by Thomas Meisenhelder
The recurring mantra from Fox, the Republican Party and the mainstream media is that Joe Biden, government spending, and the rising incomes of ordinary people are responsible for our increasing inflation rate. That is incorrect and this error is preventing an effective national response to inflation.
This misconception about inflation leads to policy errors similar to those made in response to the 2008 housing mortgage crisis and economic recession. Somehow the media and the politicians understood that crisis to be the result of unwise decisions by consumers and overly generous government housing policies. In other words, ordinary Americans were the problem. As a result of this thinking, the government responded to the crisis by providing banks and other financial institutions with huge amounts of stimulus money while doing very little for everyday homeowners who were losing their savings and their homes.
Today’s economic problem is a slightly high inflation rate (6-8 percent or so) driven, everyone seems to agree, by the rising price of oil, selected commodities, and essential services such as health care and education. Conservatives, the media, and even many so-called liberals seem to agree that prices are rising because the government has allowed ordinary people to have too much money.
Doesn’t hearing these explanations make you want to ask what country these people live in? Do you and your neighbors have too much money? Working people do not control prices. Corporations control prices and they increase them to protect their profits.
Still, our politicians and other “talking heads” in the news are focusing on everything but corporate profits. Their focus is on how rising oil prices are increasing production costs (cost-push inflation, really “profit push”); how supply chain problems are pushing prices up by creating a situation where too much money is chasing too few goods (demand-pull inflation, really “profit pull”); and, how things like the national debt, low interest rates, human psychology, the rising cost of imports, and the declining worth of the dollar are causing higher inflation. In short, Joe Biden is to blame: he gave too much money, directly and indirectly, to ordinary people, which overlooks the fact that inflation and government spending are at best only weakly correlated.
What is not talked about are the ever-growing profits of banks, financial institutions, and corporations and the wildly increasing incomes and shrinking tax responsibilities of the wealthy. It is never recognized that neither Biden nor us ordinary folks control the cost of oil, health care, education, or the operation of international and national supply chains.
Finally, the argument is made that the only thing to be done is for government and the federal reserve to tighten the money supply by increasing interest rates, increasing taxes on the middle and working classes, and decreasing government spending (except, of course, for defense and the military spending). These austerity policies, it is said, will reduce inflation, protect returns on investment, and maintain the value of our currency. These are all issues of concern to banks and corporations; they matter much less to the middle and working classes who do not derive their incomes from loans and investments.
Could it be that the overblown and disturbing talk about inflation from the media and the political Right reflects the corporate fear of low unemployment, rising wages, low interest rates, and subsequent falls in profits and “rents” (meaning payments received from then ownership of debts and material resources). In the new American economy dominated by finance, natural resources, and exports, corporations do well when interest rates are high and wages are low. When unemployment is low and wages go up, corporate profits are threatened. So they raise the alarm about so-called “hyperinflation,” hoping to convince the Fed to increase interest rates, decrease spending and slow the economy in order to raise unemployment, decrease wages, and protect their rents and profits.
These are the hidden politics of inflation.
So, what would a government truly interested in ordinary folks do? It would adopt economic policies that allow a healthy rate of inflation (around two percent or so) but avoid hyperinflation. Government could regulate the markets and control the prices of the main drivers of inflation, such as health care, education, housing, and energy. It could use the power of Medicare and Medicaid to control the cost of health care. It could use federal agencies to insure that basic needs and life choices are available at an affordable price. It could promote moderate and low-income housing. It could subsidize new environmentally-friendly forms of energy and demote fossil fuels. It could control the money supply by taxing wealth and higher incomes while increasing wage minimums. It could respond to increasing demand by spending money in ways that increases the production of the things we need. It could use price controls to stop obvious profiteering, as was done during World War Two, the Korean War, and even during the Nixon presidency. It could focus on how profits fuel inflation, seeing wage increases as an indicator of the improving quality of life of ordinary working people.
Inflation is a result of corporate decisions to protect profits by raising prices.
It’s time to change the politics of inflation by no longer blaming inflation on ordinary people, their wages, and their needs.
This work, published by CommonDreams.com, is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
Thomas Meisenhelder is a retired Professor of Sociology from California State University, San Bernardino. He lives in Huntington Beach, Calif.
Long stretches of freezing rain during a pandemic can tend to take some of the lustre out of life—especially against the background of a slow-motion fascist coup. To remind ourselves and our readers that strange and wonderful things have happened, and therefore may happen again, we present a couple of examples. On the afternoon of August 31st, passersby in Market Square were serenaded by The East Cackalacky Ascetic Marching Death Band. That’s Tom Senkus, aka CrapBot 6, on guitar, and Sharmini Wijeyesekera on the musical saw, tambourine, and vocals. The band had been busking around America for a year and a half. As one might expect, their music was full of strange delights.
Governor Sununu’s Energy Policy: A Road to Ruin
by Rep. Peter Somssich and Rep. Kat McGhee
While the rest of the country, and the world, set a course for a cleaner energy future, Governor Sununu and his party are, as one energy contractor put it, steering New Hampshire “back to the dark ages.”
