The world is facing a financial crisis because we will be facing absolute shortages of oil, food, and raw materials very soon. And that changes everything.

Markets can never solve the problem of absolute shortages: they simply supply whoever can pay the most. If we leave allocation to the market, the vulnerable will be left with nothing.

The Economist forecasts that the oil crisis will hit us by June 2026 if the Strait of Hormuz stays closed, as it will. But all politicians are still talking about are fiscal rules. That is not good enough.

There are only two things that can manage this crisis now. We need rationing of food, petrol, and diesel to ensure they are distributed equitably, and not sold to the highest bidder.

And then we must increase taxes on large companies, commodity traders, and the highest earners and wealthiest people to ensure money can be reallocated to those who will otherwise suffer as a result of the inflation that shortages are going to create.

These tools exist. What is missing is the political courage to use them.

This is the audio version:

This is the transcript:

The world is beginning to admit it is facing a massive economic crisis. The damage from this crisis will continue for some time to come, by which I mean years, if not decades. The political response so far has been almost entirely wrong. Those who will suffer most are barely being mentioned, and what we need to do now is hardly being discussed. The fact is that what we need to do now is tax wealth more.

The crisis we're going to face is one of a shortage of real goods. We are going to be short of oil. We are going to be short of food. We are going to be short of raw materials, and that will affect many jobs in the UK. We will be short of items to sell in our shops as well. Retail is going to be hit by what is happening. The fact is that what we're going to have here is a crisis of availability, but that gives rise to a second and even greater crisis, which is one of allocation. The question is, in a world of shortages, who will have the means to survive? That is what worries me.

The markets cannot work in this situation. They have never been designed to. Markets will sell whatever is available to the highest bidder, and the rest will go without. That's how we know markets work. That is how they're designed to work, but that, in this situation, where we have an absolute shortage of resources, a crisis of availability, will mean that we will end up with a crisis of allocation, because so many people will be denied the resources they need to quite literally survive.

That is why I have argued that we need rationing of essential goods now. Food needs to be rationed at this moment. Petrol and diesel need to be rationed at this moment because if we don't, we are going to be in a worse crisis soon when they begin to run out, and that is why I am arguing we need more tax on wealth now.

When the problem is allocation, we have to reallocate money as well as goods. Rationing can deal with the problem of allocating goods. Tax must deal with the problem of allocating money. That is the priority of this moment, but none of our politicians seem to get this as yet.

Rachel Reeves is talking to bankers, but not to trade unions and not to benefit claimants, and the media are talking about the jet fuel crisis, which might deny people the opportunity to go on holiday this summer, but that is the least of our worries. When we've got nothing to eat holidays aren't that important. The fact is that the people who will suffer most have almost no voice in this debate right now, and they need one.

Meanwhile, the IMF and the European Union are urging governments to be careful with their spending. They're insisting that countries must maintain their fiscal rules despite the fact that the world is descending into chaos. They're saying they must continue to operate within what they call their ‘fiscal space', which means they shouldn't be increasing taxes, whilst they must ensure their ‘fiscal credibility' by not borrowing too much.

All of this can be described by a deeply technical word, that word is ‘drivel', because without exception, that is what these people are talking about. They lack the imagination to deal with the crisis we are now facing. People are going to starve. Businesses are going to collapse. Arguing about fiscal rules will not save them. All of this language assumes the old rules of engagement still apply. They don't. The world is collapsing, and the rules are going to have to change. Pretending otherwise is not just foolhardy. It's deeply dangerous.

My argument is this: there are no real insurmountable obstacles to the programmes of change that are needed now. We most likely have sufficient resources to ensure that everyone can survive inside this new economy that we're going to face: one of shortages, compared to the wasteful economy we've been living in. But what is lacking is the willingness to get those resources to the right people.

Neoliberalism is completely unable to deliver that outcome because it does not believe in state intervention, and what we need is a state that wants to direct economic support to those people and industries that need it. Without that state at present, we cannot survive. The question then is not whether we can act. The question is whether we will act, and the answer has to be yes.

So what must we do? The most effective response is to ration first. I cannot avoid that. We must be rationing fuel at present, and we must be considering how food might be rationed if it moves into a situation of shortage. That is vital.

But at the same time, what we know is that shortages will fuel inflation, and there are many people on fixed or low incomes who will be forced out of the market for these things if that happens. Inflation, in this sense, is something that is going to impose deep poverty, hardship, and extreme suffering on many. So we must ensure that money is reallocated to those who need it to buy the essential items that the market can supply if the state rations who can get them. That's the point I'm talking about here.

