloaded this ridiculous app in the first place, which both rather illustrates how unnecessary the current chaos is, and what a quick and easy solution to it would be for individuals.
What also illustrates how unnecessary it is is that the large majority of those being pinged, are in any case immune, either from having developed natural immunity, or immunity from artificial vaccination, or, as in the case of Boris Johnson, both! How many times, now has Johnson and Starmer been led to self-isolate, despite being immune, though in the case of Starmer, for the benefit of the Labour Party, it would be better if he could be permanently and completely isolated.
We are now seeing supply chains collapse, in a way that was likely in the case of a crash out Brexit, or were an effective lockdown introduced. Lockdowns were never going to be introduced in a way that was total, but pingdown has brought about that chaos on its own. Supermarkets are saying that they have perhaps just 48 hours of supplies. Supply chains are breaking down across the economy from the supply of fuel to the supply of materials, and components. It is evidence of the point that Marx made in explaining The Law of Value,
"Every child knows that any nation that stopped working, not for a year, but let us say, just for a few weeks, would perish."
Its not even all labour ceasing, illustrating Marx's other point that modern economies are based upon collective, cooperative labour, and a widespread social division of labour. Its one reason that given an international social division of labour, as the basis upon which the global economy functions, which has brought down the costs of production to the kinds of level that society has now come to expect as the basis of its standard of living, Brexit was such a ridiculous idea. Indeed, in Britain, a large part of the problems being faced are a result of the cumulative effects of Brexit, with pingdown and COVID simply being a good cover for the government to use to hide its complicity in the chaos.
But, its not the entire reason. Across the globe, breakdowns in supply chains are arising, and also inflation is rising sharply. In Europe, Unilever has said it is seeing sharp rises in the costs of its raw materials, across the board, which it is having to pass on into prices. In the US, the other day, car company executives came out to say that the claims of central bankers and government economists about inflation being transitory was not what they were seeing, as they also saw rising costs of materials and components across the board. For those components and materials in short supply, such as microchips, it might be argued that the price rises are transitory, and will reverse when supply bottlenecks are eased, but prices are rising for materials even where there are not shortages or bottlenecks, for example, with the price of oil.
These prices are rising, because a) costs of production are rising, and b) huge amounts of liquidity put into the global economy over decades is now washing out into general circulation, where previously it was locked up in the sphere of asset markets, inflating asset price bubbles. That depreciation of currencies has its inevitable corollary in the inflation of commodity prices. What we are seeing is what I predicted several weeks ago, which is that first prices of primary products rise, and of those goods and services where monetary demand expands rapidly as lock downs are relaxed. For those primary products, where prices rise beyond a certain point, they will meet resistance from demand, as producers find they cannot pass on the increased costs in their own prices. That has been seen in timber prices, and other primary products in recent weeks. In part, it has also promoted the release of strategic reserves, for example in China, to try to force those prices back down.
But, then, a second inflationary wave crashes over the economy, because the prices of a whole range of goods and services rises again, as demand for them rises, and meets the reduced levels of supply as producers had held back production, because of rising costs. In part the rise in demand itself is a consequence of further liquidity flowing into the pockets of consumers, both productive and unproductive, as the economy expands, and liquidity moves from one sector to another. The rising prices of these end products then gives producers greater head room as far as their costs are concerned, and so, in search of additional profits, and a need not to lose market share, they expand production further, even if they have to pay higher prices for the inputs. That increases the monetary demand for primary products once again, leading to another round of price rises in those spheres, and so on.
In the case of services, the main input is labour itself, and as economies have opened the difficulty in obtaining labour has been obvious, leading to sharp rises in wages. In hospitality, wages have risen by 18%, and that passes on directly into prices. Now, with pingdown taking large amounts of labour out of supply the problem is compounded, and spread cross the whole economy not just services.
Th government is likely to have to scrap the pingdown regulations by this weekend. It was due to scrap them in August anyway. Already it has had Ministers claiming that workers in strategic jobs could ignore being pinged, only to have to retract those statements, which simply illustrates the chaotic and incompetent nature of the government, not just in the chaos it has wrought with its Brexit nightmare. Fortunately, the chaos from pingdown can be ended fairly quickly, by simply scrapping the ridiculous regulations and app. The problem of ending the chaos caused by Brexit will take longer, and requires its reversal, and the rapid negotiation to get Britain back into the EU.
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