When I was 6 or 7, my school class took a field trip to a farm. One of the sights on the farm was a pen with several goats meandering about and eating grass. I walked over to the fence to get a better look. They were cool looking animals. One of the goats meandered over to the fence eating grass. He, turns out it was a young Billy goat, continued to munch on grass along the fence until he got to me. This Billy goat sniffed around a bit at my hands grasping the wire fence and then, began chewing on my plaid shirttail sticking through the fence. In the blink of an eye, he had enough of my shirt in his mouth that I was pinned to the fence. I, of course, screamed in terror. Two teachers ran to the rescue. I peed my pants and the farmer laughed.
What does this have to do with our current economic inflation?
It is an allegory of sorts. In this story I represent the unsuspecting public. My shirt represents basic necessities. ‘We the People’ are, figuratively, peeing our pants over losing our shirts. The goat, representing inflation, cannot tell the difference between his grass and my shirt. The goat eats everything in sight regardless of who it belongs to.
Economics is the study of scarcity. When there is more demand for goods and services than the market can supply, prices go up – hence the inflation goat. How did this happen? Whose fault is it that we have our faces pinned to the fence while we soil ourselves?
Is this inflation caused by the government?
If you listen to Republican politicians, Joe Biden and the Democrats created this mess with their reckless spending? If reckless governmental spending is the cause, what about the previous administration. During the time of the pandemic under Trump, I received two stimulus checks and exceedingly generous unemployment benefits even though I am self-employed. They gave away billions to businesses to keep them afloat. That is a lot of spending. Please note here that ‘reckless’ in the Official Buckley Republican Dictionary is defined as a “type of behavior associated only with Democrats.”
If Joe and the Dems or Donnie and the Reps made this happen, then why is inflation global? The goat is eating all the kid’s shirts not just ours. Not only is the inflation global, but that goat is eating everyone else’s shirt about as much as it is ours. Neither Principal Joe, my social studies teacher, nor Mr. Donnie, who teaches Darwinian, Machiavellian Neoliberal Capitalism, can separate us from the goat. The school treasurer, Mr. Jerome Powell, has been successful in the past shooing away the goat by cutting off credit at the school store for all but the ones who do not need it. This succeeds in taking shirts away from all but the rich. Therefore, the goat has nothing to eat and dies of starvation. I know what you are going to say. How farfetched is that? Pretty draconian just to get rid of a goat? Does President Joe Biden and Fed Chair Jerome Powell really know what do about the goat? Would we have fared better under Trump, even with Powell’s help?
If the teachers in this allegory do not appear to be responsible, what about us, the students?
We have been cooped up in the house for the last two years. Even I got tired of sitting in front of the computer/TV, not allowed to go outside and play. Information abounded and vaccines were available in record time. We stayed home and hunkered down knowing this might take a while. Because we spent less, extra unemployment funds allowed millions of Americans time to evaluate their work situation and decide to try something else. That extra unemployment showed many other Americans they could afford to retire. After the interminable COVID bus ride, we jumped off the bus and ran for the fence. We started spending, resupplying depleted necessities, eating at restaurants, attending events, being social. Spending on goods and services ramped up abruptly. What did everyone think was going to happen? Who could blame us?
Who is left to be responsible for the shirt eating goat? The farmer, Mr. Big Business?
Our government supported big business with lots of taxpayer money to keep people employed and make sure there were enough supplies to keep us going during the pandemic.
There is not a person alive who was an adult in the aftermath of the Spanish Flu Epidemic of 1918. No one knows firsthand about living through a pandemic. Mr. Big had no more idea about what would work best than did governments or citizens/consumers. Typically, as a recession ends, consumer spending gradually returns to pre-recession levels, stimulating the economy. Jobs and production trail slightly behind until the economy returns to normal. So, when the COVID recession began, big corporations and businesses did what they would do for any recession, what they did for the last recession.
This recession, however, was different. When consumer spending unexpectedly exploded, suppliers, with millions fewer workers available, found themselves unable to meet the challenge. Delta Airlines, for example, cancelled 100 flights today. They simply do not have enough pilots, flight attendants, and baggage handlers. Can we blame big business for not being prepared for this completely new situation?
Is there no one to blame for the massive inflation we are experiencing?
If you think about the goat story one more time, you will remember that the farmer laughed, like many big corporations bragging to their boards and shareholders about how much money they were making by gouging us consumers. What is their incentive to catch up with the supply side of the equation? Gouging consumers works, adding to their already record profits. The wholesale price of crude oil has continued to decline since April while gasoline prices have gone up because Big Oil refuses to increase production unless they are bribed with even more oil and gas leases on public lands.
Where does that leave us?
Government did what they thought best to blunt the effect of a pandemic to save lives, keep people from starving, and avoid letting the economy fall off a cliff. Consumers mostly complied with the program by staying in, spending less, and conserving more. Business did what they knew how to do for a recession. By doing what we all thought would get us through these troubled times inflation came, inevitably. That inflation was grossly exacerbated by capitalistic greed and hubris. It will subside only when supply catches up with demand. If economists look at this closely, they may discover how to prevent this in the future.
At present there are about 4 months until the next election. Inflation is likely to continue and be on our minds as we vote. When a bill to curb price gouging came up for a vote in the House of Representatives, every Republican voted against it. In the Senate, it could not get a vote because of Republican opposition. They do not want price gouging to end... until after the election. Their plan is to combat inflation by raising taxes on everyone but the rich.
Inflation is not the only thing on the ballot in November. We will be voting on whether democracy will continue in America, whether we can reduce gun violence, whether we take necessary action to combat climate change, and whether women can make health decisions about their own bodies. All these things may, forever, be out of reach if Republicans take control of either house. Choose wisely.