The Cure for Monopolistic Exploitation

After the Libor rate fixing scandal, and the PPI mis-selling fiasco, we now have hysteria over gas and electricity companies fixing market prices to their advantage at the expense of the general customer. Well of course they’ve been doing that, it’s what they do. They aren’t charities. They charge whatever the market will bear. That’s how markets work. If the markets were competitive it would be a different story and the customer would reap the benefit. But with the fixable, non-competitive markets which have been allowed to proliferate over the past thirty years, the customer loses out to the supplier. And since the suppliers are driven by the Friedmanite rule that they exist to make as much money as possible for shareholders, it’s the shareholders who really gain at the expense of customers. But since shareholdings are largely controlled by financial intermediaries, investment banks, hedge funds and the like, it is they who are the ultimately winners at the consumer’s expense.

But it’s worse even than that.

It’s not just the markets for gas and electricity, and petrol, which are being fixed so that those in the financial sector can extract value and pay themselves enormous bonuses, not for talent or hard work, but for quasi-criminal market fixing activity. The problem goes much wider than that. Glencore is one of many, reported in the Financial Times (see http://www.gordonpearson.co.uk/28/glencore-and-their-ilk-are-screwing-the-world/) for fixing the global grain market, illicitly driving prices up for profit and out of reach of the world’s poorest. That’s how Glencore works. And when the Xstrata takeover goes through on the 20th of this month, as now seems highly probable, Glencore will also be able to fix the prices of nickel, zinc, platinum, chrome and copper and be highly influential in thermal and coking coal (see http://www.gordonpearson.co.uk/26/who-rules-the-world/). That means they will be able to screw the rest of us by fixing prices on all these markets and making huge illicit profits.

Out of the proceeds from its socially destructive activity, Glencore pays its favoured elite truly awesome amounts. Examples of excess are CEO Glasenburg’s take of a billion when the company went public on the London stock exchange, and the Xstrata CEO’s proposed take of £30m just to stay on board following the proposed merger. All that for doing not a great deal and nothing at all in the public interest. Moreover, despite earnings of around $6.5billion, Glencore manages to avoid paying any significant UK taxes, setting the fashion for currently newsworthy avoiders such as Amazon, Google, Starbucks and others, with their HMRC agreed internal transfer payments allowing profits to be accrued in tax avoiding Swiss cantons.

So why is nobody objecting to Glencore’s market fixing, exploitation, bonuses and tax avoidance? That is a real puzzle.

All over Europe ordinary people are today expressing their anger at the austerity policies which are inflicted by naïve politicians, punishing ordinary people for the reckless and predatory behaviour of financial operators. At some stage, unless markets can be made truly competitive and immune to fixing by monopolistic predators like Glencore, things look set to get nasty. The 99% will only tolerate so much.

How to make markets competitive is well known. It’s been done before. Rockefeller’s Standard Oil was broken up over 100 years ago. There is no mystery about it. Competition requires the prevention and break-up of monopolistic forces wherever they exist. Additions to monopolistic consolidation, such as the Glenocre–Xstrata merger, should be completely verboten. But until such action is taken, people will have to be content to be ruled by David and George on behalf of the City of London’s predatory monopolists.

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