Manipal, India — From 2003 to 2008 – the years when the uncontrolled greed of a handful of speculators was sending the price of commodities to intolerable levels – this columnist was among the few who pointed to such market manipulation as the cause of price fever, rather than "market conditions."
Today it is clear that it was the greed of a few financial institutions and their managers that caused the rise in food prices that killed hundreds of thousands in Asia and Africa from starvation. Super-high food prices sucked the purchasing power out of middle- and low-income consumers by raising the prices of oil and other commodities to levels where continued economic health was unsustainable.
The 2008 market crash caused not a ripple in the consciences of this handful, who continued to award themselves generous bonuses after creating economic disaster. Speculation – forward trading where the speculator need not take delivery of the commodity – caused death and hardship across the world, and it was expected, not least perhaps by U.S. voters, that President Barack Obama would make good on his promise to deal harshly with such economic depredators.
Instead, he handed over the reins of the U.S. Treasury Department to Timothy Geithner, himself a creature of the very system that is causing a second tsunami of high prices and a collapse of consumer demand. Under Geithner, the U.S. taxpayer has underwritten nearly US$2 trillion in write-offs and advances to the very agencies that caused the speculative fever which began in 2003, after the defeat of former Iraqi dictator Saddam Hussein.
Now, when speculation has once more caused oil prices to rise to levels nearly double that justified by market fundamentals, and when the prices of food and other commodities are once again being driven up by speculation, Obama is silent.
Curbs on pure speculation should be introduced. Severe penalties should be placed on market fixing to ensure price increases on goods that are essential for survival, including food grains, sugar, oils and petroleum.
Barack Obama, who sucked in hundreds of millions of dollars from the poor and middle class, will be betraying his obligation to them if he refuses to act against the speculation that is once again leading the world to economic disaster. Should high commodity prices lead to a shrinkage in consumer demand that causes an economic collapse, responsibility will fall on the "idealist" who turned the other way while greed was once more given complete freedom.
Along with petroleum and food grain futures markets, the pharmaceutical industry is an example of a cesspool wherein maggots ensure the death of hundreds of thousands by overpricing. Much of the "original" research done by selected pharmaceutical companies comes from public laboratories that transfer the findings to them for market development.
Some pharmaceutical companies use the legal system – which can often be bought in countries teeming with the world's poor – to block access to cheaper variants of drugs that are presently being sold for very high prices. In Asia and Africa, the unbridled freedom given to a few to milk the many has led to many-fold increases in the prices of drugs.
Many deaths are caused daily because of a lack of affordable treatment – and this at a time when hysteria has been created about "new" viruses such as the H1N1. If the millions now wearing masks because of the swine flu scare would bother to take analogous precautions against contracting a disease that has killed many, many more people each year, AIDS, public health would improve substantially.
But because of the success of the poor in creating cheaper drugs to retard the disease than were being offered by the handful of "killer" pharmaceutical companies, there is no financial incentive to whip up hysteria like that surrounding swine flu. Should the treatment for swine flu become affordable rather than extortionate – it costs US$200 for a positive test in India, a desperately poor country with a population in excess of 1.16 billion – we can be sure that the sponsored hype will abate.
To expect Obama to do something about such depredation may be asking too much of a president whose first actions were to compromise with his worst critic, Hillary Clinton, and appoint a crony of financial speculators as his treasury secretary. It would be asking too much of Third World governments, almost all of whom are steeped in corruption and therefore easily manipulated by pharmaceutical giants. It is definitely too much for the listless, starving populations of Third World countries.
The only hope for salvation from speculators and price gougers lies in the mobilization of public opinion in the United States and the European Union. The overwhelming majority of people in both places are idealistic and unwilling to accept unethical behavior, if told the truth. Public opinion must be mobilized against speculators in food, petroleum and raw materials and against price gougers in drugs needed for epidemics and serious illnesses. Otherwise the rest of humanity cannot be rescued from its present misery.
The world cannot be allowed to continue its slide toward economic disaster as speculators once again drive up commodity prices. It is intolerable for any civilized society to stand idly by while a few push up drug prices so high that millions go untreated.
During the two decades that ended with the defeat of the Nazis in Germany, there were some who profited from the death and loot that the Nazis indulged in, their consciences untroubled despite knowing where their profits were coming from. Today a similar mindset is at work in some of the same locations guilty of profiteering from genocide during World War II.
This time, civilized people must act before hundreds of thousands more perish. It is hoped that Obama will watch his own speeches and search his conscience in order to shed the paralysis that has afflicted him.
-(Professor M.D. Nalapat is vice-chair of the Manipal Advanced Research Group, UNESCO Peace Chair, and professor of geopolitics at Manipal University. ©Copyright M.D. Nalapat.)