France output plant prices increased by 7

Who will pay In economics, it is often the central issue. Today, it is vital. Who will pay the Bill of materials The answer to this question depend on our purchasing power, the profits of the companies, interest rates decided by the European Central Bank and its major global sisters. In other words, it is the economic fate of the next few years playing here.

No need to hope to escape the invoice with the decline in prices observed in recent weeks, starting with those of the oil or gold. The CRB index, which synthesizes nineteen commodity futures prices, fell by more than 20 in two months, although any of even one-third higher than a year ago, and two times more expensive than at the beginning of the Decade. Rising broadcasts along the chains of production, over the renewal of contracts. In the United States, the price of the materials in the industry jumped 51 in one year, those of intermediate products (already processed, but intended to be used in the factory) 17 and 10 finished products. France, "output plant" prices increased by 7. Well will require that it be found somewhere.

Good logic, the price should go to the end of the chain, i.e. the consumer you and me. In good logicians, makers of the European Central Bank are convinced that the price increase is inevitable. They fear the engagement of a downward spiral. The rising prices push consumers who are also employees to demand and obtain increases, which will in turn push prices higher This is the famous "second round effect" that sister Anne is not always come from the top of its first tower.

But the logic is what it was. Of course, fuel oil for heating added half a year. Rhodia chemist manages to pass the increase of contents first on its selling prices. Toyota is the price of its Prius of 3. But it is far from being the rule. Only industrial position of strength on their markets are able to push their tariffs. If Toyota added his now famous hybrid car, it has not affected at the price of other models. Soapers Henkel or Procter & Gamble have increased their prices, but not enough to pass increases incurred on their chemical products. This is of course competition impeding the price, more and more strong and more global competition. Sometimes the State or, as in the Viet Nam where the Government ordered the month last companies to absorb cost increases without impact on prices.

It is mainly within the company that the commodity boom is absorbed. Again, who pays the note Of course, employees are not at the party. Most often, wage increases follow just the cost of living. And companies continually reorganise their production to become still more efficient and reduce their personnel accordingly. But there is not here of what cushion the formidable rising prices suffered these quarters. Layoffs announced recently by the car manufacturers are not intended to reduce production costs to adapt to the drop in sales.

If it is neither the consumer nor the employee pays the note, it only remains a possibility: the shareholder. A priori, the assumption seems to be excluded. Listening to the chorus of analysts, profits can only climb. It is in the order of things. It is a reflection of a world where the power switched work to the capital. And it is true that, since twenty years, there was a failover of the wages to profits, in all developed countries, sales in hundreds of billions of dollars or euros. But the past is not the future. History is made of failures, and the distribution of income is not the product of an abstract mechanics but force concrete reports.

Last year, the profits of American companies accounted for 12 of the wealth created in the United States (GDP). It is an absolute record. In Europe, the companies have huge benefits. Many of them don't even know where to invest. At the same time, their leaders complain of growing competition. It is inconsistent. When the competition grows, profits are falling. Understand what is happening, to look at what happened in recent years on a global scale. Behind the opening of China, the India and the countries of Eastern, huge tanks of cheap labour, there are companies that are leading the globalization. In previous decades, the increase in trade came from the opening of borders and the development of trade. For twenty years, corporations have taken over. They break their chain of production to the four corners of the globe. They invest everywhere. They organize exchanges within them. Nearly a quarter of German imports from Eastern Europe is example of intra-firm trade (1).

This new organization, extraordinarily effective, brought down a veritable rain of gold... very unevenly distributed. Employees have virtually no right. Consumers have benefited from lower prices. But they recovered only part of the identified surplus, as sensed by Jimmy Goldsmith, billionaire become Slayer of globalization, in his book "The trap" (Fixot, 1994). The rest came to feed the larger profits in the history of the world. It is perhaps this story which is coming to an end. The competition becoming more and more real, companies are increasingly blocked on their prices. And when a shock such as raw materials, they have no choice but to break it with margins (2). They could even be forced to spend another part of their margins on wage increases. If this hypothesis is confirmed, it is the end of the profits, and therefore a stock market depressed for years. The winner ultimate of globalization, it is the consumer. Not the shareholder.