This regression is the result of four ideological tenets: 1) Rejection of climate science, 2) Loyalty to the fossil fuel industry, 3) Belief that government has no role in the clean energy transition, and 4) Certainty that scuttling proven state energy programs aids the prior three tenets.
The rejection of science on the House Science, Technology and Energy Committee is unforgiveable. But relegating New Hampshire to a high-cost, fossil-fuel-laden, energy future that negates 20 years of state efforts deserves your attention.
Stagnant energy leadership began when Governor Sununu dismantled N.H.’s Office of Energy Planning (2018). But coincident with greater Libertarian/Free Stater control of state government, reliable energy policies have come under full-blown attack.
Most of us thought lawmakers could agree on the benefits of energy efficiency, and the value of assisting low-income residents with energy bills; these are investments to make us more resilient and less vulnerable to volatile fuel prices. We assumed bipartisan support was a no-brainer for cleaner forms of locally-generated energy that lower fuel costs, keep energy dollars in the state, and shave costly demand.
But, with a single pen-stroke, we watched Governor Sununu abandon N.H.’s biomass industry and permanently damage N.H.’s forest industry, cementing a lurch towards greater out-of-state, fossil-fuel dependence. House hearings brought us testimony of lost jobs and economic ripples that would hit every county and timberland owner in the state. We heard how biomass plants kept N.H. forests healthy, aided tourism, and produced six percent of the state’s sustainable electricity. But ‘political loyalty’ was the governor’s weapon of choice when he coerced environmentally minded Republicans to change their vote and let his biomass veto stand. A bipartisan, veto-proof majority disintegrated, along with six percent of N.H.’s local, renewable energy.
Governor Sununu’s fossil-fuel allies on House Science, Technology and Energy chose to challenge the need for a new three-year energy efficiency (EE) plan in a letter to the PUC (November, 2020). Energy efficiency is the most effective and stimulative policy in N.H.’s energy portfolio. Our colleague, Rep. John Mann, says “the payback on EE is rapid and compounds over time.” When fuel prices go up, as is predicted this winter, the value of energy-efficiency multiplies. Weatherized buildings reduce fuel demand permanently. Conversely, the loss of those gains also compounds.
New Hampshire residents and businesses should cry foul for the recent PUC rejection of a stakeholder-approved three-year N.H. Saves Energy Efficiency Plan. The order, signed on November 12, 2021 by a head commissioner who resigned the same day, was 11 months overdue. No justification was given for pulling the rug out from under New Hampshire’s home-grown weatherization businesses, their workers, (who lost their jobs for Christmas), and the utilities, which have long maintained successful, good-faith collaborations in carrying out the N.H. Saves program. This regulatory conclusion rejected the evidence and caved to calls for sabotage. What is the cost of this loss of predictability?
We question the lack of meaningful objectives set forth by the self-proclaimed “manager” whose recent reorganization of executive and regulatory energy agencies places political loyalists in key jobs at the new Department of Energy (DOE), the Department of Environmental Services (DES), and the Public Utilities Commission (PUC). The greatly pared down PUC is now chaired by an acolyte of the “4 tenets,” who possesses no background in regional energy, utility rate-setting or clean energy markets. Side-stepping regulatory objectivity and expertise in favor of dogma brings New Hampshire closer to cronyism.
As other New England states take decisive action to reduce fossil fuel dependence, their need for expensive, dirty, and outdated infrastructure, goes down. As N.H. resists steps to reduce fossil fuel dependence, and fails to plan for the inevitable, our share of regional grid costs, goes up. N.H.’s long-standing approach has been to adopt proven energy strategies and modest, incremental improvements as a hedge against volatile fuel prices. Governor Sununu’s approach curbs proven strategies, like portfolio diversity, and inhibits new energy markets from taking root. Is this both pattern and plan?
We want young people to move to New Hampshire knowing state government believes in climate science and acts accordingly. We want businesses to choose New Hampshire because we pursue smart energy policy and can be counted on for stability.
Embracing the past, as innovation sprints on around us, is a road to ruin.
Rep. Peter Somssich is the Ranking Democratic Member and Rep. Kat McGhee is the Deputy Ranking Democratic Member of the House Science, Technology & Energy Committee
Less entrancing but equally strange, on the Fourth of July, 2011, these four young men, along with one other who was out of the frame, and a girl, and a pit bull, celebrated by parading around Market Square with very large snakes draped over their necks. The Award-Winning Local Daily’s Police Log notes that two complaints were filed, but no violations were found.
Flotsam & Jetsam
Governor Chris Sununu says he’s not running for the U.S. Senate seat now held by Maggie Hassan. We read that to mean he’s eyeing the White House in 2024.
His announcement was the starting gun for a GOP stampede.
Former First District Congressman Frank Guinta is acting as if he had a chance in hell, which seems unlikely. He’d have to edge past the well-heeled Bill Binnie, who’s also eyeing the slot. Binnie has tried this before, though. His money wasn’t much help in 2010, when he came in a distant third. No, Guinta’s real obstacle, though, would be the Union Leader’s memorable 2015 anti-endorsement: “Frank Guinta is a damned liar.”
“Corky” Messner seems to have the inside track, but his Denver law firm’s legal work for a state-run Chinese insurance company against a U.S. manufacturer may come back to haunt him.
And some people say there’s nothing amusing in the news….