So, we have to raise more money from those who have an excess of money to reallocate it to those who do not. This is the function of the state when it comes to a problem with regard to the allocation of money that threatens core well-being. Tax is the mechanism the state can use in this situation to relieve genuine, real poverty, and that is the crisis that we're going to be facing.

So, who should pay more tax to provide this reallocation of resources within the economy?

Companies should. There are going to be many who will be making money as a consequence of this crisis. Those that do – the larger companies, almost invariably – must pay more corporation tax as a result.

We must look at other innovations as well. Those who are trading in commodity markets at present must pay more taxes. I am proposing that they should be paying a financial transactions tax on each and every deal that they undertake, and those that I'm talking about are the dealers in oil, the dealers in wheat, the dealers in rice, and other raw materials that we need to create the food we need to survive. These people will profit from shortage. We need to recover money from them by charging a direct tax on their trading activities, which tend in this situation to push up market prices.

And – and I can't avoid this one – we will need to tax those with the greatest wealth and the greatest amount of income and gains derived from wealth within our societies. I set out in full how to do that in my Taxing Wealth Report. It was published in 2024. It's more relevant than ever now.

We must equalise income tax and capital gains tax rates in the UK. That could raise tens of millions a year.

We must impose what I call an investment income surcharge on unearned incomes like interest, dividends, rents, and other such things in the UK. If a person earns more than £5,000 a year from these sources, although I would exclude pensions, this could raise more than just about anything else, maybe £18 billion a year.

We must charge VAT on the supply of financial services because these are only consumed by the rich, but quite bizarrely, they are exempt from VAT at present.

And we must consider raising income tax rates on those with incomes above, say, £200,000 a year, whilst removing some other anomalies within the income tax system, which at present prejudice those with higher incomes.

And at the same time, we do need to extend the national insurance charge to all higher levels of income. The absurd fact is that a present rate collapses for those earning over £50,000 a year.

These measures could all be put in place quickly. They could be done now. They only need political backing. They do not require invention. The opportunity to change these laws is available at any moment. The government could begin this process of reallocation very soon, and when I mean very soon, The Economist magazine in the UK is forecasting that the real oil crisis we're going to face is going to unfold by June 2026 unless the Strait of Hormuz is reopened very soon, and the chance of that is close to zero. The parties involved – Iran, Israel and the USA – are not even talking to each other at present. They're still swapping gunfire, and that means we are facing this crisis.

The fact is what we have to do is ensure that those who have the ability to pay can meet the costs that are being imposed upon society now. Those who enjoyed the benefits of globalisation, which created their wealth, must now contribute to the consequences of the policy of globalisation, which has created the long, extended supply chains that are now exposing us to risk. They must appropriately bear the cost of the reconstruction of our societies in a new way that ensures we are resilient in the face of these challenges and that people will not suffer as a consequence of them.

You can hear their screaming about the additional tax charges already, but “let them scream” is my answer because we are talking about the survival of people here and as a community, we cannot let people suffer. My point is, even the wealthy suffer when the poorest in a society do; they cannot avoid the consequences of seeing their misery. That is something that Adam Smith said in 1776. It's still true now, 250 years later.

The alternative to what I'm suggesting is that we will see real suffering. And we cannot rely on neoliberal ideas to solve this problem. They are economically incoherent and morally unjustifiable. In that case, we have to get our politicians to stop talking all this nonsense about fiscal space, fiscal credibility, and fiscal rules. We have to talk about the capacity we have to make a difference in a world where neoliberalism will have failed. That's the subject of this video. That's what I'm talking about.

We must ensure that the vulnerable people in our societies must not pay the price of this crisis. They did not benefit from globalisation. They should not pay the price for its failure. The state has the tools to correct what is going on. Taxes, income taxes, financial transaction taxes and rationing are the tools available to us to correct the crisis we face. What we need now are politicians with the courage to use them.

That's what I think. What do you think? You might have a very different opinion to mine, and that's okay. That's the way we form ideas in this world, by having different opinions and talking about them. We have left a poll down below, but leave us your comments as well because they're very welcome and we do try to look at as many of them as we can. Sometimes that's difficult. A lot of you like to talk. That's okay. But if you like this video, please share it. Please subscribe to the channel, and if you want to make a donation to our work, because we are talking about things which we think are important, that would be great as well, because these videos do have a cost to make.

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