Yes, yes, American politicians talk about the scourge of higher prices. Only yesterday, Elizabeth Warren Donald Trump was on the warpath about the cost of gas, angrily attacking Chevron and ExxonMobil for making “too much” money, and saying that they should “give some of that back to the public.”
New York City’s Mayor Mamdani is, famously, going further. He has plans, and he has access to taxpayer money. He is intending to establish city-owned stores to sell discounted food to customers — if they have the right ID, that is.
Writing for NR, John Gustavsson expressed a few doubts about this venture, but surely we can put that down to Swedish pessimism.
Gaska upp dig, John. It’ll work out fine! The warmth of collectivism!
But there is a whole country that has passed legislation to deal with high prices head-on. It will come into force at the beginning of next year. The first stage in the process is an exercise in intimidation information gathering, a bit like this one from 2021 (via Reuters):
U.S. President Joe Biden on Wednesday said there was mounting evidence of anti-consumer behavior by oil and gas companies that is keeping fuel prices elevated, asking the Federal Trade Commission to dig deeper into possible “illegal conduct” in the market.
This foreign government will go digging, too. Under the new law, its agencies will, according to a recent report, be able to “obtain confidential information about food producers and retailers, including their transactions, prices, sales, revenue, expenses and profits.”
This data is “intended to help officials track prices throughout the food supply chain and identify the causes of sudden increases.” The government will decide which prices are going to be tracked, but essentially it will be those of staples, milk, meat, and so on, used as references when calculating inflation.
The government’s deputy industry and trade minister has explained that this would allow officials to “limit markups on socially important goods and prevent unscrupulous behavior by market participants.”
Corporate villains being tackled! No “unscrupulous behavior!”
So, which country is taking such bold steps to tackle greedflation?
Let’s just say the story comes from the Moscow Times.
Russia’s (official) inflation rate has risen to around 6 percent, which the governor of its central bank is blaming on the “fuel crisis” driving up prices for many goods and services. GDP is now expected to be flat, a revision down from earlier expectations of slight growth.
Fuel crisis?
Radio Free Europe (emphasis added):
Nearly every major refinery in western Russia has been hit by Ukrainian drones, according to the International Energy Agency. Many refineries have been hit multiple times. In total, experts estimate between 20 and 40 percent of the country’s total refining capacity has been knocked offline.
Nearly every region of Russia — even in distant Kamchatka on the Pacific Coast — has felt the effects of the Ukrainian campaign.
Some regions have imposed daily restrictions on fueling vehicles; some have tried to block hoarding or profiteering by prohibiting filling up portable fuel cans; some have instituted a coupon-system, similar to what Soviet authorities did when faced with food shortages.
Russia’s state gold reserves fell below $300 billion at the end of last month amid a broader drop in the country’s total reserve assets, according to the latest data from the Central Bank of Russia (CBR).
The CBR valued the country’s gold reserves at $298.99 billion at the end of last month, according to a report released on Tuesday.
The decline in reserve assets was also reflected in the central bank’s broader balance sheet. Total official reserve assets stood at $720.4 billion at the end of June, down from $747.4 billion in May.
Meanwhile, foreign currency reserves were flat over the same period at $392.4 billion at the end of June, compared with $392.3 billion in May.
This marks the sixth consecutive month that Russia’s official gold reserves have dropped, and the decline has been dramatic. In April, the CBR revealed that Russia’s gold reserves recorded the sharpest drop in a quarter century.
Commenting on the new price law, former Estonian President Toomas Hendrik Ilves tweeted:
Back to Soviet-era rationing and lines at the grocery store. With food aplenty in Moscow, empty shelves beyond the ring road.
Time will tell, but Ilves is correct about where state intervention in price policy is likely to lead. It almost always does. He is also right that Moscow (and by implication St. Petersburg) will receive favorable treatment. Those are the two cities where political dissent could (maybe) actually matter.
Thus, there was this from the RFE report about fuel shortages:
Aleksandr, who lives . . . in the village of Komarovo, said there’s a rule of thumb for villagers: always keep at least four jerry cans of gasoline in reserve.
“We’re not Moscow or St. Petersburg,” he said. “Right now, we’re collecting firewood, clearing roads of debris, and haying. And everyone relies on a generator when the power goes out.”
I doubt if the Russian economy will hit the buffers anytime soon, and the regime has Beijing behind it to help out if things get rough. Nevertheless, the Kremlin will not welcome an economic squeeze, which may force it to rein in some of what it has in mind. Unfortunately, it probably does not have to worry too much about popular discontent for now, particularly if it is able to keep Moscow and St. Petersburg happy. Russians are used to hard times, and they know the risks that come with protest. Whether a general mobilization this fall (rumored but not confirmed) could drive them out into the streets is a different question.