Inflation is currently a popular topic. The key reason is that it is prevalent. The cause, of course, is an open question.
Economists have repeatedly relied on blaming inflation on the explanations of “cost push” and “demand pull.” Historically, “cost push” is based on those accustomed to certain profits, lifestyles and other comforts wanting either more or obtaining insurance against perceived erosion. Thus, since they have significant economic influence, they take advantage of opportunities to carve a bigger slice out of the economic pie.
America’s 750 billionaires collectively got $1 billion richer in 2021, a tax-free 25% increase according to the calculations by Americans for Tax Fairness, based on Forbes data. Enough is never enough and they always want more, as opposed to redistributing some back to finance programs for the less fortunate.
The rich have an obligation to do more for their privileged status.
“Demand pull” comes from another direction. Popular products, many of them in discardable containers, are made from scare resources that clearly drive up product costs. In addition, efforts by those who have the least to obtain more, such as raising the minimum wage to a livable level, from those who have the most feeds into a “push-shove” scramble. Sometimes, those at the bottom settle for a “wait and see” approach, often called a COLA, or Cost of Living Adjustment. With a COLA clause, like in some contracts or with Social Security, people get an increase only after inflation occurs.
Lately, new features have entered the fray. In simple terms, one is called “bad weather.” More accurately, it is caused by climate change. According to Craig Turner, a senior commodities broker with StoneX Financial and quoted in The Wall Street Journal, weather is the biggest factor in today’s higher prices.
Recent times witness a Texas freeze, severe droughts in North and South America, triple-digit temperatures on the West Coast, wildfires in the Pacific Northwest and Colorado, floods in Appalachia, and a slew of wrecking hurricanes and tornadoes in the South and Plains.
The head of General Mills blamed price increases on short-term supply chain costs as its “bogey.”
The second bogey is the risk of viruses. Constant testing, quarantines and fear of death have caused economic disruptions that are impossible to quantify. The recent case of a contracted West Virginia truck driver pressed into service in an older rig dying of carbon monoxide poisoning while idling for a required rest can be multiplied countless times. Staffing shortages, unpredictable staff availability, coupled with the cost of repetitive training and contaminated cargo, cause cost havoc.
Basically, the economy is out of anyone’s control, regardless of political persuasion. Finger-pointing and scapegoating also are morally reprehensible actions during a crisis of this magnitude.
To camouflage impact, firms focus on the short-term bottom line in trying to fool the public.
Boxes and jars of products look the same but have less content to charge more per ounce. Fewer coupons, loss leaders and specials are offered. And prices just go up where there isn’t much competition in businesses or where anti-trust price-fixing controls are rarely enforced.
The time might have come when living as one once did becomes a thing of the past. More reliance might be needed on root-cellar storage, food preservation, home industries, co-ops and self-help exchanges. The time-dollar currency model, where people exchange skills and services with the exchange of time as currency, might gain new momentum. While increased reliance on social media over many components of life has been increasingly prized, the “bogey” issues of climate change and COVID-19 are not going away soon, or perhaps ever.
Events have made it clear that people have suffered unexpected major consequences that they cannot control, and more disruptions are on the horizon. It is time to come together and recognize that the economic squeeze is on and the American Dream might be over.
It is time to stop fighting among ourselves, start helping each other survive and begin entering into a new era of collaboration and cooperation for the betterment of everyone.